"Perhaps the fact that we have seen millions voting themselves into complete dependence on a tyrant has made our generation understand that to choose one's government is not necessarily to secure freedom" -F.A. Hayek
GMU Economics Society Blog
Dedicated to capturing the work of George Mason Economics Students and Professors.
“Free men, defined as those who understand these distinctions, are the only ones who can rescue the indifferent and the docile from growing serfdom. The burden is on them and them alone.” –Leonard E. Read
An Interest Rate Problem of Interest
by Eric Lofgren
Much talk has circulated over what has dubbed the ‘new neutral’ in which interest rates are projected to be low for a long time. With their ability to pin down the short-end of the yield curve, central bankers across the developed world have sought to stimulate their sluggish economies with cheap credit. The European Central Bank (ECB) implemented a negative 1/10 interest rate on deposits at their facility in hopes of spurring banks to lend. However, as Atif Mian and Amir Sufi related in their new book House of Debt, the problem is a demand issue. They provide compelling evidence that households ran up debt and are currently repairing their balance sheets after housing prices collapsed, unwilling to take on new debt. While at the depths of the recession there was a credit crunch on the supply side, today’s lenders cannot find the “right” kind of demand. This leaves central bankers in a bind. There are compelling reasons to keep interest rates low...
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“…People don’t become less self-interested when they get into government. They don’t somehow become selfless angels. And we can’t rely on voters to hold the government accountable. We should expect power to corrupt, and our institutions they should be built to protect us from that corruption.” –Peter Jaworski Learn Liberty : It’s Always Sunny in Government?
Quotes to Live By
“Unbounded morality ultimately becomes counterproductive even in terms of the same moral principles being sought. The law of diminishing returns applies to morality.” –Thomas Sowell
Welcome to our new Graduate Student Bloggers:
To check out their work click on the 'Graduate Contributions' tab above.
Interested in writing for the blog?
-Contact Holly Jean Soto at email@example.com
“The desire for an increase of wealth can be satisfied through exchange, which is the only method possible in a capitalist economy, or by violence and petition as in a militarist society, where the strong acquire by force, the weak by petitioning.” –Ludwig Von Mises
Assessing Potential Risk for Offshore Oil Rig Workers
Offshore oil drilling is notoriously known to be a hazardous career, fraught with numerous, and often deadly, risk for those choosing to work in this field. Whilst the offshore oil drilling process exists in various countries, we narrow our focus to evaluate the legal protections available in the United States, both in the federal and state level, for these operatives; both common and statutory laws are generally applicable to prevent and/or mitigate future liability. The areas of such potential liability for the offshore oil rig workers are diverse. By highlighting the worker’s compensation aspect to offshore oil drilling, the possible dangers the offshore workers face when out at sea are evaluated. We look to examine, albeit cursory, the impact these laws have as a factor when evaluating the minimization of social cost by accidents in this field.
The Perils of Offshore Oil Drilling
What is offshore oil drilling? In basic terms, offshore oil drilling merely is the method companies use to drill ocean beds known to be oil rich for the purposes of extracting raw petroleum. Oil companies employ teams which determine the best method to elicit the raw petroleum while being cognizant of the necessary safety precautions. Three types of offshore drilling techniques are generally employed: 1) Straight Hole Drilling, a straight line drilling; 2) Directional and Horizontal Drilling, drilling which allows for a “90-degree turn after drilling only a few feet into the ground”; and 3) Rotary Drilling, which is “[the] use of a rotating drill bit to dig into the earth.” [Raychaudhury, Anurag and Santhosh, Nithin. “Risk Assessment and Mitigation strategies for ‘Off shore drilling’ & 'Upstream activities' in the Oil & Gas Sector,” (research project, SCMHRD, 2013) p. 28-9]
Oil drilling on land has its own hazards, but such possible dangers increase with offshore drilling when the additional factors, such as the uncertainty of ocean, must be considered. As Raychaudhury and Santhosh note, “[o]il drilling is dangerous enough work on land; at sea[,] the risk to workers in compounded by the hazards of an ocean environment. […] Since petroleum is flammable, the threat of fire is constant.” [Raychaudhury and Santhosh, p. 20] Among the potential risk to the offshore workers are accidents stemming from personnel mistake and equipment failure, as well as operational malfunctions. [Raychaudhury and Santhosh p. 29-30] The general recognition of increase risk creates a unique array of issues challenging the customary worker’s compensation laws as interpreted in the United States for those working in these mini-cities out in the ocean.
As stated, supra, by limit the scope of analysis to solely tort law, both common and statutory, within the United States, much of the pertinent tort laws fall under the umbrella of worker’s compensation, but with special regulations by states invested in the field of oil drilling, such as Texas and Louisiana. General tort laws allow...
Read the full article in the 'Graduate Contributions' tab above.
“The more the state plans the more difficult planning becomes for the individual.”
“The natural progress of things is for liberty to yield and government to gain ground. “
– Thomas Jefferson
“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.”
“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
“The Constitution is colorblind, and neither knows nor tolerates classes among citizens”
- John Marshall
"Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism but peace, easy taxes, and a tolerable administration of justice: all rest being brought about by the natural course of things."
"...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."
"People are beginning to realize that the apparatus of government is costly. But what they do not know is that the burden falls inevitably on them."
-Frederic Bastiat, The Law
"The inherent vice of capitalism is the unequal sharing of the blessings. The inherent vice of socialism is the equal sharing of misery."
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.
"Capitalism has become more responsive to what we want as individual purchasers of goods, but democracy has grown less responsive to what we want together as citizens."
“… 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