M. Friedman Goes to Washington

by Chidem Kurdas

Early in his career, long before he became a Nobel prizewinner and the household name for free market economist, Milton Friedman worked for the US Treasury. The following anecdote is from his 1998 memoir with his wife Rose, Two Lucky People.  This revealing example of how public officials operate illustrates, in Friedman’s words, “the interaction between bureaucratic self-seeking and supposedly objective analysis.”  It complements my previous post on whether politicians pursue the public good.

World War II had started. For Friedman and others at the Treasury, the main mission was to figure out how to finance the war effort while avoiding inflation.  Continue reading

Financial Crisis from Lehman to Europe

by Chidem Kurdas

The current financial crisis is a reverse of the 2008 disaster in key respects. Then, investment banks were seen as the main culprits while governments appeared in the guise of cavalry riding to the rescue. The trouble originated in the United States and spread to Europe. This time, the culprits are certain governments, the problem is European and how badly it will affect the American financial system is a question. How did the crisis go from US-based mortgage securities and Lehman Brothers to Italian sovereign debt and French banks?  Continue reading

Constitution Bashers’ Internet Fallacy

by Chidem Kurdas

There’s a ferocious backlash against the Tea Party’s reverence for the U.S. Constitution. Court decisions against ObamaCare’s compulsory health insurance provision have further stoked the hostility.

One common and obvious line of attack is that the Constitution is old-fashioned and out of synch with our world of satellites and Twitter. Continue reading

Anti-Intellectualism and Freedom

by Chidem Kurdas

Anti-Intellectualism in American Life by Richard Hofstadter, a historian who died in 1970, is very much part of politics several decades after it was written. The past two years brought many charges of anti-intellectualism by left-liberals against people on the other side of the political divide.  The latest in Hofstadter-inspired critiques is an attack on Tea Partiers by Will Bunch — The Backlash: Right-Wing Radicals, High-Def Hucksters, and Paranoid Politics in the Age of Obama.

The term anti-intellectualism does not just denote those who don’t care for intellectuals. Rather, Hofstadter presents it as an ideology, an “ism” that periodically besets American culture and deprives intellectuals of political power. This deprivation disappears under certain administrations. Thus regarding the late 19th and early 20th century he wrote that “In the Progressive era the estrangement between intellectuals and power … came rather abruptly to an end.”

Similarly in the New Deal: “Never had there been such complete harmony between the popular cause in politics and the dominant view of the intellectuals.” Unfortunately – from Hofstadter’s perspective – this harmony was disrupted by right-wing reaction against policies associated with intellectuals. Continue reading

The Second Austrian Moment

by Mario Rizzo  

This is an important time for Austrians. During the Great Depression and for many years thereafter, J.M. Keynes and his followers dominated macroeconomic theory (some say they created it) as well as the conventional wisdom about the historical lessons of the Depression and the New Deal.  

We are now witnessing many important developments that will affect economics and public perceptions for a long time to come. Continue reading

Anniversary of Social Security

by Mario Rizzo  

Today is the seventy-fifth anniversary of Social Security.  

Only an unreconstructed reactionary (that is, a classical liberal) would, at this late date, be opposed to Social Security Act of 1935.  

My purpose here is not to go over that issue, however. It is to comment on a recent Washington Post article on Social Security.   Continue reading

Get Real about Jobs

by Chidem Kurdas

Today President Obama is holding a jobs summit, with the professed goal of soliciting ideas to encourage businesses to hire. Short-term tax credits for employers are among the measures mentioned.

Yesterday here on ThinkMarkets Mario Rizzo pointed to the distorting impact of such proposals and cited Gary Becker’s argument that cutting income taxes is a better way to stimulate employment.  There is another type of distortion – related to the highly informative back and forth by Jerry O’Driscoll and Roger Koppl on Mario’s post – that should be spelled out. Even as the economy recovers, government-created uncertainty is going to discourage hiring. Continue reading

Regime Uncertainty During The Great Depression

by Mario Rizzo

 

The destabilizing “regime uncertainty” that has been analyzed by the economist Robert Higgs was already seen after the first few years of FDR’s administration by one of its most influential members, Raymond Moley.

 

He had been an economic advisor to Governor Alfred E. Smith of New York. He was a conservative Democrat who quit the administration in mid-1936 because he thought it was moving too far to the left.  

 

What Roosevelt and others saw as an “experimental” or “pragmatic” turn was, in reality, a confusing and destabilizing mix of ill thought-out policies and rhetoric. Continue reading