The next time I am in Silver Bay or Two Harbors, I might see people checking prices from the new iron ore exchange announced by China earlier this week. When commodities trade globally, events in one corner of the world can affect people profoundly in another corner. I was struck by this six years ago when, trying to file a column on vacation, I found myself in an Internet...
The wreck of the Costa Concordia off the Italian coast illustrates key questions in the never-ending debate about whether government regulation of private economic activity is necessary and about its costs and benefits. Tragic as this incident is – a couple from White Bear Lake is still missing – loss of life in passenger ships is exceedingly rare, especially in contrast to a century ago. So it may not...
Nearly a century ago, Thomas Marshall, Woodrow Wilson’s vice president, remarked, “What this country needs is a really good 5-cent cigar.” Today what our country and the rest of the world need is a good risk-free store of value. The current paucity of such investments is creating harmful distortions around the world, fueling unsustainable increases in the prices of items as diverse as Minnesota farmland and the Swiss franc....
Predators and scavengers play vital roles in healthy ecosystems by culling weak individuals. But the process can be pretty repulsive to watch at times. Similarly, private equity firms and corporate raiders can play vital roles in market economies by reorganizing or shutting down businesses that fail to create value. This frees up resources for other uses. But it isn’t pretty, either. The role of private equity has come to...
At a time when there’s much talk about the 99 percent versus the 1 percent, it’s worth noting that many economists believe income inequality is not only a good thing but also necessary for strong and sustained economic growth. Before we take a closer look at that argument, some perspective is in order. A century ago, income was distributed very unequally in our country. The highest-income households got many...
Silver or gold can serve as a hedge against inflation, but be wary if anyone tells you they are sure-fire investments. The problem is that anything, whether bread, a haircut or a house, has value only because it meets peoples’ needs or wants. It has no absolute value in itself. The same is true for gold and silver, even though these often are described as having “intrinsic value.” Because...
A year ago, I said that “2011 may be an exciting year but probably not a comfortable one.” Budget problems in Europe, here in Minnesota and in Washington, D.C., bore that out, although things might have been much worse. I continue to be a pessimist about prospects for the national and global economies over the next few years. I think there is a strong likelihood that conditions will be...
Property taxes certainly excite the passions, at least judging by the spate of communications I have received – positive as well as negative – in reaction to columns that I and my counterpart Joe Soucheray wrote recently. Before we move on to other topics, here are a few of the issues that merit additional comment. The central one seems to be whether it is fair that people with more...
Fevered controversies about economic policies often constitute much ado about nothing. That’s because market outcomes often automatically offset things about which people waste much time wringing their hands. At least that is the way economists look at markets – as wonderfully useful social institutions that often are difficult to understand. Take the current debate, here in St. Paul and elsewhere, about whether high real estate taxes will drive homeowners...
Lake Pepin is filling with sediment, slowly but steadily. That hurts Minnesotans and Wisconsinites in particular. Yet, the only policy measures currently available to reduce this are unfair and economically wasteful. This need not be. Twenty years ago, the nation had an opportunity to move to more market-friendly methods of dealing with environmental problems. Economists finally had convinced many Democrats of the advantages of approaches such as emissions taxes...