In response to the financial crisis that began in 2008, in 2010 President Obama signed into law the Wall Street Reform and Consumer Protection Act, commonly referred to as the “Dodd-Frank Act." A “centerpiece of the [new law] was the creation of the Consumer Financial Protection Bureau (“CFPB”),” which was established in response to the perception of widespread failures in the federal consumer protection regime with respect to financial products and the belief that these regulatory failures contributed to
the financial crisis.
We argue that in order to answer the challenges that James Buchanan put to contemporary political economists, a reconstruction of public choice theory building on the work of Buchanan, F.A. Hayek and Vincent Ostrom must take place. Absent such a reconstruction, and the significant challenges that Buchanan raised will continue to go unmet.
Income inequality is often attributed to declines in income mobility following the Great Gatsby curve, but this relationship is of secondary importance in determining the factors of income mobility if one considers that changing rules is more important than changing outcomes under defined rules.
We present a short history of the Virginia School of Political Economy in its institutional settings of University of Virginia (UVA), Virginia Polytechnic Institute and State University, or Virginia Tech (VPI), and George Mason University (GMU). We discuss the original research and educational project as envisioned by Buchanan at UVA, its maturity into a normal science at VPI, and its continuation at GMU.
Describing the U.S. system of spectrum allocation, former Federal Communications Commission officials Gerald Faulhaber and David Farber have written, “[the] current system is similar to that of the former Soviet Union’s GOSPLAn agency, which allocated scarce resources by administrative fiat at among factories and other producers in the Soviet economy.” the U.S. spectrum regulatory framework, still largely intact since 1927, severely distorts the 21st century technology industry and harms consumers with higher prices and lack of choice.
The absence of dominion and discrimination in human relationships is a cardinal feature of a free and just society, according to James Buchanan. If classical liberals emphasized this benefit, they would help assuage the public’s fears about having to take on greater responsibilities if the welfare state were repealed.
Nobel laureate James M. Buchanan laid down a new foundation for political economy and classical liberalism. To understand its development, it’s helpful to note Buchanan’s indebtedness to the writings of Frank Knight, Knut Wicksell, and Italian public-finance scholars.
More than 40 years ago, Elinor Ostrom began her adventures with the police. In order to combat the conventional view that ‘bigger means better’, Ostrom pioneered a fieldwork-based framework for measuring police services that utilized consumer surveys and thereby created a community-centered model of analysis for public services.
When the stories of the Icelandic and Irish crises are told, they are framed as if one country did everything right to exit recession and the other country everything wrong. This article assesses their recovery policies and finds that the truth lies somewhere in between. By allowing its banking system to suffer substantial losses, Iceland shielded its citizens from the costly debt overhang apparent in Ireland. Ireland's commitment to open capital markets and price deflation has allowed trade flows to remain robust, and relative prices to realign to signal sustainable production plans to entrepreneurs. These responses provide a roadmap for other small open economies with large financial sectors entering similar crises in the future.
“Fragility” is the well-known property of being easily breakable, of failing under moderate stress. The opposite property is “antifragility,” a term coined by Nassim Nicholas Taleb (2012a) and the title of his recent book. In this article, Lawrence White considers how we might achieve antifragile banking and monetary systems. There are reforms that can marginally reduce fragility, but the author argues that to achieve antifragility will require a serious turn away from “one-practice-fits-all” centralized regulation and toward a free market’s mixture of innovation and strict discipline. In banking it will require an end not only to “too big to fail” bailouts
of uninsured creditors and counterparties, but also to other forms of taxpayer-backed depositor and creditor guarantees.