CEI Podcast for July 11, 2013: Farm Bill Controversy

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Have a listen here.

Adjunct Fellow Fran Smith breaks down the controversy surrounding this year’s farm bill.

In Which Cheating at Baseball Reaches a Whole New Level

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Nature: Hawkmoths zap bats with sonic blasts from their genitals

An Evolutionary Banquet

Chapter 5 of Brian Fagan’s excellent Cro-Magnon opens with the following quotation from the paleontologist Björn Kurtén:

“Imagine a dinner table set for a thousand guests, in which each man is sitting between his own father and his own son. At one end of the table might be a French Nobel laureate in a white tie and tails, and with the Legion of Honor on his breast, and at the other end a Cro-Magnon man dressed in animal skins and with a necklace of cave-bear teeth. Yet each one would be able to converse with his neighbors on his left and right, who would either be his father or his son. So the distance from then to now is not really great.”

It’s a similar conceit to the Evolution Stadium described by Richard Wrangham in Catching Fire: How Cooking Made Us Human, which remains one of the most thought-provoking books I’ve read.

Great Moments in Government

Economic Stall Speed

Richard Rahn’s otherwise-excellent column in today’s Washington Times cites Wayne Crews’ and my research on regulatory costs. He also cites our colleague Matthew Melchiorre’s new paper on European austerity.

Regulation Causes Inflation

Over at the American Spectator, I show why an unintentional and unavoidable side effect of regulation is inflation:

In their book Democracy in Deficit, Nobel-winning economist James Buchanan and co-author Richard Wagner observed that government spending can create inflation “[t]o the extent that resources utilized by government are less productive than resources utilized by the private sector…” The same principle applies to regulation…

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.

The Quantity Theory of Money

While writing an op-ed, I came up with a good way to explain the quantity theory of money, which is the primary explanation for how inflation happens. But I had to edit it out for space reasons. Fortunately, a blog is the perfect repository for such things, so I share it here:

I am about six feet tall. But suppose I would rather be ten feet tall! There are two ways to do this. One is to actually grow taller. The other is to change the value of a foot so that it takes ten of them to describe my height instead of six. The first option is akin to economic growth; the second is essentially height inflation. Devaluing the foot so that it takes more of them to describe the same amount of height is the same as using more dollars to describe the same amount of wealth. This is what economists call the quantity theory of money. It doesn’t operate in the real world quite so smoothly as it does on the blackboard, but it is still broadly correct.

Keynesians, monetarists, and Austrians might not agree on much, but they do all agree with the quantity theory. There are other factors involved in how inflation happens, but few doubt that the money supply is the most important factor.

The other key insight to remember is that money is not wealth. Money has value because you can exchange it for wealth — goods and services. Think of an equation with the amount of money on one side and the amount of wealth on the other. When you fiddle with one side but not the other, the price level changes. Printing more money while leaving wealth unchanged causes inflation. So does leaving the money supply alone but reducing the amount of wealth — about which more later.

There Is Nothing Left to Cut

The State Department spent $630,000 in an attempt to get more “likes” on Facebook.

CEI’s Battered Business Bureau: The Week in Regulation

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This week in the world of regulation:

  • Last week, 78 new final regulations were published in the Federal Register, despite the July 4th holiday. There were 80 new final rules the previous week.
  • That’s the equivalent of a new regulation every 2 hours and 9 minutes — 24 hours a day, seven days a week.
  • All in all, 1,846 final rules have been published in the Federal Register this year.
  • If this keeps up, the total tally for 2013 will be 3,623 new final rules.
  • Last week, 1,461 new pages were added to the 2013 Federal Register, for a total of 40,565 pages.
  • At its current pace, the 2013 Federal Register will run 78,615 pages.
  • Rules are called “economically significant” if they have costs of $100 million or more in a given year. One such rule was published last week, for a total of 16 so far in 2013.
  • The total estimated compliance costs of this year’s economically significant regulations ranges from $5.78 billion to $10.39 billion.
  • So far, 130 final rules that meet the broader definition of “significant” have been published in 2013.
  • So far this year, 312 final rules affect small business; 28 of them are significant rules.

Highlights from final rules published last week:

For more data, go to TenThousandCommandments.com.

Slow News Day

Orange News: Welshman’s delight at ‘Shed of the Year’ prize

There were more than 1,900 entrants. Well done, Alex Holland of Wales.