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511. How Did We Get into This Financial Mess?

Author:
Lawrence H. White
Publication Date:
11-2008
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
As policymakers confront the ongoing U.S. financial crisis, it is important to take a step back and understand its origins. Those who fault "deregulation," "unfettered capitalism," or "greed" would do well to look instead at flawed institutions and misguided policies. The expansion in risky mortgages to under qualified borrowers was encouraged by the federal government. The growth of "creative" nonprime lending followed Congress's strengthening of the Community Reinvestment Act, the Federal Housing Administration's loosening of down-payment standards, and the Department of Housing and Urban Development's pressuring lenders to extend mortgages to borrowers who previously would not have qualified.
Topic:
Economics and Government
Political Geography:
United States

512. A Fork in the Road: Obama, McCain, and Health Care

Author:
Michael Tanner
Publication Date:
07-2008
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Healthcare reform will be one of the top issues of the 2008 presidential election. In the face of widespread public demand for changes in the U.S. health care system, both Barack Obama and John McCain have offered detailed proposals for reform.
Topic:
Government, Health, and Politics
Political Geography:
United States

513. The Klein Doctrine: The Rise of Disaster Polemics

Author:
Johan Norberg
Publication Date:
05-2008
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Naomi Klein's The Shock Doctrine ;purports to be an exposé of the ruthless nature of free-market capitalism and its chief recent exponent, Milton Friedman. Klein argues that capitalism goes hand in hand with dictatorship and brutality and that dictators and other unscrupulous political figures take advantage of "shocks"-catastrophes real or manufactured-to consolidate their power and implement unpopular market reforms. Klein cites Chile under General Augusto Pinochet, Britain under Margaret Thatcher, China during the Tiananmen Square crisis, and the ongoing war in Iraq as examples of this process.
Topic:
Democratization, Economics, and Markets
Political Geography:
China and Chile

514. Asset Bubbles and Their Consequences

Author:
Gerald P. O'Driscoll Jr.
Publication Date:
05-2008
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
In the past, the federal government has introduced moral hazard in the banking system through deposit insurance. Banks underpriced risk because of the federal guarantee that backed deposits. After banking crises in the 1980s and 1990s, deposit insurance was put on a sound basis and that source of moral hazard was mitigated. In its place, monetary policy has become a source of moral hazard. In acting to counter the economic effects of declining asset prices, the Federal Reserve has come to be viewed as underwriting risky investments. Policy pronouncements by senior Fed officials have reinforced that perception. These actions and pronouncements are mutually reinforcing and destructive to the operation of financial markets. The current financial crisis began in the subprime housing market and then spread throughout credit markets. The new Fed policy fueled the housing boom. Refusing to accept responsibility for the housing bubble, the Fed's recent actions will likely fuel a new asset bubble. The cumulative effects of recent monetary policy undermine the case for free markets.
Topic:
Economics, Government, and Markets
Political Geography:
United States

515. FASB: Making Financial Statements Mysterious

Author:
T.J. Rodgers
Publication Date:
08-2008
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Since the passage of the Sarbanes-Oxley Act in 2002, the Financial Accounting Standards Board has passed rules that it promises will make corporate accounting more transparent. In fact, its revised Generally Accepted Accounting Principles have made it difficult for investors — or even CEOs — to understand a company's financial report.
Topic:
Economics, Government, and Markets
Political Geography:
United States

516. Freddie Mac and Fannie Mae: An Exit Strategy for the Taxpayer

Author:
Arnold Kling
Publication Date:
09-2008
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
The Fannie Mae-Freddie Mac crisis may have been the most avoidable financial crisis in history. Economists have long complained that the risks posed by the government-sponsored enterprises were large relative to any social benefits.
Topic:
Economics, Government, and Financial Crisis
Political Geography:
United States

517. Rails Won't Save America

Author:
Randal O'Toole
Publication Date:
10-2008
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Rising gas prices and concerns about greenhouse gases have stimulated calls to build more rail transit lines in urban areas, increase subsidies to Amtrak, and construct a large-scale intercity high-speed rail system. These megaprojects will cost hundreds of billions of dollars, but they won't save energy or significantly reduce greenhouse gas emissions.
Topic:
Development, Economics, and Government
Political Geography:
United States

518. Does Barack Obama Support Socialized Medicine?

Author:
Michael F. Cannon
Publication Date:
10-2008
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Democratic presidential nominee Sen. Barack Obama (IL) has proposed an ambitious plan to restructure America's health care sector. Rather than engage in a detailed critique of Obama's health care plan, many critics prefer to label it "socialized medicine." Is that a fair description of the Obama plan and similar plans? Over the past year, prominent media outlets and respectable think tanks have investigated that question and come to a unanimous answer: no.
Topic:
Economics, Government, Health, and Markets
Political Geography:
United States

519. What Can the United States Learn from the Nordic Model?

Author:
Daniel Mitchell
Publication Date:
11-2007
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
Some policymakers in the United States and Europe argue that it is possible to enjoy economic growth and also have a large welfare state. These advocates for bigger government claim that the so- called Nordic Model offers the best of both worlds. This claim does not withstand scrutiny. Economic performance in Nordic nations is lagging, and excessive government is the most likely explanation. The public sector in Sweden, Denmark, Norway, Finland, and Iceland consumes, on average, more than 48 percent of economic output. Total government outlays in the United States, by contrast, are less than 37 percent of gross domes- tic product. Revenue comparisons are even more striking. Tax receipts average more than 45 per- cent of GDP in Nordic nations, a full 20 percent- age points higher than the aggregate tax burden in the United States.
Topic:
Economics and Government
Political Geography:
United States and Europe

520. Do You Know the Way to L.A.? San Jose Shows How to Turn an Urban Area into Los Angeles in Three Stressful Decades

Author:
Randal O'Tool
Publication Date:
10-2007
Content Type:
Policy Brief
Institution:
The Cato Institute
Abstract:
California cities have the least affordable housing and the most congested traffic in the nation. California's housing crisis results directly from several little-known state institutions, including local agency formation commissions (LAFCos), which regulate annexations and the formation of new cities and service districts; the California Environmental Quality Act, which imposes high costs on new developments; and a 1971 state planning law that effectively entitles any resident in the state to a say in how property owners in the state use their land. Cities such as San Jose have manipulated these institutions and laws with the goal of maximizing their tax revenues.
Topic:
Demographics, Environment, and Poverty
Political Geography:
United States