Where free banking was given a reasonable trial, for example in Scotland and Canada, it functioned well for the typical user of money and banking services. Why then did national governments adopt central banking? Free banking often ended because the imposition of heavy legal restrictions or creation of a privileged central bank offered revenue advantages to politically influential interests. The legislature or the Treasury can tap a central bank for cheap credit, or (under a fiat standard) simply have the cental bank pay the government’s bills by issuing new money. Economic historian Charles Kindleberger has referred to a “strong revealed preference in history for a sole issuer.” As George Selgin and I have noted (Selgin and White 1999), the preference that history reveals is that of the fiscal authorities, not of money users. In some places (e.g., London) free banking never received a trial for the same reason. Central banks primarily arose, directly or indirectly, from legislation that created privileges to promote the fiscal interests of the state or the rent-seeking interests of privileged bankers, not from market forces.
Speaking of which, this essay at Human Events – one that relies heavily on the research and insights of Troy University economist Thomas Hogan (a GMU Econ PhD) – explains that more competition among money issuers would make money better. (HT Walter Grinder)
Arnold Kling ruminates wisely on the question “What is a job?” Here’s the definition he arrives at:
A job is a context for performing a particular small set of tasks that can be exchanged for the means to obtain goods and services produced by a far larger set of tasks.
Baltimore schools spend 27% more than Fairfax County schools per student and a majority of the money comes not from the city but from the state and federal government. Thus, when it comes to education spending, Baltimore has not been ignored but is a recipient of significant federal and state aid.
Citing popular attitudes about minimum-wage legislation, David Henderson explains that my colleague Robin Hanson is correct that “politics isn’t about policy.”
Pierre Lemieux ably defends Google from the officiousness, ignorance, and cronyism of European bureaucrats. Here’s Pierre’s conclusion:
Businessmen are generally inept at defending capitalism and seem to try hard to cut the branch on which they are sitting. As Adam Smith taught us, we should not trust “merchants and master manufacturers,” whose thoughts “are commonly exercised rather about the interest of their own particular branch of business, than about that the society,” and whose “judgement… is much more to be depended upon with regard to the former of these two objects, than with regard to the latter.”10 We should be as suspicious of Google’s public policy advocacy as we are of its government bashers in Brussels, Paris, or Washington D.C.
But this should not deter us from defending Google’s freedom of contract against the European Leviathan or any other Leviathan.