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  • Author: George C. Bitros
  • Publication Date: 02-2015
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: In the aftermath of the unprecedented 2008 financial crisis, researchers of macroeconomics, finance, and political economy are showing renewed interest in the old but very significant question: Are central banks in large reserve currency democracies—in particular, the U.S. Federal Reserve—prone to creating asset bubbles, and if so, how is it possible to prevent the misuse of the banks' discretionary powers?
  • Topic: Political Economy
  • Political Geography: United States, England
  • Author: Edmund S. Phelps
  • Publication Date: 02-2015
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: In his most recent tome, Edmund Phelps, the 2006 Nobel Laureate in Economic Science, addresses a topic crucial to successful national capitalist systems: the dynamics of the innovation process. Phelps develops his thesis around three main themes: In part one, he explains the development of the modern economies as they form the core of early—19th century societies in the West; in part two, he explores the lure of socialism and corporatism as competing systems to modern capitalism; and, in part three, he reviews post-1960s evidence of decline in dynamism in Western capitalist countries.
  • Topic: Economics
  • Political Geography: United States, Europe
  • Author: James L. Buckley
  • Publication Date: 02-2015
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: “The United States faces two major problems today,” writes James L. Buckley: “runaway spending that threatens to bankrupt us and a Congress that appears unable to deal with long-term problems of any consequence.” Contributing significantly to both, he argues, are the more than 1,100 federal grants-in-aid programs Congress has enacted—federal grants to state and local governments, constituting 17 percent of the federal budget, the third-largest spending category after entitlements and defense, with costs that have risen from $24.1 billion in 1970 to $640.8 billion in fiscal 2015. His “modest proposal”? Do away with them entirely, thereby saving Congress from itself while emancipating the states and empowering their people. If that sounds like a program for revising constitutional federalism, it is.
  • Topic: Government
  • Political Geography: United States
  • Author: Jason E. Taylor, Jerry L. Taylor
  • Publication Date: 03-2014
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: In September 2012, seven weeks before the presidential election—one in which top marginal tax rates were a major policy difference between the two major—party candidates-the Congressional Research Service (CRS) published a paper (Hungerford 2012) suggesting that there is no empirical evidence that top marginal tax rates impact U.S. economic growth. After all, top marginal tax rates were above 90 percent during the 1950s and early 1960s when the economy experienced rapid growth. Furthermore, marginal tax rate cuts in 2001 and 2003 were followed by the worst financial crisis since the Great Depression. The CRS study was widely reported in blogs, newspapers such as the New York Times, and The Atlantic magazine. It was portrayed as evidence refuting Republican candidate Mitt Romney's position that cutting the top marginal tax rate from 35 to 28 percent would spur economic growth and supporting Democratic President Barack Obama's position that top marginal tax rates could be raised to 39.6 percent with no cost to economic growth (Leonhart 2012, Thompson 2012).
  • Political Geography: United States
  • Author: Andrew Foy, Christopher Sciamanna, Mark Kozak, Edward J. Filippone
  • Publication Date: 03-2014
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: Since 1970, the annual growth in U.S. health care spending per capita has been more than double the real growth in GDP per capita: 4.3 percent versus 2 percent. Over that same time period countries belonging to the Organization for Economic Cooperation and Development (OECD) averaged an annual growth rate of 3.8 percent in health care spending per capita compared to only a 2.1 percent annual growth in GDP per capita. Eight of 20 countries had higher average annual growth rates in health care spending per capita than the United States (White 2007). In light of the pronounced institutional differences among these countries in medical financing arrangements, the similarity in the rate of health care spending growth is striking. Therefore, any explanation that seeks to account for the tremendous cost growth in health care over the last several decades must hold true across all OECD countries.
  • Political Geography: United States
  • Author: James A. Dorn
  • Publication Date: 07-2014
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: The Federal Reserve Act was passed on December 23, 1913. It was designed to provide an elastic currency that would respond to the needs of trade. There was nothing in the Act about price stability, interest rates, or full employment. The expectation was that the United States would continue to define the dollar in terms of gold, and that the operation of the international gold standard would ensure long-run price stability.
  • Political Geography: United States
  • Author: Charles I. Plosser
  • Publication Date: 07-2014
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: Douglass C. North, co-winner of the 1993 Nobel Prize in Economics, argued that institutions were deliberately devised to constrain interactions among parties—both public and private (North 1991). In the spirit of North's work, one theme of this article will be that the institutional structure of the central bank matters. The central bank's goals and objectives, its framework for implementing policy, and its governance structure all affect its performance.
  • Political Geography: United States
  • Author: Jerry L. Jordan
  • Publication Date: 07-2014
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: All of us who are interested in the century-long experience of central banking in the United States owe a great debt to Allan Meltzer. His several-years-long efforts gave us over 2,000 pages of careful documentation of decisionmaking in the Federal Reserve for the first 75 years (Meltzer 2003, 2010a, 2010b). The first score of years transformed a lender-of-last-resort, payments processor, and issuer of uniform national currency into a full-fledged central bank with discretionary authority to manage a fiat currency.
  • Political Geography: United States
  • Author: George Selgin
  • Publication Date: 07-2014
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: For a private-sector firm, success can mean only one thing: that the firm has turned a profit. No such firm can hope to succeed, or even to survive, merely by declaring that it has been profitable. A government agency, on the other hand, can succeed in either of two ways. It can actually accomplish its mission. Or it can simply declare that it has done so, and get the public to believe it.
  • Topic: Government
  • Political Geography: United States
  • Author: Athanasios Orphanides
  • Publication Date: 07-2014
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: The founding of the Federal Reserve was a good idea, but its performance during its first hundred years has been hampered by the lack of clarity of its mandate. At times its mandate was interpreted as requiring the pursuit of multiple targets resulting in the failure to safeguard price stability over time. This article reviews the evolution of the Federal Reserve's mandate and argues that Congress should clarify the primacy of price stability as the central bank's mandate to ensure that the Federal Reserve will better safeguard monetary stability going forward.
  • Political Geography: United States
  • Author: Lawrence H. White
  • Publication Date: 07-2014
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: Proposals abound for reforming monetary policy by instituting a less-discretionary or nondiscretionary system ("rules") for a fiat-money- issuing central bank to follow. The Federal Reserve's Open Market Committee could be given a single mandate or more generally an explicit loss function to minimize (e.g., the Taylor Rule). The FOMC could be replaced by a computer that prescribes the monetary base as a function of observed macroeconomic variables (e.g., the McCallum Rule). The role of determining the fiat monetary base could be stripped from the FOMC and moved to a prediction market (as proposed by Scott Sumner or Kevin Dowd). Alternative proposals call for commodity money regimes. The dollar could be redefined in terms of gold or a broader commodity bundle, with redeemability for Federal Reserve liabilities being reinstated. Or all Federal Reserve liabilities could actually be redeemed and retired, en route to a fully privatized gold or commodity-bundle standard (White 2012). All of these approaches assume that there will continue to be a single monetary regime in the economy, so that the way to institute an alternative is to transform the dominant regime.
  • Topic: Government
  • Political Geography: United States
  • Author: Richard H. Timberlake, Jr.
  • Publication Date: 07-2014
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: The Federal Reserve System is no longer just an unconstitutional monetary institution promoting a continuing inflation; it has also become, with quantitative easing, an unauthorized fiscal agent for the U.S. government. The fiat currency and equally fiat bank reserves it creates are much in contrast to the private currency and bank reserves that the commercial banks' clearing house associations provided in the latter half of the 19th century. It is that episode I review here.
  • Topic: Civil War
  • Political Geography: United States
  • Author: John A. Allison
  • Publication Date: 07-2014
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: I am going to talk from a different perspective because I am the only person who actually ran a bank that's been speaking today, and from that context I can tell you with absolute certainty that market discipline beats regulatory discipline. In fact, I will argue that regulatory discipline will always fail to reduce volatility and will slow economic growth. These observations are based on my understanding of public choice theory and particularly on 40 years of concrete experience in the banking business.
  • Political Geography: United States
  • Author: Martin Hutchinson, Kevin Dowd
  • Publication Date: 07-2014
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: Financial regulation is a recurring and central issue in contemporary policy discussions. Typically, leftists want more of it, while proponents of free markets want less, or preferably, none of it. We would suggest, however, that the central issue is not whether markets should be regulated, but by whom—by the market itself, which includes self-regulation by market practitioners, or by the state or one of its agencies. To put it in Coasean terms, what is the most appropriate institutional arrangement by which markets—including financial markets-should be regulated?
  • Political Geography: United States
  • Author: Gerald P. O'Driscoll, Jr.
  • Publication Date: 07-2014
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: The intellectual climate has never been more open to a critical analysis of existing monetary institutions both here and abroad. When the Germans agreed to a monetary union, they were promised that they would keep the Bundesbank; only the name would be changed to the European Central Bank. Instead, Germans with whom I have spoken now think they got the Banca d'Italia. In the United States, before the financial crisis, the Federal Reserve was held in high regard by the public. Now, at least in some circles, "the Fed" has become a term of opprobrium, not unlike "the IRS."
  • Political Geography: United States, Europe, Germany
  • Author: R. David Ranson
  • Publication Date: 07-2014
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: Passing its 100th birthday, the Federal Reserve is receiving unprecedented scrutiny. We (the public) are living through the consequences of its attempts to bolster the U.S. economy through exceptionally low interest rates and the conversion of great quantities of debt to money. Although these efforts are ongoing, we are disappointed. Even with the help of strenuous actions on the fiscal side, economic and credit-market recovery from the recession of 2008–09 was notoriously slow. It took 15 quarters for U.S. real GDP to pass its pre-recession high in the fourth quarter of 2007, compared to only 7 quarters following the deep recession of 1981–82. On a per capita basis, there was an even starker contrast between the two recoveries. Moreover, the Fed remains a suspect in the genesis of the financial crisis that precipitated the Great Recession. The ultimate test of its role as overseer and regulator of the commercial banking system met with a very poor result.
  • Political Geography: United States
  • Author: Dean Stansel, Melissa Yeoh
  • Publication Date: 01-2013
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: This article provides the first examination of the relationship between public expenditures and labor productivity that focuses on municipalities, rather than states or nations. We use data for 1880–1920, a period of rapid industrialization in which there were both high levels of public infrastructure spending and rapid growth of productivity. We use a simple Cobb-Douglas production function to model labor productivity in the manufacturing sector, letting total factor productivity depend on “productive” public expenditure by city governments—that is, on public spending that may raise the productivity of labor and encourage human capital accumulation. Using a data set of 45 of the largest cities in the United States, we find no statistically significant relationship between productive public expenditure and labor productivity in the manufacturing sector during this period. These findings are robust to three different econometric approaches. We do, however, find a strongly positive and statistically significant relationship between private capital and labor productivity. Our results are consistent with those of much of the literature examining this same relationship in states and nations and they have important implications for contemporary public policy issues.
  • Political Geography: United States
  • Author: James A. Dorn
  • Publication Date: 01-2013
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: In 2001, the U.S. gross public debt was about $6 trillion; a decade later it was $14 trillion; by the end of 2012 it exceeded $16 trillion. A large part of that increase was absorbed by foreign holders, especially central banks in China and Japan. With the U.S. government gross debt ratio now in excess of 100 percent of GDP, not including the trillions of dollars of unfunded liabilities in Social Security and Medicare, it is time to stop blaming China for the U.S. debt crisis.
  • Political Geography: United States, Japan, China
  • Author: Thomas Grennes
  • Publication Date: 01-2013
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: The value of government debt relative to the size of the economy has become a serious problem, and the problem is likely to grow in the future. Total debt of the U.S. government relative to gross domestic product increased substantially since the financial crisis and the Great Recession that began in 2007, but the debt ratio has been increasing since 2001. Gross debt relative to GDP increased from 55 percent in 2001 to 67 percent in 2007 to 107 percent in 2012. Comparable figures for debt held by the public (net debt or gross debt minus debt held by various government agencies) were 80 percent in 2011 and 84 percent in May 2012 (IMF 2012). As a result, the debt ratio is now the highest in U.S. history, except for World War II, when it reached 125 percent of GDP (Bohn 2010). U.S. debt is also high relative to the debt of other high-income countries, and projections of future debt place the U.S. government among the world's largest debtors (IMF 2011, 2012; Evans et al. 2012). Gross debt consists of all the bonds issued by the U.S. Treasury, but a broader measure that includes contingent debt results in a much larger debt (Cochrane 2011). Contingent debt includes unfunded obligations related to Social Security, Medicare, Medicaid, and loan guarantees to agencies such as Fannie Mae and Freddie Mac, and these obligations are so large that they have been described as a “debt explosion” (Evans et al. 2012). The sovereign debt crisis of the European Union has similarities to the U.S. debt problem, but it also has significant differences, as will be shown below. Interestingly, the poorer countries of the world that have frequently experienced debt problems in the past, have avoided major debt problems so far.
  • Topic: Financial Crisis
  • Political Geography: United States, Europe
  • Author: Michael Tanner
  • Publication Date: 04-2013
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: Margaret Thatcher once quipped about the problem facing modern social welfare states: "They always run out of other people's money." Today, in country after country, we are seeing that prophetic remark coming true. The headlines have been dominated by the problems of the so called PIIGS (Portugal, Ireland, Italy, Greece, and Spain), which face the most immediate economic crisis and have required economic support from the International Monetary Fund and other European countries. However, even countries with relatively robust economies, such as France and Germany, are facing unprecedented levels of debt. Unless the countries of Europe reform their welfare states, they will face some combination of huge tax increases or default on their obligations, both explicit and implicit. The result will be social upheaval and continued economic stagnation. The tough choices facing those countries are playing out today in parliaments and on the streets. The future remains highly uncertain. But how much better off is the United States? Our national debt exceeds $16.4 trillion and is increasing at a rate of more than $3 million per minute. And that only represents the debt that is actually "on the books." If the unfunded liabilities of Medicare and Social Security are included, then U.S. total indebtedness could top 800 percent of GDP.
  • Topic: International Monetary Fund
  • Political Geography: United States, Europe, Greece, France, Spain, Italy, Portugal, Ireland
  • Author: Jagadeesh Gokhale, Erin Partin
  • Publication Date: 04-2013
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: What are the implications of Europe's economic troubles for America? Several EU economies now face deep private and sovereign debt overhangs-a situation not unlike that in the United States, which also faces its own challenges with fiscal policy. How do the economic conditions in America and the EU compare in the short and longer terms? This article provides an overview of key indicators that summarize and help to project the two regions' economic prospects. It should be noted at the outset, however, that economic conditions and policies in the two regions differ in substantive ways. As in the United States, most European economies-members of the European Monetary Union (EMU)-now participate in a single currency (euro) system operated by the European Central Bank-the counterpart of the U.S. Federal Reserve System. However, the EU lacks a single central fiscal authority that operates a significant cross-nation transfer system. Having surrendered authority over monetary policy and, by the definition of a single currency, exchange rate policy, EMU member nations must depend on national fiscal policies to exert stewardship over their economies.
  • Political Geography: United States, America, Europe
  • Author: Michael Tanner
  • Publication Date: 04-2013
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: It does not take more than a glance at the headlines to see that European countries are in trouble. From Greece to Britain, from France to Portugal, it is becoming clear that the modern welfare state is unsustainable, facing fiscal catastrophe, stagnant economic growth, punishing taxes, and prolonged joblessness. European countries are being forced, kicking and screaming, to rethink their approach to social welfare. But how much better off is the United States?
  • Political Geography: Britain, United States, America, Europe, Greece, France, Portugal
  • Author: Pierre Lemieux
  • Publication Date: 04-2013
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: The American welfare state is not as different from the European welfare state as conventional wisdom would have it. If we define the welfare state as that part of the state (the whole apparatus of government at all levels) devoted to taking charge of the welfare of the public, welfare-state functions cover social protection (which includes public pensions), health, and education. These functions make up 57 percent of total U.S. government expenditures compared to 63 percent for the typical euro zone country. In this sense, the American welfare state is only about 10 percent smaller than the European welfare state.
  • Political Geography: United States, America, Europe
  • Author: Desmond Lachman
  • Publication Date: 04-2013
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: The European sovereign debt crisis offers a cautionary tale for the United States. This is the case since all too sadly the U.S. public finances appear to be on the same sort of unsustainable path that lies at the heart of the present European crisis. Whereas Europe, taken as a whole, currently has a budget deficit of around 3 percent of GDP And a gross public debt ratio of around 90 percent of GDP, the United States has a budget deficit of around 8 percent of GDP and a gross public debt ratio in excess of 105 percent of GDP.
  • Political Geography: United States, Europe
  • Author: Chris Edwards
  • Publication Date: 04-2013
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: Two decades ago Canada suffered a deep recession and teetered on the brink of a debt crisis caused by rising government spending. The Wall Street Journal said that growing debt was making Canada an "honorary member of the third world" with the "northern peso" as its currency. However, Canada reversed course and cut government spending, balanced its budget, and enacted pro-market reforms. It reduced trade barriers, privatized businesses, and slashed its corporate tax rate. The economy boomed, unemployment plunged, and the formerly weak Canadian dollar soared to reach parity with the U.S. dollar. The Canadian reforms were hugely successful. Today, the United States is in as bad or worse fiscal shape than Canada was in. U.S. leaders need to make major fiscal and economic reforms, and they can learn many lessons from Canadian efforts to restrain government and create a more competitive economy.
  • Topic: Reform
  • Political Geography: United States, Canada
  • Author: George S. Tavlas
  • Publication Date: 10-2013
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: This issue of the Cato Journal is dedicated to Anna Jacobson Schwartz, who passed away on June 21, 2012, at the age of 96. Anna was an economic historian whose scholarship was marked by, among other things, dedication, tenacity, and perseverance. Her career spanned three quarters of a century. When Anna was about 90, her son Jonathan complained (somewhat tongue-in-check) that he had thought about retiring, but did not feel comfortable doing so while his mother was still working. In 1936, she began collaborating with A. D. Gayer and W. W. Rostow on a study of fluctuations in the British economy between 1790 and 1850. The study was not published until 1953, although most of the work on the study had been completed by the early 1940s. Anna joined the National Bureau of Economic Research in 1941 and remained there for the rest of her life, continuing to go to her office until shortly before her death. She published her first NBER paper in 1947 with Elma Oliver, and her last with Michael Bordo and Owen Humpage in 2012. Her collaboration with Milton Friedman on A Monetary History of the United States, 1867–1960 began in 1948 and was not completed until 1963. The underlying objective of Anna's scholarship throughout her career was to use historical evidence, which she assembled with meticulous attention to accuracy, to understand the workings of the economy better.
  • Topic: Economics
  • Political Geography: United States
  • Author: Steven Gjerstad, Vernon L. Smith
  • Publication Date: 10-2013
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: Balance sheet crises, in which the prices of widely held and highly leveraged assets collapse, pose distinctive economic challenges. An understanding of their causes and consequences is only recently developing, and there is no agreement at all on effective policy responses. A preliminary purpose of this article is to examine in detail the events that led to and resulted from the recent U.S. housing bubble and collapse, as a case study in the formation and propagation of balance sheet crises. The primary objective of the article is to evaluate similar events around the world with a view toward assessing the economic performance of countries that have pursued varied alternative policies.
  • Political Geography: United States
  • Author: Thomas Hoenig
  • Publication Date: 10-2013
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: For the last 100 years, government officials and bank CEOs have insisted that new policies, rules, and laws—combined with greater market discipline, resolution schemes, and enhanced supervision—would ensure that future financial crises, should they occur, would be more effectively handled. In the United States, the creation of the Federal Reserve System and Federal Deposit Insurance Corporation are examples where such assurances were given to the public. More recently, the FDIC Improvement Act of 1991 and other legislation were intended to end public bailouts of failing banks and, in particular, prevent the moral hazard problem inherent in “too big to fail.” Such assurances seem even more significant following a U.S. Treasury (1991) study that found that “too big to fail” resolution policies used for six of the largest banks cost taxpayers more than $5 billion (in current dollars). If only the cost of the six largest bailouts in this recent crisis were just $5 billion. Unfortunately, it was many times greater.
  • Political Geography: United States
  • Author: James Dorn
  • Publication Date: 01-2012
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: Immigration has been instrumental in U.S. history in promoting economic development and increasing the range of options open to people. Millions of immigrants have come to America in search of opportunities to improve their lives and to raise their families. They have taken great risks and worked hard to ensure a better and freer future for themselves and their families.
  • Topic: Immigration
  • Political Geography: United States
  • Author: Bryan Caplan
  • Publication Date: 01-2012
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: Consider the following thought experiment: Moved by the plight of desperate earthquake victims, you volunteer to work as a relief worker in Haiti. After two weeks, you're ready to go home. Unfortunately, when you arrive at the airport, customs officials tell you that you're forbidden to enter the United States. You go to the American consulate to demand an explanation. But the official response is simply, “The United States does not have to explain itself to you.”
  • Political Geography: United States
  • Author: Gordon H. Hanson
  • Publication Date: 01-2012
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: As the 2012 presidential campaign gets under way, there will be intense public debate about the direction of economic policy. The continuing torpor of the U.S. economy and mounting government debt oblige candidates to detail how they would improve prospects for economic growth and reduce the federal budget deficit. We are sure to hear a great deal about plans to lower taxes, reduce government regulation, improve U.S. education, and rebuild infrastructure. But it is a near certainty that no candidate will make immigration part of his or her vision for achieving higher rates of long-run economic growth. To be sure, stump speeches will contain pat pronouncements about securing American borders, restoring the rule of law, or bringing undocumented immigrants out of the shadows, depending on the candidate's political orientation. Yet, it is a safe bet that after getting through these bullet points candidates will seek to change the subject. Immigration is a divisive issue that most national politicians prefer to avoid. President Obama checked his immigration box by making a halfhearted call for immigration reform in May 2011. That proposal was quickly buried under many more pressing items in his legislative outbox.
  • Topic: Immigration
  • Political Geography: United States, America
  • Author: Giovanni Peri
  • Publication Date: 01-2012
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: According to a survey in 2008, about 50 percent of Americans perceived immigration as a problem rather than as an opportunity (Transatlantic Trends 2008). Similar surveys conducted in the prerecession years of 2007 and before also showed that Americans were much less supportive of more open immigration policies than they were of other aspects of globalization such as free trade or free capital movements (Pew Research Center 2007). Since the onset of the recession of 2008–2009 and during the jobless recovery of 2010–11, public opinion about immigration further deteriorated. The idea that immigrants take American jobs, depress national wages, and threaten the U.S. economy has become even more rooted, as often happens during economic recessions. The political discourse accompanying the economic and labor market impact of immigrants is very intense and pervasive in the media but often generates “more heat than light”.
  • Topic: Immigration
  • Political Geography: United States, America
  • Author: Stuart Anderson
  • Publication Date: 01-2012
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: If the U.S. Congress and executive branch agencies formulated coherent policies, then here is what our immigration system would look like: highly skilled foreign nationals could be hired quickly and gain permanent residence, employers could hire foreign workers to fill niches in lower-skilled jobs, foreign entrepreneurs could easily start businesses in the United States, and close relatives of American citizens could immigrate in a short period of time. If all those things were true, then we wouldn't be talking about America's immigration system.
  • Topic: Immigration
  • Political Geography: United States, America
  • Author: Pia Orrenius, Madeline Zavodny
  • Publication Date: 01-2012
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: Immigration policy reform has reached an impasse because of disagreement over whether to create a pathway to legal permanent residence and eventual U.S. citizenship for unauthorized immigrants. The United States first—and last—offered a large-scale amnesty as part of the Immigration Reform and Control Act (IRCA) in 1986. Despite increased border enforcement and provisions for employer sanctions, the law failed to curtail unauthorized immigration. The 9/11 terror attacks renewed the emphasis on national security and led to stricter policies regarding undocumented immigrants. Over the past decade, border and interior enforcement has increased, while avenues that allowed some illegal residents to adjust to legal status have been eliminated, and a growing number of states have adopted laws aimed at driving out unauthorized immigrants.
  • Political Geography: United States
  • Author: Edward Alden
  • Publication Date: 01-2012
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: For the past two decades the United States, a country with a strong tradition of limited government, has been pursuing a widely popular initiative that requires one of the most ambitious expansions of government power in modern history: securing the nation's borders against illegal immigration. Congress and successive administrations— both Democratic and Republican—have increased the size of the Border Patrol from fewer than 3,000 agents to more than 21,000, built nearly 700 miles of fencing along the southern border with Mexico, and deployed pilotless drones, sensor cameras, and other expensive technologies aimed at preventing illegal crossings at the land borders. The government has overhauled the visa system to require interviews for all new visa applicants and instituted extensive background checks for many of those wishing to come to the United States to study, travel, visit family, or do business. It now requires secure documents—a passport or the equivalent—for all travel to and from the United States by citizens and noncitizens. And border officers take fingerprints and run other screening measures on all travelers coming to this country by air in order to identify criminals, terrorists, or others deemed to pose a threat to the United States.
  • Topic: International Security, Immigration
  • Political Geography: United States, Mexico
  • Author: Margaret Stock
  • Publication Date: 01-2012
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: The Declaration of Independence famously asserted that “all men are created equal,” but this assertion did not become an American constitutional reality until the Fourteenth Amendment was ratified in 1868. The Fourteenth Amendment's Citizenship Clause—intended to overturn the infamous U.S. Supreme Court decision in the Dred Scott (1857) case—states that “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the state wherein they reside.” Traditionally, the clause has been interpreted to confer U.S. citizenship on anyone born within the United States whose parents are subject to U.S. civil and criminal laws—which has historically meant that only babies born in the United States to diplomats, invading armies, or within certain sovereign Native American tribes have been excluded from birthright American citizenship. Alarmed by the thought that unauthorized immigrants, wealthy tourists, and temporary workers are giving birth to thousands of U.S. citizens, some want to change the long-standing rule by reinterpreting or amending the Citizenship Clause. But will this proposed change be good for America? Will it benefit America to reduce substantially the number of birthright U.S. citizens—and put in place more complex rules that would provide that U.S.-born babies are not created equal?
  • Political Geography: United States, America
  • Author: Daniel Griswold
  • Publication Date: 01-2012
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: Among the more serious arguments against liberalizing immigration is that it can be costly to taxpayers. Low-skilled immigrants in particular consume more government services than they pay in taxes, increasing the burden of government for native-born Americans. Organizations such as the Center for Immigration Studies, the Heritage Foundation, and the Federation for American Immigration Reform have produced reports claiming that immigration costs taxpayers tens of billions of dollars a year, with the heaviest costs borne by state and local taxpayers. No less a classical liberal than Milton Freidman mused that open immigration is incompatible with a welfare state. Responding to a question at a libertarian conference in 1999, Friedman rejected the idea of opening the U.S. border to all immigrants, declaring that “You cannot simultaneously have free immigration and a welfare state” (Free Students 2008).
  • Political Geography: United States, America
  • Author: Raúl Hinojosa-Ojeda
  • Publication Date: 01-2012
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: The U.S. government has attempted for more than two decades to put a stop to unauthorized immigration from and through Mexico by implementing "enforcement-only" measures along the U.S.-Mexico border and at work sites across the country. These measures have failed to end unauthorized immigration and have placed downward pressure on wages in a broad swath of industries.
  • Topic: Economics, Immigration
  • Political Geography: United States, Mexico
  • Author: Richard Vedder, Joshua C. Hall, Benjamin J. VanMetre
  • Publication Date: 01-2012
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: On most issues of public policy one can predict the position that individuals will take based on their ideological orientation. Immigration policy, however, is one topic where ideological perspective is historically useless in predicting individual positions. The decision of whether or not to liberalize immigration policy or to place greater restrictions on it is something that creates a divide not only between political parties but also within the parties themselves. Peter Brimelow (1999) is one prominent voice from the right who believes that the current immigration policies not only second-guess the American people but threaten the American nation. Brimelow is a strong supporter of placing restrictions on immigration at levels that are much lower than those that currently exist. A similar position is taken by the libertarian political philosopher Hans-Hermann Hoppe. Specifically, Hoppe (1998) argues that the United States will continue to suffer until policies are implemented that subject all migration to the condition of legally binding contractual invitations between the private domestic persons and the arriving immigrants.
  • Topic: Immigration
  • Political Geography: United States
  • Author: Robert B. Zoellick, Sebastian Mallaby
  • Publication Date: 06-2012
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: Sebastian Mallaby: We are here to talk to Bob Zoellick. I have been in Washington 16 years, Bob is the personification of the kind of silo busting polymathic energy which says, I am not just interested in international economics, I am not just interested in international relations, I am not just a U.S. government official, I am also going to do multilateral diplomacy. So Bob has been on all sides of those various divides. He has a voracious intellect, so it is always interesting to speak with him whether he is in office or out of office.
  • Topic: International Relations
  • Political Geography: United States, Europe, Washington
  • Author: Jeffrey M. Lacker
  • Publication Date: 06-2012
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: The financial crisis of 2007 and 2008 was a watershed event for the Federal Reserve and other central banks. The extraordinary actions they took have been described, alternatively, as a natural extension of monetary policy to extreme circumstances or as a problematic exercise in credit allocation. I have expressed my view elsewhere that much of the Fed's response to the crisis falls in the latter category rather than the former (Lacker 2010). Rather than reargue that case, I want to take this opportunity to reflect on some of the institutional reasons behind the prevailing propensity of many modern central banks to intervene in credit markets.
  • Topic: Financial Crisis
  • Political Geography: United States
  • Author: John A. Allison
  • Publication Date: 06-2012
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: I strongly believe that the recent financial crisis, ensuing recession, and slow recovery were primarily caused by government policy. The Federal Reserve made some very bad monetary decisions that created a bubble, i.e., a massive malinvestment. The bubble ended up being focused in the housing market largely because of government affordable housing policies—specifically, the actions of Freddie Mac and Fannie Mae, government-sponsored enterprises that would not exist in a free market. When Freddie and Fannie failed, they owed $5.5 trillion including $2 trillion in affordable housing (subprime) loans. It's true that a number of banks made serious mistakes, and I would have let them fail, but their mistakes were secondary and within the context of government policy.
  • Political Geography: United States
  • Author: George Melloan
  • Publication Date: 06-2012
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: “Well, if I had a nickel, I know what I would do. I'd spend it all on candy and give it all to you. . . . Cause that's how much I love you baby.” That wasn't a very generous proposition even in 1946, when country singer Eddy Arnold wrote those words. But at least a nickel would buy a good-sized Baby Ruth or Clark bar. Today? A jelly bean, perhaps?
  • Political Geography: United States, United Kingdom
  • Author: Benn Steil
  • Publication Date: 06-2012
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: The financial crisis that began unfurling in 2008 has led to the refashioning of the model central bank governor along the lines of Churchillian war leader, willing to try anything with the money he conjures to restore economic growth. This raises important questions as to what limits, if any, elected officials should impose on such aspiring great men, and what limits markets will ultimately impose on them if elected officials forbear. This article focuses on the second of these questions.
  • Political Geography: United States
  • Author: Judy Shelton
  • Publication Date: 06-2012
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: Something has gone terribly wrong with the world's monetary system. It's evident that some kind of fundamental reform needs to be implemented. The question is: Can governments be trusted to issue sound money, or is money too important to be left to the politicians?
  • Political Geography: United States
  • Author: Richard H. Timberlake
  • Publication Date: 06-2012
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: Over the course of more than two centuries, the United States has had two monetary systems. The first was a gold-silver standard that was framed in its essentials by the U.S. Constitution. In practical terms, it said that any legal tender money created by the federal union or the states or the "people" had to be gold or silver coins, or redeemable in gold or silver coins of specified weight and fineness. Since both gold and silver were constitutional media, the country had a bimetallic standard that ultimately became a monometallic gold standard.
  • Political Geography: United States
  • Author: Ron Paul
  • Publication Date: 06-2012
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: I've thought about and have written about the Federal Reserve for a long time. I became fascinated with the monetary issue in the 1960s, having come across the Austrian economists, especially Hayek and Mises, and I was very impressed with August 15, 1971, because the predictions made in the 1960s came about. As a matter of fact, Henry Hazlitt made that prediction in 1944 when the Bretton Woods system was set up. He said it wouldn't work and it would fall apart—and it did—so that was a strong confirmation.
  • Political Geography: United States, Australia
  • Author: Kurt Schuler, William McBride
  • Publication Date: 06-2012
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: During the 18th and 19th centuries and for part of the 20th century, more than 60 countries had free banking. The major characteristics of free banking are competitive issue of notes (paper money) and deposits by commercial banks, low legal barriers to entry, little regulation unique to the industry, and no central control of reserves (the monetary base) within the national monetary system (Dowd 1992, White 1995). Among the countries that had a form of free banking was the United States. Even after the freest period of free banking ended, with the Civil War, banks continued to issue notes until the federal government effectively monopolized note issue in 1935.
  • Topic: War
  • Political Geography: United States
  • Author: Lawrence H. White
  • Publication Date: 06-2012
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: Suppose for the sake of argument that we all agree to the following proposition: If we could change the monetary regime with zero switching cost, merely by snapping our fingers, we would prefer the United States to be on a gold standard. In the most general terms, a gold standard means a monetary system in which a standard mass (so many grams or ounces) of pure gold defines the unit of account, and standardized pieces of gold serve as the ultimate media of redemption. Currency notes, checks, and electronic funds transfers are all denominated in gold and are redeemable claims to gold. We then face the question: What would be the least costly way for the United States to make the transition to a new gold standard? We need to choose a low-cost method to ensure that the agreed benefits of being on the gold standard exceed the costs of switching over.
  • Political Geography: United States
  • Author: Kruti Dholakia-Lehenbauer, Euel W. Elliott
  • Publication Date: 10-2012
  • Content Type: Journal Article
  • Journal: The Cato Journal
  • Institution: The Cato Institute
  • Abstract: This article explores four questions. First, what theoretical frameworks help describe policy failure and success? Second, how might the decision that leads to failure or success be understood in terms of differing concepts of rationality and decisionmaking? Third, how does the discussion of risk and uncertainty as originally proposed by Frank Knight (1921) apply to a better understanding of both the first and second questions? Fourth, what is the relationship between serial and parallel processing and how are these administrative systems related to important aspects of the prior questions? Our chief contribution in this article is to show the ways in which these questions and their respective theoretical frameworks are interrelated as applied to one important contemporary policy question-climate change. We think our proposed integration of the various literatures offers important insights into the challenges policymakers face in deciding whether or not to adopt a particular policy.
  • Political Geography: United States