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.
Tragedy struck Japan this morning. It will be some time before we know just how many lives the tsunami took, and how much damage was done. But pundits are already saying dumb things.
Larry Summers, who should know better, committed the economists’ cardinal sin this morning: he fell for the broken window fallacy. The sunny side of the destruction is that it will boost the economy. Just think of all the jobs that will be created by the rebuilding process!
Over at the Daily Caller, I gently correct Summers. Natural disasters are bad for the economy. All the rebuilding activity in the next few years will only get Japan back to where it was. If the tsunami had never happened, all that energy could be put to creating new wealth. Disasters are just that: disasters.
Posted in Economics, International, Publications, Stimulus
Tagged bastiat, bastiat broken window fallacy, broken window fallacy, cnbc, daily caller, earthquake, economic growth, japan, japan earthquake, japan tsunami, larry summers, lawrence summers, natural disaster, Stimulus, tsunami
Japan’s Environment Ministry is encouraging its citizens to go to bed an hour earlier at night, and get up an hour earlier in the morning.
There is much wisdom in the old “early to bed, early to rise” adage. But that’s not what the Environment Ministry has in mind. They see going to bed early as a way to fight global warming.
By saving an hour’s worth of lighting and other electricity use every day, the Morning Challenge campaign says the average household can emit 85 fewer kilograms of carbon per year. Staying up late ensures mankind’s doom.
It is astounding that the Japanese regulators think that your bedtime is government business. Then again, this is the same country that has a legally allowable maximum waistline.
Posted in Mankind's Doom, Regulation of the Day, The New Religion
Tagged bedtime, carbon emissions, climate change, environment ministry, global warming, japan, japanese environment ministry, morning challenge, morning challenge campaign, regulation, Regulation of the Day, sleeping habits
In Japan, it is illegal for men to have a waist larger than 33.5 inches. The limit for women is 35.4 inches. Those in violation are forced to undergo counseling (Hat tip to CEI colleague Megan McLaughlin).
The law, passed last year, is part of an effort to keep obesity rates low and avoid related health problems.
One problem with using wasitlines as the primary metric is that results can vary among measurers. According to one article, “Satoru Yamada, a doctor at Kitasato Institute Hospital in Tokyo, published a study two years ago in which several doctors measured the waist of the same person. Their results varied by as much as 7.8 centimeters.”
That’s almost ten percent of the average waistline. It is sad that Japanese regulators have a strong enough nanny-state streak to legislate allowable physical dimensions. But the lack of precision in enforcing their edict must be maddening for the people involved.