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221. Envisioning a Free Market in Health Care

Author:
D. Eric Schansberg
Publication Date:
12-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Although President Obama and the Democratic Congress were able to pass landmark health legislation, their efforts to reform health care ran into predictable political roadblocks. In a severe recession, taxing business and labor is obviously not helpful to economic recovery. Moreover, an array of overreaching sales pitches—claims of additional coverage without additional costs or rationing—piqued the cynicism of the general public. Given historical spending and budget deficits, an expensive new federal program is difficult to swallow. Mandates and restrictions on health insurance can only exacerbate the problem of rapidly rising health care costs (Tanner 2010).

222. Why Some States Fail: The Role of Culture?

Author:
Claudio D. Shikida, Ari Francisco de Araujo Jr, and Pedro H.C. Sant'Anna
Publication Date:
12-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
There are many studies on the relationship between economic development and institutions. Institutions can be classified as formal or informal. This article emphasizes the importance of the relationship between culture (informal institutions) and the quality of public goods supplied by the government, using a measure of state failure: the Failed States Index. The results suggest that culture is more important than formal institutions in explaining differences in the degree to which states fail.

223. Giving Up on Foreign Aid?

Author:
Gustav Ranis
Publication Date:
12-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Andrei Shleifer (2009) and David Skarbek and Peter Leeson (2009) offer devastating critiques of foreign aid. Following Peter Bauer's and, more recently, William Easterly's lead, they assert that if aid has any impact at all it is most likely to do harm. The only exception, offered by Skarbek and Leeson, is that it may do some good at the micro-project level. I would like to raise what is rapidly becoming a contrarian point of view.

224. What Aid Can't Do: Reply to Ranis

Author:
David B. Skarbek and Peter T. Leeson
Publication Date:
12-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Gustav Ranis addresses our recent article in this journal where we argued that foreign aid is unable to solve the economic problem and thus unable to make poor countries rich (Skarbek and Leeson 2009). The following quotations from his article summarize his main objections to our argument.

225. An Austrian Rehabilitation of the Phillips Curve

Author:
Robert F. Mulligan
Publication Date:
12-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
William Niskanen (2002) estimated a Phillips curve for the United States using annual 1960–2000 data. By adding one-yearlagged terms in unemployment and inflation, he was able to show that this familiar equation is misspecified. In his improved specification, Niskanen found that the immediate impact of inflation is to reduce unemployment, confirming the traditional understanding of the Phillips-curve relationship, but also finding that after an interval as short as one year inflation has generally been followed by increased unemployment. Though Niskanen was perhaps unaware of it, his results lend strong support to the Austrian model of the business cycle. In that model, credit expansion results in a temporary but unsustainable expansion. Unemployment is lowered in the short run, but once the policy-induced malinvestment is recognized, total output and income will be permanently reduced, and unemployment will increase.

226. Deposit Insurance and Banking Stability

Author:
Kam Hon Chu
Publication Date:
12-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Many financial systems were plagued by bank runs or subject to the risk of contagion when the recent financial tsunami unfolded. The runs on the U.S. banks Countrywide and IndyMac, Britain's Northern Rock, and Hong Kong's Bank of East Asia, among others, occurred about a few years ago, but they are still vivid to us. These runs were, of course, the symptoms rather than the root cause of the financial tsunami. In response to the most severe systemic global financial crisis since the Great Depression, policymakers and regulators in many countries have implemented various drastic regulatory measures to rescue the financial systems from meltdowns and to avert deep economic downturns. Such measures vary from country to country, but generally speaking they include governments' takeovers of banks or capital injections, quantitative easing techniques, provisions of liquidity by lax lender-of-last-resort lending, lower discount rates, and more generous deposit insurance.
Political Geography:
United States, Asia, and Hong Kong

227. An Analysis of the Financial Services Bailout Vote

Author:
Jim F. Couch, Mark D. Foster, Keith Malone, and David L. Black
Publication Date:
12-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Washington's remedy to the financial problems that began in 2008 was the Troubled Asset Relief Program (TARP)—the so called bailout of the banking system. Whatever its merits, it was, for the most part, unpopular with the American public. Lawmakers, fearful that the economy might actually collapse without some action, were likewise fearful that action—in the form of a payout to the Wall Street financiers—would prove to be harmful to them at the polls. Thus, politicians sought to assure the public that their vote on the measure would reflect Main Street virtues, not Wall Street greed.
Political Geography:
America

228. Restructuring the U.S. Postal Service

Author:
Robert Carbaugh and Thomas Tenerelli
Publication Date:
12-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
From 1775 when Benjamin Franklin was appointed as the first postmaster general of the United States, the agency known as the U.S. Postal Service (USPS) has grown to become an institution that delivers about half of the world's mail in rain, snow, and the dark of night. Employing about 656,000 workers and 260,000 vehicles and operating about 38,000 facilities nationwide, the USPS is the second-largest civilian employer in the United States, after WalMart. If the USPS was a private sector company, it would rank 28th in the 2009 Fortune 500 (U.S. Postal Service 2010).
Political Geography:
United States

229. This Time Is Different: Eight Centuries of Financial Folly

Author:
Kurt Schuler
Publication Date:
12-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Carmen Reinhart and Kenneth Rogoff's wide-ranging, quantitative study of financial crises is a landmark work. Reinhart and Rogoff have taken advantage of the advances of the last 20 years in economic history, personal computers, and the Internet to assemble a large data set covering most countries of any importance for the world economy. They are the first researchers to base their generalizations about financial crises on data that combine geographic breadth with great historical depth.

230. Afghanistan: A Cultural and Political History

Author:
Malou Innocent
Publication Date:
12-2011
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
In the Western mind, Afghanistan conjures up a rugged land of fractious, tribal people. From Alexander the Great and Genghis Khan, to Tamerlane and Mughal emperor Babur, virtually no conqueror has escaped “the graveyard of empires” unscathed. Even modern, industrial empires—the British and the Russian— suffered heavy losses. Why have foreign attempts to conquer Afghanistan proved so ineffective? Why did the U.S. invasion fail to bring stability?
Political Geography:
Afghanistan and United States