That’s the conclusion of a new NBER paper by Andy Young, Matthew Higgins, Don Lacombe, and Briana Sell, “The Direct and Indirect Effects of Small Business Administration Lending on Growth: Evidence from U.S. County-Level Data” (ungated version here). “We find evidence that a county’s SBA lending per capita is associated with direct negative effects on its income growth. We also find evidence of indirect negative effects on the growth rates of neighboring counties. Overall, a 10% increase in SBA loans per capita is associated with a cumulative decrease in income growth rates of about 2%.” As the authors point out, SBA loans represent funds that also have alternative uses, and SBA-sponsored clients may not be the most worthy recipients (in terms of generating economic growth).

The results are largely robust and, perhaps more importantly, we never find any evidence of positive growth effects associated with SBA lending. Even when the estimated effects are statistically insignificant, the point estimates are always negative. Our findings suggest that SBA lending to small businesses comes at the cost of loans that would have otherwise been made to more profitable and/or innovative firms. Furthermore, SBA lending in a given county results in negative spillover effects on income growth in neighboring counties. Given the popularity of pro-small business policies, our findings should give reason for policymakers and their constituents to reevaluate their priors.

A new report on career earnings by college major is making the rounds. Engineering majors make the most, with economics the highest of the social sciences, and even ahead of business. However, as a Slate report points out, if you look at the upper tail of the distribution, economics majors do even better than engineering majors — the highest-earning economics majors do much better than the highest-earning engineering majors. The result holds even when you consider the fact that many economics majors go on to law or business school or enter other graduate programs. Slate thinks the answer is that “the finance and consulting industries like recruiting [economics majors], not necessarily for their specific skills, but because they consider the major a basic intelligence test.”

Of course, the data don’t distinguish between students of Austrian, Keynesian, Marxian, and neoclassical economics, but I know what I’d choose as an intelligence test!

An economics major.

John Whitehead of the Rutherford Institute talks with Lew Rockwell about his new book, the state, war, police, and education.

Well, she didn’t actually say that, but she might as well have. Her position is that the investors who loaned her regime money are now “terrorists” for wanting to be repaid, noting, in a speech at the United Nations, that “terrorists are also those who destabilize a country’s economy through speculation.”

Of course, Argentina wouldn’t even have needed those investors if the government had simply stuck to spending only what it collected in tax revenues. Instead, over the past decade, Argentina has been on a spending spree.

Kirchener, when she made these remarks, was perhaps anticipating Monday’s legal development in which Argentina was declared in contempt of court for refusing to pay its debts.

Now, as Christopher Westley has shown, the Argentinian state should just default on its debt, since the taxpayers have been abused enough at this point, and should not continue to be on the hook to pay for the state’s profligacy. And Argentina is indeed in the process of defaulting. But Kirchner wants to default and still be legally not in default, so that the next spending spree can get started all the sooner.

For more:

Understanding Argentina’s Coming Default by Nicolás Cachanosky 

Confiscatory Deflation: The Case of Argentina by Joseph T. Salerno

Myths and Lessons of the Argentine “Currency Crisis” by Joseph T. Salerno

Argentina’s Politicians Should Read Mises by Iván Carrino

Argentina’s Paper-Money Mire by Grant M. Nülle

Alan Greenspan once vigorously defended the gold standard, before taking command of the world’s largest printing press. Now back in civilian life, and lacking any opportunity to put his professed principles into action, Alan is again friendly to gold:

The broader issue — a return to the gold standard in any form — is nowhere on anybody’s horizon. It has few supporters in today’s virtually universal embrace of fiat currencies and floating exchange rates. Yet gold has special properties that no other currency, with the possible exception of silver, can claim. For more than two millennia, gold has had virtually unquestioned acceptance as payment. It has never required the credit guarantee of a third party. No questions are raised when gold or direct claims to gold are offered in payment of an obligation; it was the only form of payment, for example, that exporters to Germany would accept as World War II was drawing to a close. Today, the acceptance of fiat money — currency not backed by an asset of intrinsic value — rests on the credit guarantee of sovereign nations endowed with effective taxing power, a guarantee that in crisis conditions has not always matched the universal acceptability of gold.