Welcome Back!

The Chef is back to blogging at The Economist's Cookbook. This is a great free-market blog and well worth visiting often. The more free-market bloggers, the better.

Let the bad investments die already

From the Mercury News:

LAS VEGAS — President Obama unveiled a $1.5 billion program to aid the states hardest hit by the foreclosure crisis, a small but targeted effort to address a housing problem that continues to resist government solutions.

The program, which administration officials called an "innovation fund," is modest in size and reach and comes as the administration's chief foreclosure-prevention program faces criticism for not doing more to help borrowers.

Speaking to the Las Vegas Chamber of Commerce, Obama said the program would allow states to find new ways to help struggling homeowners. "That means that here in Nevada, we're going to be able to prevent some foreclosures that otherwise would have happened," he said Friday afternoon. "The goal is to target communities at the center of the crisis and to empower local agencies that know these communities best."

Obama made the same promise at a town hall meeting earlier in the day, telling about 1,700 people in Henderson, a suburb near Las Vegas, that "government has a responsibility to help deal with this problem."

VH: Here we go again. The Federal government riding the white horse over the hill to "help" out distressed homeowners. So instead of letting these bad investments go quickly to bankruptcy and clearing out the housing market, we have a vain attempt to prop up a market that shows very little signs of improvement. I don't see how this helps people who, after this small injection of public funds, will most likely lose their homes because they can't find a job or the value of their homes are much lower than what they are shelling out each month in mortgage payments. The irony in all this is that it was the Federal government that led all of these poor people down this path of destruction by implementing all sorts of "affordable housing" incentives. If the Feds want affordable housing now and they want a quick recovery of the housing market, why not let prices drop to their equilibrium? Instead, we get more public funds thrown at lost causes.

Markets In All Things

Rock out at Denny's! Listen to some live acoustic music while digging your burger.

Markets In All Things

Ladies and gentlemen, The Study Ball.

Sweden Chooses Voucher Program for Its Schools

The highly socialized nation of Sweden entrusts Milton Friedman’s idea of the voucher system. And guess what? It works.

Mmmmm...Beer!

American small breweries are another example of the free-market at work; it enables innovation, choice, and quality.

25 Most Promising "Green" Businesses

Ask yourself this question: would government have been prescient enough to pick these likely winners? Probably not. Tax dollars would have been dumped and wasted in some pet subsidy "green" project simply because some politician wanted to bring federal funds to his/her district. I say let the free-market work; let it pick the winning technologies of the future.

The Road to Serfdom

Prof. Thomas E. Woods explores the reason why the Great Depression lasted for as long as it did: Interventionist economics. We may be on the road to serfdom today because the federal government is adopting similiar policies to those implemented during the 1930's in order to dig the economy out of its current woes.



HT: Liberty Pen

Banking deregulation reduces racial wage gap

A recent study by a group of Brown University academics found that one of the benefits of a deregulated banking industry is a reduced (but not eliminate) wage gap between blacks and whites. The theory is that when laws preventing banks from incorporating in other states (than they were already operating in) were eliminated, this eventually led to increased competition and it also created better access for entrepreneurs to start up businesses that would employ more people. The more people employed the more likely hood that racial bias would be reduced. The states with the highest racial wage gap before deregulation seemed to have benefited the most after deregulation. Big government advocates that want to punish the banking industry for the recent financial crisis would do well to look over this study carefully before over-reacting with regulatory schemes.

Power of the Market--Individuals vs. Government

This is a excellent clip from Milton Friedman's "Free to Choose." There is a section on a small mailing company (before Federal Express or UPS) that attempts to fight and compete against the government backed U.S. postal service. Guess what happens?

HT: Liberty Pen

Crude oil prices slammed by supply and demand

Oil continues to fall in global markets despite machinations by OPEC; The free-market works when it is allowed to. Since Democrats were howling several months ago that speculators and Big Oil were driving up costs at our expense, what about now? I'm sure they have a neat conspiracy theory to explain lower prices though. Lower gas prices will renew the call from the left for higher taxes to offset carbon emissions or for a government monstrosity like a carbon trading scheme. Stay tuned.

Kling on Freddie and Fannie and the Recent History of the U.S. Housing Market

Quite possibly one of the most educational podcasts that I have listened to regarding the debacle of Fannie Mae and Freddie Mac is this one on Econ Talk with Russell Roberts and Arnold Kling. The discussion covers all the intricacies and mechanisms between government and these large congress-created behemoths. If you don’t believe that government had a hand in the collapse of these two GSE’s (government sponsored enterprises), take some time and listen in.

The Bailout Cometh

Oh, it’s gonna cost us, dear taxpayer. We will rue the day that we allowed the government to take hold of the economy to the extent that it has over the last week or so. The bailout will cost roughly $6,500 per family or $2,000 per person. Ho, ho, ho, Merry Christmas to us! The Liberal hounds are howling their tortuous tune of how regulation would have saved us from all this. All I hear all day on lefty talk radio is the Glass-Stegall act and how it was wiped out by the evil free-market conservatives. “Oh, look what it has wrought!” Poor fools. This country is going to go down the wrong road and we will regret it later on with more government intervention. Sorry to break it to liberals but all of this is due to the government and it’s whacked regulatory bureaucracy. With this crisis and the populist call to have the feds take control, we get closer and closer to collectivism and more government control of our lives and economy. Progressives must be so happy.
Despite the bipartisan touchy feely-ness of the last couple of days, it looks like there is going to be a lot more ideological tugging and pushing rearing its ugly head. Does anyone want to doubt that our political class will screw this entire episode up?

Best Post I’ve read Today…

From Jeff Perren at Shaving Leviathan; He rightly notes that in this current crisis on Wall Street, government will always be overly zealous and heavy handed when it comes time to regulate an industry that is currently unpopular or deemed too “greedy.” Politicians will push for regulations not because they are sure that it will help all parties involved but to seem to their constituents that they are “doing something:”

Hundreds of economists from Adam Smith to Thomas Sowell have pointed out the obvious for generations. Beneath all the complex talk of derivatives, leverage, and the like they all say pretty much the same thing: Politicians, get out of the way. Let the market deal with it.

Pencils, Price Gouging, and Politics

I posted a comment on “price gouging” just yesterday and George Will has addressed the issue along with a review of economists Russell Robert’s book, “The Price of Everything: A Parable of Possibility and Prosperity." I just received the book myself and I intend to review it once I’m done.

Markets in Everything

JetBlue is auctioning seats on its EBay store; Prices for seats start at five cents. It’s possible to get a great bargain with Ebay auctions. Wouldn’t it be nice if football and baseball teams did the same thing for season tickets?

A lesson from Milton Friedman

The lessons of the Fannie and Freddie bailout are going to be very expensive for Americans. When a corporation is singled out by government for special favors and incentives in the name of the public good, in the case of Fannie and Freddie it was housing for the masses, the situation quickly becomes prey to crony-capitalism. Here is a clip from Milton Friedman on this very subject.

HT: Liberty Pen

Why the free-market works better than a command economy

I really can’t add much to what Thomas Sowell so elegantly states:

When amateurs outperform professionals, there is something wrong with that profession.

If ordinary people, with no medical training, could perform surgery in their kitchens with steak knives, and get results that were better than those of surgeons in hospital operating rooms, the whole medical profession would be discredited.

Yet it is common for ordinary parents, with no training in education, to homeschool their children and consistently produce better academic results than those of children educated by teachers with Master's degrees and in schools spending upwards of $10,000 a year per student-- which is to say, more than a million dollars to educate ten kids from K through 12.

Nevertheless, we continue to take seriously the pretensions of educators who fail to educate, but who put on airs of having "professional" expertise beyond the understanding of mere parents.

Less driving, less pollution: Thank you, free-market!

From SFgate:
This year's record-shredding spike in gasoline prices has finally ended, with prices throughout the country falling by more than a penny per day.

And American drivers can thank themselves for the drop.

Shocked by prices that reached $4.11 per gallon nationwide and $4.61 in California, drivers stopped buying as much fuel. That cut the demand for gasoline's raw material, crude oil. Crude prices dropped as a result, taking gasoline prices with them.

High gas Prices are working—consumers are conserving gas by driving less or choosing alternatives. While I still think that high gas prices are a heavy tax on the average American, it should be noted that high gas prices have done more to get people out of their cars (and to choose fuel efficiency) than any preaching by the Sierra Club or any other environmental group.

(Graph by Mark J. Perry@Carpe Diem)

The Free Market’s imagery problem

Free-market advocates are notoriously terrible at creating positive mass media propaganda to further its idea’s. The Left has developed a great talent at pulling the heart strings with very good results. The following observation is made by Joseph Packer:

Modern-day statists seem incredibly adept at commanding the attention of the public. Have you ever noticed how there exists an unending stream of documentaries criticizing the free market? Roger and Me, Wal-Mart: The High Cost of Low Prices, This Is What Democracy Looks Like, and Sicko are some of the titles that immediately pop to mind. I can’t remember ever seeing a libertarian documentary being widely promoted, despite the fact that libertarians make up roughly 13 percent of the American population, according to research by David Boaz and David Kirby.

Is there an American over the age of 25 who does not remember the terrible images from the Exxon Valdez oil spill? These images evoke strong anti-corporate feelings even though the company has now spent over $3 billion to alleviate the environmental impacts and has paid restitution to the affected fishing industry.

How many individuals have seen pictures, much less heard of, the Milwaukee disaster? Over 400 times as much pollution was knowingly dumped in Lake Michigan in 2004 by local governments that understood they would not be held accountable. Americans have been inundated with pictures of melting icecaps, but have they seen pictures of the children starving because of our energy policies? Numerous studies show that government policies pushing ethanol as a solution to global warming act to raise food prices, leaving the world’s poorest to starve. This on top of the fact that most scientists believe the corn ethanol being pushed by the government will have no effect on warming. Many Americans have been confronted with images of children working in factories; however, they do not see the images of the 5,000 Nepalese girls forced into prostitution because of U.S. trade sanctions against child labor. These facts are not secret, but their lack of visual presence means they are all but invisible to most Americans. (Read The Entire Article)

There has been over the last number of years an acceptable move to more government oversight and regulation by the general public and a doting Washington establishment; in the false hope that stricter government oversight will equate less volatility, less malfeasant behavior, and generally a safer world. But as Mr. Packer notes above, more government oversight does not necessarily lead to its purported results.