GMU Econ alum Byron Carson explains the simple economics behind Cubans’ food shortages. A slice:
Unfortunately, none of this is new for people living in Cuba, as they’ve lived with price controls on food and other goods like taxi rides, beverages, and haircuts for over a decade. Food rations, once a relic of the Cold War, are also making a comeback.
In Flaws and Ceilings, Christopher and Rachel Coyne note that price controls have disastrous effects on markets. This logic is a cornerstone of economic science, whether people live in Cuba, China, California, or Canada. It is a logic that remains valid regardless of a country’s economic system.
GMU Econ alum David Hebert explains the simple economics behind low-skilled workers’ job shortages. A slice:
Let’s consider the recent experience of California. It raised the minimum wage of restaurant workers from $16 to $20 per hour. In just the first two months after the law took effect, 10,000 jobs were destroyed and prices at restaurants have risen.
In 2019, lawmakers in New York City passed a nearly identical piece of legislation. They increased the minimum wage from $13 to $15 per hour (equivalent to $18.72 today). The result was eerily similar. 90 percent of restaurants surveyed had raised prices, nearly 77 percent reduced employee hours, and 36 percent eliminated jobs. As then-president of the Queens Chamber of Commerce, Thomas Grech, pointed out, “[small businesses are] cutting their staff. They’re cutting their hours. They’re shutting down.”
Gene Healy takes a sober look at J.D. Vance’s record. A slice:
All told, Vance’s record is a mixed bag from a libertarian perspective. How you rank him relative to past Republican vice presidential candidates depends on what you give the most weight. On war and foreign policy, Vance is a vast improvement over what came before (he’s certainly got Cheney beat). On economic policy, he’s clearly more hostile to markets than, say, Pence and Palin—and arguably the worst of the bunch. When it comes to “electoral integrity” issues, there’s no “arguably” about it: If you want to make the case that Vance is beyond the pale, you should put your emphasis here. Even if “Our Democracy” merits only one cheer, the peaceful transfer of power is important, and it’s best not to court constitutional crisis with bogus legal theories about the vice-president’s vote-counting powers. Yet Vance has said that if he’d been veep on January 6, he’d have “told the states … we needed to have multiple slates of electors.” On that front, Mike Pence definitely has him beat.
Chris Edwards reports on Gov. Tim Walz’s sorry fiscal record. A slice:
Walz has performed poorly on Cato Institute Governor Report Cards. From a small-government perspective, his tax policies have been particularly glaring. He has repeatedly pushed for tax hikes on high earners and businesses, which has seemed more like an effort to punish taxpayers than to fill any real need for more budget revenues.
Also unimpressed with Tim Walz’s fiscal record is the Wall Street Journal‘s Editorial Board. Two slices:
Such high taxes fueled population flight during Mr. Walz’s prolonged Covid lockdowns, but the economic damage was mitigated by $21 billion in federal pandemic cash. While Republican Governors such as Iowa’s Kim Reynolds used their budget surpluses to cut taxes, Mr. Walz went on a spending binge and raised taxes even more.
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When government raises taxes on job creators, many leave or reduce hiring. As we’ve seen in Illinois, New York and California, the tax-and-spend ratchet reduces the economic growth needed to support bigger welfare states and public-worker benefits. Mr. Walz has increased transfer payments even more than in those states.
“Why does building roads cost so much in the United States?”
What would Bruce Yandle do if he were economic czar? [DBx: I know what I’d do if Bruce were economic czar: Cheer!]
For 20 years, from 1991 to 2011, Hoenig, an Iowa native, was president of the Federal Reserve Bank of Kansas City, in which role he said: Interest rates are the prices of money, so, “Tell me one product, one service, that trades well at a price of zero.” By “trades well” he meant “is put to efficient use.”
Today, Hoenig, who is now with George Mason University’s Mercatus Center, notes this: The Fed’s balance sheet of government and government-guaranteed assets, by which it nudges down interest rates, grew from $900 billion in 2007 to nearly $9 trillion in March 2022. Since 2010, after the Great Recession of 2008, whenever the Fed has tried to “normalize its balance sheet and interest rates, the market has become unstable.”
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In election years, or in years before such (these are the only kinds of years there are), the Fed is in an awkward position of its own making. In 2010, Fed Chair Ben Bernanke spoke of the Fed’s tasks of “economic management” and “economic engineering.” Fed chairs before and since have seemed to embrace similar thinking. Bernanke, said Hoenig at the time, was speaking “the language of a central planner.” Such planning is a political project — attempting to shape society’s allocation of wealth and opportunity. Such talk guarantees that any action the Fed takes, or does not take, will be skeptically examined for political motives or impacts.
Last year, the government went into a swivet when the nation’s 17th-largest bank, Silicon Valley Bank, made some bad bets on interest rates and faced possible failure. So, what is not “too big to fail”? Perhaps the biggest “systemic risk” is the propensity to discern such risk hither and yon.
