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351. Cold Case Files: The Athenian Grain Merchants, 386 B.C.

Author:
Wayne R. Dunham
Publication Date:
09-2008
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Food price increases have always been politically sensitive. Price spikes like those that have occurred recently create the demand for action on the part of government to alleviate the problem. Yet, government intervention can often do more harm than good. This article examines one such example of a counterproductive response that occurred in 388 B.C. in Athens, Greece. In response to a negative supply shock to the grain market, regulators encouraged grain importers to form a buyers' cartel (monopsony), hoping that it would reduce retail prices by first lowering wholesale grain prices. In reality, the decrease in wholesale prices resulted in a decrease in the willingness of producers in other regions to supply grain to Athens, and retail grain prices increased substantially. Grain importers soon found themselves on trial for their lives in what is probably the earliest recorded antitrust trial. This article uses the information presented at that trial and other contemporary sources to evaluate the grain merchants' actions. More generally, it analyses the impact of a buyer's cartel or monopsony on prices and consumption.
Topic:
Food
Political Geography:
Greece

352. State Sanctions and the Decline in Welfare Caseloads

Author:
Michael J. New
Publication Date:
09-2008
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Much of the scholarship analyzing fluctuations in welfare caseloads focuses on such factors as the strength of the economy and the generosity of welfare benefits. However, with the passage of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) in 1996, states obtained significantly more control over welfare policy. Despite this shift, there has been relatively little academic research on the role of state policy variation in welfare caseload fluctuations. This article provides solid evidence that strength of state sanctioning policies, which give caseworkers the ability to restrict the benefits of welfare recipients, has played a very significant role in recent welfare caseload declines. A comprehensive regression analysis of welfare caseloads from all 50 states from every year from 1996 to 2002, finds that strong state sanctioning policies are highly correlated with both large welfare caseload declines and low caseload levels.

353. Creating Financial Harmony: Lessons for China

Author:
James A. Dorn
Publication Date:
09-2008
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
The current turmoil in global financial markets, which began with the U.S. subprime crisis in 2007, has shed a bad light on market liberalism. But it was the socialization of risk—not private free markets—that precipitated the crisis. Government sponsored enterprises (GSEs), not private enterprises, politicized investment decisions and overextended credit to high-risk households by buying up and guaranteeing subprime and Alt-A mortgages.
Political Geography:
China

354. Termites in the Trading System: How Preferential Agreements Undermine Free Trade by Jagdish Bhagwati

Author:
Daniel Griswold
Publication Date:
09-2008
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
This may sound like a “man bites dog” story—“Leading free trade economist denounces free trade agreements!”—but it is not such a strange tale in the world of international economics. Since the pioneering work of Jacob Viner in the 1950s, economists have known that bilateral and regional trade agreements can actually reduce a nation's welfare by merely diverting trade rather than creating new trade. In his latest book, Jagdish Bhagwati of Columbia University makes a tough, passionate, and concise, if not airtight, argument that the proliferation of such agreements is fatally undermining the global effort to advance free trade.

355. The Swiss National Bank: 1907–2007 by Werner Abegg, Ernst Baltensperger, et al., contributors

Author:
Kurt Schuler
Publication Date:
09-2008
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
The Swiss franc is the world's best-performing currency over the last century: it has lost only about 87 percent of its value in terms of gold, compared to 97 percent for the U.S. dollar and more than 99 percent for almost all other currencies. Switzerland's avoidance of wars, which is part policy and part lucky geography, has contributed to the relative stability of the franc. So have the conservative financial habits of its citizens, which have been reflected in the country's generally prudent government finances. But some credit undoubtedly belongs to the central bank, the Swiss National Bank. It has consistently pursued monetary policies that have produced low inflation, and has made few consequential errors since it was established in 1907. Its experience therefore should be of interest far beyond the borders of Switzerland. This centennial volume, by a constellation of 40 Swiss and foreign authors, is a history and an examination of issues in monetary policy the central bank has faced. It is typically Swiss in its occasionally ponderous thoroughness, pleasing design, and high quality.
Topic:
Economics, International Trade and Finance, and Monetary Policy
Political Geography:
France and Switzerland

356. Nudge: Improving Decisions about Health, Wealth, and Happiness

Author:
Ike Brannon
Publication Date:
09-2008
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
When it comes to social policy, inertia can be a bitch. While the sentiment may not seem all that profound, its gradual realization by economists and policymakers is beginning to have an impact on public policy. It has already wreaked havoc within the economics discipline.
Topic:
Economics and Health

357. Forgotten Continent: The Battle for Latin America's Soul

Author:
Juan Carlos Hidalgo
Publication Date:
09-2008
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
For most of this decade, Latin America has been neglected by the developed world. At least that is a recurring grievance from leaders and specialists in the region. The attention of rich countries has switched to terrorism in the Middle East and poverty in Africa, while pressing needs and conflicts remain unattended in Latin America.
Topic:
Terrorism
Political Geography:
Africa, Middle East, and Latin America

358. Heads in the Sand: How Republicans Screw Up Foreign Policy and Foreign Policy Screws Up the Democrats by Matthew Yglesias

Author:
Brendan Rittenhouse Green
Publication Date:
09-2008
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Credit where credit is due: At 229 pages, Matthew Yglesias has written the world's longest blog post. The first of a generation of journalists who came to prominence through their personal weblogs, Yglesias now blogs professionally for the Center for American Progress. Heads in the Sand has all the virtues and flaws of the medium Yglesias helped pioneer. It tends toward bite-sized arguments and pith over substance, which leaves some of the chapters with a stapled-together feel. Heads in the Sand gives the impression of a Web journal read straight through, with an extremely thin set of foot-notes substituting for links. Nevertheless, the book is by and large excellent. It is full of wit and erudition, stringing together a series of incisive arguments about politics and foreign policy.
Topic:
Foreign Policy and Politics
Political Geography:
America

359. Global Imbalances, Tanking Dollar, and the IMF's Surveillance over Exchange Rate Policies

Author:
Sitikantha Pattanaik
Publication Date:
09-2007
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
The exchange rate policies of the member countries of the International Monetary Fund could come under more intrusive scrutiny because of the June 15, 2007, decision of the IMF Executive Board on bilateral surveillance. This article highlights why the IMF decision cannot help in addressing the problem of global imbalances, even if it succeeds in delivering further appreciation of the exchange rates of surplus countries against the U.S. dollar. Moreover, there could be enormous challenges for effective implementation of the decision, which may further erode the credibility of the IMF. Even though disorderly correction of global imbalances remains a concern for every country, shifting the burden of adjustment entirely to surplus countries could have potentially damaging implications for international cooperation on global economic challenges. Past experiences of international cooperation to deal with global imbalances and currency misalignments suggest that countries rarely sacrifice their domestic economic priorities. Without appropriate macroeconomic adjustment measures, neither the high and growing U.S. current account deficit nor the savings glut of several surplus countries can be corrected solely by removing exchange rate misalignments.
Political Geography:
United States

360. Can Corruption Ever Improve an Economy?

Author:
Douglas A. Houston
Publication Date:
09-2007
Content Type:
Journal Article
Journal:
The Cato Journal
Institution:
The Cato Institute
Abstract:
Many in the world of developmental economics believe that corruption, the circumvention of the rule of law for private gain, leads to nothing but woe for any nation's economy, under any circumstances. Transparency International makes the elimination of corruption their mission, and many large multinational firms today echo that goal by building ethical codes that prohibit employees from engaging in practices deemed corrupt, regardless of local attitudes and customs toward the practices. The World Bank makes curbing corruption a linchpin in their campaign to improve governance. Reasons given for blanket condemnation of corrupt behavior are often utilitarian: Corruption is expected to increase the economic costs of doing business by undermining the laws of the land; this, in turn, reduces productive activities and investments, with negative consequences unfolding for human development and economic growth.
Topic:
Corruption, Economics, and Government