May 31, 2016

The Disappointing Libertarian Party

The Libertarian Party got a fair amount of media attention over the Memorial Day weekend, thanks to their convention in Florida. The libertarians nominated former New Mexico Governor Gary Johnson and former Massachusetts Governor William Weld as their ticket for the presidential election. 

Judging from the discussions in libertarian-leaning online forums, the Johnson-Weld ticket is more than a little controversial. Most critics focus on Weld's Democrat background, questioning his libertarian credentials. Few seem to want to raise concerns regarding the credentials of Gary Johnson, though his spending record as governor of the Land of Enchantment should grab the attention of all true-to-the-core libertarians: on average, total state spending increased by more than nine percent per year under Johnson's gubernatorial tenure.

May 19, 2016

Industrial Poverty: The U.S. and Canada

Yesterday I gave an updated, condensed version of the concept of "industrial poverty", a new era of economic stagnation that began in the late 20th century. It gradually replaced the decades-long era of unprecedented economic expansion that began after the Great Depression.

My conclusion was that large parts of Europe are dangerously close to, or at risk of falling into, the trap of industrial poverty. This means that the era of stagnation that first made itself known in the 1980s, then spread like a bonfire in the 1990s, has gradually become the norm in Europe. Half of all EU member states exhibit three or four of the five characteristics of industrial poverty: 

May 18, 2016

Industrial Poverty: The European Wasteland

My 2014 book about the European crisis (which I shamelessly market here on this blog) actually discussed an important topic: the long-term consequences of a large, burdensome welfare state. I was inspired to write the book by the Great Recession, but also the fact that Europe, unlike the United States, for a long time has been trending toward economic stagnation.

The thesis of my book was that Europe has left the era of growing prosperity of the mid-20th century. That was the era when children almost certainly would grow up to live a more prosperous life than their parents. It worked for two, maybe three generations. Then Europe left that era and entered a new one where the future of the growing generation is considerably more pessimistic than it was during the era of growing prosperity.

I dubbed this new era "industrial poverty" (which was also the title of my book). The term has both a rhetorical meaning and testable analytical content. Rhetorically, it distinguishes an era of stagnation in a developed nation from the living conditions in developing nations, but also from the experience from a developed nation with a strongly growing economy.

May 17, 2016

Macroeconomics and the Welfare State, Part 3

In recent years the welfare state has become a non-issue in both academic and public-policy literature. This is especially the case among its supposed critics: conservatives and libertarians. 

There are isolated exceptions. In academia, they are a dying breed; in public policy, Cato Institute Senior Fellow Michael Tanner is the most noteworthy of very, very few exceptions. Through a relentless stream of op-eds, policy papers and research reports, Tanner keeps the public aware of the big cost of our entitlement programs and reasonable reform ideas.

But not even Tanner can break through what seems to be a universally accepted premise among conservatives in the United States, namely that...

May 14, 2016

Macroeconomics and the Welfare State, Part 2

The welfare state intrudes on people's ability and desire to provide for themselves. Its intrusion comes in three different forms: by providing work-free income; by regulating individual and corporate activity; and by excessive taxation.

According to assorted reliable data sources (Eurostat, Bureau of Economic Analysis, Office of Management and Budget, Bureau of the Census) total government spending equals 40 percent of GDP in the United States and 48 percent in the euro zone. These are frighteningly large numbers, especially for the U.S. economy which historically has been saved from Europe's excessively burdensome government. 

May 10, 2016

Macroeconomics and the Welfare State, Part 1

The Western world is facing a major economic problem: the growth rates of the European and American economies have fallen to historically low averages. I highlighted this problem in my 2014 book Industrial Poverty, where I pointed to how GDP growth has essentially been cut in half over the past 50 years. 

On May 2 University of Chicago economist John Cochrane made somewhat the same point in the Wall Street Journal:

May 1, 2016

Anarcho-Capitalism: A Libertarian Nightmare

The fight for economic freedom goes in many different directions. Some of its proponents concentrate on tax cuts, others on reforming government spending. Another target is government regulations, which according to some estimates cost the U.S. economy some $1.8-2 trillion per year.

It is tempting to say that all venues to advance economic freedom are worth the while. After all, less government is always better, is it not?