Thursday, August 30, 2012

Who Spends Wisest?

My latest op-ed has been published on "Since Monetary Spending is Unequal, Who Spends Wisest?" explains one reason why government spending and monetary inflation are not roads to prosperity.  My main point is that, because of the existential fact of scarcity,
Not all monetary spending is equal. Economic prosperity requires wise entrepreneurship. If spending is funded by voluntary saving and invested according to profit and loss considerations, it tends to be productive and hence, add to our prosperity. If spending, however, is funded by coercion and apart from economic calculation, scarce goods are wasted, and the result is relative impoverishment, prolonged recession, and unemployment.

Tuesday, August 28, 2012

On Relevant Radio

Sheila Liaugminas 
Several days ago, I was a guest on the "A Closer Look" radio show hosted by Sheila Liaugminas. I am on the first half of the program and you can listen by clicking here. I discuss the nature of recession, the consequences of government spending, and the so-called fiscal cliff.

Friday, August 24, 2012

Tuesday, August 21, 2012

Ritenour on The What's Up Radio Program

Last Thursday I appeared on The What's Up Radio Program hosted by the lively Terry Lowry. I discussed the unemployment picture and the state of our economy. The discussion was prompted by my recent piece, "What's in a Recovery?"

You can listen to an archived recording of the program by clicking here.

Monday, August 20, 2012

The Bubble: Coming Soon to a Screen Near You

A few weeks ago I directed you to a Spanish-produced film about the 2008 financial crisis. I also want to alert you to another film entitled The Bubble, based on Tom Woods' bestseller Meltdown. It is produced in the U.S., so is in English, and includes Grove City College's own Jeffrey Herbener. Here is the film's trailer:

Sunday, August 19, 2012

New Film Series about Economics from a Christian Perspective

Economics for Everybody, a new film series designed to educate viewers about Economics from a Biblical perspective has just been released. It is comprised of 12 video lessons narrated by the always engaging R. C. Sproul, Jr. The producer of the series describes it as follows:
Economics for Everybody seeks to remedy that through an insightful and entertaining exploration of the principles, practices, and consequences of economics. Thoroughly unconventional, it links entrepreneurship with lemonade, cartoons with markets, and Charlie Chaplin with supply and demand.

It’s funny, clever, profound and instructive all in one place. It’s Economics for Everybody.
I served as an economic consultant for the film and recommend it as a provocative, winsome, and informative attempt to bring both natural and special revelation to bear on economic theory and policy. Those looking for an introduction to economic ideas from a Biblical perspective will find Economics for Everybody an excellent first step.

Here is the trailer for the series:

Saturday, August 18, 2012

America's Health Care System Not that Different from Socialism

That is an important insight stressed by John C. Goodman at the Independent Institute. Goodman argues that people on both the political right and left fail to appreciate how similar our health care plan is to more explicitly socialistic plans like those in Canada and Europe.

For those inclined to romanticize the United Kingdom's health care system, I recommend the latest opinion piece by Theodore Dalrymple, discussing Britain's "cherished, lousy National Health Service."

Thursday, August 16, 2012

How Herbener Became an Austrian Economist

It was his pursuit of truth. In this fascinating interview with Tom Woods, my department chair, Jeffrey Herbener, explains his intellectual journey to Austrian economics.

In addition to the very highly regarded courses he teaches at Grove City College, he is also the featured economics lecturer at Liberty Classroom.

Wednesday, August 15, 2012

America's Alleged Economic Recovery

My latest op-ed has been published on In "America's Alleged Economy Recovery Is Slower than Japan's Lost Decade (the title was the publisher's idea), I attempt to explain why the vast majority of the most recent economic data does not look so good. My main argument is that much of our statistical recovery has been only apparent and made possible by government spending and monetary inflation. Such "recoveries" are always temporary at best because they are not built upon the economic bedrock of the market division of labor, savings and capital accumulation, and wise entrepreneurship.

Tuesday, August 14, 2012

Miller on How Govermnent Is Hampering Economic Recovery

Yesterday, my colleague Tracy Miller had an essay published on explaining how government policy is restraining economic recovery. He discusses the many ways the government has responded to the Great Recession and how they have hindered a return to prosperity.

As Miller concludes,
The financial crisis is to blame for the depth of the recent recession and partly to blame for the slow economic recovery. If market forces were allowed to work, however, the economy would recover more quickly. If they did not have extended unemployment compensation, some unemployed workers would find and accept new jobs. If uncertainty about government policy and its impacts weren’t such a big concern, firms would be willing to invest in expanding production in response to lower interest rates. A return to a system with fewer entitlements, less government spending, stable rules and a commitment to maintain low tax rates would increase confidence about the future so businesses and households would be more willing to invest and create new jobs.

Monday, August 13, 2012

The Problem of Political Economy We Face

That the government is in dire fiscal shape is general knowledge. My lecture I presented at the most recent Center for Vision and Values as well as the one I gave in July for the Institute for Principle Studies, explained the economic consequences of government spending and our outrageous government debt. The only solution that will be good for long term economic performance is to drastically cut government spending.

Ah, as Hamlet would say, there's the rub. We have gone so far down the welfare state road that to rollback government spending in a way that significantly improves our fiscal condition, people will have to vote against their short-term pecuniary interest. The Weekly Standard reports that now over 100 million people in the U.S. receive some form of government welfare. And that does not even include those on Social Security and Medicare.

As early as 2007, before the Great Recession set in, economist Gary Shilling found that over 50 per cent of Americans received significant income from government programs. This means that to turn this fiscal ship around, a majority of people will have to vote contrary to their narrow self-interest just because it is the right thing to do. I am not sure if our people have that sort of character.

Sunday, August 12, 2012

The Price of Income Inequality?

Nobel Prize laurette Joseph Stiglitz is out with the new book The Price of Inequality. In it he argues that much of our current economic trouble is due to income inequality. According to Matthew Craft of the Associated Press,
In his new book, "The Price of Inequality," he connects surging student loan debt, the real-estate bubble and many of the country's other problems to greater inequality.

When the rich keep getting richer, he says, the costs pile up. For instance, it's easier to climb up from poverty in Britain and Canada than in the U.S.

Although I think Stiglitz too suspicious with income inequality per se, in his interview with Craft, Stiglitz rightly implies at one point that the real culprit is the crony capitalism that has reached its zenith during and since the financial meltdown of 2008.

It is important not to miss this point. Capitalism and the market division of labor have not caused the magnitude of current income disparities. It is not that the rich got richer while the poor got poorer. It is that the politically connected got richer while those without access to power have to get along without any help from the state. In fact, it is worse than that. The productive have to bank roll the whole thing in the form of taxes and monetary debasement.

In a free society, people would still earn unequal incomes because of differences in skills, talents, environments, personal choices, and divine providence. Anne Bradley, Vice President of Economic Initiatives at the Institute for Faith, Work, and Economics, has just written an excellent monograph explaining "Why Does Income Equality Exist?" In answering the question, she draws upon both economic theory and the Bible to provide a comprehensive analysis of this timely topic.

Friday, August 10, 2012

The Myth of Smaller Government

Jordan Weissman, associate editor for The Atlantic, claims that we now have the smallest government in 45 years (HT: Ryan McMaken). Weissman makes this claim based on the ratio of government population to population. Ryan McMaken rightly counters that official government employment is a fallacious measure of government size because of the increase of outsourcing done by the state.

I had a friend who used to work for U. S. Department of Energy (DOE) and was there when Al Gore reinvented government. That was when the first wave of privatization of government services began. My friend told me that the DOE  contracted out about two-thirds of its work, but only laid-off about a fourth of its employees. Many bureaucrats were paid to do little except read novels, because it was more interesting than sitting and doing nothing.There was no work for them to do.

McMaken is also correct to note that government spending has skyrocketed since LBJ.
In 1968, the US government spent $883 dollars for every one of the 201 million Americans, or annual outlays totaling 178.1 billion. In 2011, the US government spent a whopping $11,493 for every one of the 313 million Americans for total outlays of 3.6 trillion. That's an increase of 1,923 percent since 1968. The CPI over this period increased 545 percent, so we're talking an enormous increase, even when adjusted for the official inflation rate.
With a reductions in government like that, who needs totalitarianism?

Additional evidence, as if any were needed, can be seen by looking at the Federal Registry which houses the U.S. Federal Code which comprises all federal regulations. In 1960 there were 20,072 pages in the Registry. In 2011 that total was up to 82,415. That is a more than four-fold increase. You can learn about our dismal regulatory state in some detail by reading Ten Thousand Commandments 2012, by Clyde Wayne Crews, Jr. at the Competitive Enterprise Institute.  Anyone who says we are living in an era of small government is either woefully mislead, willfully ignorant, or just lying.

Thursday, August 9, 2012

County in Virginia Fines Farmer for Selling Her Own Produce

This spring, Martha Boneta hosted a birthday party for one of her friend's daughters on her small farm in Paris, Virgina. For her troubles she was threatened by Fauquier Country with thousands of dollars in fines. She was cited for holding an event without a permit and for selling produce directly to consumers.

It turns out that Boneta had paid for a "retail farm shop" business license in June of last year. However, just one month later, the county Board of Supervisors approved an amendment that restricted "farm sales", and began issuing citations to farmers in the area. You can watch a report, including eyewitness testimony here:

Remember, they hate us because we're free.

Wednesday, August 8, 2012

What's In a Recovery?

My latest op-ed has been featured at Forbes. In "What's In A Recovery?" I offer some preliminary thoughts in explaining our recent macroeconomic performance. When private investment languishes while government spending continually rises, any boom will be temporary at best.

Tuesday, August 7, 2012

Coming Soon to a Health Care Industry Near You

The Wall Street Journal has a fascinating discussion about how RomneyCare has worked out for Massachusetts. The bottom line is not so well. RomneyCare has wrought tremendous increases in the government plan and much higher costs.
Massachusetts spends more per capita on health care than any other state and therefore more than anywhere else in the industrialized world. Costs are 27% higher than the U.S. average, 15% higher when adjusted for the state's higher wages and its concentration of academic medical centers and specialists.
The sad truth is this is the direction ObamaCare is taking the entire nation. Central planning requires bureaucratic decision making without meaningful profit and loss calculations. Such decision-making is always less productive, which means higher costs and often lower quality. The health care status quo was bad. Increased centralization will make things worse.

Saturday, August 4, 2012

Herbener on the Core of Economic Analysis

My department chair, Jeffrey M. Herbener, again taught at this year's Mises University at the Ludwig von Mises Institute. Here is his lecture on the core of causal-realist economic analysis, "Subjective Value and Market Prices."

Thursday, August 2, 2012

We're Not Japan, but We Can Hope

In this short video clip from Bloomberg TV, their "single best chart" of the day shows that our so-called recovery is the worst since the 1940s and even worse than Japan's lost decade thus far.

Such is what is wrought when liquidation of malinvestment via the market process is hampered.

Wednesday, August 1, 2012

Salerno on the Origins of the Austrian School

In the acknowledgements at the beginning of my book, Foundations of Economics: A Christian View, I write the following:
It should be clear that my intellectual debts are from the Misesian tradition of Austrian economics and Reformed Protestant theology. My economic pedagogy relies heavily on Murray Rothbard’s Man, Economy, and State and the intellectual foundation laid by Carl Menger and Eugen von Böhm-Bawerk and built into a full edifice by Ludwig von Mises.
If you would like to know more about the origins of the Austrian School of economics, I recommend this lecture by Joseph T. Salerno. It was presented just a week ago at this summer's Mises University at the Ludwig von Mises Institute.