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Some Non-Covid Links

In this just-released paper, my intrepid Mercatus Center colleague Veronique de Rugy, writing with Jack Salmon, warns against the explosion of U.S. government indebtedness. Here’s the abstract:

This study reviews the applicability of new definitions of fiscal sustainability that place greater emphasis on the historical trend of falling nominal interest rates. We explore how these now-broadly applied definitions are misleading and potentially dangerous. In addition, it is important to assess the underlying reasons why economists and policymakers have shied away from using the debt ratio as a measure of fiscal sustainability in recent years. Public choice theory informs us that new definitions of fiscal sustainability may be largely politically motivated, with policymakers operating within a myopic framework that benefits special interests in the short term while burdening wider society in the long term. The idea that the debt ratio “does not matter” or that the measure is not useful for measuring sustainability tends to overlook the preponderance of economic literature on fiscal sustainability, debt risk premia, and the debt-growth nexus.

Eric Boehm adds his clear voice to those who warn against U.S. government indebtedness.

Writing in the Wall Street Journal, Joshua Rauh and Kevin Warsh offer a practical proposal to help reduce the cost of “the inflation mess.” A slice:

What could the administration do to provide some relief from the symptoms, if not the sources, of the inflationary menace?

President Biden, by executive order, should immediately direct Treasury Secretary Janet Yellen to raise the annual cap on Series I savings bonds from $10,000 to $100,000. I-bonds, established by President Clinton in 1996, are guaranteed, inflation-linked securities issued directly by the Treasury to people and companies. Today, I-bonds pay a healthy 7.12% annual return. The interest rate is adjusted every six months to reflect changes in consumer price inflation. It’s hard to find a better, safer investment in this environment.

Currently, however, individual investors are limited to purchasing $10,000 in I-Bonds a year. (An arcane rule also permits taxpayers eligible for a federal tax refund to buy an additional $5,000 of I-bonds.) Investor interest has ramped up with the rise in inflation. Over the past three months alone, I-bond purchases soared to $7.1 billion, compared with an average of $700 million a year during the decade before.

Raising the cap would enable more Americans to receive some inflation protection on their hard-earned savings. The executive order should also make clear that the higher purchase cap would fall when price stability is re-established, as certified by the Fed.

The Wall Street Journal‘s Editorial Board is highly critical, rightly so, of the Hewlett Foundation’s deep ignorance of the market order. A slice:

Actually, capitalism offers solutions to all of those challenges. The largest reductions in carbon emissions have come from natural gas, thanks to the market innovation of shale fracking. Competitive labor markets have helped minorities rise despite residual racism because bigotry is too expensive. The wealth created by free markets and innovation, along with global trade, has lifted billions out of poverty. Extreme global poverty has plunged to less than 10% from 45% in 1980 while world GDP has more than tripled.

We now have fast broadband and smartphones that connect with others anywhere, anytime; 24-hour home delivery of almost anything we want; breakthrough medical treatments and vaccines; genetically engineered crops that have increased farm yields and global nutrition; cheap energy thanks to an oil and gas shale boom; and a rising standard of living for most of the world. Socialism didn’t build that.

Yet as Schumpeter predicted, people in the comfortable West, including many tech entrepreneurs, now take this prosperity for granted. “Neoliberalism’s anti-government, free-market fundamentalism is simply not suited for today’s economy and society,” says Larry Kramer, president of the Hewlett Foundation.

By “reimagining capitalism,” as the press release advertises, what these foundations really mean is putting politicians and the administrative state in charge of redistributing more of its proceeds. Yet if they had been paying attention in recent years, they might have noticed that “free-market fundamentalism” could have spared the U.S. from some terrible mistakes.

Alberto Mingardi continues to expose the fallacies peddled by Mariana Mazzucato.

Nick Gillespie talks with Stephanie Slade about libertarianism.

John O. McGinnis explains that “[i]t would be a mistake to assume the Court’s robust conception of precedent for statutory cases should preclude it from reconsidering affirmative action.”

Asra Q. Nomani explains why we should resist “anti-racism” (so called). Two slices:

Bigotry, meanwhile, is back on the curriculum, thanks partly to a “Black Lives Matter at School” campaign, which last week recommended the book Not My Idea: A Book about Whiteness to children as young as six in Evanston/Skokie School District 65, outside Chicago. “Whiteness is a bad deal”, the book argues; it amounts to signing a “contract” with the devil, who is illustrated with an indelicate pointy tail. Meanwhile, in an English lesson in Fairfax County, Virginia, students played a game of “Privilege Bingo”; even “Military Kid” has been shamed as having “privilege”.

It’s a tragedy that today’s schools are more segregated than mine was. I arrived in the United States in the summer of 1969, a four-year-old who knew not a word of English. Born in Bombay, I was part of the first generation of post-colonial Indians. My parents had survived the “white supremacy” of British rule, and witnessed Mahatma Gandhi’s nonviolent movement, which was an inspiration for the American civil rights movement.

The Civil Rights Act was passed the year before my birth, and I learned the alphabet at Martin Luther King Elementary School in Piscataway, New Jersey. My class photo from 1975 shows 25 diverse, smiling children lined up shoulder-to-shoulder in three rows — organised by height, not skin colour.


Across the country, “diversity” officers and “equity” consultants are spinning a tale that segregation is virtuous. The historically progressive Southern Poverty Law Center, established in 1971 to fight racism, now provides schools with an online “Toolkit” to create “affinity groups”, through lesson plans it calls “Learning for Justice”. It argues that “affinity groups help marginalized students to be seen and heard”. It even shows schools how to “troubleshoot questions”, like the obvious: “Aren’t affinity groups exclusionary?”

Bryan Caplan is moving from EconLog to a new blog.

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