American business, once held in high regard and master of all it surveyed during the frenzied booming 1990s, suddenly finds itself cast upon the rocks. The economic cycle of boom and bust is fascinating stuff. Its essential elements are repeated endlessly throughout the dusty pages of financial history. All of this makes Murray Rothbard’s book, The Panic of 1819, particularly interesting, timely, and enlightening.
Errors are an inevitable part of human action, writes Gene Callahan. If the future were certain, we would not need to act. Yet many economic models assume all economic actors possess perfect information, all plans are coordinated, and all adjustments to new data are made instantly and without cost.
The latest self-appointed "savior" of capitalism is Senator John McCain of Arizona, who likes to speak of himself as "straight talking," but actually is nothing more than one of the many who are now pushing for destructive new regulations. William Anderson examines the proposals to empower politicians, of all people, to clean up business.
As soon as Abraham Lincoln and the new Republican Party gained power, the average tariff rate was quickly raised from a nominal 15 percent to 47 percent and higher, and remained at such levels for decades after the war. South Carolinian John C. Calhoun's free-trade arguments, as eloquent and advanced as they were, were no match for a federal military arsenal.
Last week, headlines around the world were screaming out the sad tale of WorldCom and its $4 billion or so misstatement of earnings. But should we really be surprised that another poster child of the boom--especially one whose growth has come through rapid-fire acquisitions led by a rock star CEO--has been revealed to be a hotbed of malpractice?
Insider trading laws, writes Dale Steinreich, have empowered the SEC to undertake a mission in information egalitarianism that favors certain classes of investors and strategies, and not others. Martha Stewart and ImClone have the book thrown at them, while the stock sales of Apple Computer's executives are ignored.
Libertarianism favors the political ideals set forth in the early republic, writes Adam Young: an order of peace, free trade and individual self-government, where the state was restricted in its interference in the life of the churches, and the state was largely irrelevant to the economy and to the daily lives of the average American citizen.
Thomas Jefferson once asked the seminal question, "Sometimes it is said that man cannot be trusted with the government of himself. Can he, then, be trusted with the government of others?" Our founding documents were designed, in part by his hand, to answer that question for America.
What's the difference between the cultures of the private sector and the public sector? Consider the difference between Arthur Andersen, which has no future, and the U.S. Forest Service, which will live forever. The answer can be traced to property rights, and it explains why market outcomes are always held to a much higher standard than public-sector outcomes.
The present unstable financial system cannot be fixed by means of a monetary policy that targets the price of gold, argues Frank Shostak. This framework, favored by supply-siders, is likely to further destabilize the economy. What is needed is not a reversion to the bankrupt Bretton Woods system, but a genuine gold standard, where gold is money.
