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Defending Cato from Paul Krugman's Inaccurate Assertions | Cato @ Liberty

Paul Krugman, at what is now his usual best (worst) as a columnist, managed to make so many false statements in one column that I lost count. And his loyal readers will never appreciate the facts, much less accept the reality that most libertarian-leaning (which is not "right-wing") economists did foresee the housing bubble and other financial failures on the horizon.
Defending Cato from Paul Krugman's Inaccurate Assertions | Cato @ LibertyDANIEL J. MITCHELL
If Krugman had bothered to spend even five minutes perusing the Cato website, he would have found hundreds of items by scholars such as Steve Hanke, Gerald O’Driscoll, Bert Ely, and others about misguided government regulatory and monetary policy. He could have perused the remarks of speakers at Cato’s annual monetary conferences. He could have looked at issues of the Cato Journal. Or our biennial Handbooks on Policy.

The tiniest bit of due diligence would have revealed that Cato was not a fan of Federal Reserve polic…

Chicago isn't in Austria

One of the challenges I face as an advocate for Austrian / libertarian / classical liberal economic and politic ideals is that many of my students — and even some colleagues in the humanities — mistakenly assume that there are three basic economic models, represented by the icons Marx, Keynes, and Friedman. Sadly, most people don't know the Austrian School of economics, and when they do know a little the assumption is that Austrian adherents represent something of an outer ring around the Chicago School.

Milton Friedman, thanks to his books and a PBS series, is the best known of the "supply-side" economists and the Chicago School. He came to represent the rejection of Keynesian economics to right-leaning politicians in the United States. Of course, the entire left/right and liberal/conservative dichotomy is false, since in many ways left-leaning politicians had become the defenders of the status quo — the welfare state. True innovation seemed to belong to the "rig…

FCC: 41 percent of Lifeline phone subsidies in 2012 weren't verified

Evidence of "Big Government" efficiency:
FCC: 41 percent of Lifeline phone subsidies in 2012 weren't verified. Among the top five providers receiving money for telecom service to the poor in 2012, 41 percent of their customers either couldn't or didn't prove they were eligible. The lack of answers leaves a real possibility that some of the $2.2 billion spent on Lifeline in 2012 might have gone to those who didn't need it. In response, the FCC is keen to claim that its reforms may have saved $214 million last year…. Let's assume a 41 percent fraud rate, though I assume it is closer to 50 percent in this program. (We can also assume 20 percent to 30 percent waste, fraud, and abuse in most federal programs, sadly. Read the old classic Government Waste A to Z for a depressing analysis.) At $2.2 billion annually, that means the Lifeline program and us, the taxpayers, are being scammed for $902 million annually.

Similar issues have been found in so many programs…

Neither Demand-Side, nor Supply-Side

Some people assume, incorrectly, that I am a "supply-side" believer. I am not. I'm neither demand-side (Keynesian) nor supply-side (Chicago School) in my general beliefs about economics. Ah, and in there we find a problem with economics: beliefs are part of the complexity. The Austrian School of economics is more laissez-faire. While I find the supply-side arguments less troubling than traditional Keynesian models, I would rather embrace the free-market as much as possible. More Adam Smith than Friedman, and certainly more Hayek than Laffer.

Economist Roger Garrison has said there is a word for politicians embracing Austrian Economics: losers.

Keynesian models are demand-based, with the belief that government is the ultimate creator of demand. This is nice and simple to sell to voters, because Keynesian economics offers a solution to downturns: the government will bail us out, somehow. Most voters, not being in the entrepreneurial community or investment class, do res…

Taxes versus Cuts

I'll be among those to admit we need more revenues to reduce the ludicrous debt of the federal government. We also need to cut spending dramatically to have any hope of balance in the future. Personally, I'd rather see the cuts first, and then we can slowly raise taxes to reduce the annual deficit followed by paying down the debt to a reasonable maintenance level.

Unrestrained government expansion comes at a price. At least John B. Judis admits as much in a recent essay on the "need" for higher taxes.
Obama's Tax Hikes Won't Be Nearly Big Enough
http://www.tnr.com/blog/plank/111486/obamas-tax-hikes-wont-be-nearly-big-enoughThe New Republic
John B. Judis
December 28, 2012 | 1:23 pm

[There] are a set of unpleasant truths lurking behind this debate over the budget and taxes that policy-makers in Washington need to acknowledge. First, that in order to meet public demands for affordable health care, quality public education, and retirement insurance, government at…

The Fiscal Cliff Sham… I Mean Deal…

Apparently, Congress is populated by comedians with a penchant for satire. As evidence of this, they passed a "Fiscal Cliff" agreement that was supposedly all about protecting the middle class. Instead, it is 250-pages of muck.

How bad is it? The New York Times offers one example:
Fiscal Cliff Includes Big Favor to Big Drug Company WASHINGTON — Just two weeks after pleading guilty in a major federal fraud case, Amgen, the world’s largest biotechnology firm, scored a largely unnoticed coup on Capitol Hill: Lawmakers inserted a paragraph into the “fiscal cliff” bill that did not mention the company by name but strongly favored one of its drugs.

The language buried in Section 632 of the law delays a set of Medicare price restraints on a class of drugs that includes Sensipar, a lucrative Amgen pill used by kidney dialysis patients. Read the full text of H.R. 8… it is depressing.

It begins loftily enough, letting us know the Senate is adhering to the Constitution by not passing …