Category Archives: Publications

Towards a Humbler Monetary Policy

Posted on December 1, 2014 | Comments Off on Towards a Humbler Monetary Policy

Is it possible for opposite policies to both be wrong? Over at the Washington Examiner, I argue that it is. The U.S. is ending its quantitative easing program just as Japan is ramping its up. Those seemingly opposite policy paths are rooted in the same mistaken philosophy. I argue instead for a humbler monetary policy:

 Both Yellen and Kuroda should move their focus away from stimulus, exchange rates and constant tinkering, and toward stability, honesty and predictability in their price systems. Easing of $1.66 trillion has had almost no effect on the U.S. economy. How reality will stack up against the Bank of Japan’s predictions, no one knows.

Along the way there are discussions of Keynesian liquidity traps, the Taylor rule, NGDP targeting, and Bitcoin. The larger point is that central bankers are barking up the wrong tree. Instead of manipulating various economic indicators, they should concentrate on creating a stable, predictable, and honest price system that enables more investment, better investment decisions, and more innovation. Entrepreneurship, not interest rate tinkering, is what causes economic growth and mass prosperity.

Read the whole thing here; see also a facsimile of the print edition here, starting on p. 26.

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Posted in Economics, Monetary Theory, Publications

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No Triple Mandate for the Fed

Posted on November 5, 2014 | Comments Off on No Triple Mandate for the Fed

In a recent speech, Fed Chair Janet Yellen sent a signal that the Fed might be considering expanding its mission to include reducing economic inequality. Seeing as the Fed already has a dual mandate, this would amount to a triple mandate. Over at the American Spectator, Iain Murray and I explain why that wouldn’t work as planned, and instead offer a humbler vision for the Fed:

 If there is a guiding principle to effective Fed policy, it is that simplicity is beautiful. A complex, contradictory, unpredictable, and unstable triple mandate does the poor no favors. If the Fed seeks to maintain a stable, predictable, and honest price system as its sole monetary policy objective, it will do more to lift people out of poverty than any double or triple mandate.

Read the whole thing here.

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Posted in Economics, Monetary Theory, Publications

Minimum Wages Have Tradeoffs

Posted on October 27, 2014 | Comments Off on Minimum Wages Have Tradeoffs

Minimum wages help some workers, which is why they are so popular. But they aren’t a free lunch. There are tradeoffs. They aren’t always easy to see, but they exist just the same. My colleague Iain Murray has a piece about those tradeoffs in the Washington Examiner, to which I contributed. As Iain summarizes:

Breaking out of poverty is difficult for many people, and the evidence is that a minimum wage adds to the difficulty. Workers are fired, hours are cut, jobs are not created, non-wage perks, including insurance, free parking, free meals, and vacation days evaporate, annual bonuses shrink, prices rise, (squeezing minimum wage earners themselves), big businesses gain an artificial competitive advantage over their smaller competitors, and crime rates rise. It is a bleak litany.

On the flip side, minimum wages do give some workers a raise. Are the tradeoffs that others have to endure worth it? Read the whole thing here (or here for a facsimile of the print edition, starting at p. 24).

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Posted in Economics, Inequality, Minimum Wage, Publications

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A Pen and Phone Strategy to Shrink Government

Posted on October 9, 2014 | Comments Off on A Pen and Phone Strategy to Shrink Government

President Obama is right that Congress doesn’t do much. That’s not necessarily a bad thing, of course. But the pen and phone strategy Obama proposed can be used for a lot of things. The president seems inclined to use it mostly to expand government. But the pen and phone can also shrink government and make it more accountable, as Wayne Crews and I explain over at RealClearMarkets:

 Congress passed 72 laws in 2013, while agencies issued 3,659 rules and regulations—a 51 to one ratio. This disparity suggests two areas where a pen-and-phone strategy might do some good. First, increased government transparency about the nature of all these rules. Second, establishing something akin to a federal “Department of No” to reduce the bureaucracy’s output relative to Congress.

In short, we propose the Executive require already-required transparency documents such as the Unified Agenda to at least come out on time. And we propose at least an informal check on agency rulemaking that asks agencies to look before they leap. Read the whole thing here.

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Posted in Publications, Reform, regulation

The Case for Closing the Export-Import Bank

Posted on August 8, 2014 | Comments Off on The Case for Closing the Export-Import Bank

Over at American Banker’s BankThink blog, I have a piece making the case for closing the Export-Import Bank, mostly on corruption grounds:

 The Wall Street Journal reported on June 23 that four Ex-Im employees have been removed or suspended in recent months, “amid investigations into allegations of gifts and kickbacks.”

Former Ex-Im employee Johnny Gutierrez allegedly accepted cash payments from an executive of a Florida-based construction equipment manufacturer that has received Ex-Im financing on multiple occasions. In a July 28 congressional hearing, Gutierrez chose to plead the Fifth Amendment rather than deny the allegations. The other cases involve two “allegations of improperly awarding contracts to help run the agency” and another employee who accepted gifts from an Ex-Im suitor.

Read the whole thing here. There are, of course, many other reasons to close Ex-Im. I compiled some of them in a paper here.

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Posted in Financial Regulation, Publications, Reform, regulation

Cronyism and the Export-Import Bank

Posted on July 7, 2014 | Comments Off on Cronyism and the Export-Import Bank

Over at Rare, I have a piece on the cronyism angle of the Export-Import Bank debate. The Senate will likely vote this month on whether or not to end the bank:

[I]f government is going to dole out corporate welfare, the most efficient way to do it is to hand out cold, hard cash. Straight subsidies don’t distort international markets or invite corruption the way export subsidies do.

But most cash gifts to corporations are political non-starters. They’re a little too obvious. So companies and allied politicians need cover stories. The Export-Import Bank fits the bill.

An official logo, sophisticated-sounding economic rhetoric, and appeals to American jobs and patriotism are designed to make people feel good about the special favors Ex-Im performs for businesses.

Read the whole thing here.

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Posted in Economics, Export-Import Bank, Public Choice, Publications

Is John Boehner’s Lawsuit The Best Way To Rein In The Executive Branch?

Posted on June 30, 2014 | Comments Off on Is John Boehner’s Lawsuit The Best Way To Rein In The Executive Branch?

House Speaker John Boehner plans to sue President Obama over perceived abuses of the separation of powers. Over at the Daily Caller, I argue that Boehner has a point that the executive branch has grown too powerful. But the problem can’t be solved by a mere court case:

But suppose the lawsuit succeeds. It still wouldn’t solve the fundamental problem driving the growth of executive power. As Cato Institute presidential scholar Gene Healy put it, “If the Obama presidency has driven Americans mad, perhaps that’s because we’ve embraced a demented notion of the presidency itself,” one Healy describes as some mixture of Superman, Santa Claus, and Dr. Phil. When it comes to the presidency, we have met the enemy, and it is us.

When George W. Bush promised, without irony, to “rid the world of evil,” people believed him. With his post-9/11 approval ratings reaching the upper 80-percent range, Congress granted Bush expanded powers through the USA PATRIOT Act and other measures. The result was not the end of evil; it was the TSA, warrantless NSA surveillance, and host of other civil liberties abuses.

President Obama has not improved the situation; read the whole thing here. Also check out Gene Healy’s excellent 2008 book Cult of the Presidency, and its short e-book sequel, False Idol, both of which I could not recommend more highly.

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Posted in Political Animals, Publications

Regulatory Improvement Commission

Posted on June 6, 2014 | Comments Off on Regulatory Improvement Commission

One of my favorite regulatory reform ideas is an independent commission tasked with combing through the 175,000-page Code of Federal Regulations and giving Congress a package of obsolete, redundant, or harmful regulations to repeal in one fell swoop. That idea is now captured in a bi-partisan bill in Congress. Wayne Crews and I wrote about it recently in the Washington Times:

The Regulatory Improvement Act of 2014, recently introduced by Reps. Patrick Murphy, Florida Democrat, and Mick Mulvaney, South Carolina Republican, and Sens. Angus S. King Jr., Maine independent, and Roy Blunt, Missouri Republican, would create a Regulatory Improvement Commission to comb through the Code of Federal Regulations to identify ineffective and obsolete rules. The first time through the code, the commission would focus on a specific policy area — say, technology, agriculture or energy policy — with Congress reconvening the commission as needed going forward.

The commission would then submit to Congress a package of old rules to phase out, subject to an up-or-down vote, with no amendments allowed, in order to avoid vote-trading and backroom deals. To prevent stonewalling, Congress would be required to vote on the package within a set period of time — 30 days in committee, and 60 days after that for a floor vote, with debate time limited to 10 hours.

Read the whole thing here, plus the House and Senate versions of the bill.

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Posted in Publications, regulation

Regulatory Costs Hit Home

Posted on June 2, 2014 | Comments Off on Regulatory Costs Hit Home

Over at RealClearPolicy, Wayne Crews and I have a short piece on regulatory costs, which are now just under $15,000 per family per year.

If it were its own country, the federal regulatory state would be the world’s tenth-largest economy — larger than that of Canada, Italy, or India. Federal regulations amount to a hidden tax of almost $15,000 per household. That’s more than families spend on food, clothing, health care, education, and other necessities. Only housing costs more. Factor in regulation, and the federal government is half again as large as most people think it is.

Read the whole thing here. Data are from Wayne’s new Ten Thousand Commandments report.

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Posted in Publications, regulation

How Regulations Cause Inflation

Posted on March 18, 2014 | Comments Off on How Regulations Cause Inflation

Over at GuerillaEconomics.com, I have a short piece explaining how regulations cause inflation:

Imagine a simplified economy that consists of just two things: 100 dollars and 100 apples, with the price of an apple being one dollar each. If new regulations pass that make it harder to produce apples, the next year there are only 90 apples produced. Their price goes up from $1 to $1.11.

Read the whole thing here.

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Posted in Economics, Monetary Theory, Publications, regulation