26 Oct Some Links
Wading waist-deep into political policies, the Fed is adopting, Eberstadt says, “the role of managing and even micromanaging the American economy through credit allocation, potentially lending vast sums not only to financial institutions but also directly to firms it judges suitable for government support. The Fed already dominates the markets for U.S. Treasury debt and mortgage debt as a result of previous, lesser crises. It is by no means inconceivable that the current crisis will propel it to a comparably dominant position in domestic commercial credit.” If socialism is government allocation of economic resources (and hence of opportunity), then . . .
John Cochrane of Stanford’s Hoover Institution, who blogs as the Grumpy Economist, notes that in the 2008 financial crisis, the Federal Reserve launched “creditor bailouts, propping up asset prices to keep investors from losing money, buying unprecedented assets.” The risk of moral hazard — incentives for reckless behavior — is obvious.
Whole Foods founder and CEO John Mackey joins forces with Loyola University economist Walter Block to correct the record about Milton Friedman and free markets – a record distorted by people who have no good grasp of either. A slice:
[Binyamin] Appelbaum wants to leave off “the public shaming of restaurants that refuse to give paid leave to sick employees” and have a law enacted compelling them to do just that. But what determines employee well-being is total wages, the monetary plus the non-monetary (health care, safety on the job, and other fringe benefits). The firm cares not one whit about the proportions; its eye is only on the cost of the total compensation package. It has every incentive to allocate remuneration in accord with worker preferences. Mr. Appelbaum does not realize that if paid family leave is given, and total compensation (based on productivity) does not change, then something else will be reduced, presumably take home pay. Most workers would rather have higher take home pay than paid family leave if this means to an agreed-upon end is implemented. This is basic economics 101, and there are few people who have contributed more to it than Milton Friedman.
Perhaps the most telling point in the proposed antitrust overhaul is the effort to topple the consumer welfare standard as the foundation for antitrust policy. Rather than protecting individual firms, the consumer welfare standard focuses enforcement on promoting efficient market outcomes. For consumers, this is measured by lower prices, more innovation, and more choices in the marketplace. The consumer welfare standard emerged more than 40 years ago and its emphasis on economic efficiency and competition rationalized antitrust policy. This replaced decades worth of antitrust enforcement that was often arbitrary and contradictory, generating less than optimal outcomes and prohibiting practices that were actually innovative and efficient.
Robby Soave interviews U.S. Education secretary Betsy DeVos (who, in my opinion, is one of Trump’s best cabinet appointees; anyone who is hated so fervently by teachers’ unions must be doing something right).
Read the Full Article here: >Cafe HayekCafe Hayek