Milton Friedman on Redistribution of Wealth

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VIDEO: Jim Pethokoukis speaks to BlogCon

Among my favorite speakers at BlogCon 2011, which took place a couple of weeks ago in Denver, was Jim Pethokoukis, an economist and blogger at the American Enterprise Institute.The folks at FreedomWorks were kind enough to recently put video of his talk with us online.

Pethokoukis gives us a good run down of the economic tone deafness of the Obama Administration and the make of the mistake they’ve made and some of the other issues facing us in the future:

CBO: Stimulus bill will crowd out the private sector

Even though the Obama Administration, congressional Democrats, and Keynesian economists claimed that spending would get the country moving again, critics of the 2009 stimulus bill argued that the it was wasteful and would result in a negative impact on the economy when it was all said and done. Who was right? Well, a new report from the Congressional Budget Office shows that many of the criticisms of Obamanomics were well-founded:

The Congressional Budget Office on Tuesday downgraded its estimate of the benefits of President Obama’s 2009 stimulus package, saying it may have sustained as few as 700,000 jobs at its peak last year and that over the long run it will actually be a net drag on the economy.

CBO said that while the Recovery Act boosted the economy in the short run, the extra debt that the stimulus piled up “crowds out” private investment and “will reduce output slightly in the long run — by between 0 and 0.2 percent after 2016.”

The analysis confirms what CBO predicted before the stimulus passed in February 2009, though the top-end decline of two-tenths of a percent is actually deeper than the agency predicted back then.
CBO has re-evaluated the stimulus every three months, and its estimates for the total cost have varied. Initially the package was pegged at $787 billion, rose as high as $862 billion at one point, and is now projected to be $825 billion once all the money is paid out.

The nonpartisan agency also has changed its model for the spending’s impact on the economy, and the new calculations show the Recovery Act did less than originally projected.

Demystifying housing shortages in NYC

The New York Times seems puzzled that the laws of economics insist on fulfilling their pronouncements:

East Harlem has been undergoing a resurgence for two decades, yet the neighborhood is still pockmarked with four- or five-story walk-ups where the ground-floor stores are bustling and the apartments above are devoid of life. Their windows are boarded up, blocked up or just drearily empty, torn curtains testifying to no one’s having lived there for years.

Although the vacancy rate in Manhattan hovers at 1 percent, at least some of the landlords of these sealed-up buildings — hundreds of them exist in pockets across the city — are deliberately keeping their buildings mostly vacant, content to earn income from first-floor commercial tenants rather than deal with the trouble and expense of residential tenants.

In some cases, city housing officials say, landlords are waiting for a revived economy to raise rents so that it makes financial sense to repair plumbing and electrical wiring. In other cases, landlords are “warehousing” apartments for the moment that a deep-pocketed developer comes along, as has happened in the blocks just north of 96th Street, East Harlem’s southern boundary. In still other cases, it is simply mystifying that apartments would be left vacant for decades, particularly since East Harlem has been a magnet for Mexican and other Latino immigrants, as well as young strivers looking for cheap space.

This phenomenon is hardly “mystifying” and can be explained almost entirely by basic economics:

Vatican pushes for global authority, world bank

With a financial crisis still causing unrest in Europe as governments try to bailout each other out, the Vatican is calling for a global governing authority and a global bank as the religious institution slams markets:

The Vatican called on Monday for the establishment of a “global public authority” and a “central world bank” to rule over financial institutions that have become outdated and often ineffective in dealing fairly with crises. The document from the Vatican’s Justice and Peace department should please the “Occupy Wall Street” demonstrators and similar movements around the world who have protested against the economic downturn.

“Towards Reforming the International Financial and Monetary Systems in the Context of a Global Public Authority,” was at times very specific, calling, for example, for taxation measures on financial transactions. “The economic and financial crisis which the world is going through calls everyone, individuals and peoples, to examine in depth the principles and the cultural and moral values at the basis of social coexistence,” it said.

It condemned what it called “the idolatry of the market” as well as a “neo-liberal thinking” that it said looked exclusively at technical solutions to economic problems. “In fact, the crisis has revealed behaviours like selfishness, collective greed and hoarding of goods on a great scale,” it said, adding that world economics needed an “ethic of solidarity” among rich and poor nations.

Tweaking the economic numbers on the Clean Air Act

Rep. Hank Johnson, who’s probably most famous for his concern about the island of Guam tipping over due to large numbers of military personnel on the island, has made a statement that’s not as glaringly dumb…but it’s not far behind when you look at the numbers.  You see, Johnson was talking about Republican efforts to take a long, hard look at environmental regulations that they claim has caused increases in energy costs as well as the corollary impact on business.

“Since 1970, the Clean Air Act has reduced toxic and health-threatening air pollution by 60 percent while our economy has grown more than 200 percent,” Johnson said, and he’s essentially right.  PolitiFact took a look and found that his numbers are essentially dead on. So what’s the problem?  Well, only that it looks like growth was better before the Clean Air Act.

Johnson’s statement seems to imply that the Clean Air Act did not hurt the economy or even helped it. Wallace wasn’t sure a direct correlation can be made.

She researched GDP 10 years before the Clean Air Act passed and the 40 years since and concluded that the average annual growth was greater before 1970. “It’s kind of difficult to say it’s directly related,” Wallace told us.

Walter Williams and Milton Friedman on labor unions

Here’s an old video from the Free to Choose Network of Walter Williams and Nobel Laureate Milton Friedman debating and explaining the role of labor unions in society, including that “right to work” laws are essential to a free society:

Quote of the Day: Murray Rothbard on protesters

Murray Rothbard, the Austrian economist and anarco-capitalist, had this to say on protesters — not unlike the fools whining on Wall Street:

Russ Roberts responds to Elizabeth Warren

If you have any liberal friends on Facebook or Twitter, then you have no doubt seen them post or make reference to Elizabeth Warren’s rant about the rich and how they were fortunate enough to make their wealth because of government:

There is nobody in this country who got rich on his own. Nobody. You built a factory out there? Good for you. But I want to be clear: you moved your goods to market on the roads the rest of us paid for; you hired workers the rest of us paid to educate; you were safe in your factory because of police forces and fire forces that the rest of us paid for. You didn’t have to worry that marauding bands would come and seize everything at your factory, and hire someone to protect against this, because of the work the rest of us did. Now look, you built a factory and it turned into something terrific, or a great idea? God bless. Keep a big hunk of it. But part of the underlying social contract is you take a hunk of that and pay forward for the next kid who comes along.

This is textbook demagoguery. I don’t know many people that argue against basic functions of government, such as roads, schools, police, etc; which by the way are usually, or nearly exclusively, paid for through local taxes. Russ Roberts, an economist at George Mason University and one of the brains behind the Hayek/Keynes music videos, explains the problem with government isn’t the basic services it provides, it’s that the government has grown too large and is doing harm to the economy:

Obama names new chief economic adviser

President Barack Obama announced yesterday that Alan Krueger, an economics professor at Princeton University, would succeed Austan Goolsbee as chairman of the White House Council of Economic Advisers. It’s not a surprise that Krueger will bring nothing new in terms of this administration’s approach to the economy:

Alan Krueger, President Barack Obama’s pick to head the White House Council of Economic Advisers, will likely serve as an administration advocate for more aggressive government intervention to revive job growth.

“Our great ongoing challenge as a nation remains how to get this economy growing faster,” Mr. Obama said Monday at the White House announcement of Mr. Krueger’s nomination.
He served as assistant Treasury secretary for economic policy in the first two years of the Obama administration, where he helped design the “cash for clunkers” program to boost auto purchases.

“What you’re likely to see is, he does believe the federal government can do more to help in this economy,” Cecilia Rouse, a Princeton University economist and former CEA member, said of Mr. Krueger. “He will be a voice for more investments.”


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