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…)

missstateAt least $8 million will be allocated to fund a new parking garage near David Wade Stadium at Mississippi State University. MSU, which is in Starkville, Miss. and far from the Gulf Coast, is 250 miles from Hurricane Katrina’s landfall. Jeff Amy of the Associated Press has more,

Part of a hotel-convention center complex planned around a former cotton mill, it’s blocks from Mississippi State’s football stadium. That’s not unlike the condominiums built for University of Alabama football fans in Tuscaloosa using Katrina-related tax breaks and subsidized borrowing.

Like Tuscaloosa, Starkville was part of the presidentially declared disaster zone, and Edwards said spending is appropriate because it helps fuel “a comprehensive recovery.”

While Mississippi funds the Starkville project and can’t seem to find uses for millions in other available funding, some recovery programs in coastal areas still visibly affected by the storm are out of money.

For example, a $3 million forgivable loan program in Hancock County has committed all its funds to local businesses trying to rebuild. Storm surge was at its most extreme in Hancock County, where Katrina made its final landfall.

“We had far more applicants than we had funds,” said Tish Williams, executive director of the Hancock County Chamber of Commerce. “We were the hardest hit and the last to get.”

Mississippi still has $872 million in unspent federal aid for Katrina relief. The AP story looks into other spending endeavors that seem to be unrelated to Katrina’s aftermath.

Frankly, anybody who witnessed and had to live through the devastation along the Mississippi Gulf Coast should be sickened by the report. Federal disaster relief, especially when we are talking about the billions of dollars given to Mississippi after Katrina, proves just too tempting to mismanage and abuse for state bureaucrats and politicians.

Blog author: abradley
Thursday, September 12, 2013

NYC Mayoral Candidate Bill de Blasio Campaigns In BrooklynPeter Beinart at the Daily Beast writes a fascinating article about the way the “left” is currently being reshaped. It seems that young adults in the Democratic Party are far more radical than what America saw in the Clinton White House. In fact, as the article notes, Bill de Blasio’s Democratic Party nomination to run for New York City mayor is a signal of this new direction. If those who love liberty are not paying attention to this shift, they should: we are likely to see more and more of de Blasio’s platform at the local and state level. Here are just a few things de Blasio wants to accomplish in New York City if elected:

GYHD-Jordan-Baillor-e1378924768840Jordan J. Ballor has spent the past decade working for the Acton Institute. At Fieldnotes Magazine he share five lessons he’s learned from working at a think tank focused on the intersection of theology and economics:

1. Treat people like people. The Golden Rule, “do to others what you would have them do to you” (Matt. 7:12), may seem like common sense, but it is much more uncommon to see what it really should look like in practice. I experienced this when I was walking back to my car from the office after work one day when I was approached by someone asking for help. At the time I was caught up in my own thoughts and worries, and the person in front of me was really just a problem, an obstacle. I took the easy way out and missed an opportunity to treat a person as if he was a person, made in God’s image and likeness.

2. Your work matters to God. It doesn’t matter if you are a preacher, a plumber, or a politician; the work you do is important to God. Most of us are not tasked with leading Fortune 500 companies, passing laws, or proclaiming the gospel from the pulpit. But we are all called to be faithful, to use our various gifts to serve others. The work you do matters to God because you matter to God and he has placed you where you are for a reason. So be a channel of grace in whatever you do. As Peter puts it, “Each of you should use whatever gift you have received to serve others, as faithful stewards of God’s grace in its various forms” (1 Peter 4:10).

Read more . . .

Blog author: jcarter
Thursday, September 12, 2013

Pope says empty convents and monasteries should house refugees

Disused church buildings should be used to house refugees, who must be embraced rather than feared, Pope Francis told asylum seekers in Rome on Tuesday, underlining his papacy’s emphasis on the poor and the plight of immigrants.

A “Libertarian” Case for Conscription?
Ilya Somin, Volokh Conspiracy

There are a number of standard arguments for military conscription. But Pascal-Emmanuel Gobry’s recent essay for Cato Unbound is unusual for claiming that conscription can be justified on libertarian grounds.

Trader Joe’s To Drop Health Coverage For Part-Time Workers Under Obamacare: Memo
Dave Jamieson, Huffington Post

After extending health care coverage to many of its part-time employees for years, Trader Joe’s has told workers who log fewer than 30 hours a week that they will need to find insurance on the Obamacare exchanges next year, according to a confidential memo from the grocer’s chief executive.

Should We Create Jobs or Create Wealth?
Anne Bradley, Institute for Faith, Work, and Economics

Wealth is different from income. Income is the monetary return on labor or investments. One can potentially have a high level of income without having much wealth.

Blog author: jcarter
Wednesday, September 11, 2013

kas_656-1095-1-30_50Wilhelm Röpke is one of the most important 20th century economists that almost no Americans know anything about. To really learn about the man whose influence was considered largely responsible for enabling Germany’s post-World War II economic “miracle,” you should read Samuel Gregg’s Wilhelm Ropke’s Political Economy. But if you don’t have the time (or $109.25) to spend, you can read Ralph Ancil’s introductory article at Front Porch Republic:

Throughout his professional life Röpke was concerned about a socially and morally responsible market economy and the policies it entails. An ardent opponent of all forms of collectivism, he spoke and wrote not only against the ideologies of national socialism and communism, but against the more subtle forms of collectivism found in the ostensibly more democratic and free countries of the West.

Röpke’s central social policy concern was the distribution of economic power. Freedom and basic human happiness are best met in an economy where individuals and families are able to take responsibility for their own lives, he believed, and that meant some social and economic arrangements are better than others. Throughout his writing, Röpke therefore decentralization, deproletarianization, family farms, and small-scale artisans and merchants.

Read more . . .

“When loans are guaranteed by the state and detached from market forces and personal responsibility,” says Dylan Pahman in this week’s Acton Commentary, “those institutions being paid with that loan money experience inflated demand as everyone and anyone now can go and wants to go college. As a result, tuition prices have been inflated. The full text of his essay follows. Subscribe to the free, weekly Acton News & Commentary and other publications here.

Federal Student Loans: A Problem of Subsidiarity

by Dylan Pahman

Ever see one of those used car ads that says, “Bad credit? Drive today!” The implication being that the dealer will happily arrange a loan regardless of the borrower’s credit history. For years now, the federal government has been running a similar scheme: “Poor student? Go to college anyway!” While this campaign has had better intentions behind it, it is no less of a problem. In the field of higher education, the federal government has usurped the roles of families, private organizations, and markets, with negative moral and economic consequences.