Third Greek Bailout Is Not the Charm

Third Greek Bailout Is Not the Charm

Nearly a month ago Greek voters rejected more economic austerity as a condition of another European bailout. Today Athens is implementing an even more severe austerity program. Few expect Greece to pay back the hundreds of billions of dollars it owes. Which means another economic crisis is inevitable, with possible Greek exit (“Grexit”) from the Eurozone. Blame for the ongoing crisis is widely shared. Greece has created one of Europe’s most sclerotic economies. The Eurocrats, an elite including politicians, journalists, businessmen, and academics, determined to create a United States of Europe irrespective of the wishes of European peoples. European leaders welcomed Athens into the Eurozone in 2001 even though everyone knew the Greek authorities were lying about the health of their economy. Economics was secondary. Unfortunately, equalizing exchange rates cemented Greece’s lack of international competitiveness. Enjoying an inflated credit rating, Greece borrowed wildly and spent equally promiscuously on consumption. Greece could have simply defaulted on its debts. However, Paris and Berlin, in particular, wanted to rescue their improvident banks which held Athens’ debt. Thus, in return for tough loan conditions most of the Greek debt was shifted onto European taxpayers through two bail-outs costing roughly $265 billion. Greece’s economy has suffered, and the leftwing coalition party Syriza won Greece’s January election. Impasse resulted at the end of June as the second bailout expired. Athens denounced its creditors for insisting on repayment. Prime Minister Alexis Tsipras criticized “ultimatums, blackmail and fearmongering.” But writing off Greek debt would require European governments to confess their financial folly to their taxpayers. Restructuring Greek debt also would set off similar demands from other heavily...
And the Lowsman Trophy Goes to … Hawaii!!

And the Lowsman Trophy Goes to … Hawaii!!

You may have heard about Marcus Mariota, the “favorite son” from Hawaii who went on to win the Heisman Trophy and was then picked in the first round of the NFL draft. What you might not know is that there’s also a Lowsman Trophy, for the pro football player who is picked dead last in the draft. The player winning that trophy also gets the coveted title of “Mr. Irrelevant.” CNBC, the business news network, recently published its rankings of “America’s Top States for Business.” They score the 50 states on more than 60 measures of competitiveness, separated into 10 broad categories and then weighted based on how frequently each is used as a selling point when the states market themselves. This year the categories were workforce, cost of doing business, infrastructure, economy, quality of life, technology and innovation, education, business friendliness, cost of living, and access to capital. Hawaii was ranked #1 in quality of life. However, its scores in the nine other categories were either miserable or abominable, leading to an overall finish at #50, dropping one place from last year. We were ranked #50 in cost of living and cost of doing business, and #49 in infrastructure (just behind Rhode Island, last year’s Lowsman winner). Our highest rank in categories other than the one we aced was #36, for technology and innovation. One of the report’s authors observed that part of the problem is unavoidable. We are in the middle of the ocean, more than 2,000 miles away from the mainland and the bulk of U.S. resources. The same factors that make us an expensive place...
Close the Export-Import Bank to Cut Federal Liabilities and Promote Economic Fairness

Close the Export-Import Bank to Cut Federal Liabilities and Promote Economic Fairness

The Export-Import Bank’s charter expired on June 30. What is commonly known as “Boeing’s Bank” is headed toward Washington’s trash bin. When Congress returns, it could revive Ex-Im, which primarily subsidizes big business. But a proper burial for what candidate Barack Obama called “corporate welfare” would save Americans money, reduce economic injustice, and promote economic growth. ExIm exists to borrow at government rates to provide credit at less than market rates for select exporters, mostly corporate behemoths. The bank claims to be friendly to small business, but cherchez the money: it goes to Big Business. According to Veronique de Rugy of the Mercatus Center, the bank subsidized $66.7 billion in sales by Boeing between 2007 and 2013. In 2013, the top ten ExIm beneficiaries accounted for two-thirds of the bank’s total activities. The bank charges fees and interest and claims to make a “profit”—more than $1.6 billion since 2008. But economists Jason Delisle and Christopher Papagianis explained that the bank’s “profits are almost surely an accounting illusion.” Most important, there is no calculation for market risk. CBO figures real losses over the coming decade are likely to exceed $2 billion. Taxpayers also could get hit with a big default bill. Total outstanding credit is $110 billion, yet the agency’s own inspector general warned that bank practices create the risk of “severe portfolio losses.” The agency is supposed to create jobs by throwing cheap money at purchasers of American products. However, the bank backs only about two percent of U.S. exports. There is plenty of private money available for such deals. No one knows which contracts are sealed only with...
Grassroot Testimony on a Resolution to Improve the State Business Climate

Grassroot Testimony on a Resolution to Improve the State Business Climate

March 18, 2015   To: Senate Committee on Economic Development & Technology Sen. Glenn Wakai, Chair Sen. Sam Slom, Vice Chair   From: Grassroot Institute of Hawaii President Keli’i Akina, Ph.D.   RE: SCR 37 — REQUESTING THE DEPARTMENT OF BUSINESS, ECONOMIC DEVELOPMENT, AND TOURISM TO TAKE CERTAIN ACTIONS TO IMPROVE JOB CREATION AND BUSINESS CLIMATE.   Dear Chair and Committee Members: The Grassroot Institute of Hawaii would like to offer its comments on SCR 37, which urges the Department of Business, Economic Development, and Tourism (DBEDT) to indentify new strategies, incentives, and industries that could help improve our state’s economic future. We applaud this resolution for identifying a critical problem in Hawaii’s economic outlook and attempting to take proactive measures in order to support job creation and a better business climate for our state. In that spirit, we would like to urge the Committee to ensure that this resolution remains focused on the promotion of best practices rather than the same-old government-based incentives that have been tried time and again in our state to little effect. The single most revolutionary thing DBEDT could do to promote economic growth in Hawaii is to identify those policies that act as a drain on our economy, but are within our own power to correct. This can include everything from onerous regulations that choke out small business to hidden costs on Hawaii businesses, like the Jones Act’s effect on shipping or the effect of the general excise tax and other state taxes. Instead of looking for a way to get government more involved in shaping the economy, we should be examining how...
The Liberty Movement in Asia

The Liberty Movement in Asia

I recently had the good fortune to visit Nepal and India during a whirlwind of libertarian activity across the region. Since I was already heading to the Asia Liberty Forum, the dynamic folks at The Samriddhi Prosperity Foundation in Kathmandu invited me to speak on “Entrepreneurship, Migration, & Economic Growth” for the students and faculty of the College of Management at Tribhuvan University and at the Executive MBA programs of Ace Institute of Management and of Kings College. Migration & Economic Growth Migration is a sensitive topic where 1,000 people reportedly emigrate from Nepal every day for work in India and the Middle East. The reasons for departure are sad—usually crippling government obstacles to economic freedom at home. Yet there are short-term and long-term benefits to come of it. While these able-bodied young men and women gain skills and contacts abroad they have been sending record remittances back to Nepal to help their families and friends. Remittances to Nepal are among the most impressive in the world, now amounting to 170% of the value of imports. For low-income nations as a whole, remittances are rapidly on the rise, amounting to 6 times more than all the official overseas development assistance combined. Remittances now comprise 8% of total GDP for low-income nations. And remittances are far more beneficial than foreign aid since it comes from people who appreciate the value of the money they earn, they know the people on the receiving end, and the recipients appreciate the value enough to spend it productively. Why? One reason is that it is voluntary and could be cut off if the money...