The Ludwig von Mises Institute

The plight of America’s unemployed is terrible. Yet for the 91 percent of those in the U.S. labor force who do have a job, the numbers also tell a dark story. Take-home pay, adjusted for inflation, fell 0.3 percent in August, the third decrease in five months, the Commerce Dept. just reported. The declines followed news from the Census Bureau that median household income in 2010 fell to $49,445, the lowest in more than a decade, while the poverty rate jumped to 15.1 percent, a 17-year high. Salary and benefit growth “has been going nowhere,” says Mark Zandi, chief economist at Moody’s Analytics (MCO) in West Chester, Pa. “One of the key reasons the recovery has stalled is that real incomes have fallen.”

BusinessWeek

The banking system has delivered its class paper on: “what I did on my summer vacation.”

The most recent Economist has this figure representing homicide rates around the world.

The fact that certain nations have such high homicide rates is very unfortunate. Are these rates correlated with anything? The Economist suggests that lower levels of economic performance are correlated with higher homicide rates. This is partially true, but it does not tell the whole story. Basic regressions looking at income and homicide are missing an important variable, namely the effect of government.

My coauthor John Levendis and I investigated the data for 63 countries and consistently found that higher homicide rates are correlated with more government (as measured by lower levels of economic freedom). Maybe people should start questioning the assumption that government is created to reduce crime.

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Edward Stringham, Hackley Endowed Professor for the Study of Capitalism and Free Enterprise, Fayetteville State University

In the heat of the 2008 financial meltdown, Goldman Sachs and Morgan Stanley figured being able to accept money from depositors that would be insured by the FDIC was a dandy idea after Lehman Brothers slid into the abyss. Not to mention, the other backstops the government provided commercial banks at the time so that “money would come out of the ATM machines.”

Now, the blunt end of the regulatory stick is poised to whack the likes of Goldman and Morgan Stanley, and the Wall Street giants may look to shed the bank holding company classification according to Susquehanna Financial Group analyst David Hilder.

“The regulators have proposed a massive new compliance burden on banks to prove that their market-making activities are just that and not proprietary trading in disguise,” wrote Hilder in a note to clients (reported by CNBC). “There will be large additional costs imposed on banks as market-makers that will not apply to market-makers not owned by banks. We would expect that to draw capital to non-bank market-makers, and cause Goldman Sachs and Morgan Stanley to examine whether it makes sense for them to exit the banking system.”

For those that remember, the Goldman Sachs and Morgan Stanley bank charter applications were approved in record time over a weekend no less. The Federal Reserve issued a statement at the time that in order,

to provide increased liquidity support to these firms as they transition to managing their funding within a bank holding company structure, the Federal Reserve Board authorized the Federal Reserve Bank of New York to extend credit to the U.S. broker-dealer subsidiaries of Goldman Sachs and Morgan Stanley against all types of collateral that may be pledged at the Federal Reserve’s primary credit facility for depository institutions or at the existing Primary Dealer Credit Facility

The average bank charter application process is measured in months and years, with new bank charter approvals in last few years being rare. There have been two so far in 2011 (through June 30th), 11 in 2010 and 31 were approved in 2009. But to say Goldman and Morgan Stanley have friends in low places is an understatement.

As handy as it was to be a commercial bank when liquidity dried up during the financial crisis, now it appears that being a commercial bank may turn out to be inconvenient for firms with business plans to be regulated by the Volker Rule, which “aims to prevent banks from recklessly engaging in risky trades by prohibiting them from short-term trading for their own profit in securities, derivatives and other financial products,” reports Reuters.

The usual claim is that Sweden thrives because of a welfare state, but Nima Sanandaji argues in a new book in PDF form that the real reason has to do with a stable legal system, a homogenous culture wedded to the work ethic, and actual cuts in government welfare provision. h/t Cobden Centre

It’s been unveiled in Lviv, Ukraine! Many familiar faces in this video. Go to the end for the unveiling.

Like everyone, I loathe going to the dentist. It’s a universal thing, I suppose. They do great good for the world and clean teeth are of course essential. But, well, you know what I mean. No one wants to be in that chair surrounded by people who are scraping around in your mouth and sticking in electric things and looking for flaws that could require other terrible things to take place like the unspeakable root canal.

This is why I practically have to be shamed into go, and the people at my dentist office have figured this out, so they pester me with every manner of method to make an appointment and stick to it. So I get calls and pings to my phone and reminders. They do everything but send a car to pick me up. If I am determined to miss an appointment, I have to shut off all forms of communication. I’ve only pulled this off one time.

In any case, a dentist in my town seems to have picked up on this problem. And so the entire office has reinvented itself as a spa. A spa! Yes, you can get a tan. You can get a massage. You can get botox. It is all part of general life enhancement. I’ve not availed myself to any of these services but just knowing that they are going on does take some of the edge off.

I was telling Lew Rockwell about this and he quickly pointed out that dentists are far more free market than regular doctors. Apart from the restrictions on who gets to call himself a dentist, they mostly have to get by through providing services that actual people pay for. So prices are posted, for example. You get to choose what level of service you want. There is no long wait to get in. It is a kind of proxy for what things would be like in a market.

And so of course dentists are free to reinvent themselves too, whereas regular doctors face far more restrictions. It amuses me to realize that this reinvention is much closer to the 19th century idea of what a dentist did. As we learn from Rossini, the dentist also cut your hair, gave you a shave, did other medical services, and even set up romances.

New Nobel Laureate in economics:

Remember that under the gold standard, there was no law that restricted your debt-GDP ratio or deficit-GDP ratio. Feasibility and credit markets did the job. If a country wanted to be on the gold standard, it had to balance its budget in a present-value sense. If you didn’t run a balanced budget in the present value sense, you were going to have a run on your currency sooner or later, and probably sooner. So, what induced one major Western country after another to run a more-or-less balanced budget in the 19th century and early 20th century before World War I was their decision to adhere to the gold standard.

h/t FreeBanking

Ten years ago, libertarian activists hatched a crazy plan to colonize New Hampshire. It’s kind of working.

Free State legislators are currently pushing to decriminalize marijuana, permit the video recording of law enforcement officers, legalize the use of deadly force in self-defense, nullify health care reform, slash taxes, deregulate barbershops, and ban vaccinations in public schools. This isn’t the corporate-driven cutback crusade of Gov. Scott Walker’s Wisconsin; it’s closer to a Ron Paul revolution.

Dan and Carol McGuire relocated to the Shire from Washington in 2005. “We decided if the Free State Project failed and we hadn’t moved, we couldn’t live with ourselves,” Carol says. Political novices, they both won seats in the House of Representatives (Carol in 2008, Dan in 2010)…

Some protesters on Wall Street are drawing attention to evils of fractional-reserve banking. Krugman fights back. His entire argument is against banning the practice. This misses the point: it is enough to stop using the state and the Fed to sustain the unsustainable. Make banking a normal market activity with profits, losses, and the freedom to fail and then, as Rothbard says, fractional-reserve practices in demand-deposit banking will be selected out. Rothbard in fact went to great lengths to show that the main examples of sustained fractional reserve practices depended on some form of government intervention.