Friday, October 30, 2009

Government Failure: Game Over for the Zimbabwe Dollar

I once wrote a post on Zimbabwe's amazing hyperinflation. So incredible it was that it led Gono, the governor of Zimbabwe's central bank, to receive an Ig Nobel Prize in Mathematics.

Well, it's finally game over for their poor excuse for a currency. As it happens in all economies that fail to contain hyperinflation, the Zimbabwe dollar died off out of its own irrelevance. Here's Cato's Steve Hank on this new feat achieved by the Reserve Bank of Zimbabwe (HT Marginal Revolution's Tabarrok):
Ashes are all that is left of the Zimbabwe dollar — a remnant of paper money. During Zimbabwe’s hyperinflation, foreign currencies replaced the Zimbabwe dollar in a rapid and spontaneous manner. This “dollarization” process was legalized in late January 2009. Even though the Zimbabwe paper money remnant circulates alongside foreign currencies, its real value is tiny, its use is limited, and its value against the U.S. dollar is cut in half every two days.

Thursday, October 29, 2009

Monkey Business

A few weeks ago I suggested to my students that economic research with cognitively advanced animals could be a good way to learn more about ourselves. In the NPR audio clip below you'll hear an excellent example of the potential of such research (HT Mankiw).

Notice in the clip how changes in individual productivity will subvert rigid hierarchies based on monkey politics. No coincidence then that the political order frequently tries to interfere with the economic order - most of the time a futile effort, as exemplified by the decline of aristocracy in Europe with the ascension of entrepreneurship as narrated by Niall Ferguson.

Wednesday, October 28, 2009

Genius Is a Relative Thing

Think twice before assuming that playing chess will make your child a more capable person - well, at least outside of the art of playing chess itself. This is what the example of Bobby Fischer teaches us (HT Selva Brasilis):

Fischer’s hatred of Jews turned paranoid. Pictures of Hitler decorated his lodgings. He denied the Holocaust. America, he was convinced, had fallen into the hands of “stinking Jews.” When the September 11, 2001, attacks occurred, he called it “wonderful news.” Wanted by the U.S. government for violating an order not to play a return match with Spassky in Yugoslavia, Fischer renounced his U.S. citizenship and settled in Iceland. ...

John Carlin, in an article titled “The End Game of Bobby Fischer” in the Observer/Guardian (February 10, 2008), described Fischer, during his final years, as looking like a homeless bum. “His teeth were rotten, and his white hair and beard were long and unkempt.” Bobby had a low opinion of doctors and dentists. He had all the metal fillings in his teeth removed because he thought radiation from them was injuring his health, or perhaps American or Russian enemies were causing the harmful radiation from his molars. Fischer seldom changed his clothes or removed his baseball cap. After his death in 2008 at age sixty-four, he was buried late one night near a tiny church in Iceland. A brief, shabby funeral was attended by a Catholic priest he had never known.

BTW, Einstein's pseudo-economics is another good example of how genius is indeed a relative thing.

Tuesday, October 27, 2009

Government Failure: Institutionalizing Bailouts

John Taylor explains in this post how the administration is trying to transform its bailouts of large financial institutions (its "too big to fail" doctrine) into a permanent feature of the American financial regulatory framework:
Fears of potential damage from the failure of a large financial institution has created a bailout mentality in which the U.S. government has committed many billions of dollars, intervened in the operations of scores of private firms, and caused excessive risk-taking. A new policy is needed. Two proposals were considered in testimony at the House Judiciary Committee a few days ago. Michael Barr of the U.S. Treasury and David Moss of Harvard supported a proposal to create an FDIC-like resolution regime for any financial firm viewed as too big or complex to fail. Testimony by David Skeel of Penn and me criticized that approach as institutionalizing the bailout process seen during the crisis and supported alternatives in which the failing financial firm would go through a bankruptcy process designed to deal with financial firms.

Government Failure: More Evidence that the Administration is Wrong

Here is John Taylor criticizing the claims of the administration. And here are the findings of new research by Alesina and Ardagna (HT Division of Labour's Stephenson):
We examine the evidence on episodes of large stances in fiscal policy, both in cases of fiscal stimuli and in that of fiscal adjustments in OECD countries from 1970 to 2007. Fiscal stimuli based upon tax cuts are more likely to increase growth than those based upon spending increases. As for fiscal adjustments, those based upon spending cuts and no tax increases are more likely to reduce deficits and debt over GDP ratios than those based upon tax increases. In addition, adjustments on the spending side rather than on the tax side are less likely to create recessions. We confirm these results with simple regression analysis.

Monday, October 26, 2009

Rubber Chicken's "Evil Dead: The Musical," LOL!

On Saturday we went to see Rubber Chicken's "Evil Dead: The Musical", and folks, it had been some time since we laughed so much! If you live in Duluth and haven't seen it yet, make sure you don't miss it. Be careful however with the first four rows, they're called "splatter zone" for a reason, and it isn't water what you're going to be splattered with...

Friday, October 23, 2009

Dump that Dog and Cat

Is global warming really a top priority in your agenda? Time to act then. According to Victoria University professors Brenda and Robert Vale, you should start by dumping your dogs and cats (HT EconLog's Kling). They explain:
The eco-pawprint of a pet dog is twice that of a 4.6-litre Land Cruiser driven 10,000 kilometres a year.
One of the alternatives is to make sure that you only have edible pets:
Pet owners should swap cats and dogs for creatures they can eat, such as chickens or rabbits.
I suppose that vegetarians like me could replace them with pet trees...

Thursday, October 22, 2009

Sneaking Dollar Inflation

The graph on the right (source: The Economist) gives us a hint of how dollar inflation may be triggered under a scenario of excessive monetary liquidity and budget deficits. Interest rates will not remain low for long as the risk of deflation becomes negligible and the need to finance the budget deficit remains high, no matter how sluggish is economic growth, since the latter may reflect the negative impacts of awkward economic policies on long-run aggregate supply growth. Are we destined to live the seventies all over again?

Wednesday, October 21, 2009

Serial Marriage in American States


Here's an interesting graph that appeared in the magazine The Economist that shows the share of the population in each American state who have been married three times or more (some may want to call them serial marriers). It's interesting to notice that the incidence of serial marriages is higher in the Bible Belt, and, among women, it is also higher in the Mountain States.

The article suggests that younger age at first marriage and lower income and educational achievements could be explanatory factors. A good topic for a scientific article.

Monday, October 19, 2009

Richman on Michael Moore's Sheepish Political Economy

The Foundation for Economic Education has an excellent critique by Sheldon Richman of Michael Moore's naive and unradical documentary "Capitalism: A Love Story" (HT Division of Labour's Lopez). Richman teaches a few basic POL ECON 101 lessons to a glaringly sophomoric and sheepish Moore, for example:
What would Moore think about a system in which no one could collude with politicians to legally plunder the rest of us for their own benefit and everyone was free to enter into any cooperative arrangements to produce and offer goods to others in voluntary exchange? Michael, that’s the free market! ...

Moore is unaware that he commits the “Nirvana fallacy.” This is the erroneous idea that our choice is between the admittedly imperfect world we’re bound to live in if government leaves us alone and an imagined utopia in which benevolent and all-wise rulers oversee and regulate everything. Of course that is not the choice. Moore’s preferred system, whatever he calls it, would be run by individuals whose insight into the public interest would be no sharper and whose motives no purer than other people’s. However, since they would wield political power — which is the legal authority to compel obedience– they would be far more dangerous than anyone in a free market could ever be. He knows how corrupt politicians are. Why does he think different people would run things in his utopia? Does he really want them in charge of everyone’s job, education, health care, housing, pension, and the rest? It’s hard to understand why he isn’t uncomfortable with the idea of the people being tenants and employees of the State.

Whether he realizes it or not, Moore favors a system in which an elite necessarily would make critical decisions for the rest of us. He’d be incredulous to hear that, but if he ever comes to understand it, libertarians might end up with an unlikely ally.

Saturday, October 17, 2009

Government Failure: The Rise of Crony Capitalism in the US

This is arguably one of the major cases of government failure that has ever taken place in the US: during the last twenty years, each new administration, irrespective of party, has promoted crony capitalism as the country's economic system, at the cost of the best economic system ever experienced by humanity: free-market capitalism. The push for crony capitalism is particularly intense under the current administration.

Examples of crony capitalism abound right now. In this NPR.org article, Roberts talks about the ludicrousness of Goldman Sachs' boastful attitude about its recent profits and explains:

Goldman Sachs being proud of its performance this year is like the Harlem Globetrotters bragging that they went undefeated. It's not really a normal competition. ...

We have a financial system that not only rewards cronies and encourages recklessness. It also funnels precious capital into areas like the housing sector instead of into more productive investments.

We have to stop rescuing the reckless. We have to let people who make bad decisions bear the consequences.

Goldman Sachs bravado at the cost of the sucker, I mean, the taxpayer is a perfect example of crony capitalism. All with the help of the administration, naturally.

Another perfect example is given by this ridiculous BusinessWeek interview with Vikram Pandit, which reveals how sheepish these so-called "businessmen" have become in their wish to pander to the powers that be. Here's a segment that made my blood boil:

Businessweek: Is Citi a good investment?

Pandit: Well, I have two responses to that. Anything that's good for the government should be good for all of us. Second, whether you know it or not, you own it as well.

No Mr. Pandit, what's good for the government *is not* necessarily good for me. And whether I own it or not, this is my personal problem, not the problem of the American taxpayer.

Friday, October 16, 2009

Norberg on the Failure to Learn from the Crisis

In this excellent article, Cato Institute's Johan Norberg explains how the crises, instead of teaching important lessons to most people, reinforced their misguided beliefs (HT Selva Brasilis). Here are some interesting passages:

In the big picture, the great financial meltdown of 2008 can be blamed on the collapse if a series of bubbles -- bubbles in credit, in housing, in asset-backed securities. In the aftermath, we face a new threat -- a knee-jerk bubble in regulation and government intervention in financial markets. You've been warned. ...

All the salvage operations and bailouts that have been implemented this time will make the problem seven times worse next time, completely regardless of the effect that they may have in the short term to prevent free fall. Banks and companies have learned that the more they do things just like everybody else -- like the rest of the herd -- the more likely they are to be saved by the government if things go wrong. Because then their operations or their market will be too big to be allowed to fail. Those who think differently and do things their own way -- and thus pose no threat of systemic crisis -- cannot hope for any help. A prudent banker is one who is exactly as imprudent as the other bankers, so that he goes bankrupt when others do, as the early 20th-century interventionist economist John Maynard Keynes is claimed to have said. If we really want to make future financial storms less severe, we should be doing the opposite of what is happening now. We should remove the safeguards and untie the safety nets. We should abolish bailout plans and deposit insurance, so that
banks would be forced to think about what risks they can really bear and how much capital they need to cover those risks. We should deprive the credit-rating agencies of their official role, so that investors would have to think for themselves about where to put their money. We should systematically put an end to the protections and guarantees that government authorities give to investors and savers, to leave room for their own common sense and their own responsibility. Those who do not trust themselves should not go anywhere near the riskiest markets.

Thursday, October 15, 2009

Libertarians, the Upholders of Liberty

Klein and Briggeman explain in this article how libertarians and conservatives differ significantly in matters of sex, gambling and drugs by analyzing the contents of conservative magazines (HT Boudreaux in Cafe Hayek). As they say (italics are mine):

If a movement claims to be pro-liberty, an evaluation of the integrity of that claim must consider both what the movement says and what it fails to say. ... On the whole, the conservative magazines reveal that conservatives fail to uphold the presumption of liberty.

This investigation underscores that nowadays the menu of major public philosophies offers three options: conservatism, social democracy, and classical liberalism or libertarianism. Only the third upholds the presumption of liberty.

Wednesday, October 14, 2009

Why Did I Overestimate the Effects of the Crisis in Brazil?

In this February 25 post I wrongly predicted (as did the magazine The Economist) that the Brazilian economy would be heavily affected by the financial crisis. Looking backward, there's no question that I overestimated its negative effects in Brazil. Why?

In part, and ironically, because I overestimated the progress made by the Brazilian financial system since the country achieved macroeconomic stability in 1999. It remains very underdeveloped, what may help during a global financial crisis of the type we experienced, at the cost however of severely limiting the expansion of the country's economy during normal times.

Much more important however is something that nobody could have predicted: the country appears to have become part of a new wave of "financial bubbles" (loosely defined) frothing right now. As put by Constantino (in Portuguese, my translation):
There are some undeniable signs of froth in the Brazilian financial markets. The optimism in relation to the economic future of the country infected investors all over the world. Brazil seems to be the current object ball. Moody's has finally granted the long-awaited investment grade to the country. Billionaire property investor Sam Zell announced its commitment to increase investments in the country, stating that Brazil is his number one bet at the moment. And perhaps the main sign of excessive optimism was the Santander's Brazilian arm IPO issue. It was the largest IPO ever made in the Brazilian stock market.
This is BTW a phenomenon that we've been observing for many years: one "asset bubble" is simply replaced by another "asset bubble," as liquidity remains too high and interest rates too low. Countries like Brazil should start preparing themselves for the next pop.

PS: more support for this analysis comes from an article in the The Economist today: Mexico has a case of bubble envy. What just shows how ephemeral is success south of the border.

Tuesday, October 13, 2009

Taylor Explains the Nobel in Economics

Taylor explains the Economics Prize beautifully in these two paragraphs:

Williamson’s research teaches us to recognize when transactions will take place within a firm and when they will take place in markets. He significantly extended Coase’s insights on reducing transactions costs by delineating the advantages of such within-firm interactions when mutual dependence between people is high. The predictions of his theory are testable and have been confirmed in many empirical studies.

Ostrom's research teaches us that “market failure” due to externalities or public goods of the kinds illustrated in Garrett Hardin’s famous "tragedy of the commons" example can be resolved by genuinely engaged individuals working together, and that government intervention may therefore not be needed to solve such market failures. Indeed she finds that individual arrangements frequently achieve better results than government intervention. In this way she too builds on the work of Coase.

The question however that remains is: why hasn't Tullock got a Nobel yet?

Monday, October 12, 2009

Economics Nobel Prize Goes to Ostrom and Williamson, a Native of Superior, WI

The Economics Nobel Prize committee chose it well this year by giving the prize to public choice and theory of the firm scholars Ostrom and Williamson, both affiliated to American universities. Williamson was born and raised in Superior, WI, Duluth's neighboring city, and attended Superior Central High School. I reproduce the press release below:

The Royal Swedish Academy of Sciences has decided to award The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for 2009 to

Elinor Ostrom

Indiana University, Bloomington, IN, USA,"for her analysis of economic governance, especially the commons"

and

Oliver E. Williamson

University of California, Berkeley, CA, USA, "for his analysis of economic governance, especially the boundaries of the firm"

Economic governance: the organization of cooperation

Elinor Ostrom has demonstrated how common property can be successfully managed by user associations. Oliver Williamson has developed a theory where business firms serve as structures for conflict resolution. Over the last three decades these seminal contributions have advanced economic governance research from the fringe to the forefront of scientific attention.

Economic transactions take place not only in markets, but also within firms, associations, households, and agencies. Whereas economic theory has comprehensively illuminated the virtues and limitations of markets, it has traditionally paid less attention to other institutional arrangements. The research of Elinor Ostrom and Oliver Williamson demonstrates that economic analysis can shed light on most forms of social organization.

Elinor Ostrom has challenged the conventional wisdom that common property is poorly managed and should be either regulated by central authorities or privatized.
Based on numerous studies of user-managed fish stocks, pastures, woods, lakes, and groundwater basins, Ostrom concludes that the outcomes are, more often than not, better than predicted by standard theories. She observes that resource users frequently develop sophisticated mechanisms for decision-making and rule enforcement to handle conflicts of interest, and she characterizes the rules that promote successful outcomes.

Oliver Williamson has argued that markets and hierarchical organizations, such as firms, represent alternative governance structures which differ in their approaches to resolving conflicts of interest. The drawback of markets is that they often entail haggling and disagreement. The drawback of firms is that authority, which mitigates
contention, can be abused. Competitive markets work relatively well because buyers and sellers can turn to other trading partners in case of dissent. But when market competition is limited, firms are better suited for conflict resolution than markets. A key prediction of Williamson's theory, which has also been supported empirically, is therefore that the propensity of economic agents to conduct their transactions inside the boundaries of a firm increases along with the relationship-specific features of their assets.

PS: Lopez in the Division of Labour explains in a few words why this prize is so important:

Both laureates underscore non-coercive governance. I applaud deeply. For a good introduction, here is the scientific background provided by the Nobel committee.

Sunday, October 11, 2009

When an Economist Loses His Edge

It's not too common, but it happens. Economists that once made important contributions to the field and that suddenly lose their economic sense (almost always due to involvement in partisan politicking), contributing heavily for the denigration of the science. Krugman is the latest example of this phenomenon. Taylor explains it in this post, here's a passage:

The [Fed] meeting demonstrated how completely wrong Paul Krugman is about recent developments in economics, at least as he portrayed the subject in the New York Times Magazine last month. This was not an all efficient markets meeting. The talk from start to finish was about the market imperfections, price rigidities, deadweight losses due to market power, and imperfect information, which all occur in monetary economics. If anything there was too much focus on market distortions. Overall I saw tremendous progress documented at the meeting. ...

But if there has been so much progress in monetary economics, then why did we have the financial crisis? I argued that it was the policy, not the economics, which got off track. When the policy implications of the research were followed by policy makers, we had good economic performance, as in the period called the Great Moderation. When policy got off track, the Great Moderation ended in the financial crisis and Great Recession. I am hoping that policy will get on track again and we will have Great Moderation II.

Saturday, October 10, 2009

First Snowfall in Duluth, MN, Two Weeks Before Expected

We got our first snowfall in Duluth, MN, during last night (gated article here), two weeks before the average date of the 1st measurable snowfall in this city. This has been a pretty cold year in the region: with the exception of a relatively warm September, we simply lacked a summer season this time.

Friday, October 9, 2009

Dubner on Obama's Nobel Peace Prize

Maybe the Norwegian are a really Machiavellian people. Otherwise, Dubner summarized it perfectly:

Maybe it was because I saw the headline early this morning not on the N.Y. Times’s website or the Wall Street Journal’s, but rather on Google News. I instantly assumed that the Onion had successfully landed a story on the home page of that fine aggregator. “Barack Obama Wins Nobel Peace Prize,” the headline said. I chuckled, silently congratulated the Onion on its clever idea, and clicked the link.

But it wasn’t the Onion at all. He actually won it.

In any case, I believe that Nobel Peace Prizes shouldn't be given to anyone with inordinate access to the use of force and violence, and folks, what an amazing amount of force and violence the US Commander-in-Chief has at the point of his fingers. This prize makes as much sense as giving a Nobel Peace Prize to the "Police Corps of the World" or the "WWII US Army." Sure, both helped the world to achieve peace according to some criterion, but that has never been really the point, has it?

PS: Mankiw beats The Onion!

Thursday, October 8, 2009

Nobel Prize for Literature Goes to a Dennouncer of Communist Dehumanization

Given that in the recent past the Nobel Committee for Literature has tended to recognize mostly writers with socialist or communist inclinations (examples here, here, and here), it's good news that this year they chose to give the Prize to a dennouncer of communist dehumanization, Herta Mueller. As explained in this WSJ aritcle:

Born in Romania in 1953, Ms. Müller grew up there as part of a German speaking minority. Her father had served in the Waffen SS during World War II, and her mother was one of many Germans deported to the Soviet Union in 1945. Her latest novel "Atemschaukel," published this year, depicts the exile of German Romanians in the Soviet Union.

Though Ms. Müller left Romania for Germany in 1987, she continued to wrestle with the themes of oppression and exile in her novels and poems. Her novel "The Appointment," published in the U.S. in 2001, portrays a young woman working in a clothes factory during Ceausescu's regime. "Der Fuchs war damals schon der Jaeger," published as "The Passport" in English, and 1999's "The Land of the Green Plums" also offer portraits of the daily life in a soulless dictatorship. ...

Sara Bershtel, publisher of Metropolitan Books, which published "The Land of Green Plums" and "The Appointment," said that Ms. Muller's books creates an atmosphere of suspicion that becomes increasingly intense. "Her work is very concentrated, very spare," Ms. Bershtel said.

"Her books are set during a time of totalitarianism, but she never mentions that," Ms. Bershtel said. "Instead, she focuses on what life and relationship are like in that climate. It's about what people wear, what they eat, how they talk."

Wednesday, October 7, 2009

More on Sarkozy's Happiness Adjusted GDP

In this post about Sarkozy's "happiness adjusted" GDP proposal, Division of Labour's Stephenson makes some of the same arguments that I use in class when covering GDP and national income. Stephenson cites suicides and car-burning carousals in France as examples of things that Sarkozy would not like to see in his "Stiglitz-adjusted" GDP measure. I have relatives in France, I've been there a few times, and I could add to the list of "French annoyances" things such as the high probability of lacking services due to labor strikes, the unavailability of open shops when you need them, dealing with grumpy and over-entitled government employees, relatively small yet expensive home spaces, and the inferior quality and size of their automobiles (I'll stop here).

Obviously, I could easily make a list of many nice things about living in France. This is not the point however. The point is that nobody, not even Nobel winners, can create a "happiness adjusted index" without large amounts of arbitrariness. Depending on how you cherry pick it, you can easily make heaven look like hell or vice versa. A "happiness adjusted" GDP measure would have no credibility whatsoever due to all the politicking that it would imply. Here lies the greatest advantage of simpler measures like GDP: their meaning is straightforward and they're much less susceptible to manipulation for easy political gain.

Tuesday, October 6, 2009

GDP Growth and Energy Efficiency in the US

Doomsayers are wrong, and have always been wrong. They've also been always popular, but popularity never made anyone right, in this case for a simple reason: market economies are much more efficient and "smart" at finding solutions to social problems than their vain philosophies allow them to comprehend.

Carpe Diem brings us the amazing graph below, which shows how growth in the US during the last sixty years has normally been accompanied by significant improvements in energy efficiency. This should be no surprise to owners of a working economic brain: economic growth is the result of productivity gains, and productivity is the production of more with less. I'd say: doomsayers be doomed.

Monday, October 5, 2009

SNL: The Administration's Two Big Accomplishments, Jack and Squat

Ironically, an underachieving administration is many times a good thing for a nation. Unfortunately however the sketch is wrong: it forgot to recognize that it has yet achieved this, this, this and this, sometimes with the help of the previous one, naturally. Enjoy the vid anyway.

Sunday, October 4, 2009

7th Art: The Invention of Lying (2009)

Ricky Gervais is superb in "The Invention of Lying" (2009), an unpretentious but inspired and creative one-man show that, despite its light-handed exploration of the subject, will keep you thinking about the feasibility and desirability of a society where nobody is able to tell lies.

Lies in the movie are broadly defined not only as falsehoods and untruths, but also as unverifiable statements. In such a society everybody is absolutely straightforward and factual, hence there's no creativity in the fictional, speculative or untestable sense of it. The result is a society that can be described in the best case as boring and in the worst case as frightening.

Interestingly, it becomes clear that a completely and pathologically truthful society is unfeasible for two reasons: (1) life would be psychologically unbearable, and (2) it would give a huge economic advantage to anyone able to lie, or, as economists say, lying would be a dominant strategy in too many situations, providing an incredible amount of power to the liar. After watching the movie, it became quite easy to understand why the ability to lie is an essential human trait.

In any case, game theory and economics put aside, the movie is incredibly funny, so don't miss this opportunity to laugh your head off.

PS: here's Cowen making similar points.

Saturday, October 3, 2009

Government Failure: Azevedo on the Administration's Olympic Fiasco

Brazilian writer Reinaldo Azevedo offers some wise words on the administration's Olympic fiasco in this Veja Magazine blog article (in Portuguese). I translate the most relevant passage for your enjoyment:
It's one thing for the government of an emerging country [like Brazil] to enter head-on into the [Olympic] dispute and to paint it as question of national survival; it's however an entirely different thing for the country that's yet the leader of the western world to costar in this pantomime. In the first case, if the effort succeeds, the result is what we're seeing [in Brazil]: the consagration of the leader; if all goes wrong, accuse the bigotry of the rich [countries to explain your political defeat]. As simple as that. Obama on the other hand should only have got personally involved, as he did, with the certainty of victory. Who pretends to be greater than one really is behaves like Lula. Who pretends to be the opposite acts like Obama.

Friday, October 2, 2009

Brooks on the Next Culture War

Here's an excellent NYT article by David Brooks on things to come (HT Selva Brasilis). This passage summarizes it all:

Our current cultural politics are organized by the obsolete culture war, which has put secular liberals on one side and religious conservatives on the other. But the slide in economic morality afflicted Red and Blue America equally.

If there is to be a movement to restore economic values, it will have to cut across the current taxonomies. Its goal will be to make the U.S. again a producer economy, not a consumer economy. It will champion a return to financial self-restraint, large and small.

It will have to take on what you might call the lobbyist ethos — the righteous conviction held by everybody from AARP to the agribusinesses that their groups are entitled to every possible appropriation, regardless of the larger public cost. It will have to take on the self-indulgent popular demand for low taxes and high spending.

A crusade for economic self-restraint would have to rearrange the current alliances and embrace policies like energy taxes and spending cuts that are now deemed politically impossible. But this sort of moral revival is what the country actually needs.

Thursday, October 1, 2009

"Freedom Road Show" Visits Brazilian University Campuses

Wonderful news from Brazil: during October, a group of highly talented young scholars will lead the "Freedom Road Show" ("Liberdade na Estrada"), a series of lectures on libertarianism and the importance of individual freedom to be delivered in fifteen Brazilian university campuses. The event is sponsored by OrdemLivre.org with the support of the Atlas Economic Research Foundation and the Cato Institute. One of the participants is my friend Adolfo Sachsida.

The "Freedom Road Show" mission, in their own words, is "to expose Brazilian university students to libertarian thinking, which supports free markets, peace and individual rights. The objective is to promote a direct understanding of classical liberalism and to show how different it is from the "neoliberal" stereotype [widely accepted in Latin America] that was invented by its intellectual opponents on the left and on the right."