The common assumption among policymakers is that, in order to maintain its higher living standards against emerging markets competition, the United States must invest more in higher education. To achieve this, the government has instituted a massive student loan guarantee program, with over $1 trillion outstanding and an average of $25,000 in debt for every […]

The U.S. Department of Defense budget was $680 billion in the year to September 2012. The Environmental Protection Agency’s budget was only $17 billion. Yet when you compare the cost to the U.S. and global economy of the two departments, the comparison reverses. With modern rules of engagement and care for civilian populations, and politicians’ […]

Younger readers probably don’t remember this, but before 1980 much of the world was subjected to extraordinarily high marginal tax rates – 91% in the United States before 1964, 98% in Britain from 1974-79 (and 135% in 1968). The Laffer Curve, which states that tax revenues are zero at marginal tax rates of 0% and […]

42 months after the collapse of Lehman Brothers, negative banking stories continue appearing daily – not about the criminal prosecutions for events that happened five years ago, but on examples of greed and stupidity that are occurring today. On both sides of the Atlantic, massive regulatory efforts have been carried out that if anything have […]

Brazil’s 2011 growth was announced this week at 2.7%, or only 1.6% per capita, and prospects for 2012 don’t look too good either. Russia has just re-elected Vladimir Vladimirovich Putin, whose apparent flat-tax supply-side economics of 2001 has degenerated into crony capitalism enforced by nuclear weaponry. Indian growth is also slowing; the good news is […]

With real interest rates having been negative for nearly four years, you would expect asset markets to be in a bubble. Debt markets, with long term bonds offering yields well below the expected level of inflation, and commodities where gold is currently trading at twice its famous 1980 peak, certainly seem to exhibit bubble valuation […]

Wall Street’s 2011 results were disappointing and the howls of banker anguish over shrunken bonuses have reverberated through the better Manhattan restaurants, bars and clubs. The rise in financial services’ share of the economy, seemingly so inexorable, has at least paused. Is this merely a blip, or is it the beginning of a reversal, in […]

In an interview with Gideon Rachman of the Financial Times, a senior German official described the euro as a “machine from hell that we cannot turn off.” Personally I am more positive than most about the euro, provided it is managed by grown-ups and not by Keynesians. However there is no question that our current […]

Probably the biggest single lesson of the last few years outside monetary policy has been that the contract between top management and shareholders is broken. Top management rewards itself with ever more grandiose bonuses and option payments, while shareholders are fobbed off, not with dividends which have value, but with “share repurchases” which do not. […]

The causes of the 2007-08 downturn are now etched indelibly into popular memory: it all came about because of an infamous housing bubble, which policymakers inexplicably failed to spot. Readers of this column will know that I regard this explanation as simplistic, although housing was certainly an intermediate cause of the problem. However spotting the […]