Venezuelans Waste Time And Resources Exchanging Currencies Due To Chavez Controls

See Chavez Policy Sends Venezuelans on Cross-Border Exodus for Cash. Here is the intro:

"For Gustavo Posse, the easiest way to get dollars these days involves a 403-mile drive from Valencia, in central Venezuela, to Cucuta in Colombia.

Posse, the owner of a medical clinic, made the drive last month to get hard currency to pay for the surgical equipment he was importing from the U.S. The 58-year-old businessman said he asked the Venezuelan government to sell him dollars. The answer was no.

“I have to change money here because in Venezuela it’s not allowed,” Posse said in an interview at his hotel in Cucuta, northeastern Colombia, last month. At home, “I apply for official dollars for my business but they never approve it.”

Exchange houses in Colombian border towns like Cucuta have become the only “liquid market” in trading of bolivars for dollars after President Hugo Chavez banned currency trading last May and required banks to use a state-run market, said Ricardo Hausmann, director of the Center for International Development at Harvard University.

“It’s a desperate situation for businesses, especially in Venezuela where everything is imported,” said Juan Pablo Fuentes, Latin American economist at Moody’s Analytics in Philadelphia. “These currency controls are like a game. The government looks to fence you in and you are always looking to find the exit.”"

U. S. Defense Spending Is Very High Compared To Other Countries

See Happy Tax Day! Rest Assured. Your Money Is Well Spent Defending Rich Allies by Christopher Preble at CATO. He has some great charts. Using either defense spending per capita or % of GDP going to defense, the U. S. spends 2 or more times as much as other major countries. And it is even more if you include Homeland Security, the energy department (nuclear weapons) and the department of veterans affairs.

Spending Cuts, Not Tax Increases, Might Be The Right Way To Fight Debt And Lower Deficits

See What Obama Can Learn from the Swedes by Rohan Poojara of AEI.

"President Obama will lay out his plan to rein in the nation’s rising deficit in a speech this afternoon. While statements from the White House suggest that he will support GOP-favored steps such as reducing Medicare and Medicaid costs, his call to raise taxes on the wealthy is unlikely to be supported by the Right.

The Republicans have strong academic research backing their stance. Analysis of historical fiscal consolidations (that is, policies intended to reduce deficits and the accumulation of debt) of select OECD countries from 1970 to 2007 by AEI’s Andrew Biggs, Kevin Hassett, and Matthew Jensen show that successful consolidations consisted of 85 percent spending cuts. By contrast, the typical unsuccessful fiscal consolidation consisted of only 47 percent spending cuts and 53 percent tax increases. Additionally, the AEI analysis shows that the negative Keynesian effects of reduced spending can be offset if a large and credible fiscal consolidation generates confidence that more disruptive steps have been avoided down the road and actually lead to the creation of jobs and a boost in economic growth.

One of the countries that served as a model of getting fiscal consolidation right was Sweden in the 1990s. It was able to reduce deficits from 10 percent in 1994 to 2 percent in 1997. The cornerstones of their economic policies of the 1990s are still in place and helped Sweden get through the financial crisis without ruining public finances. AEI will host a panel on April 18 with Anders Borg, Sweden’s minister for Finance. Borg will offer insight into the lessons that the United States can learn from the Swedish model, and be joined by panelists Johnny Munkhammar, Carmen Reinhart, and Vincent Reinhart."

Was The Great Depression A Productivity Issue?

See Brink Lindsey on Innovation and Growth at EconLog.

"The Kauffman Foundation describes a new paper.

According to the paper, when countries are poor and less advanced, the economic future is relatively predictable. The example of rich countries allows policymakers in less developed countries to peek into the future and see the economic changes that need to be made. Consequently, there is less need for market competition to guide the course of development. But as countries successfully pursue "catch-up growth" and approach the technological frontier, the future grows increasingly uncertain. Now innovation, rather than imitation, is the key to continued progress, and the ceaseless trial-and-error experimentation of competitive markets becomes indispensable.

Sounds to me like a warning that China is likely to run out of low-hanging fruit. I have not yet had time to read the full paper."

Russ Roberts On The Financial Crisis

See The housing boom and bust, part 2. He makes a good case that government policies helped cause the rapid rise in home prices starting in the mid-1990s. The government, through Fannie Mae, lowered standards for loans. The meant more loans and more demand for houses. This helped create the bubble. Also, banks knew they could sell mortagages with lower standards to Fannie Mae. He admits that government was not the whole problem, but that they contributed to it significantly.

The Market Society and Its Morality. 250 Years of Adam Smith's Theory of Moral Sentiments

See The Market Society and Its Morality. 250 Years of Adam Smith's Theory of Moral Sentiments by the Council on Public Policy. This new book is a collection of essays. Here is some of the preface

"In October 2009, the Council on Public Policy in cooperation with the Earhart Foundation, the Herbert Giersch Stiftung, the Institut der deutschen Wirtschaft Köln, and the Commerzbank AG held a two day symposium focusing on The Market Society and Its Morality. 250 Years of Adam Smith’s Theory of Moral Sentiments. There could not have been a better time than the peak of the financial crisis to go back to one of the intellectual pillars of economic liberalism and to reflect on the relation between morality and free markets in Adam Smith’s Theory of Moral Sentiments and his Wealth of Nations (1776).

This book comprises the proceedings of this symposium. Douglas Den Uyl, Suri Ratnapala and Fonna Forman-Barzilai have a deeper look into the "Adam Smith Problem", i.e. the supposed antinomy between an individual naturally tending to act morally within his community and necessarily acting selfishly as a participant in a free market economy. From various perspectives each of the three authors comes to the conclusion there is no such problem.

The contributions by Deirdre McCloskey, Tom Palmer and John Meadowcroft emphasize non economical reasons for the positive evolvement of free markets and their acceptance in the present and in the future respectively. Deirdre McCloskey draws our attention to the fact that from the 1800’s until today free markets helped to reduce poverty substantially. Any merely economical explanation of this phenomenon is leaving out the major driving force behind this: Only since the acceptance of the Bourgeoisie and her concepts of market, enterprise and innovation by the actors in society the markets could unfold their genuine effects and succeed the way they did. Tom Palmer scrutinizes the most wide spread arguments for regulating free markets and at the same time he cuts back some overenthusiastic reasoning in favor of free markets."

Don Boudreaux Counters Terry Eagleton's Praise of Marx

See Terryfied at Cafe Hayek. Here it is:

"Here’s a letter to the Chronicle of Higher Education:

Terry Eagleton writes that “There is a sense in which the whole of Marx’s writing boils down to several embarrassing questions: Why is it that the capitalist West has accumulated more resources than human history has ever witnessed, yet appears powerless to overcome poverty, starvation, exploitation, and inequality?” (“In Praise of Marx,” April 11).

Where is this “capitalist West” of which Prof. Eagleton speaks? In the U.S. – surely one of history’s premier capitalist western nations – poverty, starvation, exploitation, and inequality as these were suffered for millennia upon millennia until the 18th century, are today nearly totally eliminated. The poverty that does exist in the U.S. in 2011 is relative – in the sense that I, on my college-professor’s salary, am poverty-stricken relative, say, to Alec Baldwin or Barbra Streisand.

Only the tiniest fraction of Americans today lives without solid roofs over their heads and solid floors beneath their feet, and even they don’t starve to death. The poorest Americans have life expectancies at least double those of crested and landed nobles before the industrial revolution. These same poor Americans are immensely better fed, clothed, housed, entertained, medicated, educated, and hygienated than were the vast majority of their (or anyone’s) ancestors. These facts – along with the additional one that capitalists must continually innovate (typically for mass markets!) in order to continue earning their riches – make claims of widespread “exploitation” in capitalist countries ludicrous.

Prof. Eagleton is like the lawyer who, upon seeing a gifted physician restore to complete health a patient who had been machine gunned, beaten, burned, and thrown from the roof of a skyscraper, accuses the physician of malpractice because the patient has a mild case of acne.

Sincerely,
Donald J. Boudreaux

After I post this letter, I’m going to the supermarket to be exploited, and to be served by the supermarket’s exploited workers."