In this clip Dan Mitchell of The Centre for Freedom and Prosperity talks about the Rahn Curve, and it is the spending equivalent of the Laffer curve (which is about taxation). If government gets too big it can have the effect of reducing prosperity, figuring out the ideal level is difficult as many affecting factors come into play, however, the ideal tends to be between 15% & 25%, in the USA current spending is c. 40% – so will it be any surprise to see crowding out or reduced productive sector activity?
Free markest create jobs, not governments
In this clip John Stossel talks about the free market being a job creator as opposed to Governments, he covers points similar to those that Milton Friedman covered in his documentary ‘Free to Choose’, and the truth of the matter is that governments are highly inefficient in creating growth, they have a place in prevention of disaster but managing the economy too closely is an error, sadly it is a popular one.
I, Pencil
This is a fascinating piece about a common pencil, written in 1958 it looks at the miraculous synergy that occurs, to make the seemingly common pencil, I hope you are inspired by this, I was! It is a testament to the fact that markets do in fact, offer so much good to people all around the world, that humans dealing freely with each-other will more often than not do so to the benefit of all parties. I, Pencil, By Leonard E. Read
I am a lead pencil—the ordinary wooden pencil familiar to all boys and girls and adults who can read and write.
Writing is both my vocation and my avocation; that’s all I do.
You may wonder why I should write a genealogy. Well, to begin with, my story is interesting. And, next, I am a mystery —more so than a tree or a sunset or even a flash of lightning. But, sadly, I am taken for granted by those who use me, as if I were a mere incident and without background. This supercilious …
‘What If’ … Economists were a few hundred years ahead of the game?
The Trinity Science Gallery is just across the street from our offices, proximity, linked with my interest in science (confession: I dropped out of Science in NUIM many years ago before studying business – but as a kid I actually wanted to be a scientist) means that I go there a lot, and they have these great exhibitions on regularly, the latest is called ‘What If’ and it poses questions that are part morality part science, part pie in the sky, but the fundamental aim of getting you thinking is totally successful.
Which brings me to something interesting that I noticed when I was there last week, one of the exhibitions was ‘What if we tried to make a toaster from scratch‘ (video here).
The actual description of this is as follows: ‘Thwaites (man behind the project) went on a quest to build an electric toaster from scratch, …
Krugmans take on deficits
Paul Krugmans feelings on deficits is falling further out of sync with many commentators, this is an interesting video as it plots the basic dynamics of Keynesianism against more Friedman like capital approaches.
A phone call with Bob Frank, author of ‘The Economic Naturalist’
One of my favourite things to do is to talk to the people who write the books I love, often they are hard to reach, others are surprisingly easy, some of them are hard to talk to, others are some of the nicest folks you could hope to have a conversation with, Bob Frank is very much the former and the latter, it took a while to reach him but it was worth waiting for, he has the quality I like best (and I mentioned it already in the review I did on his book ‘The Economic Naturalist’) – namely the ability to talk about complex ideas in plain language.
I called Bob at his house in Ithaca and below are the contents of some of that conversation.
KD: Bob, you have said before that you feel economics has gotten too numerical, that taking that direction can sometimes provide absolute ‘truths’ that simply are not what they seem, so where does the art come into it? Where …
The Meltdown should have surprised no one
The 2009 Henry Hazlitt Memorial Lecture, presented by Peter Schiff. Recorded at the annual Austrian Scholars Conference, Ludwig von Mises Institute, 13 March 2009. Austrian economists tend to have some very conservative views, and while many of them are unpalatable there are many that are equally pragmatic, Keynesian economics are definitely the popular choice as of late, but the free marketers still have valid points and Peter Schiff has a way of describing the economy and the situation in a very simple manner. He shot to fame for being one of the first practitioners in the USA to say that they were in a bubble and how the fallout would begin and what to expect when it did, his vision was almost 20/20.
MV=PT, quantitative easy in the UK, will it work?
The equation at the heart of prices, the ‘Quantity theory of money‘, centuries old but redeveloped by the likes of Irving Fisher, Ludwig Von Mises and Simon Newcombe, as well as being an equation restated by Milton Friedman which resulted in a Nobel prize. The equation, known as the “quantity theory of money” is MV = PT.
M is the quantity of money, V is the speed money flows round the economy, P is the level of prices and T is the number of transactions.
The formula has had one consistent feature, namely controversy. If you believe V and T are stable, then control of the money supply guarantees control of inflation. Quantitative easing (which they are talking about presently in the UK) raises M, so if V is fixed, it will push up P or T or both.
In today’s recessionary and deflationary world, that would be a welcome result. However, if …
When will the inflation arrive?
TIPS market (treasury inflation protected securities) are showing a deflated one year but an increase on the five and ten, many feel this is too low and we’ll likely see changes in the bond market soon after stimulus money starts to flow through. This is one trend to pay attention to.
The Stimulus Scam
In this clip Peter Schiff argues against the stimulus packages, calling for less government and a need for savings. Normally economic theory supports that increasing savings during a downturn (Keynes – paradox of thrift) hurts the economy. Peter says ‘au contraire’ and this clip is an interesting take on the man they named ‘Dr. Doom’, he is however, the same man who saw with absolute foresight the coming financial crash and he wrote a book about it called ‘Crash Proof’, he is a fascinating commentator.