Wednesday, January 30, 2013

WTO and Piracy as Legal Retaliation

Curious WTO dispute development involving legal piracy according to Freakonomic's Kal Raustiala and Chris Sprigman:
Back in 2007, the tiny islands prevailed in trade court against the U.S., successfully arguing that U.S. laws restricting Internet gambling violated the trade in services provisions of the WTO. But then they faced a conundrum. What could they do to punish the U.S.? Antigua’s proposed solution was to “suspend obligations” in the area of TRIPs. In other words, it would start ignoring certain copyright and patent rules.

Caplan on the Social Pressure to Lie


Ridiculing skeptics may make them shut up.  But when you do so, you're promoting not truth, but mere conformity.

Friday, January 25, 2013

The Absurdity of Rental Prohibitions in America

Having been victimized once by rental prohibitions in the US, I became since then very suspicious of rankings that put the country not at the top but ranked relatively high in respect to property rights. Sure, the wealthy are able to keep their wealth untouched - crony capitalism and corporation bailouts abound these days. Odd things have been happening  however to American economic values and the legal framework is not in place to protect small owners like it does in other polities. News like this one:
A court will consider whether homeowners have the right to rent out their property
are unimaginable in regions marked by solid cultural and legal traditions of respect to property rights as in most of Western Europe and, ironically, even in parts of Latin America - consider the example of Chile and, in the case of rental rights, even  Brazil has sounder traditions.

Tuesday, January 22, 2013

The "Anti-Austerity" Ideal Proxy

No better representative of the "anti-austerity" fraudulent mindset:
As an ex-presidential consultant, a former adviser to the World Bank, a financial researcher for the United Nations and a professor in the US, Artur Baptista da Silva's outspoken attacks on Portugal's austerity cuts made the bespectacled 61-year-old one of the country's leading media pundits last year.
The only problem was that Mr Baptista da Silva is none of the above. He turned out to be a convicted forger with fake credentials and, following his spectacular hoodwinking of Portuguese society, he could soon face fraud charges.

Friday, January 18, 2013

The Golden Rule of Public Budgeting

Preposterous news in the mainstream press announcing that California has "balanced its budget" made me think of my experience in budget and treasury offices in Brazil and, what I came to understand, is the golden rule of public budgeting: a deficit is never as small and a surplus is never as large as they are reported to be.

Wednesday, January 16, 2013

Trustworthy-no-more Depositories

Reuters:
FRANKFURT, Jan 16 (Reuters) - Germany's Bundesbank plans to bring home some of its gold reserves stored in the United States' and French central banks, bowing to government pressure to unwind a Cold War-era ploy that secured the national treasure.

The Only Real Solution to Climate Change

Climate change, man-made or not, is an inevitable reality. The most important human adaptation mechanism to climate variability, the one that is simple and has always worked, is curiously the one that has been systematically neglected in a world dominated by nation states: migration. Klaus Desmet and Esteban Rossi-Hansberg explain at Vox EU:
The current emphasis on carbon taxes as a way of dealing with global warming therefore seems appropriate. But we should certainly not forget the age-old strategy of ‘movement’ as a way of adapting to climate change. Although you may not yet be planning to migrate to Greenland, the policy debate on climate change should start giving greater importance to finding ways of alleviating migratory and trade restrictions. These frictions are fundamental to our understanding of the economic costs of global warming.

Friday, January 11, 2013

Bastiat on Law & Order


"Life, liberty, and property do not exist because men have made laws. On the contrary, it was the fact that life, liberty, and property existed beforehand that caused men to make laws in the first place." Frédéric Bastiat

Wednesday, January 9, 2013

More Platinomics Nonsense

This time the nonsense comes from The Economist's Free Exchange:
But in 2008, Congress gave the Fed authority to pay interest on reserves.  Because banks should not lend reserves to each other for less than they can get from the Fed, this restores the Fed’s control over interest rates regardless of the size of its balance sheet, and thus over inflation. ... What this means is that while the platinum coin option expands the Fed’s balance sheet and, ultimately, the monetary base, it has no implications for inflation, even if the Treasury never buys back the coin.
Back to the real world: paying interests on reserves didn't save Brazil from hyperinflation, much on the contrary, it was one of the main causes of hyperinflation. It hastens hyperinflation because the supply of high-powered money becomes incredibly endogenous to increases in nominal rates of return. In other words, the monetary and price systems become utterly unstable.

It would be funny, if it weren't tragic, that many economists appear to be unable to get this simple point.

Humanity Loses One of Its Greatest Thinkers

James M. Buchanan, one of the greatest economists of all times, who enlightened us all on the immense problems of government failure, dies at 93. A good summary of his work here.

Remember Bastiat

"L'État, c'est la grande fiction à travers laquelle tout le monde s'efforce de vivre aux dépens de tout le monde."

"The State is that great fiction by which everyone tries to live at the expense of everyone else."

Monday, January 7, 2013

Platinum Delusion

The Economist, straight to the point:
The fancy of a $1 trillion platinum coin is so tantalising in part because it puts a monetary option in play. The larger attraction, though, is that it does so in a way that honours democracy by sticking to the letter of democratic legislation, yet also flirts with the heady unilateral decisiveness of fascism. This is, I'm afraid, a combination powerfully intoxicating to the pundit id. We'd be better served, however, if the commentariat would rein in its id, stop its idle chatter about exotic, coin-based, presidential monetary policy, and begin seriously to consider the more probable but less glittering eventuality of a Greek-style default.

Murphy on Expansionary Austerity

Murphy's survey of the recent economic literature on fiscal policy (HT EconLog's Henderson) is obligatory reading in the midst of the current economic cacophony and dogmatic drivel:
Contrary to the claims of some of today's proponents of both deficit spending and increases in the highest income tax rates, there is a large literature on the historical success of supply-side economics and fiscal austerity based on cuts in government spending. Although the findings of the relevant research are not unanimous, the case for Keynesian pump-priming is not as solid as some of the Keynesians claim. Indeed, in the cases of Paul Krugman and Christina Romer, their own past academic work shows why.