Assorted Links (3/25/2012)

Here’s a list of articles that I have been reading lately:

Even Central Bankers Have Had Enough

“The Federal Reserve Bank of Dallas calls the country’s top banks a clear and present danger to the economy. This is a member of the financial establishment itself calling for Too-Big-To-Fail banks to be broken up.”

Top Saudi Cleric Issues Fatwa: Destroy Churches | Via Meadia

“In recent years the king of Saudi Arabia has won plaudits around the world for promoting interfaith dialogs. Those efforts recently received a dramatic setback when the top religious official in Saudi Arabia issued a fatwa earlier this month calling on the faithful to destroy all churches in the Arabian peninsula.”

Obama Is Humbled by the Market

“The gas market, that is, for which the president branded himself as a superman. Now he’s desperate to become human again.”

The Hunger Games: Could a real country have an economy like Panem’s?

Be sure to read this Slate article before y’all head out to see The Hunger Games!

Obama’s tax hikes threaten a new US recession

I highly recommend reading Harvard economist Martin Feldstein’s Financial Times article (short and concise – just 1-1/2 pages!) entitled “Obama’s tax hikes threaten a new US recession” at!

Subsidizing wind and solar because China and Germany are doing it

“If President Obama is going to subsidize industries either because he likes them or because other Nations’ governments are subsidizing them, then we must acknowledge that he is engaged in industrial policy, aka state-managed capitalism, with an open question about whether the managing state is based…”

Hey Baby, Is That a Prius You’re Driving?

Interesting podcast about “conspicuous conservation” (apologies to Thorstein Veblen, who famously coined the (related) term “conspicuous consumption” more than 100 years ago). This podcast “…centers around a paper by (economists) Alison and Steve Sexton… called “Conspicuous Conservation: The Prius Effect and Willingness to Pay for Environmental Bona Fides.” Why single out the Toyota Prius? how much value do people who lean green place on being seen leaning green? The Sextons found that the Prius’s “green halo” was quite valuable — and, the greener the neighborhood, the more valuable the Prius is.”

The podcast also considers various other examples of “conspicuous conservation”, including a canvas tote bag example (“For about $20 you can announce your environmental bona fides with a canvas tote that says “I’m not a plastic bag.””) and how people frequently install solar panels on the side of their homes facing the street, even if it would be more efficient (in terms of sun exposure) to install panels on the other side of their homes…

What Does the Prudent Investor Do Now?

“In The Wall Street Journal, Princeton University economist Burton Malkiel writes that at a yield of 2.25%, the 10-year U.S. Treasury is a sure loser and stocks are a safer choice.”

Liberty and ObamaCare

Quoting from this article, “The stakes are much larger than one law or one President. It is not an exaggeration to say that the Supreme Court’s answers may constitute a hinge in the history of American liberty and limited and enumerated government. The Justices must decide if those principles still mean something.”

Obamacare: The reckoning

Quoting from Charles Krauthammer’s article (concerning next week’s Supreme Court review of Obamacare), “If Obamacare is upheld, it fundamentally changes the nature of the American social contract. It means the effective end of a government of enumerated powers — i.e., finite, delineated powers beyond which the government may not go, beyond which lies the free realm of the people and their voluntary institutions. The new post-Obamacare dispensation is a central government of unlimited power from which citizen and civil society struggle to carve out and maintain spheres of autonomy.”

Solar Tariff

Quoting from this article, “It’s bad enough in the first place that the American taxpayers are subsidizing domestic alternative energy companies through these Department of Energy loan guarantees. Now we’re also going to impose protectionist tariffs to shield them from foreign competition?”

Values & Capitalism

My new “favorite” blog is Values and Capitalism, which is located at According to its “About” page, “”Values and Capitalism” is an initiative at the American Enterprise Institute that explores the moral and material nature of a market economy. The project emphasizes how the free enterprise system both creates wealth and rests upon traditional American values. Our publications and events are intended primarily for college students, with a particular emphasis on engaging Christian students in a discussion on the compatibility of their faith and the system of free enterprise.”

The GOP Budget and America’s Future

“In The Wall Street Journal, Chairman of the House Budget Committee Paul Ryan writes that President Obama’s budget gives more power to bureaucrats, takes more from taxpayers to fuel the expansion of government, and commits our nation to a future of debt and decline.”

ObamaCare’s Flawed Economic Foundations

“In The Wall Street Journal, Douglas Holtz-Eakin and Vernon L. Smith note that the individual insurance mandate has almost nothing to remedying costs imposed on the system by those without coverage.”

We Are Ruled by Professors

This article is a must read; it reminds me of British historian Paul Johnson’s famous 25-year old essay entitled “The Heartless Lovers of Humankind” (cf., which is also well worth reading. Johnson notes, among other things, that “…Almost all intellectuals profess to love humanity and to be working for its improvement and happiness. But it is the idea of humanity they love, rather than the actual individuals who compose it.”

Why Prosperity Is Hip, And Raises Living Standards

“Since the election of 1800, and even before that in the inspiration for the American Revolution itself, the American people have always voted and fought for economic growth and prosperity.”

Millennials Are More ‘Generation Me’ Than ‘Generation We,’ Study Finds

“Millennials, the generation of young Americans born after 1982, may not be the caring, socially conscious environmentalists some have portrayed them to be, according to a study described in the new issue of the Journal of Personality and Social Psychology.”

Charles Murray on the Growing Cultural Divide

“Economics can’t explain the growing cultural divide between America’s upper and lower classes, says the author of Coming Apart.”

Lies My Newspaper Told Me: Five things Portlanders are wrong about

This is a somewhat humorous (and R-rated) essay that I bumped into recently; The 5 “lies” are:

1. Home solar is the wave of the future
2. Eating local will save the earth
3. Hybrid cars will solve our carbon woes
4. Home ownership: your best investment
5. Hands-free cellphones make multitasking effortless

What piqued my interest was the author’s reference to an important insight by the 19th century British economist William Jevons called the “Jevons Paradox”. The “Jevons Paradox” predicts that an “unintended” consequence of technological progress (e.g., hybrid cars and CFL’s) is that increased energy efficiency encourages more (rather than less) energy consumption. So the same person who would otherwise be careful about turning her incandescent lights off and driving her gas powered car less will think nothing of leaving her CFL’s on and driving her hybrid car more. Basically, by lowering the cost of energy use at the level of the individual, the “paradox” is that technological innovations such as hybrid cars and CFL’s may actually increase overall energy consumption by society.

Beyond the Gas Price Blame Game, a Thorny Case of Supply vs. Demand

More on why gas prices are so high, from Knowledge @ Wharton…

The Center for Public Integrity’s “State Integrity Investigation”

Report: Connecticut One Of The Least Corrupt States In America

“A study by the Center for Public Integrity, a nonprofit in Washington, D.C. , has found that Connecticut is one of the least corrupt states in the country.”

A tip of the hat goes to my colleague Jim Hilliard for pointing out the above referenced article this morning.

While I have never lived in CT and therefore cannot offer any personal anecdotes concerning “public integrity” in that state, I was surprised by the rankings assigned to two states where I have previously been a resident: Illinois and Louisiana. I can’t help but wonder about the integrity of any “study” that assigns my home state of Illinois a C; really? Illinois is (in)famous for its level of public corruption. A recent (12/7/11) New York Times about the sentencing of former governor Rod Blagojevich (see notes that the Blagojevich jail sentencing “…delivered a warning in a state where political leaders — some aldermen, congressmen, and even the governor who immediately preceded Mr. Blagojevich, George Ryan — seemed to be headed off to jail on a regular basis.” Also Louisiana, which was highly overrated in “earning” a “C-“, has a similarly long list of politicians who are convicts; at last count, the list includes a governor, an attorney general, an elections commissioner, an agriculture commissioner, three successive insurance commissioners, a congressman, a federal judge, a State Senate president, six other state legislators, and a host of appointed officials, local sheriffs, city councilmen, and parish police jurors…

Assorted Links (3/16/2012)

Here’s a list of articles (videos) that I have been reading (viewing) lately:

Watch Bernanke’s ‘Little’ Inflation Capsize U.S.: Amity Shlaes

“A little is all right. That’s the message Federal Reserve Chairman Ben S. Bernanke has been giving out recently when asked about the evidence of inflation in the U.S. recovery.”

The U.S. Is Number One

“April 1 is a date that every politician and business executive in America should circle on the calendar. That’s when Japan cuts its corporate tax rate to 36.8% from 39.5%. The United States will then hold the title of highest corporate tax rate, with average combined federal and state profit levies of 39.2%.”

How Much Is Apple Worth?

“In The Wall Street Journal, former hedge fund manager Andy Kessler notes that Apple, which touched $600 on Thursday, is still cheap if the company can keep up its torrid growth. If.”

Daniel Yergin: What’s Behind Rising Gas Prices?

Quoting from this article, “…election-year politics aside, the forces driving up prices at the pump are very different today than they were four years ago. In 2008, it was primarily the surge in oil consumption in emerging markets, disruptions, and a belief that the world was running short of oil (the so-called peak oil crisis). In 2012, the reason is mainly geopolitics.”

Can Britain Tolerate Christians?

“In The Wall Street Journal’s Houses of Worship column, Anne Jolis writes that Britain’s nondiscrimination laws have become a morass of claims and counterclaims affecting everyone from British Airways to small bed-and-breakfast owners.”

Life insurance for the wealthy

“Gene Simmons, (former bass player for the 70’s rock band Kiss), discusses his new venture that combines low cost loans with ways to finance life insurance policies for wealthy clients.”  Until now, I didn’t realize that Gene Simmons was into financial engineering… This CNBC video is quite interesting – Gene is all about “arbitraging the system”. Seems like a scam to me…

Book Review: The Hockey Stick and the Climate Wars

“Anne Jolis reviews The Hockey Stick and the Climate Wars: Dispatches from the Front Lines by Michael E. Mann.”

Default and the Nature of Government

I learned a lot from reading this article, which provides an historical perspective on the market for sovereign debt. Especially chilling is Mr. Pollock’s description of European sovereign debt crisis of the 1920s in which “Americans would lend Germany money, so it could pay France and Britain, so they could pay the U.S.” Quoting further, “In addition to promoting their own debt to all possible buyers at all times, governments promoted the World War I loans to the Allies; loans to Germany in the 1920s; loans to developing countries in the 1970s, which defaulted in the 1980s; loans to Fannie Mae and Freddie Mac until they failed; and loans to fellow governments in the European Union up to today.”

The Magician

“In The Wall Street Journal, Wonder Land columnist Daniel Henninger writes that in this re-election year, the U.S. president is making the world and all its troubles . . . vanish.”

The Filter Bubble — What the Internet is Hiding From You

Interesting and informative review of Elie Pariser’s new book entitled “The Filter Bubble: What the Internet Is Hiding from You” (cf.…

Goldman Rejects Claims Made by Outgoing Executive

This is one heck of a way to quit your job – see the op-ed for the GS executive’s “resignation” letter…

5 common credit card mistakes, and how to avoid them

The 5 most common mistakes are: 1) not paying bills on time (28 percent of Americans); 2) spending above credit limit (15 percent of college students); 3) paying unnecessary fees (25 percent of college students paid late fee); 4) not paying the entire balance (30 to 50 percent of Americans); and 5) overlooking changes to terms of account.

Vanderbilt’s Right to Despise Christianity

“Vanderbilt University has decided that Christian student groups that hold traditional Christian religious views are not welcome on campus. They will no longer be recognized as valid student organizations. Vanderbilt’s reason is that such groups require that their leaders be Christian.”  This article provides an interesting and informative legal exegesis of constitutional principles based upon a case study of Vanderbilt University, with references to various Supreme Court decisions from the past century…

The Bill for ObamaLoans

“The Wall Street Journal reports on a new study that shows 27% of student borrowers have past due balances.”

ObamaCare’s Bogus Cost Savings

“In The Wall Street Journal, Stanford University’s Daniel P. Kessler writes about the mounting evidence that the health law won’t make care more efficient or affordable.”

Romney vs. Obama on Corporate Tax Reform

“In The Wall Street Journal, Kevin Hassett and Glenn Hubbard write that by proposing special breaks for manufacturing, Rick Santorum follows the president’s incorrect lead and introduces a significant economic distortion.”

How Biased Is Your Media?: A New Freakonomics Radio Podcast

This is a fascinating podcast; apparently newspaper readers tend to be more liberal than non-newspaper readers, which accounts for why newspapers are often perceived as being left leaning. Basically, (profit-maximizing) newspapers are producing the product that their readers are looking for. If in fact the news media has grown more “liberal” over time, perhaps this is more of a demand-side rather than a supply-side phenomenon…

Get your PQ | Tim Groseclose

Tim Groseclose is a political science professor at UCLA; he has devised a very clever quiz for calculating one’s “Political Quotient”…

Obama’s Stimulus Helped Grow Debt, Not Economy

“Last week’s release of the February employment report set off the predictable partisan squabbling, with Democrats emphasizing the positive (227,000 new jobs) and Republicans the negative (the still-shrunken labor force and still-high unemployment rate).”

Why Are Gasoline Prices High (And What Can Be Done About It)?

Quoting from this article, “While U.S. policy cannot affect the world price of oil much in either the short or long term (though policies aimed at reducing instability in oil-producing regions couldn’t hurt), policymakers do have other options that might reduce the cost of gasoline, including: tax holidays at the state and federal level; strong-dollar and inflation-control policies at the Federal Reserve; and relaxation, suspension, or simplification of environmental regulations that fragment markets, increase market fragility, and boost refining costs.”

How Housing Policy Caused the Financial Crisis

In this video from, the AEI’s Peter Wallison “…argues that the meltdown was largely a consequence of government housing policy that underwrote unsustainable economic activity.”

California’s Greek Tragedy

“In The Wall Street Journal, Stanford professors Michael Boskin and John Cogan write that no one should write off the Golden State, but it will take massive reforms to reverse its economic decline.”

Fear Has Vanished From the Stock Market

“The stock market’s so-called fear gauge is fast asleep.”  This article correctly points out that the “price” of volatility as given by the CBOE’s “Implied Volatility” index, or VIX, has become extraordinary cheap. VIX measures investor expectations of future short term stock market (S&P 500) volatility, and in early trading today, VIX is trading at around 14.7. From an historical perspective (going back to the inception of this index in January 1990), this level falls within the lowest quartile, which means that 75% of the time, investors expect future stock market volatility to be higher than it is at current levels. It is as if an “eerie” calm has fallen over the stock market. The fact that expected financial market volatility is so low should give investors everywhere pause for thought; hopefully this is not the proverbial calm before the storm…


Lies My Newspaper Told Me

An article entitled “Lies My Newspaper Told Me” is a somewhat humorous (and R-rated) essay that I bumped into this morning; The 5 “lies” are:

1. Home solar is the wave of the future
2. Eating local will save the earth
3. Hybrid cars will solve our carbon woes
4. Home ownership: your best investment
5. Hands-free cellphones make multitasking effortless

What piqued my interest was the author’s reference to an important insight by the 19th century British economist William Jevons called the “Jevons Paradox”. The “Jevons Paradox” predicts that an “unintended” consequence of technological progress (e.g., hybrid cars and CFL’s) is that increased energy efficiency encourages encourage more (rather than less) energy consumption. So the same person who would otherwise be careful about turning her incandescent lights off and driving her gas powered car less will think nothing of leaving her CFL’s on and driving her hybrid car more. Basically, by lowering the cost of energy use at the level of the individual, the “paradox” is that technological innovations such as hybrid cars and CFL’s may actually increase overall energy consumption by society.

On the social scientific study of religion

I’d like to give a “shout-out” to University of Washington political scientist (and Baylor ISR Distinguished Senior Fellow) Tony Gill for his “Research on Religion” podcast series. Research on Religion (AKA “RoR”; see is a weekly podcast series which is devoted to the social scientific study of religion.

Since I commute regularly from my home in Austin, TX to my Baylor University office (which is located 1-1/2 hours away in Waco, TX), this gives me plenty of time to listen to podcasts. By far and away, my favorite podcast series is (not surprisingly) Econtalk (located at Both EconTalk and RoR follow a similar format, in that there is a new, roughly 1 hour long podcast every week that features an interview between the program host (Russ Roberts on EconTalk and Tony Gill on RoR) and a guest who has typically published a book or article on an important/relevant/timely topic.

Anyway, the direct iTunes link for RoR is The direct iTunes link for EconTalk is

Assorted Links (3/12/2012)

Here’s a list of articles that I have been reading lately:

An Insurance Policy Against Inflation

“In The Wall Street Journal, Charles Calomiris writes that raising banks’ cash reserve requirements on deposits will reassure markets about the Federal Reserve’s intentions.”

Uncle Sam’s Teaser Rate

“The Wall Street Journal explains the risks to the federal budget deficit and taxpayers when interest rates inevitably rise.”  Quoting from this article, “Low interest rates disguise the federal debt bomb.” The problem reported here is that out of the $10.7 trillion in outstanding “publicly-held” debt, more than $8 trillion of it must be repaid within the next seven years and more than $5 trillion falls due within the next 36 months. Although the short maturity structure of this debt enables Treasury to “take advantage” of historically low short-term rates, it pretty much ignores a rather fundamental funding risk; the implicit assumption behind this policy is that the global capital markets will always be LIQUID ENOUGH to refinance the US Treasury debts as they roll over and need to be refinanced. For a “Public Finance 101” tutorial, I recommend my “Political economy and the (inflationary) future” posting from November 2010 which is available @

The Good and Bad in Eric Holder’s Drone Defense

“In The Wall Street Journal, John Yoo writes that the administration finally acknowledges there is a ‘war’ on terror, but it still prefers the law-enforcement paradigm.”

Debt, the American Way

“Banks are lending, consumers are borrowing and China is busy making us more stuff.”

A Look at the Global One Percent

“Carnegie Mellon economist Allan Meltzer notes that income inequality is a phenomenon that is commonly experienced globally, and that the most important long-term factor behind this has been the addition “… of a few hundred million Chinese and Indians to the world’s productive labor force after 1980 slowed the rise in income for workers all over the developed world… The top 1% gain relatively because they are less affected by the hordes of newly productive workers.”

Cochrane and the Economist on Dodd-Frank

Here’s an important quote from University of Chicago financial economist John Cochrane concerning the Dodd-Frank financial regulation law: “This point really nails the fundamental flaw of Dodd-Frank. It never really thought about what the most important core problems were, and how to fix them. Instead, it basically thinks we didn’t have “enough” regulation, so proceeds to “regulate” more, and to regulate anything vaguely associated with “finance.” But, not knowing what went wrong really, it’s approach is just to deputize appointed officials great power to write rules, or, more basically, direct affairs in real time.”

Buffett’s Tax Win

“The lawsuit against the IRS by Warren Buffett’s Berkshire Hathaway subsidiary NetJets to avoid paying $643 million in taxes that the IRS said it owed was the subject of a post here back in November. Now, the Huffington Post reports, NetJets paid $2.5 million to lobbyists who got Congress to change the law so the company doesn’t owe the tax…a $643 million return on a $2.5 million lobbying investment is a pretty good return on investment even by Warren Buffett standards.”

Reagan Was A Sure Loser Too

“In The Wall Street Journal, Main Street columnist William McGurn looks back to the 1980 presidential campaign and writes that conventional wisdom about this year’s Republican presidential prospects sounds mighty familiar.”

Psychos on Wall Street

“The easiest way to explain the never-ending string of Wall Street scandals and implosions is to observe that a surprising percentage of people in the financial industry are psychos, according to Al Lewis.”

Krugman and British Austerity

“So far as unrelated historical events provide any evidence, the historical evidence in Britain supports the view that spending cuts bring about larger economic recoveries than deficit spending does.”

MOOCs, Large Courses Open to All, Topple Campus Walls

“Massive Open Online Courses are free, non-degree programs that have been drawing top professors and are seen as a tool for democratizing higher education.”

The Chicago way

My home state of Illinois would do well to “spin off” Chicago if it could. As this article notes, “Chicago… has the dubious distinction of being the federal district with the most (1,828 most public officials) convictions since 1976.”

Limbaugh and Our Phony Contraception Debate

“In The Wall Street Journal, Family Research Council fellow Cathy Cleaver Ruse writes that law student Sandra Fluke is demanding that a Catholic school give up its religion to pay for her birth-control pills.”

Bishop Dolan’s Liberty Letter

“The Wall Street Journal on the Catholic Cardinal’s vindication of religious freedom and his chilling visit to the White House.”

Has the Facebook Friend Bubble Burst?

“More social networkers are “Unfriending” people on Facebook, a new survey reveals.”

The Fundamental Law of Road Congestion

“Most of us—including politicians—believe that building more and wider roads reduces congestion. However, research dating as far back as the 1960′s proves these benefits are generally temporary as vehicles soon fill new lanes.”

Book Review: Michelangelo

“Michelangelo” meticulously chronicles the first two-thirds of the artist’s life, including his work on the Sistine Chapel.”

France’s Class Warrior

“In an editorial, The Wall Street Journal considers François Hollande, who says his proposed 75% tax rate is ‘patriotic.'” Apparently the French Socialist Party and US Treasury Secretary (Tim Geithner) both think that making the 1/3/5/10 percenters pay high marginal tax rates is a matter of “patriotism” (see “Geithner and the ‘Privilege’ of Being American” @…

Conservatives and the Mandate

“In The Wall Street Journal, Business World columnist Holman Jenkins writes that ObamaCare is a specific instance of a broader truth about America’s health-care policy—it’s grossly regressive.” Also see “My preferred approach for reforming health care…” (located at for related commentary by yours truly :-)…

Geithner and the ‘Privilege’ of Being American

Quoting from this article by economist Lawrence Lindsey: “Last week Treasury Secretary Tim Geithner said that the “most fortunate Americans” should pay more in taxes for the “privilege of being an American.” One can debate different ways of balancing the budget. But Mr. Geithner’s argument highlights an unfortunate and very destructive instinct that seems to permeate the Obama administration about the respective roles of citizens and their government.”

The Other GM Bailout

“The Wall Street Journal on the $18 billion tax gift Obama didn’t mention.” Time to put on your green eye shades and follow the money!