Capital Commerce
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More Immigrants, More Jobs
Continue reading… 25 CommentsByron York repeats the conventional wisdom about immigration's effect on employment:
Is this time of great economic distress really the right time to argue for greater immigration? "You want to bring more people in?" asks one incredulous GOP aide on Capitol Hill. "That was a hard case to make when unemployment was four percent, much less when it's almost ten percent."
But if anything, greater immigration becomes more necessary when there's more unemployment.
This argument assumes that there are a limited amount of jobs out there, and so each additional person looking for a job means one less job for someone else. It's funny that this argument is coming from a GOP aide, because his or her own party seems to reject this zero-sum logic in every case except immigration. Look at the GOP response to the climate change bill just passed by the House: they argue that it will kill jobs by raising costs to businesses. But immigration restrictions also increase costs to businesses by reducing the supply of labor, thus making it more expensive. So why is it "incredulous" that anyone could have a problem with this job-killer?
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Sarbanes-Oxley Reform Needed For Stimulus?
Continue reading… 2 CommentsYesterday Thomas Friedman wrote about some ideas to improve America's capacity for innovation. Here were some (emphasis added):
Barrett argues that we should also use this crisis to: 1) require every state to benchmark their education standards against the best in the world, not the state next door; 2) double the budgets for basic scientific research at the National Science Foundation, the Department of Energy and the National Institute of Standards and Technology; 3) lower the corporate tax rate; 4) revamp Sarbanes-Oxley so that it is easier to start a small business; 5) find a cost-effective way to extend health care to everyAmerican.
I'm going to expand on point number 4. It might seem strange to think that Sarbanes-Oxley has anything to do with small business. After all, the law deals with the financial reporting requirements of public companies. Sure, there are public companies that are much smaller than others, and public companies with not that many employees, but these are phenomenally successful companies that represent only a tiny fraction of all the businesses in the country. They are very complex enterprises compared to your average business.
But the effects of Sarbox end up being felt outside the relatively small number of public companies.
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CBO Releases 'Off The Wall' Budget Estimates
Continue reading… 3 CommentsMichael Jackson is on the front page of just about every newspaper today. Buried within your newspaper you might find a story that is, I dare to say, a bit more important.
The Congressional Budget Office has just released two reports--one on Obama's budget, the other on the long-term fiscal outlook--that give some more concrete numbers on the coming growth of both the annual deficit and the long-term debt. Of course, it's nothing new that America isn't in great fiscal shape, but attaching numbers to that realization is necessary to really comprehend what's going on.
The CBO finds that under President Obama's budget, the deficit would be $9.9 trillion, or 9.9 percent of GDP, in 2009. Accompanying this, the CBO also finds the total debt held by the public to rise from 57 percent of GDP in 2009 to 82 percent (!) of GDP in 2019.
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An Immigration Compromise?
Continue reading… 19 CommentsThe economic crisis seems to have pushed the immigration debate to the wayside--even though lifting restrictions on foreign workers could arguably be a big stimulus in itself. But that doesn't mean that some on Capitol Hill aren't still trying to bridge the gap between people who don't want any kind of "amnesty" and those who want to make legal immigration easier.
The nonprofit group the Krieble Foundation recently promoted its "Red Card Solution" to the immigration issue with an event for members of Congress and their staffers, and they also had a National Press Club event where some members of prominent free-market groups like Freedom Works.
What's the idea?
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Regulators Intentionally Asleep At The Switch
Continue reading… 2 CommentsThomas Frank in the Journal today makes the now-familiar argument that financial regulations failed to avert the economic crisis not just because of the regulations themselves, but because of the people in charge of enforcement. The regulators were unduly influenced by the industries they were supposed to regulate. This is by no means a recent phenomenon, and Frank goes back to this historical example:
The first federal regulatory agency, the Interstate Commerce Commission, was set up to regulate railroad freight rates in the 1880s. Soon thereafter, Richard Olney, a prominent railroad lawyer, came to Washington to serve as Grover Cleveland's attorney general. Olney's former boss asked him if he would help kill off the hated ICC. Olney's reply, handed down at the very dawn of Big Government, should be regarded as an urtext of the regulatory state:
"The Commission . . . is, or can be made, of great use to the railroads. It satisfies the popular clamor for a government supervision of the railroads, at the same time that that supervision is almost entirely nominal. Further, the older such a commission gets to be, the more inclined it will be found to take the business and railroad view of things. . . . The part of wisdom is not to destroy the Commission, but to utilize it."
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Exclusive Conversation With Ron Paul: The Future Of The Federal Reserve
Continue reading… 70 CommentsPresident Obama's financial regulatory plan has created controversy over the role of the Federal Reserve in our economy like rarely before. The person in Congress with perhaps the most unconventional point of view on these issues in American politics is Congressman and former presidential candidate Ron Paul (R-TX), a longtime critic of the very institution of the Fed and fractional reserve banking. He has recently sponsored a bill that would audit the Fed, which has attracted cosponsors such as Dennis Kucinich (D-OH).
I talked to Congressman Paul about his unique perspective and why the Fed is controversial again.
Me: Do you think the Fed is the main culprit behind the current economic crisis?
Paul: I don't believe you can have financial bubbles without artificially expanding the supply of money and credit, and only the Fed can do that in collusion with the banks, who can operate under fractional reserve banking. So that's where the financial bubbles come from, whether it's housing or the stock market or the bond market. That's the source of the bubble, and that's what has to be addressed, and yet the Fed has been able to operate in secrecy on exactly how they allocate credit and what they do with international markets. So yes, the Fed is the number one culprit.
I guess the response from defenders of Greenspan would be that to jack up interest rates enough to defuse the housing bubble would have been really bad for growth and unemployment, and that was unacceptable at the time.
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How Kim Jong Il's Death Could Affect Investors
Continue reading… 4 CommentsRumors of the North Korean leader's death have hit a fever pitch after this story that the country is trying to import expensive medical equipment, presumably to deal with Kim's ailing health.
Instability coming out of North Korea tends to have a dampening effect on Asian financial markets and the value of South Korean won. But the last major brouhaha--when North Korea tested a nuke in May--barely made a peep with traders. Gary Dorsch of Seeking Alpha says that's because traders decided that "it was just a harmless display of Kim Jong Il’s temper tantrums that erupts once every few years."
But if North Korea were to lose its leader, the ensuing uncertainty might be taken more seriously precisely because no one seems to have a firm grasp on what would happen.
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California Leads Nation In Marijuana Legalization Debate
Continue reading… 33 CommentsIt seems that the spendthrift ways of politicians in Sacramento might do the job of the San Andreas fault earlier than expected: break the state up into pieces.
Could these be the desperate times needed to pass one desperate measure: legalize marijuana to raise revenue? We first heard about that proposal in California months ago, but there's been no action.
Tom Ammiano, the California assemblyman who proposed the legislation, spoke to the Seattle Times this week about how the debate is moving forward:
Assemblyman Tom Ammiano contends his bill would generate up to $1.3 billion in revenue.
"People who initially were very skeptical — as the polls come in, as the budget situation gets worse — are having a second look," the San Francisco Democrat said. "Maybe these issues that have been treated as wedge issues aren't anymore. People know the drug war has failed."
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Industrial Policy For Venture Capital?
Continue reading… 4 CommentsDr. Scott Shane--who used to do some blogging for US News--has started a blog on entrepreneurship at the New York Times. His first post considers the idea that Congress should make venture capital-backed firms eligible for Small Business Innovation Research grants. He says it's a good idea, but only if the federal government is honest enough to admit that the program would no longer be a free-market one, but the government picking winners among start-ups:
The market failure problem doesn’t influence venture-capital-backed start-ups. By definition, V.C.-backed companies pursuing innovations do not face market failure because the private sector is financing them. So where does this leave me? I’m in favor of the government making V.C.-backed start-ups eligible for S.B.I.R. grants but only if it is willing to own up to what the change in policy represents — a change in philosophy from one of government intervention to prevent market failure to one of industrial policy designed to get the maximum return from government investments in entrepreneurship.
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Obama's New Regulatory Plan: Cheese It, It's The Fed!
Continue reading… 3 CommentsQuick initial thoughts on the Obama administration's financial regulatory plan: It would give the Federal Reserve new powers to supervise "systemically significant" institutions--ie, players who are "too big to fail." The Fed would also become part of a council of regulators that would monitor systemic risk throughout the entire financial system.
But it was the Fed's lack of foresight that partially got us into this mess to begin with. How is it a solution to give the Fed more responsibility and ask it to predict more about the economy?
