Real and Pseudo Free Banking

Like certain weeds and infectious diseases, some myths about banking seem beyond human powers of eradication.

I was reminded of this recently by a Facebook correspondent’s reply to my recent post on “Hayek and Free Banking.” “We had free banking in the US from 1830 until 1862,” he wrote. “It didn’t work out too well.” “During the Wildcat Era,” he added, “banks were unregulated and failed by the hundreds.”

Imagine the effect my critic must have anticipated — the crushing blow his revelations would surely deal to my cherished beliefs. Upon reading his words, my eyes widen; my jaw goes slack. Can this really be so?, I ask myself? I read the ominous sentences again, more slowly, sub-vocalizing. Beads of sweat gather across my brow. Then, pursing my lips, my eyes downcast, I turn my head, first left, then right, then left again. If only I had known! All these years…no one ever…I mean, how was I supposed…it never occurred to me… DARNITALL! Why didn’t I think of looking at the U.S. experience before shooting my mouth off about free banking?

Well, that isn’t what happened. “What cheek this fellow has!” was more like it. (OK, it wasn’t exactly that, either.) Of course I’ve looked into the U.S. record. So has Larry White. And Kevin Dowd. And every other dues-paying member of the Modern Free Banking School. We’ve looked into it, and we’ve found nothing there to change our minds concerning the advantages of freedom in banking.

An Unnecessary Indictment of Dylann Roof

Today, the Justice Department indicted Dylann Roof on 33 federal hate crime charges for the killings of nine people at Emanuel A.M.E. church in Charleston last month. This indictment is entirely unnecessary.

Hard as it may be for some to imagine now, there was a long time in this country when racially and politically motivated violence against blacks was not prosecuted by state and local authorities. Or sometimes, as in the case of Emmett Till—the young boy from Chicago who was lynched in Mississippi for allegedly being too forward with a white woman—prosecution was a farce and the perpetrators were acquitted.

How Capitalism Is Undermining the Indian Caste System

Karl Marx was wrong about many things but right about one thing: the revolutionary way capitalism attacks and destroys feudalism. As I explain in a new study,  in India, the rise of capitalism since the economic reforms of 1991 has also attacked and eroded casteism, a social hierarchy that placed four castes on top with a fifth caste—dalits—like dirt beneath the feet of others. Dalits, once called untouchables, were traditionally denied any livelihood save virtual serfdom to landowners and the filthiest, most disease-ridden tasks, such as cleaning toilets and handling dead humans and animals. Remarkably, the opening up of the Indian economy has enabled dalits to break out of their traditional low occupations and start businesses. The Dalit Indian Chamber of Commerce and Industry (DICCI) now boasts over 3,000 millionaire members. This revolution is still in its early stages, but is now unstoppable.

On the Bright Side: Three Full Decades of CO2-Induced Vegetative Greening in China

Here we introduce a new feature from the Center for the Study of Science, “On the Bright Side.” OBS will highlight the beneficial impacts of human activities on the state of our world, including improvements to human health and welfare, as well as the natural environment. Our emphasis will typically focus on the oft-neglected positive externalities of carbon dioxide emissions and associated climate change. Far too often, the media, environmental organizations, governmental panels and policymakers concentrate their efforts on the putative negative impacts of potential CO2-induced global warming. We hope to counter that pessimism with a heavy dose of positive reporting on the considerable good humans are doing for themselves and for the planet.

According to Piao et al. (2015), the reliable detection and attribution of changes in vegetation growth are essential prerequisites for “the development of successful strategies for the sustainable management of ecosystems.” And indeed they are, especially in today’s world in which so many scientists and policy makers are concerned with what to do (or not do) about the potential impacts of CO2-induced climate change. However, detecting vegetative change, let alone determining its cause, can be an extraordinarily difficult task to accomplish. Nevertheless, that is exactly what Piao et al. set out to do in their recent study.

More specifically, the team of sixteen Chinese, Australian and American researchers set out to investigate trends in vegetational change across China over the past three decades (1982-2009), quantifying the contributions from different factors including (1) climate change, (2) rising atmospheric CO2 concentrations, (3) nitrogen deposition and (4) afforestation. To do so, they used three different satellite-derived Leaf Area Index (LAI) datasets (GLOBMAP, GLASS, and GIMMIS) to detect spatial and temporal changes in vegetation during the growing season (GS, defined as April to October), and five process-based ecosystem models (CABLE, CLM4, ORCHIDEE, LPJ and VEGAS) to determine the attribution.

Poll: 51% Say Business Owners Should Serve Same-Sex Couples, but 59% Say Wedding Businesses Should Be Allowed to Decline

A recent AP/GfK poll finds a slim majority (51%) of Americans say businesses with religious objections should be required to serve same-sex couples. Forty-six percent (46%) say these business owners should be allowed to refuse service. However, for business owners specifically offering wedding-related services, Americans say these particular businesses “should be allowed to refuse service” by a margin of 59% to 39%. 

These results correspond with the nuanced argument Cato scholar Roger Pilon recently made in the Wall Street Journal. Pilon explains that businesses open to the public ought to serve everyone; however, business owners with religious objections (who are not a monopoly) should not be forced to participate in the creative act of planning and participating in the wedding of a same-sex couple. Referring to two couples who recently were heavily fined for declining to provide services for same-sex weddings, he writes:

“Because they represent their businesses as open to the public, the Kleins and Giffords shouldn’t be able to deny entrance and normal service to gay customers… But it is a step further—and an important one—to force religious business owners to participate in a same-sex wedding, to force them to engage in the creative act of planning the event, baking a special-order cake for it, photographing it, and so on.”

Americans seem inclined to support this nuanced view that businesses should serve all customers regardless of sexual orientation, religion, race, gender, income, national origin, etc.—but that wedding-related businesses requiring owners’ direct participation in the wedding should not be forced to provide service against the owners’ religious beliefs.

Keeping Their Promises

In blogs over the last several months, I have revisited the fiscal records of the eight Republican presidential candidates who have gubernatorial experience. As the 2016 race heats up, the candidates will begin making many promises on tax and spending issues, but will we be able to believe them?

The records show that some governors worked hard to limit the size and scope of government. Others grew government with more spending and higher taxes. The candidates fit into three categories: the “A’s,” the falling grades, and the consistent “B’s”.

Three of the former governors earned at least one “A” during their tenure: George Pataki of New York, Jeb Bush of Florida, and Bobby Jindal of Louisiana. Pataki earned high marks for slashing state spending by $2 billion and cutting the personal income tax. Bush passed a billion dollar property tax cut coupled with a large business tax cut. Jindal dramatically cut spending. Spending is down 9 percent in Louisiana since fiscal year 2009.

No Markets, Then No Water. California’s Avoidable Crisis

This is what happens in a world without markets for water, as Eli Saslow reports in the Washington Post:

Their two peach trees had turned brittle in the heat, their neighborhood pond had vanished into cracked dirt and now their stainless-steel faucet was spitting out hot air. “That’s it. We’re dry,” Miguel Gamboa said during the second week of July, and so he went off to look for water….

For a few days now, they had been without running water in the fifth year of a California drought that had finally come to them. First it had devastated the orchards where Gamboa and his wife had once picked grapes. Then it drained the rivers where they had fished and the shallow wells in rural migrant communities. All the while, Gamboa and his wife had donated a little of their hourly earnings to relief efforts in the San Joaquin Valley and offered to share their own water supply with friends who had run out, not imagining the worst consequences of a drought could reach them here, down the road from a Starbucks, in a remodeled house surrounded by gurgling birdbaths and towering oaks.

The article reads like science fiction. And it’s so tragic, because markets could go a long way toward allocating California’s water to its highest-valued uses, as Peter Van Doren and Gary Libecap discussed recently. More Cato studies on water markets here.