Some Links

by Don Boudreaux on September 17, 2011

in Balance of Payments, Environment, Great Depression, Regulation, State of Macro, Stimulus, Trade, Video

The great Bruce Yandle – Emeritus Professor of Economics at Clemson University – is interviewed in the current issue of the Richmond Fed’s Region Focus.  One of the finest privileges of my life was being Bruce’s colleague at Clemson for five wonderful years.

Here’s a video contest for you creative students!

Carpe Diem’s Mark Perry explains that trade is always balanced.

The editors at the Wall Street Journal rightly criticize Mitt Romney for his economically uninformed – but obviously politically motivated – criticisms of Beijing’s monetary policy.  Listening to politicians address economic issues is like listening to astrologers talk about the physics of the formation of stars.

The September 2011 issue of The Freeman is, as is typical of each issue of this superb publication edited by Sheldon Richman, loaded with great material.  At the risk of unintentionally insulting some authors, though, I want especially to recommend the powerful essay by Cato’s David Boaz on the outlandish and evil ‘war on drugs,’ and the essay by Freeman columnist and historian Burt Folsom on the Great Depression.

Over at The Independent Review, Julio Cole tells of the intellectual journey of Nobel laureate writer Mario Vargas Llosa.

My buddy Wayne Crews, of the Competitive Enterprise Institute, explains how we can transcend post- 9/11 insecurity here in our homeland.

My GMU colleague (formerly in the Dep’t. of Economics, but now over in the School of Public Policy) Jack High explains, in this letter in the Washington Post, why we ought to be skeptical of policy solutions proposed by Keynesians.

And George Will discusses “our floundering ‘federal family’.”

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{ 5 comments }

vikingvista September 17, 2011 at 1:53 pm

From the Romney article, can someone explain this:

“China and other countries sterilize inflows of dollars from abroad to prevent prices from rising as the country’s productivity increases.”

I’ve only had 3 hours sleep, but something here doesn’t sound right.

Richard Stands September 17, 2011 at 1:59 pm

“Listening to politicians address economic issues is like listening to astrologers talk about the physics of the formation of stars.”

Love that.

SweetLiberty September 17, 2011 at 4:43 pm

Doesn’t the same apply to Krugman?

Richard Stands September 17, 2011 at 7:40 pm

From what little I’ve read, Journalist Krugman often seems to disagree with Professor Krugman. What would one call an astrophysicist who changes careers to do astrology charts for patrons? Perhaps he could start a 900 line for an “Economic Friends Network”.

Chucklehead September 18, 2011 at 5:30 pm

My GMU colleague (formerly in the Dep’t. of Economics, but now over in the School of Public Policy) Jack High explains, in this letter in the Washington Post, why we ought to be skeptical of policy solutions proposed by Keynesians.
Keynesian spending won’t save the economy
A wise man once said:
“The politicians are always going to inject some amount of money into the hands of consumers and into the economy, like a doctor giving a lifesaving blood transfusion. But where does the economic injection come from? It has to come from inside the system. It’s not an outside stimulus like the chest paddles or the transfusion. It means taking money from someone or somewhere inside the system and giving it to someone else.

The standard stimulus package doesn’t change incentives. It’s a check from the government. The hope is that the receiver will spend it. But when you just send out checks from the government, whoever gets stimulated is likely to be offset by someone who gets unstimulated.

The money has to come from somewhere. If you raise taxes to fund the plan, the people who are taxed are poorer and they’ll spend less. If you borrow money to fund the plan, the people who buy the government bonds have less money to spend and that offsets the stimulus. It’s like taking a bucket of water from the deep end of a pool and dumping it into the shallow end. Funny thing—the water in the shallow end doesn’t get any deeper.

And even the people who get the money often save more of it than they spend.

That’s why stimulus schemes based on giving people money have a poor track record of energizing the economy. Usually, the only thing that gets stimulated is a politician’s approval rating.

I’m not saying that economy policy is irrelevant. Economic policy matters because it affects the long-run growth of the economy. I’m all for policies that make us more productive or innovative by changing incentives. But those policies take time. There’s little any economic doctor can do to move our $14 trillion organism of an economy in the next few months.

Politicians who work in the Oval Office—or those who seek to work there—would be wise to remember that patience is a virtue. Focus on the policies that lead to growth over time. Expecting results overnight is bound to lead to disappointment.

Russell Roberts is a professor at George Mason University and a research fellow at Stanford University’s Hoover Institution. He hosts the weekly podcast series, EconTalk.

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