Posts tagged with: Mercatus Center

Remember the “fiscal cliff”? It wasn’t a cliff.

Over at Neighborhood Effects, James Broughel asks the question, “Has the Sequester Hurt the Economy?”

So have the sequester cuts hurt the economy? One possible answer comes from a new paper by Scott Sumner of Bentley University. Sumner argues that cuts to government spending don’t have serious deleterious macroeconomic effects when the Federal Reserve is targeting inflation. This is because the Fed ensures that prices stay stable under an inflation targeting regime, which keeps demand stable even in the face of government spending cuts. Similarly, when the Fed stabilizes the price level it also offsets any beneficial effects that fiscal stimulus might have, which helps explain the lackluster results from the 2009 American Recovery and Reinvestment Act (aka the “stimulus”).

Implicit in Sumner’s theory is that expansionary austerity, or the idea that the economy can grow even in the face of large government spending cuts, is indeed possible. Some of my colleagues at the Mercatus Center have described other ways in which expansionary austerity is possible.

First of all, I would like to be clear that I do not disagree that “expansionary austerity” may be possible. Nor do I disagree that the sequester cuts have not significantly hurt the economy. However, while the sequester included spending cuts and, therefore, technically qualifies as “austerity,” it was not what everyone was making it out to be. (more…)

The call to “buy American” is one we hear frequently or see plastered on the bumper of the car in front of us. Donald Boudreaux, senior economics advisor at Mercatus Center, explains the problem with this ideal in a letter to the Washington Post:made in usa

Let’s make a deal.  Government will agree to protect only those American workers and small-business owners who in return agree to stop buying foreign-made products. (more…)

Blog author: dpahman
posted by on Thursday, February 7, 2013
No more credit card offers on Saturdays....

No more credit card offers on Saturdays….

Regarding the USPS decision Wednesday to stop Saturday mail delivery, Ron Nixon at the New York Times writes,

The post office said a five-day mail delivery schedule would begin in August and shave about $2 billion a year from its losses, which were $15.9 billion last year. The Postal Service would continue to deliver packages six days a week, and post offices would still be open on Saturdays. Reducing Saturday delivery is in line with mail services in several other industrialized countries like Australia, Canada and Sweden, which deliver five days a week.

This move has not come without opposition, however. Nixon continues,

Whether it will succeed is difficult to predict. Many lawmakers view the Postal Service as the quintessential government service that touches constituents almost every day, and rigidly oppose any changes. Also, postal worker unions hold sway over some lawmakers who are influential in writing legislation that governs the agency.

Again, he reports,

Most Americans support ending Saturday mail delivery. A New York Times/CBS News poll last year found that about 7 in 10 Americans said they would favor the change as a way to help the post office deal with billions of dollars in debt. The Obama administration also supports a five-day mail delivery schedule.

But three postal unions and some businesses on Wednesday called the move to five-day delivery misguided.

He goes on to note, “Many companies said ending Saturday delivery would have a devastating effect on their businesses.”

This sounds like a dire situation. Faced with “a requirement that it pay nearly $5.5 billion a year for health benefits to future retirees” and a 37% decline in first class mail since 2007, the postal service has ceased to be profitable as it stands, despite consistent yearly increases in the price of stamps. Small businesses may be threatened; Nixon reports that Ricardo Rolando, president of the National Association of Letter Carriers, has additionally claimed that stopping Saturday mail “would be be particularly harmful” to “rural communities, the elderly, the disabled and others”; shouldn’t something be done to fix this problem? (more…)

Blog author: jballor
posted by on Friday, October 26, 2012

Call for Papers: “Intellectual Property and Religious Thought”

University of St. Thomas School of Law, April 5, 2013. The University of St. Thomas will hold a conference titled “Intellectual Property and Religious Thought,” on April 5, 2013, co-sponsored by the Terrence J. Murphy Institute for Catholic Thought, Law, and Public Policy and The University of St. Thomas Law Journal. The conference will be held at the University of St. Thomas School of Law building in downtown Minneapolis.

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In a new column on Sojourners, Prophet Jim Wallis reveals that Wall Street financiers are coming to him for confession, sometimes skulking along darkened streets to hide their shame:

Some come like Nicodemus – a religious leader who came to talk to Jesus in private – at night. Many have felt remorseful about what happened on Wall Street and how it has hurt so many people. They describe the behavior in their profession with words such as “greedy,” “risky,” or “reckless.” These business and banking leaders do feel sorry, but repentance means that remorse must be coupled with a change in the behaviors that led to the problems.

The Prophet, who can read their very thoughts (“repentance and accountability were far from their minds”), bids them to change their ways and reminds them about God and Mammon. But it is not so much a conversion of hearts and minds Wallis is asking for, as it is the divine wrath of Washington regulators. His three-point plan (emphasis mine):

First, provide transparency and accountability. Given the human condition and the many temptations of money, we need transparency and accountability in financial markets and instruments, including high-risk and questionable ones such as the now infamous “derivatives.” To protect the common good, we need to enact greater regulation and oversight of all elements of the banking industry.

Second, provide consumer protection. Any pastor can now tell you stories of how parishioners were mistreated, cheated, and damaged by current banking practices. Many clergy strongly favor protecting consumers from predatory financial practices. They want a strong independent Consumer Finance Protection Agency, with jurisdiction and enforcement power over all companies in the financial sector, in order to protect people from fraudulent, misleading, and abusive practices.

Third, limit size and risk, so banks are no longer too big to fail – and are bailed out at public expense. This means setting limits on the size of financial institutions and the risks they can take. Ban bank ownership of private investment funds, and establish an orderly process to dissolve a failing bank, in order to avoid future taxpayer bailouts. Give a stronger voice to shareholders and investors in institutional practices and policies – including determining the executive compensation of companies, and the now infamous bank executive bonuses.

A much more intelligent and balanced analysis of the financial crisis was published yesterday by Russ Roberts, a professor of economics at George Mason University and a scholar at the Mercatus Center. Note the complete lack of cheap moralizing that informs so much of Wallis’ economic “analysis.” This is from the introduction to Roberts’ “Gambling with Other People’s Money”: (more…)