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May 2009

Volume 59, 2009

FEATURES

Ought Implies Can

Ethical Pronouncements without Economics Lead to Diastrous Public Policies

APRIL 24, 2009 by STEVEN HORWITZ

Too often ethical pronouncements have an air of hubris about them, as the pronouncer simply assumes we can do what he says we ought to do. By contrast, economics demands some humility. We always have to ask whether it's humanly possible to do what the ethicists say we ought. To say we ought to do something we cannot do, in the sense that it won't achieve our end, is to engage in a pointless exercise. If we cannot do it, to say that we ought to is to command the impossible.

Capitalism: Yes and No

APRIL 24, 2009 by CLARENCE B. CARSON

capitalism gained its currency from Marx and others as a blunderbuss word, misnames what it claims to identify, and carries with it connotations which unfit it for precise use in discourse.

A Crisis of Political Economy

We Need Structural Change to Overcome Record Budget Deficits and Boom-and-Bust Cycles

APRIL 24, 2009 by CHRIS MATTHEW SCIABARRA

The current state and the current banking sector require each other. They are so reciprocally intertwined that each is an extension of the other. Remember this the next time somebody tells you, as New York Times columnist Bob Herbert did, that "free market madmen" caused the current financial crisis that is threatening to undermine the global economy. There is no free market. There is no "laissez-faire capitalism." The government has been deeply involved in setting the parameters for market relations for eons; in fact, genuine "laissez-faire capitalism" has never existed. Yes, trade may have been less regulated in the nineteenth century, but not even the so-called Gilded Age featured "unfettered" markets.

Global Warming Revisited

Climate Change is a Godsend for Big-Government Enthusiasts

APRIL 24, 2009 by MICHAEL HEBERLING

Mainstream Macro in an Austrian Nutshell

APRIL 24, 2009 by ROGER W. GARRISON

While the events that have unfolded over the past year have required some outside-the-box theorizing by mainstream macroeconomists, the econo-mists of the Austrian school can offer a straightforward, fill-in-the-blanks explanation by drawing on the theory first articulated by Ludwig von Mises and then developed by Friedrich A. Hayek.

Do We Need Deposit Insurance?

APRIL 24, 2009 by JEFFREY MIRON

f banks can suspend convertibility, depositors know that runs merely precipitate suspension. This greatly reduces depositor incentive to panic and run. Allowing banks the right to suspend would probably not eliminate all runs, but it would plausibly limit them to banks that are insolvent rather than merely illiquid. The question, then, is whether a banking system with less regulation--no prohibition on suspension and no deposit insurance--might work better than current regulation--prohibitions on suspension, combined with deposit insurance and balance-sheet regulation. The evidence from the pre-1914 era suggests that the regime with less regulation has promise. Banks were not legally allowed to suspend convertibility during this era, but many did so anyway, sometimes with explicit approval of, or even encouragement from, regulators. This did not eliminate runs and panics, but the record suggests that suspension reduced contagion and failure in these episodes.

The Shame of Medicine: The Case of Alan Turing

The Persecution of Homosexuals is Paradigmatic of the History of Psychiatry’s Monumental Blunders

APRIL 24, 2009 by THOMAS S. SZASZ

The posthumous diagnosis of suicide as mental illness is the ritual degradation ceremony of our therapeutic age, much as the posthumous burning of the heretic's corpse was the ritual degradation ceremony of an earlier theological age.

The Two-Price System: U.S. Rationing During World War II

Price Controls and Rationing Led to Law-Breaking and Black Markets

APRIL 24, 2009 by ROBERT HIGGS

Making a Bad Bill Worse

Protectionism Reduces American Opportunities for Prosperity

APRIL 24, 2009 by JOHN STOSSEL
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