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21. Is America Becoming Greece?

Author:
Michael Tanner
Publication Date:
04-2013
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
It does not take more than a glance at the headlines to see that European countries are in trouble. From Greece to Britain, from France to Portugal, it is becoming clear that the modern welfare state is unsustainable, facing fiscal catastrophe, stagnant economic growth, punishing taxes, and prolonged joblessness. European countries are being forced, kicking and screaming, to rethink their approach to social welfare. But how much better off is the United States?
Political Geography:
Britain, United States, America, Europe, Greece, France, and Portugal

22. American and European Welfare States: Similar Causes, Similar Effects

Author:
Pierre Lemieux
Publication Date:
04-2013
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
The American welfare state is not as different from the European welfare state as conventional wisdom would have it. If we define the welfare state as that part of the state (the whole apparatus of government at all levels) devoted to taking charge of the welfare of the public, welfare-state functions cover social protection (which includes public pensions), health, and education. These functions make up 57 percent of total U.S. government expenditures compared to 63 percent for the typical euro zone country. In this sense, the American welfare state is only about 10 percent smaller than the European welfare state.
Political Geography:
United States, America, and Europe

23. Lessons from Europe's Debt Crisis for the United States

Author:
Desmond Lachman
Publication Date:
04-2013
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
The European sovereign debt crisis offers a cautionary tale for the United States. This is the case since all too sadly the U.S. public finances appear to be on the same sort of unsustainable path that lies at the heart of the present European crisis. Whereas Europe, taken as a whole, currently has a budget deficit of around 3 percent of GDP And a gross public debt ratio of around 90 percent of GDP, the United States has a budget deficit of around 8 percent of GDP and a gross public debt ratio in excess of 105 percent of GDP.
Political Geography:
United States and Europe

24. Canada's Fiscal Reforms

Author:
Chris Edwards
Publication Date:
04-2013
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Two decades ago Canada suffered a deep recession and teetered on the brink of a debt crisis caused by rising government spending. The Wall Street Journal said that growing debt was making Canada an "honorary member of the third world" with the "northern peso" as its currency. However, Canada reversed course and cut government spending, balanced its budget, and enacted pro-market reforms. It reduced trade barriers, privatized businesses, and slashed its corporate tax rate. The economy boomed, unemployment plunged, and the formerly weak Canadian dollar soared to reach parity with the U.S. dollar. The Canadian reforms were hugely successful. Today, the United States is in as bad or worse fiscal shape than Canada was in. U.S. leaders need to make major fiscal and economic reforms, and they can learn many lessons from Canadian efforts to restrain government and create a more competitive economy.
Topic:
Reform
Political Geography:
United States and Canada

25. Anna Jacobson Schwartz: In Memoriam

Author:
George S. Tavlas
Publication Date:
10-2013
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
This issue of the Cato Journal is dedicated to Anna Jacobson Schwartz, who passed away on June 21, 2012, at the age of 96. Anna was an economic historian whose scholarship was marked by, among other things, dedication, tenacity, and perseverance. Her career spanned three quarters of a century. When Anna was about 90, her son Jonathan complained (somewhat tongue-in-check) that he had thought about retiring, but did not feel comfortable doing so while his mother was still working. In 1936, she began collaborating with A. D. Gayer and W. W. Rostow on a study of fluctuations in the British economy between 1790 and 1850. The study was not published until 1953, although most of the work on the study had been completed by the early 1940s. Anna joined the National Bureau of Economic Research in 1941 and remained there for the rest of her life, continuing to go to her office until shortly before her death. She published her first NBER paper in 1947 with Elma Oliver, and her last with Michael Bordo and Owen Humpage in 2012. Her collaboration with Milton Friedman on A Monetary History of the United States, 1867–1960 began in 1948 and was not completed until 1963. The underlying objective of Anna's scholarship throughout her career was to use historical evidence, which she assembled with meticulous attention to accuracy, to understand the workings of the economy better.
Topic:
Economics
Political Geography:
United States

26. Balance Sheet Crises: Causes, Consequences, and Responses

Author:
Steven Gjerstad and Vernon L. Smith
Publication Date:
10-2013
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Balance sheet crises, in which the prices of widely held and highly leveraged assets collapse, pose distinctive economic challenges. An understanding of their causes and consequences is only recently developing, and there is no agreement at all on effective policy responses. A preliminary purpose of this article is to examine in detail the events that led to and resulted from the recent U.S. housing bubble and collapse, as a case study in the formation and propagation of balance sheet crises. The primary objective of the article is to evaluate similar events around the world with a view toward assessing the economic performance of countries that have pursued varied alternative policies.
Political Geography:
United States

27. The Case for Simple Rules and Limiting the Safety Net

Author:
Thomas Hoenig
Publication Date:
10-2013
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
For the last 100 years, government officials and bank CEOs have insisted that new policies, rules, and laws—combined with greater market discipline, resolution schemes, and enhanced supervision—would ensure that future financial crises, should they occur, would be more effectively handled. In the United States, the creation of the Federal Reserve System and Federal Deposit Insurance Corporation are examples where such assurances were given to the public. More recently, the FDIC Improvement Act of 1991 and other legislation were intended to end public bailouts of failing banks and, in particular, prevent the moral hazard problem inherent in “too big to fail.” Such assurances seem even more significant following a U.S. Treasury (1991) study that found that “too big to fail” resolution policies used for six of the largest banks cost taxpayers more than $5 billion (in current dollars). If only the cost of the six largest bailouts in this recent crisis were just $5 billion. Unfortunately, it was many times greater.
Political Geography:
United States

28. The Use of Public Assistance Benefits by Citizens and Non-citizen Immigrants in the United States

Author:
Leighton Ku and Brian Bruen
Publication Date:
02-2013
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
Claims are sometimes made that immigrants use public benefits, such as Medicaid, the Supplemental Nutrition Assistance Program, or the Temporary Assistance for Needy Families programs, more often than those who are born in the United States. This report provides analyses, using the most recent data from the Census Bureau, that counter these claims. In reality, low-income non-citizen immigrants, including adults and children, are generally less likely to receive public benefits than those who are native-born. Moreover, when non-citizen immigrants receive benefits, the value of benefits they receive is usually lower than the value of benefits received by those born in the United States. The combination of lower average utilization and smaller average benefits indicates that the overall cost of public benefits is substantially less for low-income non-citizen immigrants than for comparable native-born adults and children. The report also explains that the lower use of public benefits by non-citizen immigrants is not surprising, since federal rules restrict immigrants' eligibility for these public benefit programs.
Topic:
Economics, Health, Humanitarian Aid, Markets, and Immigration
Political Geography:
United States

29. Why Growth Is Getting Harder

Author:
Brink Lindsey
Publication Date:
10-2013
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
For over a century, the trend line for the long-term growth of the U.S. economy has held remarkably steady. Notwithstanding huge changes over time in economic, social, and political conditions, growth in real gross domestic product (GDP) per capita has fluctuated fairly closely around an average annual rate of approximately 2 percent. Looking ahead, however, there are strong reasons for doubting that this historic norm can be maintained.
Topic:
Economics, Globalization, International Trade and Finance, Markets, Financial Crisis, and Governance
Political Geography:
United States

30. Is Public Expenditure Productive? Evidence from the Manufacturing Sector in U.S. Cities, 1880–1920

Author:
Dean Stansel and Melissa Yeoh
Publication Date:
01-2013
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
This article provides the first examination of the relationship between public expenditures and labor productivity that focuses on municipalities, rather than states or nations. We use data for 1880–1920, a period of rapid industrialization in which there were both high levels of public infrastructure spending and rapid growth of productivity. We use a simple Cobb-Douglas production function to model labor productivity in the manufacturing sector, letting total factor productivity depend on “productive” public expenditure by city governments—that is, on public spending that may raise the productivity of labor and encourage human capital accumulation. Using a data set of 45 of the largest cities in the United States, we find no statistically significant relationship between productive public expenditure and labor productivity in the manufacturing sector during this period. These findings are robust to three different econometric approaches. We do, however, find a strongly positive and statistically significant relationship between private capital and labor productivity. Our results are consistent with those of much of the literature examining this same relationship in states and nations and they have important implications for contemporary public policy issues.
Political Geography:
United States