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Mercatus scholars apply economic analysis to the issues of the day

The Perks of a Privatized Metro System

by Erika Davies, Antony Davies on June 28, 2016

Something interesting happened following Metro’s single-tracking and long-term shutdowns.

Lyft started offering discounted rides to Washington commuters. With these discounts, the ride sharing giant joins FedEx, Underwriters Laboratories, private schools, passport expeditors, and many other businesses to become one more private-sector company offering to fix the blunders of a public-sector enterprise. According to market skeptics, this isn’t the way it’s supposed to work – Lyft is a profit-seeking entity. And according to conventional wisdom, profit-seeking companies jump at opportunities to exploit in pursuit of the almighty dollar. With Metro on the ropes and thousands of commuters stranded, conditions are perfect for services like Lyft to charge the absolute maximum the market will bear. Why then are they cutting their price in half?

...

How Brexit Will Impact the Global Economy

by David Beckworth on June 27, 2016

David Beckworth, economist and research fellow at the Mercatus Center, joined Federalist Radio to discuss Britain’s exit from the EU and how it will impact the global economy. Dr. Desmond Lachman, resident fellow at the American Enterprise Institute, also explained some of the reasons why the UK voted the way they did.

The “Brexit” decision, in some ways considered a populist uproar, comes as a shock to elites all over the world. “Globalization has been integrating our world more and more, really since the 1980’s it’s been accelerating, and I think its bringing some of this tension,” Beckworth said. “One of the biggest mistakes that the EU elites made was handling of the Eurozone crisis.”...

Ryan Is Right to Tackle Federal Regulations, but We Must Look at State and Local, Too

by Christopher Koopman on June 24, 2016

Earlier this month, Speaker Paul Ryan (R-Wis.) and House Republicans announced a series of policy proposals to create "a confident America, where everyone has the chance to go out and succeed no matter where they start in life." The goals of this initiative, "A Better Way," are certainly admirable. A major focus of the proposals released so far concern removing barriers to opportunity and upward mobility through reforming federal regulations and increasing congressional oversight of federal agencies. However, while this a good place to start, the barriers that exist at a federal level are only a small piece of the puzzle.

In fact, the most pervasive barriers to opportunity are not a...

Mercatus Center Scholars Weigh in on Brexit

by Richard Williams, Scott Sumner, David Beckworth, Daniel Griswold on June 24, 2016

Mercatus Center scholars weigh in on the United Kingdom's historic vote to leave the European Union, examining the impetus behind the vote and the potential future repercussions.

David Beckworth discusses the role central banks played in the Brexit with Bloomberg's Matt Miller, Joe Weisenthal and Scarlet Fu on "What'd You Miss?" 

David Beckworth j...

Reduce the Hurdles to Private Investment in Infrastructure

by Veronique de Rugy on June 23, 2016

The Congressional Budget Office has a new report looking at the return of federal investment in transportation and research. The bottom line is that the return is not so much as the private-sector investment. So rather than invest more money in federal investments, let's get rid of all the federal policies that get in the way of the private sector's doing the investing.

First, let's look at the CBO report. Salim Furth of The Heritage Foundation explained in an email to me how this CBO report deserves much credit for "diligently following Congress' new requirement that CBO include macroeconomic feedback effects in its evaluations of major fiscal policy changes." He continued: "This dynamic approach is a lot more work than the alternative, and Director Keith Hall is quietly making CBO more transparent. He's more open to criticism, but that's a benefit in the long run, since it will compel CBO to constantly improve...

House Republicans Propose Real, Though Incomplete, Medicaid Reform

by Brian Blase on June 23, 2016

Medicaid, the joint federal-state program that finances health care and long-term care expenses for disabled and low income individuals, needs fundamental reform. Medicaid provides far too many enrollees with relatively little value, produces relatively poor outcomes, and crowds out private sector coverage.

Many of the program’s problems emanate from the open-ended federal reimbursement of state Medicaid expenditures. Last year, the federal government paid 63% of state Medicaid bills. The current financing structure discourages both states and the federal government from caring much about the value the program delivers and allows interest...

Los Angeles' New Manufacturing Hub Won't Generate Innovation

by Adam Millsap on June 22, 2016

The White House blog announced that Barack Obama is engaging in several innovation-themed events during the week of June 20th. One is the formal announcement of the winner of the ninth manufacturing hub competition: Smart Manufacturing Leadership Coalition in Los Angeles. The coalition will get $70 million of taxpayer money, and based on the work of similar winners it will be used to create a manufacturing organization that functions as a combination advocacy and networking group and research center that funds projects and engages in workforce education and training....

Fichtner, Warshawsky on Social Security Trustees Report

by Mark J. Warshawsky, Jason J. Fichtner on June 22, 2016

The Social Security annual report, released today, shows that while the projected insolvency date for the combined Old Age, Survivor, and Disability Insurance (OASDI) trust funds remains unchanged at 2034, another year has been lost to inaction. The Obama administration trustees have called for legislators to address the shortfall "as soon as possible."

Mercatus Center senior research fellow Mark Warshawsky, a member of the Social Security Advisory Board from 2006 through 2012, said the following in response to the report:

The insolvency date for the overall program has not changed from last year, that is, it is now one year...

The Brexit Vote is a Referendum on the European Union’s Thousands of Stifling Regulations

by Richard Williams on June 22, 2016

How many people does it take to change a lightbulb in England? Depends on what the European Union (EU) says.

A priest in Suffolk, England used to hire a man to climb a ladder to change his lightbulbs. That was fine until the European Union Working at Heights Directive banned this activity so that now the priest must spend1,700 pounds (about $2,000).

In the next seven years, they added an additional 12,000 regulations (about 1,700 per year). The vast majority of them (only about 1 in 200) have no analysis of the likely impacts. This is problematic as the costs of EU regulations are estimated to be above ...

Unplanned Order

by Donald J. Boudreaux on June 21, 2016

One of history's most profound discoveries is that complex, beautiful and immensely useful arrangements often emerge without anyone designing them.

Charles Darwin, of course, famously explained how complex life forms emerge over many generations through trial and error. Each of these life forms is well suited to survive in its environment. Yet no one designed these life forms.

Indeed, the complexity of the natural world is so impressive that many people of faith resist Darwin's theory. They find it difficult to believe that the amazing and magnificent order of the natural world could be the result of anything but the conscious design of a creator.

I don't wish to debate theology or biology. Instead, I want to discuss another complex, beautiful and immensely useful arrangement: the modern economy.

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