Quotes To Live By :

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“Under a system of perfectly free commerce, each country naturally devotes its capital and labor to such employments as are most beneficial to each. This pursuit of individual advantage is admirably connected with the universal good of the whole….[It] distributes labor most effectively and most economically; while, by one common tie of interest and intercourse, the universal society of nations throughout the civilized world.”

-David Ricardo

Quotes To Live By :

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“A government that sets out to abolish market prices is inevitably driven toward the abolition of private property; it has to recognize that there is no middle way between the system of private property in the means of production combined with free contract, and the system of common ownership of the means of production, or socialism. It is gradually forced toward compulsory production, universal obligation to labor, rationing of consumption, and, finally, official regulation of the whole of production and consumption.”

-Ludwig Von Mises

Quotes To Live By :

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"...The net result of government credit has not been to increase the amount of wealth produced by the community but to reduce it, because the availiable real capital has been placed in the hands of the less efficient borrowers rather than in the hands of the more efficient and trustworthy."

-Henry Hazlitt

Second Segment of 'Law and Economics' monthly series.

Law and Economics versus Economic Analysis of Law: Is There a Difference?

By Guest Blogger Jennifer Lee

 

Geoffrey P. Miller’s “Law and Economics versus Economic Analysis of Law” [Miller American Bankruptcy Institute Law Review, Winter 2011] advocates the terms “law and economics” and the “application of economic analysis onto the law” should be two separate and particular terms. More than a mere parsing of words, the author urges scholars to recognize, and apply, the distinction between the two terms rather than the traditional approach of interchangeability.  Miller delineates the economic analysis of law as the “application of pure economic theory to legal materials,” whilst law and economics is “a genuine partnership of two disciplines, each with something to contribute.” [Ibid.]  For Miller, the analysis of law and economics may initially be more challenging than the economic analysis of law…

Jennifer Lee is a GMU ES Guest Blogger currently pursuing a graduate degree in Actuarial Science at George Mason University. She is licensed to practice law in Virginia and the District of Columbia.

Click here to read full length article in our ‘Graduate Contribution’ Tab.

 

Quotes To Live By:

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“… I don't think our recent Great Recession is simply a Keynesian or monetarist or aggregate-demand story. I think real business-cycle theory has a lot to say about the event. One thing we have seen across the board in a lot of countries is what economists call the risk premium, it has gone up. Investors are more cautious. People are more afraid … some terrible economic event will happen that they hadn't foreseen. There's more worry about so-called black swans. So the risk premium is higher. We have a sector, banking, which we thought worked pretty well, and now we realize it had been working really quite horribly. So there's been a decline in the perceived quality of financial intermediation and also a significant real shock to housing and construction. So the real business-cycle model applies, too.”

-Tyler Cowen in Learn Liberty: Explaining the Great Recession

Quotes To Live By :

“Free trade is simply a policy of treating foreign goods and services no differently than domestic goods and services are treated. Free trade is a policy of allowing domestic consumers to buy from abroad just as freely as they can buy at home. Protectionism is a policy of discriminating against foreign goods and services, a policy of saying to domestic consumers, “If you want to buy foreign-made goods and services, you have to jump through some extra large hurdles to buy those goods and services.”

-Don Boudreaux in Learn Liberty: Free Trade vs. protectionism

Undergraduate Contribution by Guest Blogger Brian Martens:

Is the Public Debt Dangerous?

By Guest Blogger Brian Martens

During the last financial crisis we experienced a surge in financial and private sector debt that peaked around $17 trillion and $42.5 trillion, respectively, before retreating during the crisis. This was followed by an increase in Federal debt nearly matching GDP. The decrease in financial debt with respect to GDP and in total shows in part the deleveraging of many financial institutions in response to the crisis. The subsequent rise in public debt has alarmed many economists, but for what reasons exactly should economists be worried about high levels of public debt? Is it possible that the “sudden stops” that characterized the financial crisis also occur with respect to lending to central governments of industrialized nations, leading to a sovereign debt crisis or slower economic growth?

 

In 2010, the AEA published an article in their review from Reinhart and Rogoff (2010) on the relationship of public debt and GDP growth which documented the observation that as advanced countries passed a threshold of 90% public debt/GDP, median GDP growth slowed considerably. It is worth noting, however, that there were several countries included in this group who did not have their own sovereign currency, such as many Euro countries who do not have independent monetary policy to control interest rates and monetary easing during periods of crisis. It is also worth noting that during the period from 1946-2009, international monetary arrangements changed drastically, particularly the Bretton Woods System and the birth and growth of the EU. The collapse of the international gold exchange standard would also likely have had an effect on the level of debt a sovereign nation could support. Despite this, it is significant that the US has historically not performed well with public debt/GDP ratios above…

 

Click here to read the full length article in our ‘Undergraduate Contribution’ tab.

Quotes To Live By :

“We all declare for liberty; but in using the same word we do not all mean the same thing. With some the word liberty may mean for each man to do as he pleases with himself, and the product of his labor; while with others, the same word may mean for some men to do as they please with other men, and the product of other men’s labor. Here are two, not only different, but incompatible things, called by the same name-liberty. And it follows that each of these things is, by the respective parties, called by two different and incompatible names- liberty and tyranny.”

-Abraham Lincoln