Articles
Speak Freely
The Renovated Political Landscape in Spain: New Parties, Same ideas
Spain will face new elections next month after its main political parties failed to form a government since the last elections in December. But Luis Pablo de la Horra doubts whether new elections will bring Spain the change it needs. [Continue reading: Speakfreely.today]Elections in Spain: Populism Loses Momentum
The outcome of the new elections in Spain (elections that are the direct consequence of the inability of the four main parties to form a government after the December 2015 elections) has come as a surprise to virtually everyone. A black swan made its appearance while the votes were still being counted. The Popular Party won the election with 33% of the votes and 137 seats (out of 350), 14 more than in the December elections (although 49 fewer than those obtained in 2011). Despite being cornered by numerous cases of corruption, the conservatives did not only surpass their own expectations, but they also beat most polls, which forecasted the same seats and percentage in votes that they had achieved in the previous elections. [Continue reading: Speakfreely.today]
Who is Gary Johnson?
If you hadn’t heard of Gary Johnson before, then you probably have now that his Aleppo gaffe is all over the media. But who exactly is Gary Johnson? Did you know he was named CEO of a marijuana company a couple of years ago? Or why the former New Mexico Governor earned the nickname Governor Veto? Luis Pablo de la Horra gives you his view on the Libertarian candidate. [Continue reading: Speakfreely.today]
Economic Growth in the US in the aftermath of the Great Recession: What’s behind the Sluggish Recovery?
The post-recession period in the US has shown that economic growth is not what it used to be. The annualized, real GDP growth over the period 2010-2015 was 2.1%, compared to the 3.4% growth during the sixty-year period that goes from 1947 to 2007. When expressed in GDP per capita terms (that is, when changes in population are factored in), the difference is still blatant: 1.3% in the post-crisis years versus a 2.1% annualized growth between 1947 and 2007. [Continue reading: Speakfreely.today]
The American Anarcho-Individualist Tradition
Despite its strong association with Spanish anarchism during the 1930s, collectivism was not a hallmark of anarchism everywhere. In the US, for example, anarchism went hand in hand with certain Lockean-rooted individualism (developed by nineteenth-century thinker and father of liberalism John Locke and based on a deontological defense of property rights, individual sovereignty, and the non-aggression principle)that permeated the works of most nineteenth-century anarchist authors on the other side of the Atlantic. The figure who best embodied the ideas of individualist anarchism in America was, without doubt, Lysander Spooner. [Continue reading: Speakfreely.today]
Do Patients a Favor a Legalize Kidney Sales
Spain is one of the leading countries in kidney transplants. In 2016, near 3,000 transplants were carried out in Spanish hospitals, of which 11% came from living donors. Yet the number of chronic kidney disease (CKD) patients awaiting a kidney still amounts to 4,300 or around 140% of the number of transplanted patients last year. [Continue reading: Speakfreely.today]
Let’s not Fall into the Trap of Anti-Immigration Rhetoric
The anti-immigration rhetoric on which Trump based his presidential campaign has moved from simple demagoguery to concrete policy measures. Earlier this month, President Trump gave his support to the RAISE Act whereby the bill’s sponsors, Senate Republicans David Perdue and Tom Cotton, expect to reduce legal immigration by 50% over the following decade. [Continue reading: Speakfreely.today]
The Extinguisher of War, the Eradicator of Prejudice, the Diffuser of Knowledge
Last week witnessed the signing of what is probably the most important international agreement of the last few years. Leaders of 44 African countries gathered in Kigali (Rwanda) to establish the African Continental Free Trade Area (AfCFTA), the largest trade agreement since the creation of the World Trade Organization in 1995.[Continue reading: Speakfreely.today]
4 Ways to Effectively Communicate Libertarianism (and Not Die Trying)
What’s the best way to communicate the ideas of liberty to people unfamiliar or even hostile towards free markets? Even though this is a question I have been asking myself for years, attending LibertyCon has led me to reflect more thoroughly on this issue. Here are 4 ways to get the message across.[Continue reading: Speakfreely.today]
When it Comes to Investing, Go Passive: A Guide for Smart Investors
Setting aside part of one’s income to provide for contingencies seems a matter of common sense. Uncertainty about the future requires sacrificing consumption today, in order to secure consumption tomorrow. From a macroeconomic perspective, it also makes sense: savings allow for capital investments, one of the keys to increasing productivity and producing economic growth.[Continue reading: Speakfreely.today]
Vox: Rise of the Far Right in Spain?
When Vox, Spain’s right-wing populist party, gathered 10,000 people in a rally in Madrid last October, it made the headlines in every national newspaper. After all, the far right had been irrelevant in the Spanish political landscape since 1980. How was it possible that an extra-parliamentary, far-right force possessed such convening power?.[Continue reading: Speakfreely.today]
Four reading recommendations for freedom lovers
Every cloud has a silver lining. This proverbial saying should be applied to all situations in life, including to the recent confinement we have endured over the last two months. During this time, I have had the opportunity to catch up on reading and shorten my never-ending reading list. Here are four books I have recently read that will delight the lovers of freedom.[Continue reading: Speakfreely.today]
Foundation for Economic Education (FEE)
Public Ed Gets Schooled in Developing Countries
Does this sound familiar? “Education is a basic pillar for any society. It is the bedrock upon which a country builds its present and future prosperity; therefore it is important that governments in developing countries provide free, basic education so that children do not fall behind due to lack of economic resources, thereby expanding opportunities to thrive and abandoning the vicious circle of poverty.” [Continue reading: Foundation for Economic Education]
Economic Theory Really Is Pro-Immigration
In his now-classic work The Myth of the Rational Voter, Bryan Caplan identifies four systematic biases about economics held by the average citizen: make-work bias (an inclination to overestimate the disadvantages of temporary job destruction due to productivity increases), anti-market bias (a tendency to overlook the benefits of the market as a coordination mechanism), pessimistic bias (an inclination to underestimate the present and future performance of the economy), and anti-foreign bias (a tendency to underestimate the economic benefits of interaction with foreigners). [Continue reading: Foundation for Economic Education]
The Evidence Weighs in Favor of Immigration
In a previous article, I analyzed the economics of immigration from a theoretical perspective. I concluded that economic theory clearly supports immigration-friendly policies since they benefit all parties involved. In this article, I will examine the empirical evidence on the effects of immigration on host countries and immigrants themselves. [Continue reading: Foundation for Economic Education]
The Southern Slave Economy Was Anti-Capitalistic
The discussion around the political economy of slavery has been one of the central debates in the academic study of the Peculiar Institutionin the Antebellum South. Traditionally, the Southern economy was considered non-capitalistic and pre-bourgeoise; a pre-industrialized economy that struggled to thrive due to the lack of incentives imposed by slave labor, the absence of a legal framework that stimulated the emergence of capitalism and a backward, agriculture-based economy. [Continue reading: Foundation for Economic Education]
Zara Billionaires "Cheap" Philanthropy: $360 Million for Cancer Treatment
Amancio Ortega, founder of Inditex and top 5 on Forbes list of The World’s Billionaires, was recently involved in a controversy on account of a donation that his foundation made to the public health care system in Spain. The donation, which amounts to $360 million, was aimed at acquiring new equipment for diagnosis and treatment of cancer in public hospitals. [Continue reading: Foundation for Economic Education]
Did Krugman Catch a Contradiction in Friedmans Great Depression Work?
In this article published shortly after Milton Friedman’s death, Paul Krugman critically examines the figure of the Chicago School economist as an academic and disseminator of free market ideas. The article is quite long, so I do not intend to undertake a thorough analysis of Krugman’s take on Friedman. Yet there is one element in the article I would like to briefly address in the following lines. [Continue reading: Foundation for Economic Education]
Spain Embraces the Ridesharing Economy
Economic theory tells us that barriers to entry in a particular sector tend to push prices up. In addition to increased costs, these restrictions also reduce the quality of the goods or services provided by incumbent companies and slow down the emergence of disruptive innovations. [Continue reading: Foundation for Economic Education]
CapX
Globalisation gives us reasons to be cheerful
In 2015, YouGov, an international market research firm, conducted a poll on the state of the world, in which 71 per cent of respondents said they were convinced that the world was becoming a worse place, and only 5 per cent thought that living standards were improving across the world. [Continue reading: CapX]
Pensioners are Feeling the Pain in Spain
When the British Government announced last week that it was bringing forward increases to the pension age, there was outrage. Critics claimed it was austerity via the back door, that Britons were going to be working until they dropped. [Continue reading: CapX]
Refugees are a boon – not a burden
Since the Syrian Civil War started in 2011, over five million people have seen themselves forced to flee the country in search of a better life. Most of them have resettled in neighboring countries, mainly in Turkey, which has accommodated around 3 million refugees since the outbreak of the war. [Continue reading: CapX]
The price of Catalan turmoil
In a deliberately confusing speech during a plenary session of the regional parliament on October 11, Catalan President Carles Puigdemont unilaterally announced the independence of Catalonia and then proposed that parliament suspend that independence so as to start negotiations with Spain’s national government. [Continue reading: CapX]
Demonstrations don’t change reality of public pensions in Spain
In response to the recent approval of a modest pension increase by the Spanish government, thousands of pensioners marched the streets of major Spanish cities last Thursday in protest. Madrid saw particularly heated demonstrations when 3,000 people broke through the police cordon and surrounded the Congress of Deputies. [Continue reading: CapX]
Spain’s road to nowhere
When Spanish Prime Minister Mariano Rajoy had his budget passed by Congress two weeks ago, nothing indicated that he was about to be removed from office. But one of the most successful political manoeuvres in the history of modern Spain came to a climax at the end of last week, when Rajoy was replaced as prime minister by Socialist party leader Pedro Sánchez.[Continue reading: CapX]
Under Sánchez, Spain looks set for a slippery slope to economic decline
Politics is the art of spending regardless of whether there is money to do so. This seems to be the motto of Pedro Sánchez, the new prime minister of Spain, who has recently revealed his intentions to boost public spending until the end of his term, presumably in 2020. [Continue reading: CapX]
Why we need a market for human organs
The bizarre case of former Barcelona footballer Eric Abidal has once more brought the issue of organ donation into the public eye. To recap, Spanish newspaper El Confidencial published reports suggesting that back in 2012 the club’s then president Sandro Rosell tried to buy the cancer-stricken player a liver on the black market and then claim the transplant had come from Abidal’s cousin, Gerard.[Continue reading: CapX]
Turning in his grave: Franco’s remains cause a stir in Spain
In the hills outside Madrid, 37 miles away from the crowded city centre of the capital, a 500-foot cross stands over a Catholic basilica known as The Valley of the Fallen. The vast monument, built between 1940 and 1958 to honour the dead from the victorious Nationalist side of the Spanish Civil War, is the resting place of thousands of victims from both sides of the conflict.[Continue reading: CapX]
Spain offers a warning of the liberal threat to free speech
What are the limits of free speech? According John Stuart Mill, one of the intellectual fathers of classical liberalism, the answer to this question lies in the so-called Harm Principle: free speech should be limited only in those cases where exercising it harms others. This sounds reasonable. After all, it is consistent with the motto “your freedom ends where mine begins”, with which most people agree. Yet the Harm Principle has a problem: it is vague enough to justify unlimited free speech as well as severe restrictions on it simultaneously.[Continue reading: CapX]
The populist right is on the march in Spain
In the introduction to the book Twenty-First Century Populism, Daniele Albertazzi and Duncan McDonnell define populism as “an ideology which pits a virtuous and homogeneous people against a set of elites and dangerous ‘others’ who are together depicted as depriving (or attempting to deprive) the sovereign people of their rights, values, prosperity, identity and voice”.[Continue reading: CapX]
Spain’s government is heading down a dangerous economic road
Last month, Spain’s Prime Minister Pedro Sánchez reached an agreement with Podemos, the left-wing populist party over next year’s budget. Despite the government’s efforts to get other political groups to support the proposals, which have already criticised by the European Commission for being too expansive, the lack of a parliamentary majority means it will be difficult for Sanchez to get most of his plans through Congress.[Continue reading: CapX]
A snap election means open season for Spain’s demagogues
Eight months. That’s how much time has passed since Spain’s prime minister Pedro Sánchez unseated Mariano Rajoy in a no-confidence vote in June last year. Unfortunately for Sanchez, it is also the duration of his first term in office. This morning, Sánchez had to make the difficult decision of calling a snap elections for April 28 after Congress rejected his budget proposal two days ago. Although he had made clear from day one that he had no intention of ending his term before 2020, the lack of parliamentary support to pass the budget has forced him to dissolve parliament and go to the country.[Continue reading: CapX]
Monetary tweaks won´t get Europe out of the slow growth trap
When the European Central Bank announced the end of quantitative easing in December, it was conveying a very clear message to markets and governments alike: we are approaching the end of expansionary monetary policies, so get ready for what’s coming.[Continue reading: CapX]
Spain´s far-right has arrived – but how far can it go?
The results of the recent elections in Spain have caused a stir in the already-complicated Spanish political landscape for several reasons.[Continue reading: CapX]
An African single currency is closer than ever
The project for a single currency in Africa seems closer than ever. The fifteen countries of the Economic Community of West African States (ECOWAS) recently agreed to abandon their monetary sovereignty in 2020 and introduce a new common currency: the ECO.[Continue reading: CapX]
Spain shows how to take the fight to populist demagogues
The rise of populist movements has traditionally been connected to economic and political crises. Time without number, times of turmoil and social conflict have bred demagogues feeding on people’s anger and hopelessness, offering simple answers to complex problems.[Continue reading: CapX]
The debate over Franco´s burial is finally coming to an end
Spaniards: Franco is dead. These words, uttered on TV by prime minister Carlos Arias Navarro back in 1975, brought an end to almost four decades of dictatorship in Spain and kicked off the most prosperous period in the country’s history. In the 45 years since, a debate has raged over whether Western Europe’s last dictator should still be buried in The Valley of the Fallen, a state-owned vast mausoleum visited by hundreds of thousands of people every year.[Continue reading: CapX]
Spain swaps the frying pan for the fire
When Pedro Sánchez called for elections in February last year, nobody could imagine that Spain would be without government for the next 326 days. Finally, after two elections and three unsuccessful attempts, Sánchez has managed to secure a majority of votes in Congress and has been re-elected President.[Continue reading: CapX]
Life in lockdown: how Spain is dealing with the coronavirus crisis
Black swan. These were the two words that came to my mind when the first case of coronavirus was detected in Spain less than two months ago.[Continue reading: CapX]
Sometimes the best thing to do on election day is to stay at home
It was trumpeted (if you’ll forgive the pun) as the most important election in decades, and America 2020 didn’t disappoint. Although numbers are still to be confirmed, the Trump vs Biden presidential election saw a record voter turnout with two-thirds of the electorate going to the polls on election day. This represents the highest turnout in more than 100 years.[Continue reading: CapX]
Adam Smith Institute
Labor Flexibility Beats Unemployment: A Closer Look at the Labor Market in Denmark
Despite Bernie Sanders’ efforts to identify Denmark with some sort of democratic socialist utopia where a highly-interventionist government regulates all the nooks and crannies of the economy, it is well known nowadays that the success of this Scandinavian country is closely linked to its high degree of economic freedom. We just need to look at the latest Index of Economic Freedom, published every year by the Heritage Foundation, to state the obvious: Denmark ranks in the top 15 worldwide. [Continue reading: Adam Smith Institute]
Institute of Economic Affairs
Misconceptions about the Nordic Economies
The Nordic countries are usually mentioned in the Spanish political debate as examples of well-functioning and efficient Welfare States where the government provides citizens with a large range of social benefits. (The terms “Nordic” and “Scandinavian” will be employed interchangeably to refer to Sweden, Finland and Denmark. Norway and Iceland are excluded from my analysis.) Politicians, especially on the left side of the political spectrum, look at Sweden, Denmark, or Finland as successful social democratic experiments in which social entitlements are guaranteed by the benevolent and caring hand of the State. Their existence is conclusive evidence that those who question the sustainability of an unlimited expansion of the welfare state are wrong. [Continue reading: Institute of Economic Affairs]
Medium
What Everybody Knew about Banco Popular, but Nobody Dared to Say
Only two months after acquiring Banco Popular, Santander has sold a majority stake in Popular’s real estate portfolio to Blackstone. The private equity firm will pay around $6 bio for 51% of the bank’s real estate assets, valued at $11.7 billion. The book value of the assets (that is, the historical cost at which the assets were entered on the accounting books of the bank) amounts to $35.2 billion or three times as much as their market value. Or put differently: assets were sold at a 66% discount to book value. [Continue reading: Medium]
Akerlofs “Market for Lemons”: A Critical Comment
The effects of information asymmetries on the coordinating role of the market is probably one of the most discussed topics in the history of modern economic science. The neoclassical paradigm assumes that economic agents possess perfect information that allow them to make utility-maximizing decisions, which means that information asymmetries are left out of the neoclassical models. [Continue reading: Medium]
What Should Be the Objective of the Firm?
The academic literature about the nature of the firm has traditionally focused on two research questions aimed at understanding the role of firms in capitalist economies. The first question was first raised by Ronald Coase in his paper The Nature of the Firm (Coase 1937). In it, the British economist put forward a rationale for the existence of firms. Coase tried to answer the following question: why do firms exist? [Continue reading: Medium]
Unconventional Monetary Policy during the Great Recession: Lessons for Today?
The coronavirus health crisis and the measures taken by governments to curb the pandemic are having an enormous impact on the global economy. According to Morningstar, the world economy is expected to contract by 1.4% in 2020, a downward revision of almost four percentage points compared to the World Bank’s forecast released in January this year.[Continue reading: Medium]
Rare
Donald Trumps statement on Venezuela might have been admirable were it not so hypocritical
In one of his usual televised tomfooleries, this time in a plenary session of the newly formed Constituent Assembly (a kind of pseudo-democratic parliament that has replaced the rightful legislature in a rigged election), the Venezuelan dictator Nicolas Maduro urged his secretary of state to make the necessary arrangements to talk on the phone with President Donald Trump to address the relationship between their countries. [Continue reading: Rare]
Students for Liberty España
Contra el Desempleo, Flexibilidad Laboral: El Mercado de Trabajo en Dinamarca
A pesar de los intentos de Bernie Sanders de vendernos la idea de que el innegable éxito económico de Dinamarca es consecuencia directa del elefantiásico tamaño de un Estado que, según nos dicen, regula todos los recovecos de la economía nórdica, lo cierto es que la prosperidad danesa está estrechamente ligada a su alto grado de libertad económica. Basta con echar un vistazo al Índice de Libertad Económica, que publica cada año la Heritage Foundation, para constatar lo obvio: Dinamarca se halla entre los 15 países con mayor libertad económica del mundo. [Continue reading: Students for Liberty España]
La Evidencia No Miente: El Mundo es Cada Vez un Lugar Mejor
En 2015, la firma de estudios de mercado YouGov llevó a cabo una encuesta sobre el estado del mundo. El 71 por ciento de los encuestados decía estar convencido de que las condiciones de vida a nivel mundial estaban empeorando; sólo el 5 por ciento pensaba que el mundo progresaba adecuadamente. En una entrevista en el diario La Stampa, el Papa Francisco se subió al carro del pesimismo antiglobalización al afirmar que “la riqueza ha crecido en términos absolutos, pero la desigualdad y la pobreza se han incrementado”. Ambos testimonios están incluidos en el nuevo libro de Johan Norberg Progress: Ten Reasons to Look Forward to the Future. [Continue reading: Students for Liberty España]
Lysander Spooner y la Tradición Anarco-Individualista en Estados Unidos
El anarquismo español ha estado tradicionalmente ligado al movimiento sindicalista surgido a finales del siglo XIX en Madrid y Barcelona. La consolidación de la acracia española llegó con la fundación en 1910 de la Confederación Nacional de Trabajadores (CNT), cuya importancia en el panorama obrero español iría creciendo de forma gradual hasta su práctica desaparición en 1939 con la victoria de los sublevados en la Guerra Civil Española. El anarquismo patrio siempre tuvo un carácter manifiestamente colectivista, influido por el anarquismo de raíz bakuniana. [Continue reading: Students for Liberty España]
The American Conservative
Republican Tax Reform: Feast Today, Famine Tomorrow
The vague tax reform promises that Donald Trump put forward during his presidential campaign have finally been turned into concrete measures. Republican senators and their House counterparts recently released their respective proposals to simplify the cumbersome American tax system. Once both bills are passed, a conference committee will be assembled to work out a final piece of legislation. [Continue reading: The American Conservative]
A New Fed Chairman for a New Economy
The day has finally arrived. Jerome Powell has been sworn in as the new chairman of the Federal Reserve, replacing Janet Yellen, who had served as the chair of the Board of Governors since 2014. Powell was nominated by President Donald Trump in November and was recently confirmed by the U.S. Senate after Trump refused to reappoint Chairwoman Yellen to a second four-year term. He’ll take the helm of the central bank at a time of dramatic correction for the world economy; the Dow Jones Industrial Average sagged 4 percent on Monday, partially in response to anxiety over the Fed’s schedule of interest rate hikes.[Continue reading: The American Conservative]
No To Wasteful Coronavirus Stimulus, Yes To Social Insurance
It all began in December of last year when a hospital in Wuhan, the most populous city in Central China, reported a number of pneumonia cases of unknown origin. A few days later, on January 8, a new virus, which was later named by the World Health Organization as COVID-19 or just the coronavirus, was identified as the cause. When the newfound virus was discovered to be extremely contagious, Chinese authorities rushed to take measures aimed at curbing its spread.[Continue reading: The American Conservative]
Modern Monetary Theory Is Bunk And Would Lead To Disaster
What if governments could spend without collecting taxes or raising debt? What if printing money and spending it on goods and services weren’t inflationary? What if governments could never go bankrupt? What if everything that you’ve learned about money and public finance was wrong?[Continue reading: The American Conservative]
Blogactiv
A European Monetary Fund: an Old, Bad Idea
The European Commission remains committed to undertaking an ambitious economic and fiscal reform for the European Monetary Union. The Commission recently released a roadmap where it puts forward a set of guidelines aimed at strengthening “the unity, efficiency and democratic accountability of Europe’s Economic and Monetary Union by 2025.” These guidelines include moving forward with the proposal for a banking union, reaching a new agreement on the necessity of undertaking structural reforms in the Member States or incorporating the Stability and Growth Pact, which imposes fiscal discipline on Euro countries, to the Eurozone’s legal framework. [Continue reading: Blogactiv]
Catalonia’s Groundhog Day
When Spanish President Rajoy announced in October that he would start the legal procedures to remove the Catalan government and call for regional elections, many people, especially in Catalonia, breathed a sigh of relief: the trip to nowhere initiated a few years ago by Catalan secessionists had been put to an end. The political turmoil, the naïve thought, would give way to a new time of political and economic stability. [Continue reading: Blogactiv]
Lights and Shadows of Draghi’s Proposals to Reform the Eurozone
Mario Draghi is a man of few words. The President of the ECB is not the kind of public figure that enjoys being in the spotlight all the time. Yet every time he speaks, he makes the headlines. [Continue reading: Blogactiv]
Intellectual Takeout
Why Bitcoin Will Never Become a World Currency
One doesn’t need to hold a PhD in Economics to realize that money plays a vital part in the correct functioning of an economy. By means of an excellent analogy, the American economist Steve Horwitz likens money to blood circulating through the body: any disease affecting the red river of life will likely impact the body as a whole.[Continue reading: lntellectual Takeout]
Demolishing the Pillars of Prosperity in the Name of Art
Imagine you own a modest house in the countryside. You go there with your family on the weekends, fleeing the noisy and congested atmosphere of the city. Your husband and you are still paying back the mortgage you took a few years ago to purchase the house, working hard to make ends meet.[Continue reading: lntellectual Takeout]
3 Economic Fallacies That Just Won’t Die
In any academic discipline, one can find two types of experts: those who are incapable of explaining complex ideas in a simple manner; and those capable of making the difficult look easy. This year marks the 25th anniversary of the death Henry Hazlitt, one of the few economists that belongs to the second group.[Continue reading: lntellectual Takeout]
Bill Gates Fails Logic While Talking Cryptocurrencies in Reddit AMA
In a Q&A session on Reddit last week, Microsoft’s founder Bill Gates accused cryptocurrencies of causing “deaths in a fairly direct way,” leading to headlines such as this: “Bill Gates says crypto-currencies cause deaths.[Continue reading: lntellectual Takeout]
The Gender Pay Gap is Real ... but it Has Little to Do With Gender Discrimination
On occasion of International Women’s Day, millions of people marched on the streets of dozens of cities around the world to vindicate women’s rights and denounce gender-based violence and discrimination in all its forms. In Spain, demonstrations were accompanied by a general strike that, according to labor unions, was followed by 5.3 million women.[Continue reading: lntellectual Takeout]
Why Estonia—Yes, Estonia—Is Suddenly One of the Wealthiest Countries in Eastern Europe (and the Most Innovative)
The question on why some countries are rich and prosperous whereas others seem to be condemned to the scourge of poverty has been around for centuries. Many factors have been argued to be the determinants of prosperity: geographical, cultural, historical, etc. [Continue reading: lntellectual Takeout]
Venezuela’s President Tackles Economic Crisis by Deleting 3 Zeros From its Currency
It seems that Venezuela’s dictator Nicolás Maduro has finally found the way to bring the country out of the unprecedented economic crisis Venezuela is immersed in since 2012. The ineffable leader of the Bolivarian Revolution has recently announced the launching of a new currency, the so-called Sovereign Bolivar, which will replace the bolivar as the official medium of exchange starting in June.[Continue reading: lntellectual Takeout]
Rent Control Advocates Need a Lesson in Economics
Rent control is one of those policies that continues to attract the favor of the public despite the fact it has repeatedly proven to be ineffective when it comes to improving the lives of those it is aimed at.[Continue reading: lntellectual Takeout]
5 Economics Books Everyone Should Read
When was the last time you read a book about economics? If your answer is “when I was in high school” or “I have never read a book on such a boring topic”, here are some suggestions in ascending order of difficulty that might help you get into economics.[Continue reading: lntellectual Takeout]
Ayn Rand and Ludwig von Mises Once Had Dinner Together, and It Can Teach Us a Lot About Intellectual Dogmatism
At the International Society for Individual Liberty’s Conference, Milton Friedman once gave a speech titled “Say ‘No’ to Intolerance” (you can find the transcription here) where he criticized the sectarianism of a part of the libertarian movement.[Continue reading: lntellectual Takeout]
Why More Regulations Won’t Fix the Financial Sector Problems
What is the role of the finance today? Is it still an essential pillar in the value-creation process that has characterized market economies since the emergence of capitalism in the 18th century? Or it has grown into an uncontrolled leviathan that does more harm than good?.[Continue reading: lntellectual Takeout]
How Nat Turner’s Failed Revolt Changed the Debate on Slavery
On August 22, 1831, a group of slaves began a revolt in the county of Southampton, Virginia, that would go down in history as the largest uprising against the Peculiar Institution in nineteenth-century America. The rebellion was led by Nat Turner, a slave from Southampton, one of the few southern counties where black Americans were the majority.[Continue reading: lntellectual Takeout]
Bourgeois Dignity: The Idea that Created the Modern World
When thinking about the astonishing improvement in living standards occurring over the last two centuries, one can’t help but wonder about the causes of such a radical transformation: what explains the unprecedented increase in income per capita that the world has experienced since 1800?[Continue reading: lntellectual Takeout]
3 Ways Milton Friedman Improved the Field of Economics
Milton Friedman is probably the most important free-market thinker of the twentieth century. His ideas in defense of capitalism and economic freedom had an enormous influence on the shift towards free-market policies that took place from the 1970s onwards.[Continue reading: lntellectual Takeout]
What the Origins of Money Teaches Us About Spontaneous Order
Money has been around for most of human history. From Mesopotamia (or even earlier), all civilizations have employed some kind of medium of exchange to facilitate transactions regardless of their geographical locations, legal and economic systems, religious beliefs or political structures. Have you ever wondered why? In a brief essay entitled “On the Origins of Money,” the nineteenth-century Austrian economist Carl Menger provides an answer to this question. Menger argues that money emerged spontaneously in different times and places to overcome the disadvantages of barter and facilitate the expansion of trade. Which disadvantages? [Continue reading: lntellectual Takeout]
Isaac Asimov’s Foundation: The Science Fiction Masterpiece You Probably Haven’t Read
What if we could use science to predict the future of humankind and, thereby, prevent the collapse of civilization as a result of wars, economic crises or any other unforeseen event that could endanger its existence?This is the starting point of the Foundation saga, a series of seven books written by the brilliant and multifaceted author Isaac Asimov. [Continue reading: lntellectual Takeout]
3 Nobel Prize-Winning Contributions to Economic Science (From People Who Weren’t Economists)
Since it was introduced in 1968, the Nobel Memorial Prize in Economic Sciences has been awarded to 79 individuals for their contributions to different branches of economics. Yet not all of them were economists by training. Here are three contributions that earned their authors the Nobel Prize in a field that wasn’t initially theirs.[Continue reading: lntellectual Takeout]
5 of the Worst Economic Predictions in History
Uncertainty makes human beings uncomfortable. Not knowing what’s going to happen in the future creates a sense of unrest in many people. That’s why we sometimes draw on predictions made by leading experts in their respective fields to make decisions in our daily lives. Unfortunately, history has shown that experts aren’t often much better than the average person when it comes to forecasting the future. And economists aren’t an exception. Here are five economic predictions that never came true.[Continue reading: lntellectual Takeout]
Is Killing a Tyrant Ever Justified?
In his work De rege et regis institutione (1599), Jesuit priest Juan de Mariana examines the limits of political power, which, in sixteenth-century Europe, was exercised by monarchs. According to Mariana, monarchs should be subject to the same moral standards as the governed. Should they deviate from the principles of natural law by confiscating the legitimate property of the people, levying taxes against the consent of the governed or usurping the functions of the parliament, it is the right of the people to assassinate a ruler that has turned into tyrant.[Continue reading: lntellectual Takeout]
Undermining the Independence of the Fed is a Terrible Idea
President Trump is known for expressing his views openly, without mincing his words. He has shown in many occasions that he doesn’t care about political correctness, an attribute that has allowed him to gain the support of millions of Americans. But being politically incorrect isn’t always a virtue, especially when it implies making unreasonable statements without measuring the consequences.[Continue reading: lntellectual Takeout]
Is the World Really Getting Richer?
These days, our view of the world seems to be dominated by a sense of pessimism. No matter how many surveys you look at (see, for instance, here and here), results are always the same: most people are convinced that the world is becoming a worse place in which to live.[Continue reading: lntellectual Takeout]
Five Lesser Known Financial Crises of the 20th Century
A decade has passed since the collapse of the Lehmann Brothers investment bank, triggering the worst recession since the stock market collapse of 1929. But between the 1930s and 2008, the world experienced several economic downturns, some of which had a long-lasting impact on the affected countries. Here are five less well-known crises that shaped the Twentieth Century.[Continue reading: lntellectual Takeout]
How One African Nation is Pulling Itself Out of Poverty
When discussing the dramatic increase in living standards of the last decades, we usually forget to mention that this increase hasn’t been uniform. Whereas Asia has experienced tremendous economic growth, Africa is the continent that has benefited the least from global capitalism. This doesn’t mean that living standards in Africa haven’t increased at all. Since 1990, extreme poverty in Sub-Saharan countries has been considerably reduced and life expectancy has gone up by more than 10 years.[Continue reading: lntellectual Takeout]
Would the US be Happy Doing Things the ‘Swedish Way’?
Sweden has traditionally been portrayed in the US political debate as the epitome of democratic socialism: a country where the benevolent hand of government has managed to create a sustainable and generous welfare state funded by a progressive taxation system in which high-income earners pay their fair share; a country where the government provides basic services for all at a lower cost and higher quality than the private sector; a country where the greed of businesses is subordinated to the interests of workers and society as a whole.[Continue reading: lntellectual Takeout]
The Man in the High Castle and the History That Never Was
United States, 1962. It’s been 15 years since the Nazis dropped an atomic bomb on Washington D.C., forcing the US government to surrender to the Axis powers. The United States is now divided into two vast provinces, each of which is controlled by the two world-ruling empires: the Greater Nazi Reich and the Japanese Empire.[Continue reading: lntellectual Takeout]
Beyond Climate Change: 3 Important Economic Contributions of Nobel Prize Winner William Nordhaus
Yale economist William D. Nordhaus was recently awarded the Nobel Prize in Economic Sciences (or, to be more precise, the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel) for his analysis of the economic impact of climate change. Nordhaus pioneered the study of global warming from an economic perspective, developing a model to assess the potential costs of climate change on the world economy.[Continue reading: lntellectual Takeout]
What is Neoliberalism?
Neoliberalism is one of those concepts that changes meaning depending on whom you ask. Whereas the intellectual opponents of capitalism use it to refer to the political and economic system that emerged in the 1980s and continues to be hegemonic today, classical liberals see it as a vague and empty concept that adds nothing to the political debate.[Continue reading: lntellectual Takeout]
More Markets and Less Politics
Facebook is an excellent way to waste time. But it sometimes becomes a source of inspiration. Last week, I came across a post by economist Steve Horwitz in which he commented on a WSJ article about Israeli tech companies hiring Palestinian engineers due to a lack of qualified workers in the sector.[Continue reading: lntellectual Takeout]
Three Times Keynes Was Not a Keynesian
John Maynard Keynes is, together with Milton Friedman, the most influential economist of the 20th century. His most acclaimed work, The General Theory of Employment, Interest and Money, contributed to the paradigm shift that took place in the economics profession in the mid-1930s. He’s also the most quoted economist among non-economists, who more often than not misrepresent his ideas.[Continue reading: lntellectual Takeout]
Human Freedom Index 2018
Cato Institute’s scholars Tanja Porčnik and Ian Vásquez have recently released the 2018 Human Freedom Index (HFI), a report where the authors look at freedom in the world using data from 2016. The HFI ranks countries from most to least free after analyzing 79 indicators related to personal and economic freedom. Here are five graphs that summarize the report’s main takeaways.[Continue reading: lntellectual Takeout]
Are We Witnessing the End of the Bitcoin Era?
The Bitcoin revolution seemed unstoppable. Despite suffering multiple large corrections over the last years, Bitcoin’s price kept reaching new highs until almost surpassing the $20,000 threshold, something unimaginable when Bitcoin emerged in 2009. I remember watching in 2015 the documentary The Rise and Rise of Bitcoin, whose title may now look pretentious, but at the time seemed totally justified[Continue reading: lntellectual Takeout]
The Man Who Created the German Economic Miracle
On April 2, 1948, Ludwig Erhard, a little-known economist who had opposed Nazism, was appointed Director of the Economic Council of Bizonia, the territory resulting from the merger of the British and American occupied territories in post-WWII Germany.[Continue reading: lntellectual Takeout]
Venezuela´s Situation Requires a Great Deal of Pragmatism
In a bold move last week, the National Assembly of Venezuela, which was deprived of its constitutional powers by the government-controlled Supreme Court in March 2017, appointed National Assembly’s leader Juan Guaidó as interim President of Venezuela. This triggered an immediate reaction on the streets where millions of Venezuelans gathered to demand the resignation of President Nicolás Maduro.[Continue reading: lntellectual Takeout]
What Might Have Been: Russia´s Missed Opportunity of 1917
The Bolshevik uprising of October 1917 is usually thought to have resulted in the overthrow of the tsarist autocracy, which had ruled the Russian Empire since 1547. This belief has led to a certain idealization of the Russian Revolution. Despite the crimes that were later committed in the USSR in the name of communism, the Russian Revolution is frequently seen as a courageous revolt that terminated with tsars’ authoritarian monarchy.[Continue reading: lntellectual Takeout]
The Double-edged Sword of Economic Sanctions Against Venezuela
Venezuela is going through one of the worst economic crises of the last century. According to the International Monetary Fund (IMF), Venezuela’s GDP has fallen nearly 50 percent since 2014.[Continue reading: lntellectual Takeout]
Venezuela´s 3 Comrades in Economic Meltdowns
Venezuela is dealing with the most severe economic crisis of its history. Numbers are mind-blowing. Since 2014, the Venezuelan economy has contracted by almost 50 percent. The annual inflation rate reached 80,000 percent last year and three million people have left the country fleeing poverty and political repression.[Continue reading: lntellectual Takeout]
Is a Recession around the Corner?
Is the US heading towards recession? That depends on whom you ask. Nobel laureate economist Paul Krugman believes the country will face an economic downturn sometime in the next two years. But the latest CNBC survey of chief financial officers shows businesses don’t expect a recession in the near future.[Continue reading: lntellectual Takeout]
Electricity Access Is Spreading (Except in Venezuela)
Venezuela has recently experienced a wave of blackouts resulting from the ineptitude of Maduro’s dictatorship, whose policies have led the country to the most severe economic crisis of its history.[Continue reading: lntellectual Takeout]
Economies Do Better Under Democracy
The tremendous economic growth of China over the last three decades has reinforced the perception that authoritarian countries can spur economic growth just as efficiently as democracies.[Continue reading: lntellectual Takeout]
Zimbabwe Is a Basket Case; Botswana Shows It Doesn´t Have to Be
Over 500 days have passed since Robert Mugabe, Zimbabwe’s longtime dictator, was overthrown. He had been in power for 37 years.[Continue reading: lntellectual Takeout]
Underemployment: The American Economy´s Biggest Underreported Story
Both economists and the media constantly monitor the unemployment rate. And for good reason. It says a lot about the health of the economy.[Continue reading: lntellectual Takeout]
Monetary Stability and the Independence of the Federal Reserve
Monetary stability is essential for countries to thrive. A stable currency reduces uncertainty about the future price level, allowing businesses to make long-term investment decisions without worrying about the negative impact of unexpected spikes in inflation. This is in turn boosts economic growth via higher investment spending.[Continue reading: lntellectual Takeout]
Three Classic Reads That Are Still Relevant Today
Summer is the best time to catch up on the reading that, for one reason or another, you haven’t had time to do the rest of the year. But instead of reading the average beach paperback, why not dig deeper and check out some classics from the past? Here are three that I believe to be worth a look.[Continue reading: lntellectual Takeout]
Paul McCartney: A Real Goldie Oldie
If your birthday lands on June 18, you are lucky to share it with one of the most talented songwriters of all time: Sir Paul McCartney. The ex-Beatle turns 77 in 2019, right in the middle of a tour that will bring him to San Diego, Phoenix, Las Vegas, Vancouver, and Los Angeles.[Continue reading: lntellectual Takeout]
Are We Witnessing the Resurrection of Bitcoin?
Bitcoin is back. The pioneering cryptocurrency has shown clear signs of recovery in the last months, moving from $3,715 in January this year to nearly $12,000 today.[Continue reading: lntellectual Takeout]
The Demographic Winter is Here
The demographic winter is here. The last decades have witnessed an increase in the share of the population aged 60 and older, which has moved from around 12.5 percent in 1950 to almost 22 percent in 2017. In 2040, this number is expected to reach 28 percent of the U.S. population. In other words, in two decades, almost one third of Americans will be older than 60.[Continue reading: lntellectual Takeout]
Can Tweets Have a Negative Effect on the Economy?
Think before you speak. This is the first lesson political advisors teach rookie politicians.Unfortunately, President Trump has always turned a deaf ear to the advice of those around him. Trump never refrains from expressing his views openly (especially on Twitter,) no matter the impact his words may have on the economy.[Continue reading: lntellectual Takeout]
The Ugandan Miracle of a Market-Driven Charity?
In The Theory of Moral Sentiments, Adam Smith, the father of modern economics, describes the sympathetic nature of human beings in one short, brilliant, sentence.[Continue reading: lntellectual Takeout]
Three Women in the History of Economic Thought
In a letter to his rival Robert Hooke, Sir Isaac Newton wrote his memorable remark: “If I have seen further, it is by standing on the shoulders of Giants.” Shedding light on the accumulative nature of scientific progress, Newton knew his ability to formulate the laws of motion and universal gravitation depended on the discoveries made by those who preceded him.[Continue reading: lntellectual Takeout]
How Cuba´s Dictatorship Hides its Dead Children
Fidel Castro, the dictator who ruled Cuba with an iron fist for almost six decades, has been dead for more than three years now. Unfortunately, his regime didn’t die alongside him. The Caribbean’s largest island is still under the burdensome yoke of communism.[Continue reading: lntellectual Takeout]
The Daily Caller
Prejudices Against Immigrants And Refugees Are Hurting The U.S. Economy
In February 2016, Senate Republicans David Perdue and Tom Cotton introduced a controversial immigration bill, called the RAISE Act, which, if passed, would cut legal immigration in half over the next decade. In addition, it would cap refugee admissions to 50,000 — far below the number of refugees admitted over the past years. The bill, which has the explicit support of President Donald Trump, is in parliamentary procedure in the Senate and has yet to be voted.[Continue reading: The Daily Caller]
E!Sharp
Dealing with migration in Europe
The last months have witnessed a significant increase in the arrival of undocumented immigrants to the Spanish coasts, reaching a record level since 2006. Spain has become the main sea route to enter the European Union for thousands of people escaping poverty and war in Africa and Asia. This has caused the outrage of the right-wing parties, blaming the Spanish government for creating a pull effect when it agreed to let a rescue ship with more than 600 immigrants on board into one of its ports last June.[Continue reading: E!Sharp]
Instituto Juan de Mariana
El objetivo de la empresa en las economías de mercado (I)
Hace unos días, la senadora demócrata Elizabeth Warren presentaba un proyecto de ley destinado a cambiar las bases del gobierno corporativo de las grandes empresas que operan en Estados Unidos. Entre otras medidas, la propuesta pretende reemplazar el objetivo clásico de las empresas, basado en la maximización del valor a largo plazo de los accionistas, por el enfoque stakeholder.[Continue reading: IJM]
El objetivo de la empresa en las economías de mercado (y II)
En el artículo anterior, analizamos la teoría clásica sobre el objetivo de la empresa en las economías capitalistas (a la que llamamos SVM, por sus iniciales en inglés). De acuerdo con el enfoque SVM, las empresas deben maximizar el valor de los accionistas a largo plazo, lo cual implica maximizar los beneficios netos después de impuestos. Vimos también que la teoría SVM tiene fundamentos teóricos sólidos a nivel agregado. Cuando las empresas maximizan sus beneficios en un marco competitivo, el bienestar social aumenta.[Continue reading: IJM]
El estado de bienestar como excusa
Hace unos días, el economista estadounidense Bryan Caplan, conocido defensor de las fronteras abiertas, compartía un meme en Facebook en el que se ridiculizaba uno de los argumentos más repetidos en contra de la libertad migratoria[1]. En la imagen, una pintura del artista estadounidense Joseph Brickey, aparecía Dios dirigiéndose a Moisés en los siguientes términos: “Cuando el extranjero morare con vosotros en vuestra tierra, no le oprimiréis” (Levítico, 19:33); a lo que éste respondía: “Antes habría que acabar con el estado de bienestar”.[Continue reading: IJM]
Más allá del cambio climático: tres contribuciones de Nordhaus a la ciencia económica
William D. Nordhaus, profesor de la Universidad de Yale desde 1967, ha sido galardonado recientemente con el Premio Nobel de Economía (para ser más precisos, el Premio en Ciencias Económicas en memoria de Alfred Nobel) por su análisis del cambio climático desde una perspectiva económica[1]. Nordhaus fue el primero en desarrollar un modelo de evaluación integrada para cuantificar el impacto del cambio climático sobre la economía mundial. No obstante, las aportaciones de Nordhaus al avance de la ciencia económica no se limitan a este ámbito. He aquí tres contribuciones relevantes del economista estadounidense que no están relacionadas con su trabajo sobre cambio climático.[Continue reading: IJM]
Tres ideas sorprendentes en la ‘Teoría General’ de Keynes
John Maynard Keynes[1]es, junto con Milton Friedman, el economista más influyente del siglo XX. Su obra más aclamada, La Teoría General de la Ocupación, el Interés y el Dinero, contribuyó al cambio de paradigma que tuvo lugar en la ciencia económica a mediados de los años 30. También es probablemente el economista más citado entre los profanos en la materia, quienes a menudo distorsionan sus ideas por desconocimiento de su obra. He aquí tres ideas incluidas en la Teoría General que suelen pasar desapercibidas para el gran público.[Continue reading: IJM]
Ludwig Erhard y el milagro económico alemán
El 2 de abril de 1948, Ludwig Erhard, un desconocido economista alemán, fue nombrado director del Consejo Económico de Bizonia, nombre dado al territorio resultante de la fusión de las zonas ocupadas por el Reino Unido y Estados Unidos en la Alemania de posguerra.[Continue reading: IJM]
Values4Europe
Italy´s Budget Proposal: A Fiscal Nonsense
“Italy plans an obvious significant deviation of the recommendations adopted by the Council under the Stability and Growth Pact for 2019.” This was the clear message that Pierre Moscovici, Commissioner for Economic and Financial Affairs, sent the Italian Minister of Finance and Economy regarding the budget proposal elaborated by Italy’s coalition government for fiscal year 2019. In a letter sent last October 18, the European Commission made clear that the proposed budget involves a clear violation of the Stability and Growth Pact, a mechanism designed to curb the uncontrollable desire of European politicians to increase public spending.[Continue reading: Values4Europe]
Spain´s business sector has done its homework over the last decade
One of the factors that triggered the financial and economic crisis in Spain was the excessive accumulation of debt in the private sector (both households and corporates). Between 2000 and 2007, the debt to GDP ratio moved from around 0.88 to 1.67, an astonishing increase taking into account that, in the same period, nominal GDP was growing at a compound annual growth rate of 6.6 percent (i.e., the rate of growth of private debt was substantially higher than that of nominal GDP).[Continue reading: Values4Europe]
Why I don´t vote
The Stanford Encyclopedia of Philosophy defines democracy as “a method of group decision making characterized by a kind of equality among the participants.” In effect, democracy can be a useful mechanism for making collective decisions. For instance, an association representing the homeowners of a residential community can make the decision of renovating the pavement of a street after obtaining the explicit consent of a majority of them.[Continue reading: Values4Europe]
A European Central Bank Primer (I): Objective, Organization and Responsibilities
Next year marks the 20th anniversary of the Euro, the most important step in the European integration process since the Treaty of Rome. Six months prior to the official launch, the European Central Bank (ECB) was established to administer the new common currency in the eleven countries that originally designed the monetary union. Since then, eight more countries have joined the Eurozone, which is now formed by nineteen countries.[Continue reading: Values4Europe]
A European Central Bank Primer (II): How does the ECB conduct monetary policy?
In a previous article, I talked about the objective, organizational structure and responsibilities of the European Central Bank. Today, I aim to discuss how the ECB conducts monetary policy in the Eurozone. But let me start by discussing more in detail the price-stability objective and why it matters.[Continue reading: Values4Europe]
A European Central Bank Primer (III): Unconventional Monetary Policy Tools
In the second part of this primer, I discussed how the ECB conducts monetary policy with the aim of achieving price stability in the Eurozone. As shown, the ECB has historically employed three different policy tools to control the price level: open market operations (and more specifically, main refinancing operations), reserve requirements and the so-called standing facilities. Yet the 2010 Eurozone crisis pushed the ECB to adopt a number of unconventional policy measures that it had never tried before in order to preserve the Euro, stabilize the weak economies of the Euro area, reach the 2-percent inflation goal, and boost economic growth in the aftermath of crisis.[Continue reading: Values4Europe]
A European Central Bank Primer (IV): Transmission Mechanisms of Monetary Policy
In a previous article, I introduced the concept of long-term neutrality of money, which the ECB defines as a general principle according to which “a change in the quantity of money in the economy will be reflected in a change in the general level of prices. But it will not induce permanent changes in real variables such as real output or unemployment.”[Continue reading: Values4Europe]
A European Central Bank Primer (V): What does the ECB’s balance sheet look like?
As the entity responsible for the conduct of monetary policy in the Eurozone, the ECB has a prerogative that no other financial institution possesses: it has an exclusive monopoly over the issuance of euros. As a result, the ECB’s financial position differs radically from that of any other bank in the Euro area. Today, we will take a closer look at the balance sheet of the Eurozone’s monetary authority.[Continue reading: Values4Europe]
The Bank of Spain warns about the harmful effects of raising the minimum wage
On December 21 last year, the Spanish government issued an executive order whereby it increased the national minimum wage by an astonishing 22.3 percent for fiscal year 2019. Despite the potentially harmful effects that such a drastic measure could have on Spain’s ailing labor market (the unemployment rate is still over 14 percent), Sánchez’s government didn’t hesitate to approve the largest increase since 1977.[Continue reading: Values4Europe]
Book Review: The Clash of Economic Ideas
“I’m rather good at it”, said a young John Maynard Keynes to a friend shortly after starting the only economics course he would take in his life; a course that would turn a mathematician by training into the most influential economist of the twentieth century (with Milton Friedman’s permission).[Continue reading: Values4Europe]
What´s behind skyrocketing rental prices in Spain?
Last month, Spain’s prime minister Pedro Sánchez was forced to call a snap election after Congress rejected his budget proposal. The call for elections and subsequent dissolution of parliament has not, however, prevented Sánchez’s caretaker government from continuing legislating via executive orders.[Continue reading: Values4Europe]
What is Modern Monetary Theory? (I): Some ideas
In an interview last January, Democratic Party’s rising star Alexandria Ocasio-Cortez brought attention to so-called Modern Monetary Theory (MMT), a theory that challenges the foundations of mainstream economics regarding fiscal and monetary policy. Whereas its supporters see in MMT a solid theoretical framework with which to justify the expansion of public spending, its detractors argue that following MMT prescriptions would lead the country to the abyss. Who’s right?[Continue reading: Values4Europe]
What is Modern Monetary Theory? (II): A Critique
In the last months, the US political debate has revolved around a number of proposals (e.g., Bernie Sander’s Medicare for All or Alexandria Ocasio-Cortez’s Green New Deal) that, if materialized, would send government expenditures through the roof. Most economists would tell you that, in the long run, these new programs must be financed either by increasing taxes or by trimming other budget items.[Continue reading: Values4Europe]
What is Modern Monetary Theory? (III): A Critique
A widespread idea among MMT proponents is that governments can never go bankrupt. And to some extent, this is true. If a government has the capacity to print money, it can’t strictly default on its debt. Put differently, a government with monetary autonomy will always be able to print money to repay its debt in nominal terms. But at what cost?[Continue reading: Values4Europe]
Global migration numbers refute the rhetoric of invasion
The anti-immigration wave that has emerged over the last years on both sides of the Atlantic has contributed to spreading a number of mantras about the migration phenomenon on a global scale. I myself have tried to debunk some of the myths related to the economic impact of immigrants on host countries, pointing out that most claims are either false or overstated (e.g., here, here, or here).[Continue reading: Values4Europe]
What do Europeans think about immigration?
According to a recent YouGov poll, 4 out of 10 EU citizens think the benefits of immigration outweigh the costs[1]. Anti-immigration views are stronger in Sweden and Italy, with around 50 percent of respondents claiming that the costs of immigration are substantially higher than the potential benefits. In contrast, only one-third of the Polish population consider that immigrants have a negative impact on the country.[Continue reading: Values4Europe]
Amancio Ortega or how anti-capitalist bias clouds the judgement of left-wing populists
Amancio Ortega doesn’t make the headlines very often. Zara’s magnate, a self-made man who rose from being clerk in a clothing store to founding the largest fashion retailer in the world, has always avoided being in the spotlight, which has worked for him thus far. Yet when one is the sixth richest person on earth, it is inevitable to end up in the news once in a while.[Continue reading: Values4Europe]
What is the place premium?
Wage differentials within a country can be explained by factors such as work experience, years of education, or career choices. Yet things get more complicated when comparing wages from workers living in different countries. When we do so, we need to take into account an extra factor: migration barriers. This is exactly what economists Michael Clemens, Claudio Montenegro and Lant Pritchett do in their latest paper.[Continue reading: Values4Europe]
Mr. Trump, leave the Fed alone
One sometimes wonders if Trump’s irresponsible statements have other objective than to show his bold ignorance on economic and political issues. Last week, the US President lashed out at the Federal Reserve for its stance on monetary policy. In a nutshell, he complained about the dollar appreciating against the Euro as a result of Fed’s policies. This, according to Trump, undermines the country’s competitiveness against the Eurozone.[Continue reading: Values4Europe]
Who will succeed Mario Draghi as head of the ECB?
The days of Mario Draghi as head of the European Central Bank are coming to an end. Next October, Draghi will cease to be one of the most powerful central bankers in the world after eight years in office. A hero for some, a villain for others, everyone agrees that his mandate will go down in history as one of the most decisive in the short history of the euro as he was forced to cope with a crisis that almost breaks up the Eurozone only a few years after its inception.[Continue reading: Values4Europe]
Economic freedom and the decriminalization of homosexuality in Botswana
Milton Friedman used to say that economic freedom is a necessary but not sufficient condition for political freedom. The case of China seems to prove the Chicago School economist right. The Asian country’s successful attempts to increase living standards through free-market policies over the last four decades haven’t been accompanied by reforms aimed at democratizing the country.[Continue reading: Values4Europe]
What can we expect from ECB´s new president Christine Lagarde?
Habemus praeses. Incumbent IMF chairwoman Christine Lagarde was recently nominated to become the next president of the ECB after the agreement reached by European leaders last week. The French politician will take up the position next November, bringing an end to Draghi’s eight-year mandate.[Continue reading: Values4Europe]
Book Review: The Ethics of Voting
Voting in local, national, or supranational elections is in general seen as an act of good citizenship. Even though participation rates vary from country to country, a large percentage of the population in advanced democracies go to the polls quasi-religiously in every election. Yet few people reflect upon the ethical implications of voting.[Continue reading: Values4Europe]
What is that Phillips curve everyone is talking about?
Federal Reserve’s Chairman Jerome Powell testified last month before the House Committee on Financial Services Committee. As usual, Powell answered questions regarding the present and future of monetary policy.[Continue reading: Values4Europe]
The case for legalizing paid surrogacy
Spain’s government has recently urged the Attorney General to investigate the operations of businesses offering surrogacy services. Despite not providing any evidence to support her claims, the Minister of Justice accused some of these businesses of child trafficking, criminal organization, money laundering, and false documentation.[Continue reading: Values4Europe]
ECB´s latest move won´t work
Draghi never disappoints. In his penultimate monetary-policy meeting, the still President of the ECB announced that the Eurozone’s central bank would soon resume the net asset purchase program in an attempt to get inflation back to the ECB’s 2 percent target after some months of lower-than-expected inflation. The Governing Council also agreed to lower the deposit rate to -0.5%, although a considerable fraction of banks’ excess reserves will be exempt from paying interest thanks to the new two-tier system introduced by the ECB.[Continue reading: Values4Europe]
Does vaccine skepticism affect immunization rates?
Believe it or not, vaccination is still a controversial issue in many countries. Despite the scientific consensus that vaccines pose no risk to human health, some parents are still skeptical regarding their safety and effects, leading some of them to avoid vaccinating their children often based on pseudo-scientific arguments.[Continue reading: Values4Europe]
Experiments in economics? You bet!
Every year around this time, the Royal Swedish Academy of Sciences awards the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel—aka the Nobel Prize in Economics.[Continue reading: Values4Europe]
The importance of financial education in today´s world
The financial roots of the 2008 crisis led many EU countries to develop national strategies aimed at improving the financial education of their citizens. In Spain, for instance, the National Securities Market Commission and the Bank of Spain launched a four-year financial education plan that has been renewed twice since 2008. Similar plans were implemented in Ireland, Denmark, France or Portugal.[Continue reading: Values4Europe]
Rafael Leónidas Trujillo: the dictator who inspired a Nobel Prize
Most Latin American countries were ruled, at some point of the twentieth century, by dictators responsible for countless violations of human rights. Augusto Pinochet, who ruled Chile with an iron fist for almost two decades, was responsible for more than 3,000 executions and hundreds enforced disappearances. During Videla’s dictatorship in Argentina, between 13,000 and 30,000 citizens were “disappeared”, an euphemism for kidnapped, tortured and executed. Castros’ tyranny has committed innumerable crimes since the Cuban Revolution ousted Batista in January 1959, including the extrajudicial execution of 1,234 people. [Continue reading: Values4Europe]
What explains the emergence and strengthening of populism in Europe?
The last years have witnessed the rise of populism all over Europe. Parties like Alternative für Deutschland in Germany, Rassemblement national in France, the Movimento 5 Stelle in Italy, or Podemos and Vox in Spain have gained importance in detriment of traditional conservative and social democratic parties.[Continue reading: Values4Europe]
Austrian Economics Center
Immigration and Innovation: Two Sides of the Same Coin
Immigration is a controversial issue in most developed countries. Most people continue to hold what economist Bryan Caplan calls an anti-foreign bias, i.e., a tendency to underestimate the economic benefits of interaction with foreigners. It is hardly surprising, therefore, that anti-immigration policies have so much popularity among voters.[Continue reading: AEC]
The Gender Pay Gap Is Misleading
The gender gap is usually defined as the systematic differences in labor-market outcomes between men and women. These differences can arise in several employment-related metrics such as the labor force participation rate or the types of occupations women and men hold.[Continue reading: AEC]
A Non-Austrian Vindication of Hayek´s Monetary Policy
Hayek has always been considered somewhat of a maverick within the Austrian School. His views on several economic and philosophical issues depart from those of others in the Austrian tradition, particularly those in the Rothbardian lineage. A good example is Hayek’s support for a government-provided safety net in the form of “a minimum income for everyone, or a sort of floor below which nobody need fall even when he is unable to provide for himself.”[Continue reading: AEC]
The Importance of Financial Literacy for Today’s World
The OECD recently released the results of the 2018 financial literacy assessment. In it, the organization tests the financial knowledge of 117,000 students from thirteen OECD (Australia, Canada, Chile, Estonia, Finland, Italy, Latvia, Lithuania, Poland, Portugal, Slovak Republic, Spain, and the United States) and seven non-OECD countries (Bulgaria, Brazil, Georgia, Indonesia, Peru, Russia and Serbia).”[Continue reading: AEC]
Fighting for Freedom with Balloons: The Story of Lee Min-Bok
Two years ago today, on April 27, 2018, a summit took place between the president of South Korea and North Korea’s dictator, Kim Jong-un, to discuss several key issues, including the denuclearization of the Korean peninsula, the improvement of inter-Korean relations, and the establishment of peace after seven decades of war.[Continue reading: AEC]
Investing in Times of a Pandemic
Every year around this time, Schroders releases its Global Investor Study, a survey where the British asset management company analyzes the attitudes and behaviors of 23,000 investors from 32 countries. Naturally, this year’s survey revolves around how the pandemic has affected the investment decisions and economic prospects of investors.[Continue reading: AEC]
The Biases of Central Bank Research Papers
The 2008 Financial Crisis led central banks all over the world to make use of several monetary policy tools that were considered unorthodox before. Particularly, monetary authorities resorted to three policies. First, central banks started to provide long-term refinancing to the banking sector in order to boost lending. Second, forward guidance (i.e., the communication by monetary authorities of the future path of the policy rate) was introduced to reduce economic uncertainty via anchoring the expectations of economic agents. Finally, central banks expanded their balance sheets by purchasing long-term assets, a policy known as quantitative easing (QE).[Continue reading: AEC]
Deflation: Friend or Foe?
Deflation is the most feared economic phenomenon of our time. The reason behind this a priori irrational fear (why should we be afraid of prices going down?) is the Great Depression. The most severe economic crisis of the 20th century was accompanied by a massive deflationary spiral that pushed prices down by 25% between 1929 and 1932 (this is equivalent to an annualized inflation rate of minus 7% over that period). Given the impact that the Great Depression had on the social imaginary of the American and European societies, it isn’t surprising that people tend to associate deflation with crises and economic hardship.[Continue reading: AEC]
Classical Liberalism and Effective Altruism
In Why Nations Fail, economist Daron Acemoglu and political theorist James A. Robinson argue that the only way for developing countries to escape the poverty trap is through inclusive institutions such as formal property rights, the rule of law, political pluralism, or certain redistributions of wealth that create a level playing field for everyone.[Continue reading: AEC]
In Defense of Short Selling
The recent GameStop controversy has once again turned the spotlight on short selling (i.e., the practice of borrowing a stock you don’t own and sell it on the market). This isn’t the first time. Short selling has been under scrutiny for decades, with many countries imposing restrictions on this practice during periods of economic and financial crises.[Continue reading: AEC]
Law & Liberty
Milei´s Policy Challenges
Argentina welcomes a new president. Defying poll predictions of a technical tie, the anarcho-capitalist candidate Javier Milei achieved a resounding victory over Peronist Sergio Massa in the runoff by a wide margin. The unexpected turn of events led to Massa conceding defeat even before the official results were announced, surprising many observers.[Continue reading: L&L]
Rethinking thinking
You find yourself in a bar, deeply engaged in a discussion with a friend over a public policy issue. You hold your position with confidence, convinced beyond doubt that there’s no room for debate. Every article you have read, every news segment you have watched, and every conversation you have had in the past month regarding this issue has reinforced your stance. In your mind, you are right, and your friend is mistaken. The evidence, as you see it, is undeniable. Why, then, does she fail to acknowledge what seems to be so clear?[Continue reading: L&L]