Topic: General

Upcoming Book Forum: Blood Oil: Tyrants, Violence, and the Rules that Run the World

On Wednesday January 13 at noon, Leif Wenar will be at Cato to discuss his new book, Blood Oil: Tyrants, Violence, and the Rules that Run the World. The book explores one of the great moral challenges of our time. That is, the massive benefits from development and global connectedness—in which we are all inescapably complicit—also enriched, enabled, and emboldened people who systematically made the lives of others desperate and miserable.

This cycle rolls on seemingly unabated. Indeed, the world’s dependence on oil and other natural resources continues to fuel violent conflicts and fund a large fraction of the world’s autocrats. But Wenar provides hope. After detailing the myriad negative consequences of resource wealth, Blood Oil outlines how “citizens, consumers, and leaders can act today to avert tomorrow’s crises — and how we can together create a more united human future.”

The War against Cash, Part II

I wrote yesterday that governments want to eliminate cash in order to make it easier to squeeze more money from taxpayers.

But that’s not the only reason why politicians are interested in banning paper money and coins.

They also are worried that paper money inhibits the government’s ability to “stimulate” the economy with artificially low interest rates. Simply stated, they’ve already pushed interest rates close to zero and haven’t gotten the desired effect of more growth, so the thinking in official circles is that if you could implement negative interest rates, people could be pushed to be good little Keynesians because any money they have in their accounts would be losing value.

I’m not joking.

Here’s some of what Kenneth Rogoff, a professor at Harvard and a former economist at the International Monetary Fund, wrote for the U.K.-based Financial Times.

Getting rid of physical currency and replacing it with electronic money would…eliminate the zero bound on policy interest rates that has handcuffed central banks since the financial crisis. At present, if central banks try setting rates too far below zero, people will start bailing out into cash.

And here are some passages from an editorial that also was published in the FT.

…authorities would do well to consider the arguments for phasing out their use as another “barbarous relic”…even a little physical currency can cause a lot of distortion to the economic system. The existence of cash — a bearer instrument with a zero interest rate — limits central banks’ ability to stimulate a depressed economy.

Meanwhile, Bloomberg reports that the Willem Buiter of Citi (the same guy who endorsed military attacks on low-tax jurisdictions) supports the elimination of cash.

Citi’s Willem Buiter looks at this problem, which is known as the effective lower bound (ELB) on nominal interest rates. …the ELB only exists at all due to the existence of cash, which is a bearer instrument that pays zero nominal rates. Why have your money on deposit at a negative rate that reduces your wealth when you can have it in cash and suffer no reduction? Cash therefore gives people an easy and effective way of avoiding negative nominal rates. …Buiter’s solution to cash’s ability to allow people to avoid negative deposit rates is to abolish cash altogether.

So are they right? Should cash be abolished so central bankers and governments have more power to manipulate the economy?

There’s a lot of opposition from very sensible people, particularly in the United Kingdom where the idea of banning cash is viewed as a more serious threat.

The War against Cash, Part I

Politicians hate cash.

That may seem an odd assertion given that they love spending money (other people’s money, of course, as illustrated by this cartoon).

But what I’m talking about is the fact that politicians get upset when there’s not 100 percent compliance with tax laws.

They hate tax havens since the option of a fiscal refuge makes confiscatory taxation impractical.

They hate the underground economy because that means hard-to-tax economic activity.

And they hate cash because it gives consumers an anonymous payment mechanism.

Let’s explore the animosity to cash.

Star Wars, Science Fiction, and Foreign Policy

Happy Star Wars launch day! As the newest film in the Star Wars franchise is exciting fans around the globe, it’s also offering a unique opportunity for foreign policy scholars: attempting to shoehorn Star Wars parallels and metaphors into foreign policy debates.

It’s certainly easy to do. Over at Foreign Policy, authors examine why the rebel victory at Endor may not have been the decisive battle it initially appeared:

Much of the chaos following the Rebel Alliance’s victory was predictable. Its wartime leaders were overwhelmingly focused on avoiding missteps and destroying their vastly more powerful enemy while ignoring the problems of violence, factionalism, and criminality that plague post-conflict environments across the universe.

You don’t have to work hard to see the clumsy historical metaphor here: the rebellion’s victory gave way to a ‘failed democratic transition,’ with the Rebel Alliance unable to turn their victory into a durable political settlement. In a post-Arab Spring world, the parallels are obvious.

Science Fiction Authors Lost in the Myths of the 1950s

I’ve been watching “Childhood’s End” on the SyFy channel this week. I remember the book, a 1953 novel by Arthur C. Clarke, being a big deal when I was in junior high school. My bookish friends and I all read it. But I had little memory of the plot, so watching the show is an entirely new experience. It’s well done, mysterious, maybe a little slow. But I noticed one thing that reminds me that it was written by a British author educated in the first half of the 20th century.

The technologically superior alien Overlords arrive, take control of earth, and impose their rule on us without any real challenge. They announce that they will end war, poverty, and injustice. And they do, just like that. Sure, a few cranks in the #freedomleague complain that we’re not free, but nobody denies the peace, abundance, and good health that the Overlords have delivered. Earthlings don’t even have to work any more. That is, the book and the miniseries don’t even stop to ponder whether absolute centralized government – terrestrial or alien – could deliver more peace, harmony, and abundance than a market system. It’s just taken for granted. 

And that’s a common theme in mid-century sci-fi. In his Foundation series, Isaac Asimov imagined a branch of mathematics known as psychohistory that could predict the future. Because human action, taken en masse, can be predicted for millennia.

And as I wrote on Ira Levin’s death, his wonderful libertarian novel This Perfect Day reflected similar assumptions about centralization and government planning. The novel is set 141 years after the Unification, the establishment of a world government guided by a central computer. The computer, Uni, provides all the members of the human race with everything they need - food, shelter, employment, psychotherapy, and monthly “treatments” that include vaccines, contraceptives, tranquilizers, a drug to prevent messy beard growth, and a medication that reduces aggressiveness and limits the sex drive. Everyone loves Uni, which gives them everything they could want, except for a few hardy rebels who just value freedom.

It’s the Heritage Individual Mandate Debate All Over Again

A group of prominent conservatives recently released an ObamaCare replacement plan that would replicate many of that law’s worst features. As I explain in a new post at Darwin’s Fool, conservatives need to examine this proposal closely against the alternative. An excerpt:

If you’re a conservative and you’re reading this, chances are good you have a gun to your headConservatives are so averse to health policyNational Review‘s Ramesh Ponnuru once quipped that “Republicans will do anything to repeal ObamaCare–except think about health care.” This is no small problem. Indeed, it is how we got ObamaCare in the first place: conservative neglect enabled a raft of very un-conservative health care ideas to germinate at the Heritage Foundation for a decade and a half. By the time Democrats picked up those ideas and ran with them in 2009, it was too late. Conservatives were powerless to stop them.

Conservatives may indeed be just one election away from repealing ObamaCare, which is all to the good. But some conservatives have proposed replacing ObamaCare with refundable tax credits for health-insurance.  Tax credits are ObamaCare-lite. They would cement in place many of ObamaCare’s worst features, and replicate its awful results. If those features acquire a bipartisan imprimatur, we will never in our lifetimes be rid of them. Unless conservatives give tax credits the scrutiny they should have applied to the Heritage Foundation plan in the 1990s, they will make the same mistake all over again.

Conservatives don’t have to repeat history. A better set of reforms offers a clear path toward a market system, and away from ObamaCare, by building on the bedrock conservative idea of health savings accounts (HSAs). “Large” HSAs would deliver better, more affordable, and more secure health care, particularly for the most vulnerable. At the same time, Large HSAs would give workers a larger effective tax cut than all the Reagan and Bush tax cuts combined, and nine times larger than repealing ObamaCare.

Read the whole thing.

Good Bye NCLB, Hello ESSA

President Obama has just signed the Every Student Succeeds Act, ending the era of No Child Left Behind. If nothing else, that big majorities of both parties in Congress felt the need to greatly ease federal force in elementary and secondary education – at least overt federal force – is a powerful testament to the breadth of the public backlash against federally driven standardization, testing, and “accountability.” That backlash may well have hit a tipping point thanks to the Common Core, through which the federal government attempted to get states not just to have state curriculum standards and tests, but national standards and tests. In other words, Washington began to influence the specifics of what children across the country would learn.

Is the ESSA much better than NCLB? No, and it could potentially end up taking very little power away from Washington even though the language surrounding it has been all about returning authority to states and districts. But that the rhetoric about the federal role has had to change so greatly is a very encouraging thing.

Of course, the work of getting Washington to obey the Constitution by getting out of education – and of fundamentally changing the education system to one based in freedom – is nowhere near complete. But at least things may be heading in the right direction.