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91. The Welfare State as an Underlying Cause of Spain's Debt Crisis

Author:
Pedro Schwartz
Publication Date:
04-2013
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
The ongoing crisis that so dramatically hit Spain in 2008 was at least in part caused by the countercyclical monetary policy the Federal Reserve and the European Central Bank applied in the first years of the new century. Their artificially low interest rates must in part be responsible for the excessive leveraging in banks, businesses, and households. Their unwarranted use of monetary policy to foster growth has recoiled on them with a vengeance. Now central bankers and their political masters find that they cannot perform as expected. A constant feature of financial crises in the past two centuries, as Reinhart and Rogoff (2010) have noted, is that, when banks collapse, companies fail, and families go insolvent they all turn to the central bank and the government to bail them out. The authorities usually find it difficult to answer those anguished calls even when they have the power to print money, so that devaluations and write-offs ensue.
Political Geography:
Europe and Spain

92. Market Failures, Government Solutions, and Moral Perceptions

Author:
J. R. Clark and Dwight R. Lee
Publication Date:
04-2013
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
It should be obvious to even the casual observer that both markets and governments fail—neither comes close to achieving perfection. Externalities, both positive and negative, are the most common explanation for market failures. The undersupply of public goods, for example, is seen as a market failure, and is the direct result of a positive externality being generated when a person contributes to a public good which, by definition, benefits others whether they contribute or not. Similarly, excess pollution is seen as a market failure resulting from the negative externality of people imposing uncompensated costs on others by emitting pollutants into the environment. But externalities are just as commonly the result of government activity as they are market activity. For example, many government transfers are best seen as negative externalities motivated by the desire of politically influential groups to benefit at the expense of others.

93. 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

94. Red Ink: Inside the High-Stakes Politics of the Federal Budget

Author:
Daniel J. Mitchell
Publication Date:
04-2013
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
If you want a primer on fiscal policy issues that gives you an establishment perspective, David Wessel's Red Ink should be your cup of tea. If you thought the 1990 budget deal was a good thing and if you want something similar today, you should read Red Ink to have your views reinforced.

95. The Righteous Mind: Why Good People Are Divided by Politics and Religion

Author:
Aaron Ross Powell
Publication Date:
04-2013
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
The Righteous Mind offers a comprehensive and intriguing answer to that age-old political question, "Why do so many people disagree with me?" After all, I believe what I believe because I think the evidence and arguments are convincing. Otherwise, I wouldn't believe it. So why do others disagree?

96. Curbing Campaign Cash: Henry Ford, Truman Newberry, and the Politics of Progressive Reform

Author:
John Samples
Publication Date:
04-2013
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
No one has yet written a detailed history of campaign finance regulation, even limited to the United States. In 1988, Robert E. Mutch published Campaigns, Congress, and Courts: The Making of Federal Campaign Finance Law. He then embarked on research seeking to fill out that story in the late 19th century. My own The Fallacy of Campaign Finance Reform combines public choice analysis with political theory in a way that historians might not recognize. Ray La Raja's excellent Small Change: Money, Political Parties, and Campaign Finance Reform Examines a larger historical tableau from a political science perspective. Paula Baker is apparently at work on a broader history of campaign finance and its regulation. This work began as a case study in that project and grew into a book. I look forward to the broader history, but I am happy to have this work.
Topic:
Reform
Political Geography:
Europe

97. Editor's Note

Author:
James A. Dorn
Publication Date:
10-2013
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
This issue of the Cato Journal features the papers from Cato's 30th Annual Monetary Conference— Money, Markets, and Government: The Next 30 Years —which was held in Washington on November 15, 2012. After 30 years, it is well to recall F. A. Hayek's advice: “All those who wish to stop the drift toward increasing government control should concentrate their effort on monetary policy.”
Political Geography:
Washington

98. 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

99. Monetary Policy during the Past 30 Years with Lessons for the Next 30 Years

Author:
John B. Taylor
Publication Date:
10-2013
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
The 30th anniversary of the Cato Institute's monetary conference series provides an excellent opportunity to take stock of what we have learned about monetary policy in the past 30 years and to draw lessons for the next 30 years.

100. Fed Policy: Good Intentions, Risky Consequences

Author:
Charles I. Plosser
Publication Date:
10-2013
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
The last five years have been an extraordinary time for the global economy and monetary policymakers. The financial crisis and the severe global recession that followed have tested our resolve, our patience, and our economic theories. To restore the health of ailing financial markets and economies, central banks have driven shortterm interest rates to essentially zero, expanded their balance sheets to unprecedented levels, and engaged in market interventions that have blurred the lines between monetary policy and fiscal policy.
Topic:
Economics and Health