The Island of Logic

The Federal Reserve in December proposed new restrictions on debit card transactions that cap swipe fees at 7 – 12 cents. This represents an almost 84% cut in the current average. At the time of the announcement stocks in the major debit card processors Visa and MasterCard plummeted. Shocker, who would think that the Government meddling would cause problems in the market. This is an attempt by the Federal Reserve to impose price caps in our “free market” system. In a Capitalist and free market system competition and the consumer set prices on services and commodities not an over reaching Federal Government. Price caps, subsidies, excessive taxes, tariffs or any other form of Government price setting or regulations always causes havoc in a free market. The market and economy needs to be left alone and to itself. The less government regulates and meddles the more prosperous an economy. It’s simple.

If you appose the Debit Card Rules and you want to tell your Senator and Representative go to http://www.dontmakeuspay.org/ and fill out the email form.

Link to Essay: http://www.realclearmarkets.com/blog/519.pdf

Jeffrey Miron, Harvard University, writes an excellent essay on the Obama Stimulus plan. This is a must read for all voters as they go to the polls on November 2nd. Jeffrey points out that the Administration’s stated goal of providing economic stimulus in accordance with the Keynesian model was perhaps not the Administration’s primary objective. Despite the Keynesian model’s lack of complete merit the Obama Administration does claim to follow its guide in their economic stimulus plan. The Stimulus however doesn’t follow Keynesian model necessarily, so the question begs to be asked, if not stimulus, what are their objectives? Below is Jeffrey Miron’s  conclusion.

The Administration should have endorsed a stimulus package based on a repeal of the corporate income tax and reductions in employment taxes. This policy would have accomplished its stated goals, and the budgetary implications would have been less negative than those of the package ultimately adopted because this alternative plan would have enhanced rather than detracted from economic efficiency. This approach would also have been difficult for Republicans to oppose.

Yet the Administration did not take this approach, presumably because its true goals were not just economic stimulus. Instead, the Administration wanted to reward its constituencies (unions, environmentalists, public education) and increase the size and scope of government. This tactic is consistent with the Administration’s policies in general. Across the board, it has taken a big government, redistributionist approach, whether regarding housing, unions, health, the auto industry, trade, antitrust, or financial regulation. The Administration’s view appears to be that government is better than individuals at deciding how taxpayers get to spend their money and that government should engineer large transfers from richer to poorer.

I mourn for days when Economics and Capitalism are taught again in our schools.