Issue CCLIX

September 5-6, 2010

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Economics
Halt the Dividend Tax Increase:
Gary Wolfram

September 5, 2010
Dr. Gary Wolfram argues that Congress must act soon to prevent taxes on dividend income from more than doubling Jan. 1, from a maximum rate of 15% to a maximum rate of nearly 40%.  The tax increase would create a drag on the economy at a time when nearly 14.6 million Americans are unemployed. It will harm our energy industry, a key to manufacturing and transportation, in particular, since energy companies tend to distribute dividends and rely heavily on the value of their stocks to reduce the cost of capital needed to fund infrastructure. The resulting increase in energy costs will funnel its way through the economy, reducing production and adding to our employment woes.

Oil Tax Will Hurt the National Economy:
Gary Wolfram

September 5, 2010
It would make little sense to address the unemployment problem by increasing the cost of producing many of our goods and services. Yet, writes Dr. Gary Wolfram, that would be the effect of the Obama administration's proposed $80 billion tax increase on the oil and natural gas industry over the next decade.

Feels Like a Depression to Me:
Alan Caruba

September 5, 2010
Alan Caruba urges readers to get used to the word “Depression.” That’s what we’re in, and the first step to get out of it will be to send people to Congress who will address these problems. At the heart of the current Depression is the federal government’s intrusion into the nation’s housing market via Fannie Mae and Freddie Mac.


The Fed and the Ratchet Effect:
Robert P. Murphy

September 6, 2010
One of economic historian Bob Higgs's outstanding contributions is the "ratchet effect." During a crisis, the size and scope of government grow tremendously. After the crisis subsides, government shrinks, but not to the precrisis level. In consequence, leviathan expands over the decades, leaping from one crisis to the next. Dr. Robert Murphy writes that we see Higgs's thesis of the ratchet effect on brilliant display with the Federal Reserve in the wake of the financial crisis of 2008. The recent Fed announcement, signaling a major shift in policy, shows that Ben Bernanke has no intention of giving up his newly acquired influence.

Is Our Money Based on Debt?:
Robert P. Murphy

September 6, 2010
Different groups often notice different aspects of the same phenomenon — this is the point of the famous tale of the blind men encountering an elephant. When it comes to the Federal Reserve, Austrians usually focus on how its tinkering with interest rates leads to the boom–bust cycle. However, plenty of non-Austrians hate the Federal Reserve System, too. For some of these critics, one of the most perverse features of our present monetary system is its basis in debt. Specifically, if Americans ever began seriously paying down their debts, the supply of dollars would shrink. In the present article Dr. Robert Murphy explains this strange fact.

What Does "Debt-Based" Money Imply for Interest Payments?:
Robert P. Murphy

September 6, 2010
In a previous article, Dr. Robert Murphy explained the sense in which our fractional-reserve, fiat financial system is built upon debt-based money. In this perverse arrangement, new dollars come into existence through the creation of government and private debt. Going the other way, if the private sector and the federal government ever began seriously paying down their debts, the supply of US dollars would shrink. These observations are not common in Austrian economics, but they are discussed quite frequently in radical critiques of banking and "money-changing" per se. Such critics claim that the charging of interest itself is unnatural. In the context of our present, admittedly perverse, system, these reformers argue that the people have to take on more debt, because "there's not enough money in the economy" to pay back the principal and interest from their previous loans. Dr. Murphy writes that although there is a grain of truth in this claim, in its crudest form it confuses stocks with flows. Although the critics are right to castigate our current system, they are wrong when they say that interest payments require a constantly growing supply of money.

Politics
Environmental Extremism in Bullet Form:
Edward Hudgins

September 5, 2010
Talk about dodging a bullet. When armed, explosives-laden eco-terrorist James J. Lee took hostages at the Discovery Channel headquarters in Silver Spring, Maryland, we watched on TV as police evacuated small children from the building’s daycare center, and we feared the worst. Fortunately, a SWAT team killed Lee before he could create pools of blood and tears. Most environmentalists have remained quiet about the incident and hope it will soon be forgotten. Most would no doubt argue that this gunman who claimed inspiration from Al Gore was a lone nut. They would say that the reasons he cited for his actions do not represent their philosophy. But, writes Dr. Edward Hudgins, they would be wrong.

The Envious Feminist:
Selwyn Duke

September 6, 2010
Misery does love company, and this brings Selwyn Duke to feminism.  While the ideology certainly has its justifications — the various grievances, real and imagined (all groups have some grievances) and its spin-cycle theories — these are not truly the wind beneath its wings.  For that you have to search the emotional realm, and, if you do, one thing you will certainly find there is envy.

The Bankrupt Finnish Welfare State:
Kaj Grussner

September 6, 2010
"Progressives" in America are often keen on promoting the European welfare state as an argument for big government, not least in the healthcare debate. They point to European countries, often the social-democratic Nordic countries, as role models, with their universal healthcare, public school system, generous social-safety net, and all the happy people who live there. Many people have tried to dispel this myth, but it still persists. Kaj Grussner, a Finnish tax consultant, does not presume to be able to put this issue to rest, but there are some things that should be known about this mythical utopia, the "best country in the world" — Finland.

Science
Twenty Minutes to Argue That Work on Radical Life Extension is Valid Research:
Reason

September 5, 2010
If you only had 20 minutes, what would you do to convince an intelligent (college educated or professional) audience of the significance of life extension beyond 120 years? The Longevity Meme's Reason offers an overview of the points he would recommend.

"Religious wars are not caused by the fact that there is more than one religion, but by the spirit of intolerance...the spread of which can only be regarded as the total eclipse of human reason." 
~ Charles de Montesquieu