Brandolini’s Law. (HT Guillaume Nicoulaud)
It’s simply untrue that when government repays its creditors with money devalued by inflation, taxes aren’t raised. Taxes are raised. But in this case the burden of the higher taxes falls disproportionately and unfairly on government’s creditors.
In a new study just released by the Mercatus Center at GMU, economists Russell Sobel and Rachel Graefe-Anderson explore the connection between political connections and the performance of industries and firms. Here’s the abstract:
The US federal government’s response to the financial crisis was an unprecedented increase in government subsidies, grants, and contracts given directly to specific private businesses. The terms “crony capitalism” and “cronyism” are now widely used to describe the modern relationship between government and private business. Cronyism is a system in which success in business is determined by political connections rather than market forces. In this paper we estimate the extent to which industry-level and firm-level performance is determined by political connections rather than normal market forces. Our results suggest that corporate political activity is positively correlated with executive compensation measures, but not robustly with firm performance and profitability measures. This suggests that political connections have no significant effect on the performance of firms or particular industries in most cases, but that company executives do indeed benefit from having closer ties with the political process.
Here are two especially good book reviews in the latest issue of Public Choice. (Unfortunately, both are securely behind pay walls.) Randy Holcombe reviews Thomas Piketty’s Capital in the Twenty-First Century, and GMU Econ doctoral student Rosolino Candela reviews Edmund Phelps’s Mass Flourishing.
George Selgin is leaving the University of Georgia after a productive 25-years stint there. George is coming to DC to join the Cato Institute (and also with an affiliation with GMU Econ and the Mercatus Center). Not least because George is one of my dearest personal friends, I’m thrilled! (But I will miss George’s lovely home in Athens, which is pictured at the top of George’s post. Many are the happy evenings that I spent at that home, especially when I was at Clemson University.)
Towson University economist (and GMU Econ PhD) Howie Baetjer celebrates Uber – and warns against the zeal to have government regulate that consumer-friendly transportation service. Here’s Howie’s conclusion:
The markets for city rides should be set free. It is unfair to taxicab companies for Uber to charge market prices while taxis must charge what regulators decree. But the sensible response to this unfairness is not to burden Uber the way taxis are burdened, but to unburden the taxis and leave all ride services free to compete.