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During most of my career as a financial market economist, I made it a holiday tradition to write a “review and outlook” for the economy in the style of Clement Moore’s classic, “A Visit from St. Nicholas.” I have continued this tradition since I retired more two years ago. In this year’s rendition, I encounter a Santa who seems more than a bit peeved by the frustratingly slow pace of economic recovery, which he attributes to overly intrusive and ineffectual policies. ‘Twas the night before Christmas, the year of fourteenAnd signs of the season could be everywhere seen.While…

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The Federal Communications Commission is actively considering turning the internet access industry into a public utility by classifying it as a “Title II” service under the Communications Act of 1934. Proponents of the idea, including President Obama, argue that doing so is necessary to protect “the open Internet” and all the benefits it has produced.Everyone is for preserving an open Internet, but replacing a competitive industry with a regulated utility is not the way to do it. Broadband competition has produced a remarkably innovative, dynamic market in which output and performance…

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Last week, the California Department of Finance announced that California’s population grew to 38.5 million, an increase of 335,000 (or 0.9%) between July 1, 2013 and July 1, 2014. More problematic for the Golden State is that since 1999-2000, on average, the state has seen less than 1 percent growth per year.
To understand why, we have to look at population growth’s main two components: natural increases (i.e. the difference between births and deaths) and net migration (the sum of California’s net immigration and net domestic migration). Here we a find troubling trend: stagnation.
These…

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In the course of 24 hours, the ruble dropped more than 10% against the dollar. This sudden collapse comes on the heels of a six-month period in which the ruble has lost 55% of its value. Unsurprisingly, many of the resulting headlines are self-congratulatory, describing a Western victory over Russia. But the collapse of the ruble owes far more to other factors - primarily the dramatic drop in the price of oil - than it does to sanctions, and may not help to solve the Ukraine crisis.
Although the ruble has been floundering for some time, the last two days have seen a sharp and unexpected drop…

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When Dodd-Frank became law more than four years ago, even its proponents acknowledged that the law needed some tweaks. After all, remaking the financial markets in the wee hours of the night fueled by cold pizza and too much caffeine is a risky undertaking. Despite acknowledged problems, the law has remained largely untouched until this month. Fixes look like capitulation to Wall Street. It took emergences unrelated to Dodd-Frank-the need to get a spending bill done and the impending expiration of the Terrorism Risk Insurance Act-to drive changes in recent weeks. Concern that fixing errors…

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Where in the world do authorities decide who is eligible to vote after the vote is counted, and then discard the ballots of voters who are deemed ineligible? Plus, these authorities limit free speech before the election. Not Cuba. Not Russia. The answer, sadly, is the United States of America, at least with respect to union elections.That is the essence of the new union election rules, called Representation-Case Procedures, issued by the National Labor Relations Board, now dominated by Obama appointees. The new rules were published in the Federal Register on December 15.These rules govern…

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The sharp decline in world oil prices during the last half of this year has become the defining economic event of 2014. It has been hailed as a timely stimulus to global demand because it adds to the purchasing power of consumers. Lower gas prices have already strengthened the U.S. expansion and supported the still-fragile recoveries in much of Europe, Japan and the emerging economies. These demand side effects are still growing, but they are only the most immediate impacts. Depending on how the tumultuous events in the oil market play out, they will have important effects through many…

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Immediately after the 114th Congress is sworn in, the Republicans will face a battle that will determine whether they will be able to deliver for the voters, who have just given them sizeable majorities in both the House and the Senate. The battle in question will be the fight over how the Congressional Budget Office (CBO) will “score” tax bills for budget purposes.
The CBO has long employed “static scoring,” which assumes that tax changes have no impact upon economic growth. The liberals will fight to retain static scoring, because they know that static scoring is their first and best line…

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There’s no doubt what the received wisdom is these days. All year the financial press has been echoing the theme that emerging markets are toast. The Fed, we’re told will shortly be initiating a period of monetary tightening and rising rates. This, we are told, will suction vast quantities of capital out of the global economic periphery towards the havens of the developed world. The dollar will soar in value and emerging market currencies will plummet. Tough economic times will drive global investors towards ‘safety’.
Dr. Jerome Booth disagrees. He recently retired as Director of…

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President Obama recently weighed in on the Federal Communications Commission’s (FCC) net neutrality proceedings, basically endorsing a government takeover of the internet. Given the president’s predilections for executive orders, the decision is not surprising. Imposing sweeping new regulations on the internet would continue the expansion of the administrative state that the president favors. But new regulations come at the price of reduced innovation and lower levels of capital investment, which is unfortunate, because neither the administration nor the FCC have yet to make the case that…

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We all know that the American energy revolution, led by the new technologies of hydraulic fracturing and horizontal drilling, has created a flood of new shale-oil and natural-gas production that has overwhelmed world markets and driven prices down by roughly 40 percent. End-of-week crude oil closed near $57 a barrel, and the national average gasoline price finished at $2.60.
No matter what the naysayers are trying to sell, the new energy reality is unambiguously good for the U.S. and global economies. There may be some dislocations among countries, sectors, or companies, but the overwhelming…

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One significant factor where I find myself in total agreement with the monetarists over at the FOMC is that “reserves” are meaningless in every context but the setting of monetary policy. This is not uncontroversial terrain, but it should be. Banking is not what most people think of it and in the modern “shadow” (wholesale is a better word, as is “eurodollar standard” for the global end of it) system there are far more important settings. The liability created by the Federal Reserve, titled “reserves”, is only a byproduct of whatever it is the Fed is trying to influence through the Open…

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Representatives from the U.S. and 195 other countries are meeting in Lima, Peru for the 20th Conference of the Parties of the United Nations Framework Convention on Climate Change, hoping to lay the foundation for a major treaty to reduce global greenhouse gas emissions. But evidence shows this is the wrong approach to address climate change and negotiators would be better off focusing on market competition and innovation, which have proven able to reduce emissions intensity and promote economic growth.
The U.S. is seeking an agreement based on voluntary reductions in carbon dioxide emissions…

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All too frequently of late, economists claim that simply putting more demand into the economy will drive growth, and that a reduction in demand is a scary thing that will reward us with stagnation. A recent article published in the Wall Street Journal titled “Baby Bust Threatens Growth” claimed that “if fewer women have children, there’s less buying of diapers, school supplies, and homes to accommodate growing families.” Fewer people means less demand, and economic decline if mainstream economists are to be believed.
But if we go back to Economics 101, economic growth is simply about making…

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Do regulators actually care about the fate of U.S. companies on the world stage? Recent experience indicates no.
Three years ago, the Federal Communications Commission (FCC) blocked AT&T’s proposed merger with T-Mobile. Instead of making a statement regarding the poor analysis by AT&T’s surely superb legal team, the FCC’s then-Chairman Julius Genachowski issued a one sentence statement that the merger did not meet the FCC’s standard for approval, injecting ambiguity and exemplifying enforcement on the part of the government when it came to big-stakes mergers. Adding insult to injury, AT&T was…

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