Who Answers for Government Lies?

Who Answers for Government Lies?

Judge Andrew Napolitano

Here is a quick pop quiz. What happens if we lie to the government? What happens if the government lies to us? Does it matter who does the lying?Last year, the Obama administration negotiated an agreement with the government of Iran permitting Iran to obtain certain materials for the construction of nuclear facilities. It also permitted the release of tens of billions of dollars in Iranian assets that had been held in U.S. banks and that the courts had frozen, and it lifted trade sanctions. In exchange, certain inspections of Iranian nuclear facilities can occur under certain circumstances.

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Hillary on the Ropes

Judge Andrew Napolitano

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Late last week, the inspector general of the State Department completed a yearlong investigation into the use by Hillary Clinton of a private email server for all of her official government email as secretary of state. The investigation was launched when information technology officials at the State Department under Secretary of State John Kerry learned that Clinton paid an aide to migrate her public and secret State Department email streams away from their secured government venues and onto her own, non-secure server, which was stored in her home.
The migration of the secret email stream most likely constituted the crime of espionage -- the failure to secure and preserve the secrecy of confidential, secret or top-secret materials.

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A Reaganesque Recipe to Reinvigorate China’s Economy?

Daniel J. Mitchell

The long-term trend in China is positive. Economic reforms beginning in the late 1970s have helped lift hundreds of millions of people out of abject poverty.
And thanks to decades of strong growth, living standards for ordinary Chinese citizens are far higher than they used to be. There’s still quite a way to go before China catches up to western nations, but the numbers keep improving.
That being said, China’s economy has hit a speed bump. The stock market’s recent performance has been less than impressive and economic growth has faltered.
Is this the beginning of the end of the Chinese miracle?
If you asked me about six months ago, I would have expressed pessimism. The government was intervening in financial markets to prop up prices, and that was after several years of failed Keynesian-style spending programs that were supposed to “stimulate” growth.
But maybe my gloom was premature.

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Are Economists Useless, Despicable, and Loathsome People?

Daniel J. Mitchell

I spend a lot of time mocking statists, and with good reasons.
But since I’m an economist, maybe I should be careful about throwing stones.
Especially since, based on a fairly miserable track record, my profession lives in a big glass house.
So let’s take a closer look to see whether Shakespeare was wrong about which profession most deserved extermination.
We’ll start with a story from The Economist, which informs us that the IMF has a perfect record of failure when predicting recessions.

“The only function of economic forecasting is to make astrology look respectable,” John Kenneth Galbraith, an irreverent economist, once said.…The IMF publishes forecasts for 189 countries twice a year, in April and October, for the year in question and the following one.The Economisthas conducted an analysis of them from 1999 to 2014… Over the period, there were 220 instances in which an economy grew in one year before shrinking in the next. In its April forecasts the IMF never once foresaw the contraction looming in the next year. …Our random-number generator correctly forecast the start of a recession 18% of the time.

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Clinton Embodies Washington’s Decadence

She breaks the rules and gets away with it every time. No wonder voters are fed up.

ENLARGE .

Campaigning in Buena Park, Calif., May 25. Photo: Zuma Press

Peggy Noonan

The most interesting thing Donald Trump has said recently isn’t his taunting of Hillary Clinton, it’s his comment to Bloomberg’s Joshua Green. Mr. Green writes: “Many politicians, Trump told me, had privately confessed to being amazed that his policies, and his lacerating criticism of party leaders, had proved such potent electoral medicine.” Mr. Trump seemed to “intuit,” Mr. Green writes, that standard Republican dogma on entitlements and immigration no longer holds sway with large swaths of the party electorate. Mr. Trump says he sees his supporters as part of “a movement.”
What, Mr. Green asked, would the party look like in five years? “Love the question,” Mr. Trump replied. “Five, 10 years from now—different party. You’re going to have a worker’s party. A party of people that haven’t had a real wage increase in 18 years.”
My impression on reading this was that Mr. Trump is seeing it as a party of regular people, as the Democratic Party was when I was a child and the Republican Party when I was a young woman.
This is the first thing I’ve seen that suggests Mr. Trump is ideologically conscious of what he’s doing. It’s not just ego and orange hair, he suggests, it’s politically intentional.

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Austrian Economics Is More than Free-Market Economics

Austrian Economics Is More than Free-Market Economics

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Matthew McCaffrey

Austrian economists are known for supporting free markets and criticizing government intervention. In fact, many people mistakenly think of Austrian economics as nothing more than a radical defense of free markets, though it’s really a framework for studying human action and its social implications.1
Still, you can usually spot free market conclusions lurking in the background of Austrian work, and this raises important questions about how policy implications influence the development of theory. For example, is it possible that the need to justify free market policies distorts Austrian research? This is the argument made in a new collection of essays edited by Guinevere Nell, titled Austrian Theory & Economic Organization: Reaching Beyond Free Market Boundaries.

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Why We Need a Recession

Why We Need a Recession

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Ronald-Peter Stöferle

According to the National Bureau of Economic Research (NBER), a recession is defined as a “significant decline in economic activity spread across the economy, lasting more than a few months.” Often, this is understood as two consecutive quarters of negative economic growth as measured by a country’s GDP.
Public opinion is generally quite simple in regard to recession: upswings are generally welcomed, recessions are to be avoided. The “Austrians” are however at odds with this general consensus — we regard recessions as healthy and necessary. Economic downturns only correct the aberrations and excesses of a boom. The benefits of recessions include:

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Three Reasons to Be Worried About the Economy

Three Reasons to Be Worried About the Economy

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Yonathan Amselem

On January 12, America’s central planner-in-chief gave his State of the Union address. The president promised nothing less than to feed the hungry, create jobs, shape the earth’s climate, and make everyone a college graduate. There’s nothing new here, though. We’ve heard variations of this silly song and dance every year under both Democrats and Republicans. The president lambasted naysayers as fear-mongers that were too partisan to admit we have a booming economy. The fact that the Dow Jones cratered roughly 9 percent in the same thirty-day period President Obama gave his address did nothing to quell Obama's optimism about America’s future. In fact, he labeled the US economy “the strongest and most durable in the world.”
Despite our leader’s unwavering confidence in America’s fortunes, a quick peak under the hood reveals a pretty grim state of American commerce.

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Where Negative Interest Rates Will Lead Us

Where Negative Interest Rates Will Lead Us

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Patrick Barron

Despite zero-interest-rate-policy (ZIRP) and multiple quantitative easing programs — whereby the central bank buys large quantities of assets while leaving interest rates at practically zero — the world’s economies are stuck in the doldrums. The central banks’ only accomplishment seems to be an increase in public and private debt. Therefore, the next step for the Keynesian economists who rule central banks everywhere is to make interest rates negative (i.e., adopt negative-interest-rate-policy or “NIRP.”) The process can be as simple as the central bank charging its member banks for holding excess reserves, although the same thing can be accomplished by more roundabout methods such as manipulating the reverse repo market.

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Demagoguery vs. Data on Employment in America

Demagoguery vs. Data on Employment in America

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Tyler A. Watts

Demagogue politicians love to play on popular fears that low-wage foreigners are “stealing” good paying American jobs by way of outsourcing and globalization. The claim is made by protectionists of all political stripes, whether leftists complaining of a “rigged economy” or rightists speaking of other countries “beating us” economically.
A sound economic analysis of the claim about job losses due to international trade should address two questions: First, is it true that the US has lost jobs due to trade (or other factors)? Second, is this phenomenon good or bad overall for the US and world economies?
On the first point, it can appear as though the US has lost jobs. For example, as Figure 1 shows, manufacturing employment in the US has declined by about 2 million from pre-Great Recession levels, and is down by over 7 million, or 37 percent, from the all-time high reached in 1979.

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Central Banks Should Stop Paying Interest on Reserves

Central Banks Should Stop Paying Interest on Reserves

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Brendan Brown

In 2008, the Federal Reserve began paying interest on reserve balances held on deposit at the Fed. It took more than seven decades from the US leaving the gold standard — in 1933 — for the fiat regime to do this and thus revoke a cardinal element of the old gold-based monetary system: the non-payment of any interest on base money.
The academic catalyst to this change came from Milton Friedman’s essay “The Optimum Quantity of Money” where he argued that the opportunity cost of paper money (any foregoing of interest compared to on alternative money-like instruments such as savings deposits) should be equal to its virtually-zero marginal cost of production. Opportunity cost could indeed be brought down to zero if base money (bank reserves, currency) in large part paid interest at the market rate. Under the gold standard, the opportunity cost of holding base money largely in metallic form (gold coin) was indeed typically significant. All forms of base money paid no interest. And the stream of interest income foregone in terms of present value was equal in principle to the marginal cost of gold production (this was equal to the gold price).

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Will North Korea and Cuba Ever Be Wealthy?

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Ryan McMaken

After years of claiming to embrace revolutionary Marxism, the Cuban state is, for reasons of necessity and pragmatism, moving toward becoming a more traditional authoritarian state. Even once Raul and Fidel Castro are dead, it's rather unlikely that the Cuban government will suddenly turn to a political system that leans heavily in favor of relatively free markets. As has been the case with China, the ruling class of Cuba will find ways to perpetuate itself and maintain political control while keeping for itself a substantial amount of the wealth produced by the labors of the common people. It will likely loosen up on its control of the economy because it recognizes that more-free economies are more productive than less-free economies. But, don't look for Cuba to become a haven for entrepreneurship any time soon.

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Switzerland Votes on "Free Lunch"

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Claudio Grass

In early June, the Swiss will be called upon to make a historic decision. Switzerland is the first country worldwide to put the idea of an Unconditional Basic Income to a vote and the outcome of this referendum will set a strong precedent and establish a landmark in the evolution of this debate.
The Swiss public will have to approve or reject a change in the constitution that would allow for the introduction of an Unconditional Basic Income (UBI) or a preset, monthly minimum income to be paid out by the government to every adult and child in the country if their income falls below a specific threshold. Even though details of this proposal have been few and far between, the most commonly cited amount of this guaranteed income would be 2,500 Swiss Francs for adults and 625 francs for children. The architects of the proposal stress that this government-guaranteed payment, unlike the current benefit programs, will be entire “no questions asked”, i.e., it will not be means-tested and will apply to every person legally living in Switzerland.

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