Economics

Egypt: You Can't Eat Democracy

May 26, 2011

By Alan Fraser & Ben Crossland

But the most pressing problem for the interim government remains the economy, as in most of the Arab Spring countries: “We are very much concerned by the rise in expectations... Sometimes the demands are justified and sometimes they are unrealistic," Finance Minister Samir Radwan said this week.

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Legislating Middleman’s Ouster

By Dr. Khalil Ahmad

March 2, 2011

The middleman tends to be eliminated . . . He can only be safely eliminated by natural processes. Sometimes he is of real use and helps production; sometimes he is not; but this cannot be decided by a blind strike, but only by allowing the forces of competition to act upon him.
[Hon. Auberon Herbert]

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Economic Backbone: It’s None Of Your Business

By Nyda Mukhtar

February 21, 2011

They are capable of resuscitating a dying economy and of making third world countries first world powers. They can develop cities and rural areas, put an end to wars, and make societies and communities stronger.

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The Cruelest Tax Of All

By Sarel Oberholster

January 31, 2011

The zero-interest-rate policy deserves closer scrutiny. Would a saver willingly agree to an economic environment of zero interest rates? Certainly not. Would a debtor prefer a zero interest rate? Absolutely. The saver and the debtor would, under normal, willing-economic-participant conditions, negotiate a "price" for the use of money saved. That price for the use of funds is interest.

The central bank enters the negotiation between saver and borrower, and by counterfeiting money it destroys the negotiating base of the saver. Counterfeiting money through policies of unlimited liquidity provision is a "price control" over interest rates, instituted to force interest rates down and eventually spiral them downwards out of control to zero. The interest income of the saver is eventually taxed to extinction at zero interest rates.

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Monetary Policy: The Right Increase

By Ali Salman

January 22, 2011

The State Bank’s decision to increase the discount rate seems justified to counter the rising inflation, a negative real interest rate and increased government borrowing.

When real interest rates are negative, there is no incentive for lending and saving. In such an inflationary environment, every individual would rationally spend her money today rather than save for tomorrow. This would further deepen the inflationary spiral.

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Trade Deficits And Fiat Currencies

January 11, 2011

There is a definite connection between fiat currencies and trade deficits. Critics of the Federal Reserve are right to blame it for distorting trade flows and setting the US economy up for an inflationary crash. However, a trade deficit per se is not a sign of a bad economy. Indeed the trade deficit might blossom if the US ever returned to the gold standard, though it would be due to a productive net inflow of producer goods.

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This Bread Is Mine

December 25, 2010

What Smith, Ricardo, and Marx have done, and what the followers of the latter two continue to do, is to confuse the meanings of two important words: cost and value. While it may be true in the above instance that it might cost five dollars to produce the lumber from a given tree, the value of the lumber from that tree has no immediate relationship to cost.

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Raising Taxes Is Not Reducing Government Spending

December 20, 2010

The fundamental question is, who is the owner of the funds paid in taxes? Is it the citizens, who have earned the funds and who turn them over to the government under the threat of being fined or imprisoned, or even killed if they physically resist the government, or is it the government?

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Rewarding Market For Disclosure

December 17, 2010

Adapting existing social contracts for business transactions hold the answer towards documentation; not levy of more taxes.

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Pakistan: A Flood Of Restrictions

October 07, 2010

The government is also considering a flood tax aiming to raise Rs.138 billion (US$1.6 billion). In the current economic meltdown, such a claim looks very implausible. Moreover, taxes always discourage private and philanthropic giving. If I were taxed in the name of flood relief, I would obey but would then refuse to give to all charitable organizations. Thus a flood surcharge would only increase the flow of cash to government coffers instead of going to the many fairly effective humanitarian charities.

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