Recent referenda on the minimum wage produced some striking results: The California proposal to raise the minimum wage to $18 an hour in steps by 2026 narrowly failed, 51%-49%. Opponents and backers amassed a combined $1.8 million war chest for the issue — the lowest amount of all the propositions on Californians’ ballots this year, according to The Sacramento Bee. If the measure had passed, it would have made California, along with Hawaii, the highest general minimum wage of any state. Since 1994, every single state referendum on the minimum wage had passed, even in red states like South Dakota and Nebraska.  For instance, the recent election also produced this result in Missouri: Missouri voters agreed 58%-42% to establish a $13.75-an-hour minimum wage by next year, which would then increase by $1.25 a year until it reached $15 an hour in 2026. Keep in mind that the cost of living in California is far higher than in Missouri.  So what explains the California vote? I see several factors at work: Voters are still angry about high inflation. Shoppers are annoyed at the way that tipping has spread to more and more types of businesses. California has a separate $20 minimum wage for fast food workers.  Most voters are older, and recall working for less money when young, even adjusting for inflation. But it’s probably not just anger about high prices.  California’s rent control proposition was also rejected, and by a far larger margin, nearly 60-40.  I suspect that the election results in California partly reflect a backlash against progressivism. When I was young, California was a red state.  The passage of Proposition 13 in 1978 restrained the growth in property taxes.  In 1988, California voted for Bush while Massachusetts liberal Mike Dukakis won Iowa by 10 points.  In 1994, voters passed Proposition 187, which banned the provision of public services to illegal aliens in California. In the same year, voters approved the “three strikes law”, which mandated long prison sentences (25 years to life) for three felony convictions, even if the third conviction was for a relatively minor offense.  Prop 13 remains in effect, but the other propositions were later watered down. Over time, red states frequently become blue, and vice versa.  It’s quite possible than in a few decades West Virginia will be blue and Vermont will be red.  Indeed West Virginia was blue when I was young, and Vermont is one of only two states that voted Republican in 1936.     Minimum wages and rent control are not the only areas when California voters shifted to the right: California voters passed Prop. 36, which increases penalties for retail theft and drug trafficking, and they voted down Proposition 6, which would have paid people in prison for their labor and abolished slavery in any form.   In the San Francisco Bay Area, voters ousted the progressive-minded Oakland Mayor Sheng Thao and Alameda County District Attorney Pamela Price. Democratic socialist San Francisco Supervisor Dean Preston lost his race.  In Los Angeles, DA George Gascón was ousted by Nathan Hochman, a candidate who promised he would be a more law-and-order district attorney. The votes on criminal justice issues did not surprise me, as there is a lot of anger here about the increase in crimes such as shoplifting. But I was mildly (and pleasantly) surprised by the shift in voter sentiment against interventionist economic policies.  We’ll see if this is the start of a new trend.  California’s Proposition 13 kicked off a national tax revolt that led to the election of Ronald Reagan in 1980.  (1 COMMENTS)

The climate is getting hotter, and people are contributing to the change. What should we do about it? Many people think they’re fighting climate change and keeping the environment pristine by prohibiting development on huge chunks of land in California and otherwise making it prohibitively costly to build there. They’re wrong. Building restrictions in California and other temperate areas make building new housing in the greenest, most climate-friendly places prohibitively costly and push people to the browner, less climate-friendly, carbon-spewing south. Enter Bryan Caplan’s new book Build, Baby, Build, which I reviewed for AIER here. Caplan explains the optimistic economics and ethics- and pessimistic politics- of building regulation and shows just how many social problems can be addressed if not altogether alleviated simply by letting people build more housing. With respect to climate change and the environment, he explains research by the economists Edward Glaeser and Matthew Kahn showing how restrictions on building in California and the Northeast have raised housing prices and encouraged migration to less climate-friendly areas. I write this from my Sweet Home Alabama, which has a lot going for it but would be practically uninhabitable without air conditioning from about April until October. In graduate school, I applied for a job in San Jose, California. I remember looking at the weather and being shocked: it now shows lows of 42 in December and January and highs of 82 in July and August. Birmingham, meanwhile, has lows of 36 and 33 in December and January and highs of 91 in July and August. Birmingham has five months–May, June, July, August, and September–with high temperatures greater than or equal to the hottest part of the year in San Jose. The median sale price of a single-family home in Birmingham? $189,450. Compare that to $1.7 million in San Jose. Yes, San Jose is expensive even for California, but the median single-family home sale price in Oakland is over $1 million. Even our very nice, centrally-located, well-insulated five-bedroom home built in 2018 is worth about a third of San Jose’s median sale price. Yes, San Jose looks like a very nice place to live, and its gentle climate means people’s lives are gentler on the environment. The heavily regulated California housing market, however, means many people are priced out of places where their environmental footprint is smallest and pushed into places where their environmental footprint is largest. A browner, warmer planet is the unintended consequence of California regulators’ demand for low-density “green” housing. If you’re looking for a great introduction to the environmental issues Caplan discusses, Kahn (one of the authors he discusses) did the world a huge favor by writing Fundamentals of Environmental Economics and publishing it on Amazon for $1 a little over a decade ago. It’s the perfect gift for Mother’s Day, Father’s Day, birthdays, and other gift-giving occasions, and it’s both cheaper (and greener) than a greeting card. It might even make people understand that cities like San Francisco need more housing much more than recycling bins.   Art Carden is Professor of Economics & Medical Properties Trust Fellow at Samford University. (0 COMMENTS)

In his 2018 book Expert Failure, Roger Koppl discusses the influence of “big players” on expert opinion (pages 214-215, 230).  A “Big Player” is an entity whose presence alone can influence individual behavior.  Where Roger gives the example of the IPCC and the intelligence system in the US, it seems we’re also seeing it now in policy. Both major Presidential candidates were major “buyers” of expert opinion and it seems their mere presence is enough to influence the market for expert opinion. Both floated incredibly heterodox economic policies (for Trump: protectionism; for Harris: price controls). And, despite the overwhelming majority of professionals being against said policies, both have found experts willing to lend credibility to their policies. This leads me to consider a significant problem with “science-guided policy.” While science can be used to influence policy outcomes in a potentially helpful way (eg, a carbon tax can be used to reduce CO2 emissions and fight global warming), the tail can come to wag the dog, too. Policies can be asserted and scientific justifications sought after the fact. Consequently, this can lead to a game of “whack-a-mole” where a rotating list of (often contradictory) justifications are floated and discarded as situations warrant. In turn, actual policy discussions go nowhere because goal posts are constantly shifting.  In short, expert opinion becomes about justifying a preferred policy rather than policy attempting to solve a given problem and seeing expert opinion to help. We saw this with the Harris campaign when she floated the idea of a federal price-gouging ban on groceries. The policy is non-specific, and we saw few economists come out to justify her claims: price controls in an emergency doesn’t have negative welfare effects, price controls in a monopoly can be welfare enhancing, price controls in a government owned monopoly can be welfare enhancing, price controls in an inflationary environment can be good, etc. All of these justifications require sometimes mutually exclusive assumptions about the market conditions.  They cannot all be correct.  The policy is in search of justification, and the “big player” is able to offer enough to influence the expert opinion. Indeed, in an extreme case, the influence can be enough to influence experts to recant previous arguments!  University of Michigan economist Justin Wolfers is one such example.  In Wolfers’ Principles of Microeconomics textbook with Betsey Stevenson, Wolfers and Stevenson discuss anti-price gouging legislation as a form of price controls and the economic consequences thereof (see page 146, 2nd edition).  However, in an August 28 interview with CNBC, Wolfers denied that anti-price gouging legislation was a form of price control. We saw the same with the Trump campaign: justifications for tariffs have ranged from national security, to protect jobs, to fair trade, to trade deficit reduction, to optimal tariff, to revenue maximization, to externality, etc.  When the tail wags the dog (when the policy drives justification), policy discussions become difficult; since there is no justification, no problem, stated, it is malleable and so defenders of the policy just move from one to the other. The scientific expertise of the justifiers gives credibility to these schemes.   Jon Murphy is an assistant professor of economics at Nicholls State University. (0 COMMENTS)

The media is full of analyses as to why Donald Trump defeated Kamala Harris in the recent election. At various times, I’ve mentioned factors like voter frustration over high inflation, illegal immigration, and woke excesses on college campuses. The more I think about the election, however, the less confidence I have in any single explanation. This is especially true in a close election. And while Trump had a comfortable majority in the Electoral College, if just 1% of the electorate had uniformly swung from Trump to Harris, she would have won both the popular vote and the Electoral College. Consider the following thought experiment. The popular vote margin went from Trump trailing by roughly 4.5% in 2020 to winning by 1.5% in 2024.  You can think of that as 3% of the electorate switching from the Democrats to the Republicans.  If only 2% had switched toward Trump, he might well have lost.  This means that almost any factor that moved an additional one percent of the electorate might legitimately be seen as decisive.  Thus if (relative to 2020) 5 different issues each moved 1% of the electorate toward Trump, and 2 single issues moved 1% of the electorate toward Harris, that could explain this year’s result.  In that case, any single one of the 5 issues favoring Trump could be seen as decisive. Here’s Bloomberg: Among the moves [Trump] pledged—all of which are up to Congress, not him—were to extend the 2017 tax cuts that largely benefitted corporations and the rich (price tag: $4.6 trillion); remove taxes on tipped wages for service workers ($250 billion); increase the child tax credit from $2,000 to $5,000 ($3 trillion); and eliminate taxes on Social Security benefits ($1.8 trillion). But Republicans can’t possibly deliver all of this, or even most of it, despite having full control of Washington.  That’s an impressive list, but it doesn’t even include Trump’s promise to bring back the SALT deduction, which is a hugely important issue to many voters in states like New Jersey and New York (two states where Trump did much better than expected.)  Nor does it include Trump’s proposal to abolish taxes on overtime pay.  But I almost never see these tax plans discussed as the reason why Trump won, by pundits of either party.  Most of the analyses have focused on other issues.  It’s almost as if there is something slightly disreputable about speaking of election outcomes in crude financial terms. Perhaps pundits believe that most voters didn’t decide to vote for Trump on the basis of these promises.  But that’s not the issue at stake.  The question is not how “most voters” vote, the question is whether a promise to boost the child tax credit to $5000 and bring back SALT deductions and abolish taxes on tips, and abolish taxes on overtime pay and abolish taxes on Social Security income were enough to sway 1% of the electorate.  That doesn’t seem all that implausible. Another objection is that the Democrats also made expensive promises, and perhaps the various promises balanced out.  That’s a reasonable counterargument.  For instance, the Democrats have been trying to forgive student loans, although the initiative has been tied up in the courts.  Harris also promised to exempt tips, but only after Trump had done so.  Thus her promise achieved less attention.   But Trump’s tax cut promises were much larger than Harris’s and only partly offset by higher tariffs.  In addition, some voters wrongly believe that tariffs are paid by foreigners.   Thus I suspect that Trump’s tax program was more popular than the one proposed by Harris, even among lower paid workers.  This is a source of extreme frustration to progressives, who see the Democrats as the party of the working class.   I don’t have any firm conclusion here.  Rather I’d encourage people to be open minded about election explanations in a close race.  Thus the statement that 98% of voters would not reject a candidate because she was a black woman does not in any way refute the claim that Harris lost the election because she’s a black woman.  (To be clear, I believe the main reason the Democrats lost related to other factors, such as those I listed at the top of this post.  But in a very close race, almost any single factor could be decisive.) The analysis above applies even more strongly to complex historical events.  Thus there might be a dozen factors that led to something like the Great Depression or World War II, where a different outcome for any single factor could have led to a radically different outcome.  This is of course related to the famous “butterfly effect” in chaos theory. PS.  In an ultra-close race like 2000, almost any single factor could plausibly be cited as decisive, even if it merely moved a few hundred votes. (0 COMMENTS)

I enjoy reading intellectual biographies – books dedicated to exploring how a particular person’s thinking evolved and developed through their lifetime. This, too, applies to intellectual autobiographies, where thinkers describe their own journey about how they came to believe what they believe. Of course, all such accounts should be taken with a pinch of salt. It’s difficult to know how much of our explanations for our views are genuine accounts of how those views developed compared to post-hoc justifications for ideas that developed for unrelated reasons. Still, some of the attributions one makes seem plausible. The late conservative philosopher Roger Scruton attributed his embrace of conservative thinking to his horrified reaction to the 1968 riots carried out by the far-left in France. Asking a friend of his who participated in the riots for an explanation of the ideas motivating the activists, he was referred to Michael Foucault’s book The Order of Things. Scruton described his reaction to that book and its ideas as follows: The book is not a work of philosophy but an exercise in rhetoric. Its goal is subversion, not truth, and it is careful to argue—by the old nominalist sleight of hand that was surely invented by the Father of Lies—that “truth” requires inverted commas, that it changes from epoch to epoch, and is tied to the form of consciousness, the “episteme,” imposed by the class which profits from its propagation. The revolutionary spirit, which searches the world for things to hate, has found in Foucault a new literary formula. Look everywhere for power, he tells his readers, and you will find it. Where there is power there is oppression. And where there is oppression there is the right to destroy. In the street below my window was the translation of that message into deeds. Seeing the deeds those ideas had wrought, Scruton was moved to craft his own philosophy as an opposition to such thinking. Looking back at my own in life, I recall a strange but, I think, pivotal moment in my own development that probably contributed to my libertarian turn by making me very suspicious of group dynamics. And that event was the Jim Carrey movie The Cable Guy. On the off chance that the connection isn’t immediately obvious to you, let me explain. The Cable Guy was released in 1996, which I was 13 years old. I was eager to watch it, having very much enjoyed The Mask when it was released two years earlier. One night, we rented the movie, and I watched it by myself. And I absolutely hated it. I thought it was dumb, too low-brow for even my 13 year old self, and it left me cringing and rolling my eyes rather than laughing. Okay, so when I was 13 I was disappointed that a Jim Carrey movie wasn’t as funny as I had hoped, but that isn’t where the story ends. A few months later, I was over at a friend’s house – it was his birthday, and he was having a birthday party. There were about eight or ten of us over there, if memory serves. And the final activity of the birthday party was going to be everyone watching a movie together- specifically, The Cable Guy. Even though I had already seen and hated that movie, I was determined to be a good sport and watch along with everyone else. And everyone else at that party loved it – they laughed hysterically throughout. But here’s the thing – I was laughing alongside them. And not because I was just playing along and trying to fit in. On this occasion, I really was finding the movie to be hilarious and my laughter was genuine. Simply by watching the movie along with a group of people, I was swept up in the energy of the group and was suddenly finding great amusement in something that, on my own, I found to be almost painfully stupid. Later on, I looked back on that and felt genuinely horrified. Sure, I got some laughs I otherwise wouldn’t have had. But I also had a deep and abiding sense that in those moments when I was swept up in the energy of the group, I wasn’t myself anymore – I had, without intention or desire, become a different version of myself that I didn’t enjoy looking back on, and didn’t accord with how I wanted to be. And that gave me a very strong revulsion against collectivist mindsets, group identities, and moving in sync with a crowd. In the classical liberal and libertarian tradition, I found an intellectual history that stressed the importance of thinking of one’s self – and for one’s self – as an individual, not as a member of an identity group, that stressed a suspicion of crowds and mobs, and encouraged that others be thought of and treated in the same way. And in that, I found a sort of intellectual vaccine to inoculate myself against the madness of crowds. And though it may sound perplexing, that simple experience of laughing at a dumb movie in a basement that day also gave me a measure of sympathy for the kinds of rioters Scruton rightfully found so horrifying. When I see footage of people carrying out destructive acts as part of a mob, a small part of the back of my mind is keenly aware that I could have been such a person. If I had been more inclined to buy into an group-identity based worldview, if I had been encouraged to nurse a particular set of grievances, if I carried those ideas with me into that environment and was swept up in the energy of so many others – I could end up acting the same way. When I see a person drunk on the madness of a mob mentality, I see it the same way as if I see someone drunk in the more traditional sense – “That could be me, if I let myself drink that much of the Kool-Aid.” (0 COMMENTS)

On November 7, Arnold Kling, formerly a co-blogger at this site, wrote: I can pinpoint the exact moment when I started to lose sleep over higher education in America. This was in the Spring of 2012, at my daughter’s graduation ceremony at Brandeis University. The main graduation speaker was in the midst of a not-memorable talk when she said “and I read this morning in the New York Times that America will be more than 50 percent non-white by 2050.” To me, this would have been a straightforward observation, neither good news nor bad news. But the students greeted it as if they had just heard that their favorite sports team had won a championship or their favorite political party had won an election. They whooped and hollered and cheered for several minutes. It was by far the biggest applause line of her entire speech. I get it. This is troublesome. If you read the whole of Arnold’s post–and I recommend that you do–you probably won’t find yourself less troubled. Arnold concludes: I take the view that the colleges and universities are beyond salvation. But what if you are someone who, say, loves economics and loves the idea of teaching economics to young minds? If you said that colleges are beyond salvation, you would probably conclude that you should choose to be an economist in a think tank or a consulting economist or something else. Even if the vast majority of colleges and universities are beyond salvation, that doesn’t mean all colleges are. And it doesn’t mean that even those beyond salvation can’t have nice niches. One of my benefits from being on Facebook is that a lot of young graduate economics students and assistant professors of economics have heard of me and try to friend me. Unless I see some big negative–and I rarely do–I accept. As a result, I follow what they’re doing in their careers: what they teach, how they teach, and how students respond to their teaching. I read a lot of positive stories. I think of Art Carden at Samford University (who is now, actually, a full professor–how time flies), Jonathan Murphy at Nicholls State University, and Michael Makovi at Northwood University, to name three off the top of my head. I could easily name five or six others. So even if you are pessimistic, as Arnold is and I am, about the future of universities, it’s important to know how badly you want to teach people. If it’s an incredible itch, as it was with me, remember that all you need to do is find one good job and do it well. There are niches out there. (0 COMMENTS)

Over the last 30 years, the Israeli public has moved to the right on the question of how to deal with the Palestinians. Why did this happen? How has this changed Israeli politics and the strategy of the Palestinians? Listen, as journalist Haviv Rettig Gur explores the political and military history of the last three […] The post Terrorism, Israel, and Dreams of Peace (with Haviv Rettig Gur) appeared first on Econlib.

Given a choice between the rule of law and the law of rulers, I’d choose the former every time.  That’s even true if I happen to agree with the ideology of the people who are currently in change.  Thus I’ve consistently opposed “court packing”, regardless of which party is in power at the time. One little known aspect of Fed rules is that the interest rate on bank reserves is technically set by the seven member Federal Reserve Board (not the 12 member FOMC).  The president appoints the members of the Reserve Board, but not the 5 reserve bank presidents that also serve on the FOMC. In practice, the FOMC has a sort of “gentleman’s agreement” to allow all 12 members to vote on where to set the IOR, as it has become the key tool of policymakers, but technically only the Reserve Board members have a vote.  Benn Steil has an article in Barron’s discussing how President Trump might use that loophole to reshape the Federal Reserve: Section 505 of former Sen. Richard Shelby’s (R., Ala.) draft 2015 Financial Regulatory Improvement Act would have transferred the authority to set the interest rate on reserves to the FOMC, and would therefore have restored the full committee’s ability to control short-term rates generally. Ironically, it was Democrats who objected to the Act, on the grounds that the Reserve Bank presidents serving on the FOMC were quasi-private appointments. But unless and until such an act is passed, the Board, and not the FOMC, will have the effective power to control rates. Here is where President Trump comes in. The most important way for him to control both the Board and the FOMC remains replacing Chair Powell—if that is possible. But it is not the only way. Two appointees from Trump’s first term remain on the board: Christopher Waller and Michelle Bowman. Incoming Vice President JD Vance recently cited Bowman favorably. She has been widely mentioned as a successor to Democratic appointee Michael Barr as vice chair for supervision when his term (as vice chair, but not governor) expires in July 2026. Democratic appointee Adriana Kugler’s term expires in January 2026, after which Trump can replace her with a loyalist. Should Waller and Democratic appointees Barr, Philip Jefferson, and Lisa Cook decide to pursue other opportunities before their Board terms expire, Trump would have yet more room to control the Board and its power over rates. The Democrats were reluctant to give the regional bank presidents more power, as that group has occasionally tended to be a bit more hawkish than the Reserve Board members.  But be careful what you wish for.  If you give more power to a subgroup that is more directly controlled by the executive branch, the results may not be to your liking when that branch of government is controlled by the opposition party. One more example is worth thinking about.  Congress gave the president wide discretion over setting tariff rates at a time when the president (in both parties) tended to be more supportive of free trade than was Congress.  They probably never envisioned that a future president might use that power to enact a dramatic increase in tariff rates.  Here’s the Yeutter Institute: While the U.S. Constitution grants to Congress the power to levy tariffs on goods, Congress has delegated some of that power to the Executive Branch over time. The U.S. Constitution states in Article I, Section 8 that “The Congress shall have the Power to lay and collect Taxes, Duties, Imposts and Excises.” Congress passed general tariff legislation until the early 1930s. However, in a move to grant more flexibility to the President to revitalize global trade in the midst of the Great Depression, Congress gave the Executive Branch the power to negotiate tariff reductions within levels pre-approved by Congress through the Reciprocal Trade Agreement Act of 1934. President Franklin D. Roosevelt became the first President to have the authority to levy tariffs and negotiate bilateral trade agreements without the approval of Congress. There’s a reason why the framers gave Congress the power to set tax rates and tariffs. (0 COMMENTS)

  Toyota USA Chief: Hey, About Those IMPOSSIBLE EV Mandates… by Stephen Green, PJ Media, November 11, 2024. California’s electric vehicle mandates, which go into effect next year, are “impossible” to meet and will result in reduced choices on dealer lots. “I have not seen a forecast by anyone,” Jack Hollis, chief operating officer of Toyota Motor North America, said on a Friday roundtable discussion, “government or private, anywhere that has told us that that number is achievable. At this point, it looks impossible.”   The Real Mission of the Fed by Arnold Kling, In My Tribe, November 11, 2024. Excerpt: Before the creation of the Fed, America suffered from periodic financial crises. Since the creation of the Fed. . .America has suffered from periodic financial crises. The populist era in American banking finally ended in the 1980s. Before then, a bank could not have a branch in more than one state. Many states allowed only a single branch within the state. Our contemporary banking system, dominated by a handful of large national institutions operating in every city, would have been unrecognizable as late as the early 1970s. Prior to the deregulation of the 1980s, our financial system was so fragmented that savings in the East Coast, where there was a surplus, could not flow to the West Coast, where they were needed. The Federal Home Loan Mortgage Corporation, now known as Freddie Mac, was created in 1970 largely at the behest of California’s homebuilders and housing lenders, who were desperate to obtain capital from New York and other eastern states. DRH comment: One of the most eye-opening parts of Jeff Hummel’s Masters-level class in Monetary Theory at San Jose State University, which I took on line in early 2021, was the facts about how primitive the American banking system was compared to that of the system in my native Canada. Restrictions on branch banking were a key element in the start of the Great Depression.   The Political Example of Davy Crockett by Miles Smith IV, Law & Liberty, November 12, 2024. Excerpt: By 1833, Crockett—despite remaining a committed political Jacksonian—openly defied Jackson, particularly because of what he believed was the president’s unconstitutional veto of the Bank of the United States. Crockett never embraced the bank, and was not a “bank man,” but he was convinced that the Bank’s charter was constitutional and that Jackson acted outside of his authority when he vetoed its recharter in 1832. Jackson’s veto convinced Crockett “that Old Hickory had become a tyrant, abetted now by having Van Buren as vice-president, obviously the hand-chosen successor.” During the 1834 congressional canvas, “Crockett spoke out strongly for rechartering the bank and holding onto its deposits,” and accused Jackson “of seeking to close the bank in order to take control of the deposits himself to use for the purpose of ensuring Van Buren’s succession.” The United States, he declared, could “be a nation of laws or have a despot.” Crockett, still actively supporting the bulk of the Jacksonian political program, nonetheless answered Jacksonian newspapermen who questioned his intelligence by mocking Jackson. “It is objected to me that I want learning. Look to your President. Look to your President I say. What does he know?” Voters in Tennessee—loyal to Jackson—finally sent Crockett packing for good in the gall of 1834. When he left office in early 1835, Crockett apocryphally quipped: “I told the people of my district that I would serve them as faithfully as I had done; but if not, they might go to hell, and I would go to Texas.” Where Crockett did not go was over to the opposition or to the press to make himself a darling of the Whig Party. He did, in fact, go to Texas, where he now lies buried after his death fighting the forces of the Mexican dictator at the Alamo in March 1836. FDIC Survey Shows 5.6 Million Unbanked Households, But Only 1.6 Million Want Accounts by Nicholas Anthony, Cato at Liberty, November 12, 2024. Much like [sic] interest in a job should be factored into the unemployment rate, so too should interest in a bank account be factored into the unbanked rate. Ideally, this interest would be quantified as the number of people who have tried to open an account in the last six months. Although this exact information is not currently available, the Federal Deposit Insurance Corporation’s biennial survey of unbanked householdsdoes have a question that asks unbanked Americans how interested they are in opening an account, and the numbers are astounding. Over 70 percent of unbanked Americans routinely say they are not interested in having a bank account (Figure 1).     (0 COMMENTS)

In September, 1938, British Prime Minister Neville Chamberlain struck a deal with Adolph Hitler. Britain (and France) would allow Germany to seize the parts of Czechoslovakia that were inhabited by ethnic Germans (the Sudetenland), in exchange for a promise not to make any further advances on the country. Upon returning home, he declared that he had insured “peace for our time.”  A few months later, Hitler grabbed all of Czechoslovakia. In my book entitled The Midas Paradox, I cited a NYT report on the market reaction to the Munich Agreement: “From a strictly market viewpoint the news of the decision of the Czech Government to capitulate to the demands that it cede the Sudeten area to Germany was favorable. Prices, quite naturally, improved as the threat of war seemed to recede. But this was ‘good news’ with a difference; hardly the sort of good news to capture the imagination of individual traders and evoke a spirit of bullishness. Even in Wall Street, where the mental processes are supposed to be exceedingly realistic, there was a sufficiently powerful sense of the tragedy involved in Czechoslovakia’s surrender and the unhappy role that Britain and France played in bringing it about to dampen the normal speculative impulses.” (NYT, 9/22/38, p. 33) This happened a long time ago, and I suspect that today very few Americans understand the consequences of appeasing a tyrant who promises that he just wants a portion of a neighboring country. I was reminded of this market reaction when I read the following tweet: (0 COMMENTS)