The Financial Crisis and the Free Market Cure

A new book I’m looking forward to reading is The Financial Crisis and the Free Market Cure: Why Pure Capitalism is the World Economy’s Only Hope. The author is John A. Allison, who is the new president of the Cato Institute.

A press release from Cato contains: “Allison believes that destructive economic policies are being made now based on a misidentification of the causes of the financial crisis and recession. In the book, he describes how government incentives helped blow up the real estate bubble to unsustainable proportions, how financial tools such as derivatives have been wrongly blamed for the crash, and how Congress completely misunderstands — and completely mismanages — control over financial institutions.”

Allison was in Wichita in 2009. My reporting on his appearances is at Causes of global finance crisis explained in Wichita and John A. Allison: The current problem, and what to do.

An interview with Allison is below.

The dreary tale of Obamanomics

Wall Street Journal: “So this is the dreary tale of Obamanomics: Keep borrowing more than $1 trillion a year and keep the Fed printing money at historic levels, in return for mediocre growth and stagnant incomes. The alternative is to stop punishing the employers, investors and workers who are the real source of growth. The Romney plan to cut tax rates, reform the tax code, restrain spending and repeal ObamaCare would be a good start. Mr. Obama will spend the next 10 days trying to persuade voters that 1.7% growth is the best we can do. If he’s re-elected, he’s probably right.” Chronic Fatigue Economy: We borrowed $5 trillion and all we got was this lousy 1.7% growth.

What the candidates won’t explain about outsourcing

Cato Institute video and Daniel Ikenson: “Like almost everything about the 2012 presidential campaigns, the bickering between the major party candidates over who is most responsible for shipping jobs overseas has been banal and utterly uninformative. While politicians have scared many Americans with hyperbolized sales pitches about the costs of foreign outsourcing, most people remain in the dark about the causes and benefits of outsourcing. What is foreign outsourcing anyway? Why do some businesses invest in sales operations, research and development, production and assembly operations, or the provision of services abroad? Are low wages and lax environmental and safety standards in poor countries really the magnets attracting U.S. investment? If so, why is 75% of U.S. direct investment abroad in rich countries? What explains the fact that the United States (high-standard, rich country that it is) is the number one destination in the world for foreign direct investment? Doesn’t the fact that businesses have options in our globalized economy serve to discipline some of the worst government policies?”

Huelskamp wants Americans to have answers regarding Libya

U.S. Congressman Tim Huelskamp: “News of the assassination of America’s ambassador to Libya and three other Americans engaged in the diplomatic service of our nation should have led everyone in Washington to seek immediate answers. After all, the rest of the country was hungry for information. Instead, President Obama and others in his Administration have given America the silent treatment. The answers they have provided have been incomplete, if not misleading.” The complete op-ed is at Americans deserve answers.

Tweets from Trump

Here’s a Trump-Tweet from today:

Michelle replied with these:

I’m with Michelle on this. Why does anyone pay attention to Donald Trump?

Why would the Capital-Journal print this?

Why would the Topeka Capital-Journal publish allegations about a Republican candidate when the only sources are two Democratic party political operatives? Matt Watkins, chair of Wyandotte County Democrats, is just trying to win an election using whatever techniques his ethical compass allows, which we can see is just about anything. But the Capital-Journal ought to be held to a higher level of accountability. I hesitate to link to the story, but here it is: Democratic chairman says Steineger under KBI scrutiny.

Cronyism and erosion of public trust

John Garen via Mercatus Center: “Large governments with broad powers engender competition for influence over those powers. This leads to cronyism, where certain groups obtain special privileges in exchange for political support. The academic literature indicates that, in addition to other negative effects, cronyism can cause public mistrust in government that limits the effectiveness of core government functions such as maintaining property rights and other individual rights. Survey data show a large decline in trust in government, much of which has occurred while government grew rapidly. Evidence indicates that government growth has been associated with rent-seeking and cronyism, leading to a withdrawal of trust. Thus, cronyism — bad government — can undermine even the appropriate functions of government. The literature also suggests that trust can be restored by the practice of good government. It seems that the best way to do so is with a smaller, more focused government that is centered on carrying out its core functions and to steer clear of cronyism.”

The complete essay is at GOVERNMENT CRONYISM AND THE EROSION OF THE PUBLIC’S TRUST: An Exploratory and Cautionary Essay.