Brexit Roundup

The UK recently passed a referendum to leave the European Union. Regardless of your view on the outcome, it certainly is a momentous occasion with potentially far-reaching implications for the future of the EU itself.

Here are some articles I found informative on the issue:

A nice summary

A cautiously optimistic take

A couple of very positive takes (here and here)

A negative take

Here's a look at the fallout in the US stock market in the wake of the vote.

Crop Insurance Spending Myopia

In the last couple of weeks there's been a lot of focus inside the beltway on crop insurance. First, a 2-year budget deal between Republicans and Democrats planned to cut $3 billion from the crop insurance program. The deal would boost total spending by $80 billion (not including off-budget items) over 2 years. The $3 billion has since been restored to crop insurance in this bill.

More recently another bill called the "Assisting Family Farmers through Insurance Reform (AFFIRM) Act," has been proposed in both the Senate and House. The bill would cut $24.4 billion over 10 years from the crop insurance program by 1) capping RMA's premium share at $40,000, 2) eliminating RMA's share of the premium for all farmers with adjusted gross income over $250,000, 3) retaining the $3 billion cut to insurance providers, 4) reducing the commission paid to insurance salespeople, and 5) eliminating the Harvest Price Option.

The AFFIRM Act is, of course, being sold as a fiscally-conservative measure, but numbers can be deceiving. "Billion" is a big word, but context is important. 

I want to be clear here that I'm not advocating any cuts to or expansions of federal spending, I just want to bring some data to bear on the conversation.

Tradeoffs Between Social Policy and Growth

Mark Thoma's recent Fiscal Times column seems to me to be heavy on politics and light on economic analysis. He sets out to convince the reader that there is no tradeoff between social insurance provided by the federal government and economic growth, but I think there are good reasons to doubt this notion.

Acton Institute's Milton Friedman Quotes

July 31st would have been Milton Friedman's 103rd birthday. Several blogs featured tributes to Friedman, but I really enjoyed the Acton Institute's six quotes by Friedman on economics and freedom.

Friedman was a fantastic communicator of sound economics and the benefits of free markets to the public. His interviews, debates, and televised discussions with other thinkers are still relevant informative decades later.

I've reproduced the 6 quotes below:

The conditions for freedom: “History only suggests that capitalism is a necessary condition for political freedom. Clearly it is not a sufficient condition.”

On shortages: “We economists don’t know much, but we do know how to create a shortage. If you want to create a shortage of tomatoes, for example, just pass a law that retailers can’t sell tomatoes for more than two cents per pound. Instantly you’ll have a tomato shortage.”

On private property: “Nobody spends somebody else’s money as carefully as he spends his own. Nobody uses somebody else’s resources as carefully as he uses his own. So if you want efficiency and effectiveness, if you want knowledge to be properly utilized, you have to do it through the means of private property.”

On minimum wage laws: “The high rate of unemployment among teenagers, and especially black teenagers, is both a scandal and a serious source of social unrest. Yet it is largely a result of minimum wage laws. We regard the minimum wage law as one of the most, if not the most, anti-black laws on the statute books.”

On freedom and fairness: “’Fair’ is in the eye of the beholder; free is the verdict of the market. The word ‘free’ is used three times in the Declaration of Independence and once in the First Amendment to the Constitution, along with ‘freedom.’ The word ‘fair’ is not used in either of our founding documents.”

On free markets: “What most people really object to when they object to a free market is that it is so hard for them to shape it to their own will. The market gives people what the people want instead of what other people think they ought to want. At the bottom of many criticisms of the market economy is really lack of belief in freedom itself.”

Potpourri

It's been awhile since I've posted anything here. That's largely due to some projects with (self-imposed) deadlines I've been working on day and night over the last 7 days or so. I was able to get a draft of the regulatory impact paper off to my co-authors this evening, so when I get their feedback, I'll be posting a couple of things on it.

Caroline Baum of the Manhattan Institute has an informative article on recent changes in Fed policy and interest rate projections over the next few years.

I recently ran across this old post by David Henderson at EconLog. David calls these the "Ten Pillars of Economic Wisdom" and I have to agree that these would be a great way to start the semester in really any economics class.

Even though he has recently backed off his comments, I think this short post by Jim Clifton, chairman of Gallup, makes some good points. Labor force participation in the crucial 25-54 age range fell during the early 00's recession, never recovered, fell again in the 2008 recession, and has been falling since. Meanwhile, the teen labor force participation rate crashed in the 2008 recession and has been flat since. I fail to see how any of that is evidence of a recovery.

An interview with Thomas Sowell. Not much else needs to be said.

Don Boudreaux on the distributional effects of government debt. Short version: "We owe it to ourselves" is an absurd justification for gov't debt.