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6191. Markets, Tort Law, and Regulation to Achieve Safety

Author:
Paul H. Rubin
Publication Date:
06-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Markets, tort law, and regulation are alternative methods of achieving safety. Of these, the market is the most powerful, but it is often ignored in policy discussions. I show that both for the United States over time and for the world as a whole, higher incomes are associated with lower accidental death rates, and I discuss some examples of markets creating safety. Markets may fail if there are third-party effects or if there are information problems. Classic tort law is a reasonable (although expensive) way to handle third-party effects for strangers, as in the case of auto accidents. In theory, regulation could solve information problems, but in practice many regulations overreach because of different information problems—consumers are unaware of unapproved alternatives. A particularly difficult information problem arises in the case of what I call “ambiguous goods”— goods that reduce some risks but increase others (for example, medical care and malpractice.) Product liability focuses on these goods; over half of the litigation groups of the American Association for Justice are for ambiguous goods.
Topic:
Markets
Political Geography:
United States

6192. Economic Freedom and Happiness

Author:
Daniel M. Gropper, Robert A. Lawson, and Jere T. Thorne Jr.
Publication Date:
06-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
That liberty is necessary for greater happiness and a better life is a notion deeply rooted in the American sensibility. But is there a link between greater freedom and greater happiness across countries? In this article we explore this question by examining the empirical relationship between liberty, as measured by economic freedom, and happiness across more than 100 countries.
Political Geography:
America

6193. The Impact of Ohio's EdChoice on Traditional Public School Performance

Author:
Matthew Carr
Publication Date:
06-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Over the course of the last 35 years, traditional public school student achievement in the United States has been stagnant, despite myriad reform efforts and a doubling in total expenditures on K–12 education (Ravitch 2000, Hanushek 1986, Greene 2005). The ramifications of this academic achievement plateau on human capital development and thus the country's global economic standing are of paramount importance (Heckman and Masterov 2007). Thus, one of the most important public policy questions that government and society faces is how to improve the academic performance and quality of the nation's public education system.
Topic:
Government
Political Geography:
United States

6194. Why Some Cities Are Growing and Others Shrinking

Author:
Dean Stansel
Publication Date:
06-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Over the last three decades, large cities like Pittsburgh, Detroit, Cleveland, Buffalo, and Toledo have seen their populations shrink, while areas like Houston, Atlanta, Dallas, Tampa, and Phoenix have seen their populations grow rapidly. Examining the policy differences between high-growth and low-growth areas can provide evidence that may help declining cities reverse their fortunes.
Political Geography:
New York

6195. Gustav Cassel: In Defense of Private Property Rights

Author:
Benny Carlson
Publication Date:
06-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
In their book on property rights, Terry Anderson and Fred McChesney (2003: 13) make the following statement: The idea that property rights might themselves be a distinct and explicit area of economic inquiry is relatively recent. In classical economics, well-defined and secure property rights were typically assumed to exist, not analyzed or explained.

6196. Property Rights and Environmental Quality: A Cross-Country Study

Author:
Carrie B. Kerekes
Publication Date:
06-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Public policy often regards pollution and other measures of poor environmental quality as public bads that result from market failure and require government intervention through regulatory policies and more stringent environmental standards. In this article, I argue that pollution and environmental quality should instead be regarded from a property rights perspective, in which institutions of clearly defined and enforced property rights create incentives that lead to reduced levels of pollution and an overall improvement in environmental quality. Using cross-country data, I examine the relationship between property rights and environmental quality.

6197. Dollarization: The Case of Zimbabwe

Author:
Joseph Noko
Publication Date:
06-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
This article investigates the recent monetary experience of Zimbabwe with dollarization. It shows how dollarization has allowed Zimbabwe to quash hyperinflation, restore stability, increase budgetary discipline, and reestablish monetary credibility. Zimbabwe's hyperinflationary past and the stabilization measures taken by the government are outlined, and the consequences defined. Problems arising from a lack of financial integration, an error in the choice of currency to dollarize under, and the inability of the government to enter into a formal dollarization agreement are discussed.
Political Geography:
Zimbabwe

6198. Why Do Federal Funds Trade at the FOMC's Target Rate?

Author:
Jerry H. Tempelman
Publication Date:
06-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
The role of inflation expectations on the part of economic agents is being increasingly recognized and incorporated into frameworks for the setting of monetary policy (for example, Piger and Rasche 2008, Hetzel 2008). In this article, I describe how expectations are also critical in the implementation of monetary policy. According to the textbook view, the Federal Reserve controls the federal funds rate by varying the supply of reserves available to the banking system. I will argue, however, that fluctuations in the supply of reserves are not the full explanation, thus providing additional support for Taylor (2001), who found that federal funds trade at or around the Federal Open Market Committee's target rate in part because market participants expect that if they don't, the Fed will step in and react.

6199. Suckers, Punters, Pathbreakers: When Homo Oeconomicus Is Selflessly Selfish

Author:
Anthony de Jasay
Publication Date:
06-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Rational choice presupposes that people do what they like better than any available alternative. If, however, we mistrust what they declare to like or what psychology is supposed to tell us about it (a pardonable enough mistrust), we can only infer what they like from observing what they do. We must be content with revealed preference. The theory of choice is locked into the tautology of “they do what they like because they like what they do,” and requiring their preferences to be orderly and consistent is of little practical help. In its elegance, modern choice theory, as represented in neoclassical economics, is too smooth and slippery to be very useful.
Topic:
Economics

6200. Alchemists of Loss: How Modern Finance and Government Intervention Crashed the Financial System by Kevin Dowd and Martin Hutchinson

Author:
Steven Horwitz
Publication Date:
06-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
The combination of the recession and financial crisis of the last few years has led to quite the outpouring of books by economists purporting to explain what happened and why, and how to avoid a repeat performance. This very crowded field has seen a range of quality, but a good number of these books have been quite well done. Alchemists of Loss by Great Britain's Kevin Dowd and Martin Hutchinson is another very good treatment of the issues. The authors bring a wealth of experience to their book. Dowd has had a long career as an academic, with much of his work focusing on the history and theory of “free banking” and other forms of financial deregulation. Hutchinson is a longtime financial journalist and has worked in the merchant and investment banking industries in Britain. They have written a comprehensive, fairly detailed, and surprisingly entertaining account of the historical context, theoretical framework, and actual events of the crisis.
Topic:
Financial Crisis
Political Geography:
Britain