The history of North Carolina is replete with smuggling activity and the lure (and lore) of illegal markets. Most of the contraband involves activities or products that are 'bad for you.' But laws often create powerful incentives that drive more, not less, of these lucrative albeit unwanted activities. There are occasion exceptions.
Scarcity is a fact of life. More to the point, it's a fact of economic life. Self-interested individuals and unanticipated commercial opportunities have always been the most reliable engines of economic growth, raising standards of living for millions whom those ambitious and inventive folk neither do nor perhaps care ever to know.
Is there a worldwide shortage of rice? No, but rice is more scarce in some regions than it has been in recent years, and there is an ongoing debate over what the next policy steps should be. This apparent worldwide food crisis owes to a crippling confluence of wishful-thinking monetary policies and other programs that have dramatically increased the scarcity and cost of providing basic foodstuffs on which the world's poorest populations especially need for survival.
The current discussion of a possible summer holiday on federal gasoline taxes is one that is has become extremely muddled.The reason is that advocates and opponents of a holiday tax break are each arguing their case from a different perspective. The range of arguments over a federal gasoline tax holiday is broad: costs vs. benefits, long run vs. short run, overall macroeconomic growth vs. family welfare. The result is a confusing jumble of analysis and policy prescrptions, with nary a market option among the suggestions.
The most familiar story of the need for extensive bank regulation depicts pre-Federal Reserve banking in the U.S. as chaotic, rife with uncertainty and bank failure. But that's not the story that a more complete history offers. In the regulation vs. deregulation debate, there are important instances of well-functioning free enterprise banking and market discipline. In the U.S., the best example is the Suffolk Clearinghouse system.
In today's anxious financial environment, when we look to the government and the Federal Reserve to step into the economy with interest rate adjustments and extra cash reserves at every downturn, it's a little appreciated fact that there was an important pre-Federal Reserve banking era in the United States. Even today, that era has insights to offer into American monetary and banking policy, and U.S. economic health.
What's it worth to save some money on the purchase of gasoline for your car? Depending on where and how much you drive, hybrid vehicles promise to lower your transporation costs through reduced gasoline purchases. And as gasoline prices climb, that may be all you need to know to investigate a hybrid car for family transportation. But higher fuel prices may be driving up the price of the very vehicles that offer greater fuel efficiency and savings for the consumer.
The cumulative effects of the play-off between political advantage and economic necessity is the theme of Hayek's [1941] critique of Keynesianism. It has been described as having 'a tiger by the tail.' The value of what the Federal Reserve tries to do, and how it carries out its mission, must be judged against the expected long-run consequences of credit expansion and not just a short term easing of interest rates.
Housing and financial markets have collectively been holding their breath, awaiting decisions from the Federal Reserve on possible monetary policy changes. And the results are in. The Federal Open Market Committee, the Fed's monetary policy arm, voted to reduce two key short-term interest rates at its most recent meeting. Is this a solution to the subprime market woes, and the swings and plunges that market prices have been taking alongside them?
There is some, but not much controversy about whether Americans are saving enough. What's clear is that for some time Americans have embraced more debt and household consumption, and reduced saving as a percentage of disposable income—the saving rate—than have previous generations. Evidence suggests that if we want both retirement wealth and heritable wealth for our kids, we almost certainly need to adjust our personal spending and saving habits.
North Carolina's coastal towns and counties are in the midst of a period of tremendous flux, and markets, consumers, and regulators are all struggling with the problem. The issue: how to craft a situation that will deliver either property owner security, or fairness, or tax revenues, or environmental protection, or some or all of the above. We may as well try to stabilize grains of sand along the shore. And in fact, that's the problem.
