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It is far too early to render final judgment on the Obama presidency. All the chatter about his “legacy” overlooks two obvious realities. The significance of Obama will depend heavily on events that have not yet happened (for starters, the fate of the Iranian nuclear deal) and comparisons, for better or worse, with his successor. Still, it’s possible to make some tentative observations.
As I’ve written before, the administration’s greatest achievement was, in its first year, stabilizing a collapsing economy and arguably avoiding a second Great Depression. Even now, only eight years after the…

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Free trade suffered a series of setbacks in 2016. For the first time in decades, Democrats and Republicans aligned in opposition to liberalization. Public opinion also began to shift. Support for free trade fell to historic lows among Republican voters.
How will these developments affect free trade moving forward?
All signs point toward another tough year. But free trade’s opponents should not cheer too loudly. Their main targetAmerica’s trade agreementsplay a vital role in regulating global markets. In an uncertain global economy, these regulations are needed more than ever.
In the…

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A parade of news stories tell Americans they face a crisis of insufficient retirement saving, with retirement savings gaps in the trillions of dollars. Many commentators look back fondly on the days of traditional defined benefit pensions, lamenting the shift to 401(k) and IRA plans. Some advocates propose big changes to our retirement system, such as expanding Social Security, repealing tax preferences for 401(k)s, and setting up retirement plans run by state governments.
But heres the reality: in our 401(k) world, more Americans are saving larger amounts for retirement than…

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Martin Luther King proclaimed that he had a dream that “…my four little children will one day live in a nation where they will not be judged by the color of their skin but by the content of their character.” His dream was far more powerful than it is given credit for. It is a general call for freedom and free-market prosperity. People can not be free unless they are free from the constraints of government and can choose where to work, what to do, where to travel and reside, what to purchase, what school to attend, and so on, on the basis of what they perceive is best for them and…

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Following his anticipated confirmation, Treasury Secretary nominee Steve Mnuchin will exert tremendous influence when it comes to reshaping America’s burdensome regulatory agenda and fixing our outdated, complex tax code.To help fulfill incoming President Donald Trump’s campaign promise to spur investment and power job growth in a thriving U.S. economy, Mr. Mnuchin should move quickly toward industry-neutral, comprehensive corporate tax reform. Doing so will reverse eight years of the Obama administration’s regulatory overreach and punitive business tax policies. Rhetoric from both…

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I think it absolutely clear that the American people, as well as so many other groups of concerned citizens around the world, have been incredibly patient. Over the last decade, in particular, they have been told to let things work themselves out, to not worry about the great consequences that were unfolding before their very eyes because the best and the brightest minds were on the case. Momentous though these considerations were, their considerable intellectual capacity and combined acumen were pledged as an antidote to any general wariness.

For the most part, that was how all these…

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The term fake news has popped up a great deal recently. Its the latest fad that will soon fade away and largely be forgotten. Far more troubling is when fake issues are ginned up on the political front.
Fake issues constantly plague a governmental system in which assorted special interests seek advantages such as rent seeking and crony capitalism by pushing for a large, intrusive government to tax, spend, subsidize and regulate. So-called crises are manufactured, and government action is demanded. For good measure, bad or muddled economic thinking contributes to the…

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We are in the throes of another round of what the economist Joseph Schumpeter memorably called “creative destruction.” Two icons of American business Macy’s and Sears are struggling. Macy’s plans to close 100 stores to improve profitability, and Sears has sold its Craftsman tools line for roughly $900 million to raise cash. Conceivably, one or both of these historic chains could go bankrupt.
Their distress is part of a larger consolidation of retailers under siege from e-commerce. The Limited is closing all its 250 stories. Kmart, owned by Sears, is shutting dozens of stores. This…

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A few days ago, the Wall Street Journal reported that some of the early supporters of 401(k)s now lament the 401(k)revolution, because 401(k)s have been replacing traditional pensions instead supplementing them. The article notes, accurately, that 401(k)s were originally designed for an entirely different purpose to enable corporate executives to defer taxes on their bonuses but that instead they have become the vehicle of choice for corporate retirement plans generally.
It goes on to note many of the ways in which retirement under a system of voluntary investment accounts…

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Media outlets and activists episodically highlight the ethical complexities of mineral supply chains that lie behind producing everything from electric cars to iPhones. The U.S. imports nearly a half-trillion dollars worth of tech products computers, TVs, integrated circuits, and batteries and another half-trillion worth of cars and machinery. All of these goods begin with raw materials increasingly sourced from places like the Congo, China, or Argentina.
Most economists hold free trade as generally positive. But that doesnt mean markets necessarily consider the ethical dimensions…

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In the final days of his tenure, President Obama is busy polishing his legacy, including his farewell address on Tuesday. Like all presidents before him, judgment of his record will hang in large part on perceptions about how the economy performed during his time in office. An objective assessment of the outgoing president’s record would fairly conclude that the economy under his watch was not as bad as his critics charge but not as good as his supporters claim.In the administration’s final Economic Report of the President, issued in mid-December, the Council of Economic Advisors…

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While they’re heroic historical figures today, there was a time when Orville and Wilbur Wright were viewed as crackpots. When the 20th century dawned it was accepted wisdom among serious thinkers that man would never fly.
Interesting about Orville is that while he envisioned what few did in terms of flight, the very notion of broadly owned automobiles struck him as cockeyed. Supposedly they were too unreliable. What about those GPS systems that eventually made the driving of now ubiquitous cars quite a bit simpler? The initial proponent of them in the private sector had scores of…

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Republicans in the House are proposing sweeping corporate tax reform. Their proposals would effectively repeal the corporate income tax, currently levied at a 35 percent rate, and replace it with a new destination-based cash-flow tax (DBCFT) at a 20 percent rate for corporations and 25 percent for unincorporated businesses. The new tax would be border-adjustable taxing imports and exempting exports.
The DBCFT has a lot to offer and it deserves a serious look. But right now, the overall proposal is very poorly understood. Here are 11 things to know:
(1) The truly…

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Last week while most people were in the midst of holiday recreation and reflection, the Chinese central bank attempted to deny reality. This was not an effort similar to what we have become quite used to, where whatever monetary office tells us there is a recovery or robust economy when the issue is at best unsettled, and more often than not claimed in direct contradiction to all evidence. The PBOC instead wrote in a blog post that the media were being “irresponsible” for reporting that the onshore CNY exchange rate to the dollar had traded below 7.0 at one narrow point last week.
The Chinese…

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The broad consensus is to own stocks and to sell gold.
But, as I have discussed since 2003 in my annual Surprise Lists, the broad consensus of investors is often wrong. Indeed, it is often the case that the very coalescing of popular opinion behind an investment tends to eliminate its profit potential.
As Howard Marks writes:
“First-level thinking is simplistic and superficial, and just about everyone can do it (a bad sign for anything involving an attempt at superiority). All the first-level thinker needs is an opinion about the future, as in: ‘The outlook for the company is favorable,…

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