Alex Chalmers makes clear that “AI won’t fix central planning.” (HT Arnold Kling)
Kevin Frazier and Jennifer Huddleston identify five flaws in pending AI legislation.
Jim Dorn draws lessons for monetary policy from William McChesney Martin’s famous “punch bowl” speech. Two slices:
William McChesney Martin Jr. was chairman of the Federal Reserve Board from 1951 to 1970. He is perhaps best known for his “punch bowl” speech delivered on October 19, 1955, to the New York Group of the Investment Bankers Association of America. His often-quoted line in the penultimate paragraph reads: “The Federal Reserve … is in the position of the chaperone who has ordered the punch bowl removed just when the party was really warming up” (Martin 1955: 12). He made this statement in the context of a recent increase in the Fed’s discount rate, which tightened monetary policy.
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Two main lessons can be drawn from Martin’s punch bowl speech. First, the Fed needs to be prudent and humble in exercising its monetary powers. There are limits to what the Fed can do. Its main function should be to safeguard the dollar’s long-run value by adhering to a predictable, responsible monetary framework. Second, a rules-based approach to policy—both monetary and fiscal—is consistent with the moral element in private enterprise. Freedom is best protected by limited government, so individuals have a wide range of choices under a just rule of law.
Today, we have a discretionary government fiat money system. Much of the Fed’s bureaucracy could be abolished by a simple monetary rule rather than the complex framework currently in place (see Dorn 2018). Whether the punch bowl will be removed, under increasing political pressure to use the Fed to monetarize fiscal deficits and expand its mandate to include environmental and social issues, remains to be seen. After more than 70 years, Martin’s speech remains relevant both for monetary policy and the moral state of the union.
Stanford’s Joshua Rauh and several coauthors find that the California wealth tax’s projected revenue is a fantasy. Supporters advertised $100 billion in collections. Building on sound analysis as opposed to wishful thinking, Rauh’s team saw billionaires already leaving and, as a result, other future tax revenues disintegrating. By driving high earners out permanently, the most likely “net present value” of the wealth tax is negative $24.7 billion.
Whether politicians and voters want to admit it or not, the real problem is still spending. California’s revenue has surged by 55 percent since 2019, but Sacramento has expanded state spending commitments by 68 percent. It patched budget deficits in three consecutive years ($27 billion, $55 billion, and $15 billion) not by fixing the underlying problem but by drawing down reserves and applying onetime fixes. The Legislative Analyst’s Office now projects a fourth consecutive deficit, this time reaching nearly $18 billion in 2026-27 and growing to $35 billion annually by 2027-28. Medi-Cal alone will hit an all-time high, taking $49 billion from the General Fund.
Currently 20 American airports use private contractors, not the Transportation Security Administration, to screen passengers. And those private contractors still get paid regardless of whether Congress passes legislation on time.
The federal government’s Screening Partnership Program (SPP) allows airports to apply to use qualified private companies for passenger screening, rather than relying on unionized federal employees. TSA still gets to set all the regulations and standards for the private screeners. The agency just doesn’t do the screening itself.
This is a much better way to do airport security. A government agency regulating itself creates conflicts of interest. International Civil Aviation Organization standards say that security providers and regulators should be independent.
Jarrett Dieterle decries “the progressive war on cheap eats.”
