Category Archives: Fiscal Freedom

Suffolk County Executive Steve Bellone's officemust provide records to the county comptroller for an audit of a proposed $1.1 billion sports arena and convention center in Ronkonkoma, a judge has ruled.

State Supreme Court Justice David T. Reilly ruled Tuesdaythat Bellone's administration must comply with a subpoena filed by County Comptroller John M. Kennedy Jr. last year.

The subpoena seeks documents related to the selection of Jones Lang LaSalle and Ronkonkoma Vision Project LLC to develop plans for the project, whichincludes asports arena, a hoteland commercial space.

The order comes three weeks before Election Day, when voters will choose between Bellone and Kennedy for county executive.

Kennedy, a Republican who is challenging Bellone next month for county executive, said he launched his audit after Brookhaven Town Supervisor Edward Romaine and Islip Supervisor Angie Carpenter, both Republicans, asked him to look into a fatally flawed selection process.

Newsday reported last year that Ronkonkoma Vision Project officials cited a defunct Seattle sports arena as a success story to Suffolk officials, raising questions about their qualifications.

Kennedy filed a subpoena after he received about half the documents he sought through Bellones office, which treated it as a freedom of information request.

Bellones office filed a motion to quash the subpoena, arguing that Kennedy was acting outside his jurisdiction as comptroller.

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Reilly ruled that the comptroller is acting within his authority as the countys chief fiscal officer to ensure the prudent and economical use of public moneys in the best interest of taxpayers.

Kennedy called the judges decision tremendously significant in that it demonstrates that we were never out of bounds, we were never overreaching.

Jason Elan, a spokesman for Bellone, a Democrat, said the county executive plans to appeal the decision.

"It's hard to see this is anything but politics as usual when no funds have been billed to or paid out from the county," Elan said of the audit.

Rachelle Blidner covers Suffolk County government, politics and breaking news.

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Bellone must give arena records to Kennedy, court rules - Newsday

South African Reserve Bank deputy governor o Kuben Naidoo says SAs big five retail banks Absa, FNB, Nedbank, Standard Bank, and Capitec will still rule the banking roost over the coming decade. (Photo: Gallo Images / Phill Magakoe)

This year, 19 October marks 42 years since Black Wednesday. Black Wednesday saw the banning of several prominent South African newspapers, the arrest and subsequent torture of numerous editors and journalists, and the banning of 19 black consciousness organisations. It marks one of the darkest days for media freedom in the history of South Africa.

As Glenda Daniels wrote in a piece marking the 40th anniversary of Black Wednesday: Nothing as violent as this has occurred since 1994. But today, the media is a murky, ambivalent and contested space marred by political interference, commercial imperatives and depleted newsrooms.

Carefully chosen words, the media is a murky, ambivalent and contested space marred by political interference, commercial imperatives and depleted newsrooms. As with so much in South Africa since 1994, our world has become much more complex and the old dichotomies have broken down. Apartheid was universally accepted as evil and so fighting apartheid was universally accepted as good. There was a clear right and a clear wrong, a visible enemy and a tangible end goal. We were guided by a singular vision of creating a non-racial, non-sexist, democratic and prosperous South Africa. We knew who was on which side of the Struggle.

Today, our country flounders in a volatile ocean without such a North Star, without a clear sense of good and evil, and without an understanding of who is on which side of the fence.

Unfortunately, this has become the new normal. Life will never be as simple as it was during the Struggle, and our country may never again produce leaders of the likes of Mandela, Tambo, Sisulu, Kathrada, Helen Joseph, Lilian Ngoyi or Bram Fischer. That is a bygone era. Were on our own, trying to make our way in this new, much more daunting world.

In this murkiness, each of us must grapple with issues of integrity. What does it truly mean today? I believe that, in this singular term, we will find our direction again. It should become our new North Star.

In many ways, the media and central banks struggle with the same dance: the need for independence balanced by the need to be held accountable to society. Journalists integrity rests on the need to be independent of political interference and commercial imperatives, at the same time holding public trust through being accountable for what they say, write, publish or broadcast. Similarly, central banks seek to be independent from political and commercial interference while holding the trust of the public through being open, transparent, impartial and accountable. Neither of us, journalists nor central banks, are in a popularity contest. It is our responsibility to tell the truth, in all its gory detail. Hence, our social licence to operate depends not on our popularity but on our integrity.

This battle for independence while being trusted by society occurs in an environment of mind-boggling complexity. There are commercial pressures, political noise and the all-important societal context within which South Africa finds itself today the baggage we all carry, as a nation, so to speak. Added to this is a rapid technological change which democratises the media while simultaneously lowering standards. This technological advance makes it easier and quicker to communicate, tell stories, and to share an experience or a narrative, but it also makes it harder to distil truth from fiction. Seeking truth and facts has become that much harder.

At this point, let me opine that I think journalists have a tougher job than I do. Maintaining journalistic integrity in todays world is harder than safeguarding an independent central bank. There is only one central bank per country, and with some effort and careful institutional design, we can try to maintain our independence while still creating mechanisms for society to hold us accountable. We still require integrity, though.

In the case of journalists, there are multiple platforms: from print to the internet, from radio to television, dozens of large media groups, hundreds of smaller ones, and literally tens of thousands of individuals plying their trade, some with only the pretence of being a journalist in the true sense of the word. Designing the correct institutional mechanisms for independence and accountability in that context is just so much harder.

I am paid by an institution, a central bank, that literally prints money. Journalists are paid by firms better known for burning cash than for making it. We central bankers have a fairly detailed, though perhaps untested, mechanism for dealing with a rogue or errant central banker. Your industry is much more prone to rogue elements or rogue journalists breaching journalistic ethics codes. It is much harder to prove beyond a reasonable doubt that a journalist has breached their ethical code than in my world.

So let me admit up front that I have a few pieces of advice for you on how to do your job, including your job of maintaining the highest ethical standards in journalism.

But first, let me set out the case for an independent central bank in our country and in our context. Central bankers deal with what we call a time-inconsistency problem, meaning that the actions we take today have different, sometimes even opposite, effects today compared to the effects in the future. Central banks are almost unique in that respect. Actions that we take today to boost the economy may have the opposite effects in the future. Similarly, the constraints imposed today may allow for higher living standards in the future. Very few institutions have this problem.

We believe that we do not have the ability to boost long-run growth; we can only intervene to smooth out the cycles in the economy. Long-run growth is determined outside of a central bank. Similarly, in your world, you can only tell the stories, analyse the news, and make comment. You cannot make up facts. Facts are not made by you; they are made outside of the newsroom.

In a democracy, elected governments have fiscal powers. They have the right to levy taxes, to spend public resources, and to borrow if need be. In theory, there is almost no constraint on these powers. Politicians are incentivised to maximise benefits in the near future, sometimes the very near future. They are, by design, incentivised to borrow from tomorrow for the benefit of citizens today. The future taxpayers who have to pay back that debt are sometimes not even born yet, and most probably have no vote or voice in our political system.

This is probably the same reason why most politicians cannot respond appropriately to climate change, since responding appropriately imposes costs on citizens today for the benefit of tomorrow. Markets are similarly incapable of solving this time-inconsistency problem.

Back to central banking. Not all countries have independent central banks, but most democracies do have them. And they have them because, without such an institutional mechanism, politicians would want too much of a good thing for todays voters at the expense of tomorrows voters. And its not just governments in this equation. Citizens, too, can legitimately borrow to finance benefits today, in some cases long-term benefits, but in many cases, they are provided with a benefit today at a cost tomorrow. A house or a good education, or even a car to commute with, is a justifiable expense because it raises both todays and tomorrows living standards. But many other expenses my shirt, the watch I wear, the dinner I eat at night provide only transitory benefits, and if the expense is financed from borrowings, then, by definition, it lowers my living standards in the future.

Central banks dont stand directly in the way of these politicians. Neither do we stand in the way of you swiping your credit card for a night out at the Saxon, for example. Central banks merely set the price at which you or your government can finance todays goods at the expense of tomorrows. In theory, the market could fulfil this function without a central bank, putting up the price of credit when the amount of credit demanded rises above the savings rate. And some, if not many, interest rates are indeed set by efficient markets. But markets themselves cannot solve the time-inconsistency problem.

Similarly, as journalists, you do not stand in the way of injustice or malfeasance. You merely shine a light on it, bringing to the fore the costs of such actions.

The role of the central bank, in general, is a disciplining one. It brings forward, in an open and transparent manner, a part of the cost of borrowing from tomorrow. It makes the trade-offs starker, so that everyone can see the cost in todays prices. As Ive said earlier, this is not a popularity contest.

If central banks did not play this role, or if this role was unduly influenced by a political cycle, we would perhaps have lower interest rates before an election and higher interest rates after. A former governor, Gerhard de Kock, operating in a time without central bank independence, once lowered rates before an election only to raise them soon after. President Richard Nixon is famous for calling a central bank governor to remind him of the upcoming election and the need for some economic stimulus in the run-up to the election. The term quantity easing had not been coined yet, but you get the point.

Democracy brings freedoms, but it also requires disciplining institutions institutions that tell the truth without fear or favour. This is your task too: to bring reality and facts to light in order to balance our freedoms.

Besides facing the time-inconsistency problem and the risk of being prone to political cycles, central banks also mediate between borrowers and savers in a society. In many countries, the power of these two groupings is not equal. In South Africa, which is a savings-constrained economy, the power of borrowers is bigger than that of savers. In some countries, Germany for example, the power of savers exceeds the power of borrowers. Markets do not always play an impartial mediating role in this complex relationship. Central banks are supposed to be the honest brokers in this relationship, respected because of their integrity and competence rather than being popular or well-liked.

As already mentioned, not all countries have independent central banks. Countries without an electoral democracy do not need this kind of discipline because there are no elections and politicians are not incentivised to deliver short-term gains at the expense of the long term. Dont get me wrong. I would rather have the freedoms in our democracy than the alternative. But that, in some ways, is my point. With freedom comes the responsibility to construct institutions which limit our freedom to do as we please. Such a construct is itself important in sustaining democracy.

A free and respected media with integrity is similarly central to safeguarding democracy. But it, too, must be subject to a certain degree of discipline. Ethics codes, standards for journalistic integrity, a press ombud and the rule of law are all mechanisms to discipline the media to play their essential role in safeguarding democracy.

The concept of a free and credible media enjoys widespread public support. Even if some politicians observe it only in the breach, at least they all argue publicly for a free and independent media. You are fortunate in this regard. But dont take this privilege for granted; it comes on the shoulders of those journalists arrested and tortured 42 years ago.

As for central bankers, we still have to fight the fight for an independent central bank in the court of public opinion. It is because, like journalists, we love democracy and cherish its freedoms, that we fight for independent institutions to safeguard our democracy.

As important as the role of a free press was in the struggle for democracy, it is not a sufficient condition for good governance. Kenya and Nigeria are good examples of countries with a free and thriving media sometimes operating in a context characterised by corruption and weak governance.

In addition to a free press, we need something else to secure good governance: accountability. In our case as a central bank, we recognise the need to be held accountable by society for our actions. I would even posit that, as a society, we have been poorly served by our Parliament in holding the central bank accountable. In my seven years at the South African Reserve Bank, weve actually had to ask Parliament to call us to account. And when we are called to Parliament, many MPs focus on political grandstanding rather than holding us accountable for our actions.

The media is not a single, homogenous entity, so it cannot be held accountable in the same manner as central banks are. Accountability to society is, by its nature, an ill-defined concept anyway. Accountable to whom, when and how? You rely, rightly so, on internal processes, a press council and a press ombud to support this role. These institutions are working better today than in days gone by, but this is still not optimal. As our politics became more corrupt in the past decade or so, both business and the media have been sucked in, to the detriment of the reputation and standing of the industry.

Sanef has the dual role of vigorously protecting the independence and freedom of the media while simultaneously holding the industry accountable to society. This is the correct role and a laudable one, but its by no means an easy one. I do believe that you need to do more work on defining how the media is held accountable by society, as vague and amorphous as this concept may seem.

The economics of the media have changed fundamentally over the past decade. News is a commodity and, in general, freely available. I started using Twitter during the Oscar Pistorius trial. I was hooked. I could get up-to-the-second news of what was happening in court, and it cost me nothing. Similarly, I once read an article on the Internet, of 26,000 words, in the New Yorker magazine on the Church of Scientology. It was an excellent article, which took almost a year to investigate and write. I wondered how much it would have cost to put such an article together and how the magazine could afford this when many people could get the article on the net for free.

How do we sustain an independent media with integrity when the economics of news and the media are changing so drastically? With great difficulty, I assume. No one can be sure of what the future holds for the media industry, in particular for news, analysis, opinions and editorials. Perhaps news organisations will become like symphony orchestras. The economics would never justify their existence, but a combination of sales, philanthropic donations and public funding would sustain smaller but sizeable centres of excellence. Society recognises the media as a public good.

I have to watch this space closely because my industry may well be similarly disrupted. At present, we derive our power from the ability to produce money, either physically or electronically. We manage a foundational piece of the national payments system, and we issue licences to institutions able to take deposits of this money that weve produced. But what if the production of a currency becomes as democratised as a newsfeed on Twitter? Virtual currencies, with parallel and diffused payments systems bypassing banks, could render central bankers completely useless.

So we can learn from you about the disruptive effects of technology and about rapid change in the economics of an industry. We may well need your advice in a few years time when trying to manage these complex changes.

Let me conclude by going back to the issue I began with, the issue of integrity. A cynic would say there will always be journalists with a political or factional agenda. There will always be media houses with less editorial independence than is deemed appropriate. There will always be brown envelopes and character assassinations for political or commercial reasons.

We must, however, rise above such cynicism and continue to advance an agenda of free speech, journalistic integrity, and accountability to society. And, like central banks, weve got to fight these fights in the court of public opinion, not just in courtrooms or newsrooms.

It is a fight you can only win if you stand firm to the highest standards of integrity and hold yourself accountable to society, in its broadest sense. Technological change makes our lives harder but potentially more interesting too. Popularity is not your goal; its your opium. Keep telling it like it is.

Democracy sorely needs an independent and respected media. DM

Kuben Naidoo is deputy governor of the South African Reserve Bank. This is an edited version of his speech delivered at the annual South African National Editors Forum (Sanef) Black Wednesday gala dinner at Emoyeni in Parktown, Johannesburg on Friday 18 October 2019.

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Integrity and independence must be the North Star that guides both central banks and journalism - Daily Maverick

Peer-Reviewed Papers (published in academic journals):

1994|1996|1997|1998|1999|2000|2001|2002

2003|2004|2005|2006|2007 |2008 |2009 |2010 |2011

Other Papers Related to Economic Freedom: 1998-2007

If you know of any other papers current or forthcoming that should be included on this page, or have further information about any of these papers or authors, please write to freetheworld*at*fraserinstitute.org.

de Vanssay, X. and Z. A. Spindler (1994). Freedom and Growth: Do Constitutions Matter. Public Choice. 78, 3-4: 359-372.

This paper empirically investigates whether certain constitutional enumerations matter for economic growth. We find that negative (positive) rights tend to have a positive (negative) effect on economic growth, and that structural constraints have a more significant and larger effect than procedural constraints.

Uses the Scully and Slottje Index as an independent variable. (See: Scully, GW and Slottje, D, (1991) Ranking Economic Liberty Across Countries Public Choice 69, pp. 151-2). The model estimates the steady-state solution of an (institutionally) augmented Solow growth model. The dependent variable is the logarithm of per-capita income. This is a cross-section analysis covering 100 countries.

de Vanssay, X. and Z. A. Spindler (1996). Constitutions, Institutions and Economic Convergence: An International Comparison. Journal for Studies in Economics and Econometrics. 20, 3 (November): 1-19.

Abstract: This paper explores empirically whether constitutional enumerations and economic freedom indexes affect economic convergence. Some constitutional features and economic freedom do affect convergence, though economic freedom is by far the more influential.

Uses the Scully and Slottje Index as an independent variable. (See: Scully, GW and Slottje, D, (1991) Ranking Economic Liberty Across Countries Public Choice 69, pp. 151-2). The dependent variable is the average annual per capita growth rate. This is a cross-section analysis covering 109 countries.

Islam, Sadequil (1996). Economic Freedom, per Capita Income and Economic Growth. Applied Economics Letters 3: 595-97.

Examines the effect of economic freedom on income and growth in high-, middle-, and low-income country sets and finds that economic freedom is significant for a sample of all countries but only in some subsets.

Uses the precursor to Economic Freedom of the World, Measuring Economic Freedom, by James Gwartney, Walter Block and Robert Lawson, a chapter in Stephen Easton and Michael Walker (eds.), Rating Global Economic Freedom (Vancouver: The Fraser Institute, 1992). Measuring Economic Freedom is the main data source for institutional variables.

Paul, C.W.; Souder, W.E.; Schoening, N.C. (November 1996). The influence of government policies on innovation and technological advance. Journal of Scientific and Industrial Research of India. 55 (11): 851-859.

Petersmann, E.U. (June 1996). International competition rules for governments and for private business The case for linking future WTO negotiations on investment, competition and environmental rules to reforms of anti-dumping laws. Journal of World Trade. 30 (3): 5-35.

Ali, Abdiweli M. (1997). Economic Freedom, Democracy and Growth. Journal of Private Enterprise 13 (Fall): 1-20.

This paper takes advantage of newly constructed measures of economic freedom to show the importance of economic freedom on growth. I find that economic freedom is a more robust determinant of growth than political freedom and civil liberty.

Uses summary ratings from Economic Freedom of the World: 1975-1995 as one variable in a comparison of a number of institutional variables.

Anwar, S.T. (1997). Economic freedom of the world: 1975-1995. Journal of International Business Studies. 28 (4): 872-878.

Dornbusch, R. (1997). Brazils incomplete stabilization and reform. Brookings Papers on Economic Accountability. (1): 367-404.

Easton, Steven T., and Michael A. Walker (1997). Income, Growth, and Economic Freedom. American Economic Review 87 (2) (May): 328-32.

Finds that economic freedom is an important explanatory variable for steady-state levels of income. The addition of a variable for economic freedom is also shown to increase the explanatory power of a neo-classical growth model.

Economic Freedom of the World: 1975-1995 is the main data source for institutional variables.

Goldsmith, Arthur A. (1997). Economic Rights and Government in Developing Countries: Cross-National Evidence on Growth and Development. Studies in Comparative International Development 32 (2) (summer): 29-44.

The paper finds that developing countries that score better in protecting economic rights also tend to grow faster and to score higher in human development. In addition [the paper finds that] economic rights are associated with democratic government and with higher levels of average national income.

Uses summary ratings from Economic Freedom of the World: 1975-1995 as one of a number of institutional variables.

Hakura, F.S. (April 1997). The Euro-Mediterranean policy: The implications of the Barcelona Declaration. Common Market Law Review. 34 (2): 337-366.

Hanke, Steve H., and Stephen J.K. Walters (1997). Economic Freedom, Prosperity, and Equality: A Survey. Cato Journal 17 (2) (Fall): 117-46.

The article compares several institutional indexes for content and explanatory power: Gerald Scullys studies, The Fraser Institutes Economic Freedom of the World, Freedom Houses Economic Freedom Indicators, The Heritage Foundations Indices of Economic Freedom, The International Institute for Management Developments World Competitiveness Yearbook 1996, The World Forums Global Competitiveness Report 1996. Compares liberty and prosperity, equality and foreign policy implications. They find that economic freedom is positively correlated with per-capita GNP.

Economic Freedom of the World: 1975-1995 is used as one variable in a comparison of a number of institutional variables.

Jordan, Jerry L. (1997). Jobs Creation and Government Policy. Cato Journal 16 (3) (Winter): 287-94.

Argues that employment-creating initiatives or job-creation policies hinder the creation of new technology and the process of creative destruction. Also argues that the role of government monetary intervention in the economy should be limited to creating stable monetary policy.

Makes reference to the general conclusions of Economic Freedom of the World: 1975-1995 regarding economic freedom and income and growth.

Download the paper. (PDF)

Mbaku, J.M. (December 1997). Africa in the post-Cold War era: Three strategies for survival. Journal of Asian and African Studies. 32 (3-4): 223-244.

Park, Walter G., and Juan Carlos Ginarte (1997). Intellectual Property Rights and Economic Growth. Contemporary Economic Policy 15 (July): 51-61.

The authors have compiled an index of intellectual property rights, and examine its effects on growth and the factors of production (investment, schooling, and R&D). The paper finds that IPRs affect economic growth indirectly by stimulating the accumulation of factor inputs like R&D and physical capital.

Uses summary ratings of Economic Freedom of the World: 1975-1995 as a control variable for market institutions in the analysis.

Trebilcock, Michael J. (1997). What Makes Poor Countries Poor?: The Role of Institutional Capital in Economic Development. Chapter in The Law and Economics of Development, edited by Edgardo Buscaglia, William Ratliff and Robert Cooter. Greenwich: JAI Press.

Discusses the general conclusions regarding economic freedom and growth found in Economic Freedom of the World: 1975-1995.

Ayal, Eliezer B., and Karras Georgios (1998). Components of Economic Freedom and Growth: An Empirical Study. Journal of Developing Areas 32 (Spring): 327-38.

The paper uses regression analysis to examine the effect of the components of economic freedom on growth, output and investment and finds that economic freedom enhances growth both via increasing total factor productivity and via enhancing capital accumulation. It also identifies components that have the highest statistical effects on these variables, with the aim of informing policy makers.

Uses component ratings from Economic Freedom of the World: 1975-1995 as the main data source for institutional variables.

Download the paper. (PDF)

Chafuen, Alejandro (1998). Estado y Corrupcion. In Alejandro Chafuen and Eugenio Guzmn, Corrupcin y Gobierno (Santiago, Chile: Fundacin Libertad y Desarrollo): 45-98.

Finds that corruption is negatively related to economic freedom.

Economic Freedom of the World: 1975-1995 and Transparency International are the main data-source for institutional variables.

Dawson, John W. (1998). Institutions, Investment, and Growth: New Cross-Country and Panel Data Evidence. Economic Inquiry 36 (October): 603-19.

This paper outlines the alternative channels through which institutions affect growth, and studies the empirical relationship between institutions, investment, and growth. The empirical results indicate that (i) free-market institutions have a positive effect on growth; (ii) economic freedom affects growth through both a direct effect on total factor productivity and an indirect effect on investment; (iii) political and civil liberties may stimulate investment; (iv) an important interaction exists between freedom and human capital investment; (v) Milton Friedmans conjectures on the relation between political and economic freedom are correct; (vi) promoting economic freedom is an effective policy toward facilitating growth and other types of freedom.

Uses Economic Freedom of the World: 1975-1995 as the main data source for institutional variables.

De Haan, Jakob, and Clemens L.J. Sierman (1998). Further Evidence on the Relationship between Economic Freedom and Economic Growth. Public Choice 95: 363-80.

Primarily investigates the robustness of the index of economic freedom devised by Gerald Scully and D.J. Slottje and determines that the robustness of results depends heavily on how freedom is measured. Finds that some specifications are robust predictors of the growth rate of real per-capita GDP (1980-1992) but few are robust for investment share of GDP.

Empirical analysis on Economic Freedom of the World: 1975-1995 is limited to correlation with the Scully and Slotjies index. Suggests further empirical work be done on Economic Freedom of the World.

Elbadawi, I. and Schmidt-Hebbel, K. (December 1998). Macroeconomic policies, instability and growth in the world. Journal of African Economy. 7: 116-168 Suppl. 2.

Farr, W. Ken, Richard A. Lord, and J. Larry Wolfenbarger (1998). Economic Freedom, Political Freedom and Economic Well-Being: A Causality Analysis. Cato Journal 18 (2) (Fall): 247-62.

The paper uses Granger causality analysis to demonstrate that economic freedom causes economic well-being and economic well-being causes economic freedom. Additionally, the authors argue that economic well-being causes political freedom but that there is no causation flowing from political freedom to economic well-being. The paper also finds no evidence of a casual relationship in either direction between economic freedom and political freedom. Indirectly economic freedom causes political freedom through its effect on economic well-being.

Economic Freedom of the World: 1975-1995 and the Freedom House index of political rights and civil liberties are the main data sources for institutional variables.

Download the paper. (PDF)

Ford, John B., Kiran W. Karande, and Bruce M. Seifert (1998). The Role of Economic Freedom in Explaining the Penetration of Consumer Durables. Journal of World Business 33 (1): 69-86.

The study examines the link between economic freedom (a measure of government intervention) and the penetration of three durable goods (televisions, radios and automobiles) across countries.

Cites conclusions of Economic Freedom of the World: 1975-1995; uses other indexes of economic freedom for empirical work.

Grubel, Herbert G. (1998). Economic Freedom and Human Welfare: Some Empirical Findings. Cato Journal 18 (2) (Fall): 287-304.

The paper compares economic freedom to income, growth, unemployment in the OECD, the UN Human Development Index, life expectancy, literacy, poverty, and income distribution. It finds that economic freedom does not have a cost in terms of income levels, income growth, unemployment rates, and human development.

Economic Freedom of the World: 1997 Annual Report is the main data source for institutional variables.

Download the paper. (PDF)

Gwartney, James, Randall Holcombe, and Robert Lawson (1998). The Scope of Government and the Wealth of Nations. Cato Journal 18 (2) (Fall): 163-90.

The paper examines the effect of the size of government in OECD countries upon economic growth. This paper draws on the authors Joint Economic Committee Study, The Size and Functions of Government and Economic Growth.

Makes reference to the general conclusions regarding economic freedom and income and growth as published in Economic Freedom of the World: 1975-1995 and Economic Freedom of the World: 1997 Annual Report.

Download the paper. (PDF)

Henderson, David (1998). The Changing Fortunes of Economic Liberalism. London: Institute of Economic Affairs.

A comprehensive review of the trends in economic liberalism in the last century. The book covers economic liberalism in thought and practice as well as discussing how the climate of political and popular opinion has both helped and constrained the development of liberal policy. One section uses the Economic Freedom of the World to discuss the progress made by countries engaging in economic reform and the appendix discusses the derivation, benefits, and limitations of the Economic Freedom of the World.

Economic Freedom of the World: 1975-1995 is the only quantitative source for institutional variables.

Johnson, James P., and Tomasz Lenartowicz (1998). Culture, Freedom and Economic Growth: Do Cultural Values Explain Economic Growth? Journal of World Business 33 (4): 332-56.

The paper discusses which cultural values are associated with economic freedom, drawing on two international quantitative cultural indexes.

Uses the summary ratings from Economic Freedom of the World: 1975-1995 as one of a number of institutional variables.

Johnson, Simon, Daniel Kaufmann, and Pablo Zoido-Lobaton (1998). Government in Transition: Regulatory Discretion and the Unofficial Economy. American Economic Review, Papers and Proceedings (May): 159-239.

Empirically studies the effect of institutional quality on the share of the unofficial economy in GDP.

Uses the component, Equality of Citizens under the Law and Access of Citizens to a Non-Discriminatory Judiciary, of Economic Freedom of the World: 1997 Annual Report as one of a number of institutional variables.

Kealey, T. (April 1998). Why science is endogenous: a debate with Paul David (and Ben Martin, Paul Romer, Chris Freeman, Luc Soete and Keith Pavitt). Research Policy. 26 (7-8): 897-923.

Lim, Linda Y.C. (1998). Whose Model Failed? Implications of the Asian Economic Crisis. Washington Quarterly 21 (3): 25-36.

The paper examines the conflicting interpretations of the role of governments and economic freedom in the success and subsequent crises in Asia.

Cites conclusions of Economic Freedom of the World: 1975-1995.

Mbaku, John Mukum, (1998). Constitutional Engineering and the Transition to Democracy in Post-Cold War Africa. The Independent Review 2 (4) (Spring): 501-17.

Discusses the constitutional guarantees necessary to secure economic freedom and why such guarantees are important. Focuses specifically on Africa.

Makes reference to the general conclusions of Economic Freedom of the World: 1975-1995 regarding economic freedom and income and growth.

Milhaupt, Curtis (1998). Property Rights in Firms. Virginia Law Review 84: 1145-94.

Discusses how differences in property rights and corporate governance systems arise within differing institutional frameworks.

Uses the Property Rights component of Economic Freedom of the World: 1975-1995 as one of a number of institutional variables in case-study analysis.

Nelson, Michael A., and Ram D. Singh, (1998). Democracy, Economic Freedom, Fiscal Policy and Growth in LDCs: A Fresh Look. Economic Development and Cultural Change 46 (4) (July): 677-96.

The study examines the effect of democracy on economic growth after controlling for a number of variables for the size of government and institutions. The study finds that it is not the redistributive policies of democratic governments that hinder development in developing countries but the lack of economic freedom.

Uses the precursor to Economic Freedom of the World, Measuring Economic Freedom, by James Gwartney, Walter Block and Robert Lawson, a chapter in Stephen Easton and Michael Walker (eds.), Rating Global Economic Freedom (Vancouver: The Fraser Institute, 1992). The summary ratings of Measuring Economic Freedom are used as one variable in a comparison of a number of variables for institutions and the size of government.

Norton, Seth W. (1998). Poverty, Property Rights, and Human Well-being: A Cross-national Study. Cato Journal 18 (2) (Fall): 233-45.

The paper compares property rights to indicators of development and determines that the well-being of the worlds poorest inhabitants [is] sensitive to the cross-national specification of property rights. The paper shows that well-specified property rights enhance the well-being of the worlds most impoverished.

Economic Freedom of the World: 1997 Annual Report and the Heritage Foundations Indices of Economic Freedom are the main data source for institutional variables.

Download the paper. (PDF)

Norton, Seth W. (1998). Property Rights, the Environment, and Economic Well-Being. In Peter J. Hill and Roger E. Meiners (eds.), Who Owns the Environment (Rowman & Littlefield): 37-54.

Investigates whether countries with better property rights have better performance on environmental measures.

Uses the summary ratings of Economic Freedom of the World: 1975-1995 as one of four measures used as proxies for property rights.

Porket, J.L. (1998). Is the state in retreat? Politicka Ekonomie. 46 (6): 805-815.

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Fiscal Freedom | Prometheism.net - Part 38

TRAHANT REPORTS September is going to be a mess. Congress must sort out some really complicated fiscal issues. There is the budget, an increase in the debt limit, how much to spend on federal programs and services, and, if theres time, tax reform.

This should be easy in a one-party government. Republicans come up with a budget plan. Then the House acts, the Senate does its thing, and President Donald J. Trump signs the idea into law. Easy. Except there is no Republican majority in Congress (other than the R listed by members names.)

The House is made up of at least three factions, or parties, and no majority. (The three groups are: Republicans, Democrats, and the more conservative House Freedom Caucus.) So in order to gather enough votes to pass a budget, or any other of the challenges, at least two of the three factions have to agree on a plan.

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The Senate has its own divisions within the Republican Party. (The very reason why a Republican replacement for the Affordable Care Act has not yet become law.)

And the White House is not on the same page either. The president proposed a stingy budget thats been pretty much rejected by members of the House and the Senate (except the more conservative elements such as the House Freedom Caucus.)

Courtesy Trahant Reports

Mark Trahant, Trahant Reports

For example the Trump administration proposed budget calls for$4.7 billion for the Indian Health Service, a cut of some $300 million or 6 percent of the agencys budget. But a House spending plan calls for anincrease of $97 million over last years levels. Indeed,the Appropriations Committeethat funds IHS and the Bureau of Indian Affairs plans to spend a total of $4.3 billion more than the president requested on programs under its jurisdiction. (In general: The presidents budget reflects significant budget cuts across Indian country,according to analysis by the National Congress of American Indians.)

The Senate will come up with its own spending plan. Then, in theory, the two houses will resolve their differences and agree on how much the federal government should spend next year (and the president can go along or veto the legislation and start all over).

But no. Thats not how Congress is actually legislating these days. More often Congress agrees to a temporary spending plan based on last years budget, the Continuing Resolution. Thats an easier sell to members because it represents a last minute, throw up your hands, and do something, approach. The other alternative is a government shutdown. President Trump tweeted in May that our country needs a good shutdown in September to fix mess!

Yes, the budget is a mess. Period. Even take the word, budget. Thats a proposal from the president. But in Congress a budget is a spending limit that Congress imposes on itself. It sets a ceiling that each of the 12 Appropriations subcommittees have to live with. And, more important right now, the budget sets the rules for debate so the Senate can pass some legislation (such as the health care bill) with only 50 votes. (Most bills need 60 votes to stop a filibuster from stopping the process.)

Back to the congressional budget. Last month the Budget Committee approved a plan that would cut domestic spending by $2.9 trillion over the next decade. The full House will vote on this plan when it returns. Its a bleak document that would end up slashing many of the programs that serve American Indians and Alaska Natives. Remember the appropriations committees would still spend the money; but the budget would act as an overall cap.

This budget plan starts off withhistorically low federal spendingfollowed by even more severe budget cuts between now and 2027. To show how out of touch this budget is, it includes program cuts for Medicaid that were a part of the failed health care legislation. (Whats changed? Nothing.) This bill tips toward the conservatives who want more spending cuts to be sooner, as in right now.

That makes the problem political. There are probably not enough votes to make this budget so. A few Republicans dont see this harsh approach as good government. And even if the votes are found in the House, the Senate is another story. Think health care.

And if this budget cannot pass, its not likely there is another one that would.Democrats in the House say: Congress cannot continue to underfund these crucial investments (and) without relief from these spending caps, vital government programs are facing significant cuts for fiscal year 2018 that would have significant effects on American families all across the country.

And the budget is only one fiscal crisis. Another issue that is immediate and serious involves the debt limit. Thats the amount of money the federal government can borrow is currently set at $19.85 trillion (federal debt exceeds that level now, but the Secretary of Treasury can basically shuffle money from different accounts). Conservatives want spending cuts as part of any deal to increase the debt limit. As Rep. Tom Cole, R-OK, and a member of the Chickasaw Tribe, told MSNBC. A debt limit increase without spending cuts is like having a credit card and saying, Ive reached my limit, Im just going to change the limit higher without changing any of my spending habits.

But, like on the budget, the votes are not there. (Especially in the Senate where 60 votes will be needed.)

Download our free report, Intergenerational Trauma: Understanding Natives Inherited Pain, to understand this fascinating concept.

This is tricky because the Republican administration understands what failure could do to the country. Budget director, Mick Mulvaney, is now supporting a debt limit increase. But when he served in Congress, Mulvaney said he was willing to risk a default to force a discussion on spending.

In both the House and the Senate votes from Democrats will be needed to pass the debt limit. But will there be enough Republicans.

If Congress does not pass the debt limit, the United States would be catastrophic. And, almost immediately, this failure would impact federal budgets because interest rates would spike upward. Interest rates are already the fastest growing part of the federal budget and a sharp increase in rates would add significantly to the total federal debt. In other words: By voting against a debt limit increase, Congress would make the debt problem worse. Far worse.

But Republicans have campaigned against a debt limit increase for a long time. Its going to be one tough vote.

In case youre keeping score:

So yes, September is going to be a mess. And after the budget, spending bills, and debt limit is complete, theres still tax reform on the agenda. Yet another mess.

Mark Trahant is theCharles R. Johnson Endowed Professorof Journalism at the University of North Dakota. He is an independent journalist and a member ofThe Shoshone-Bannock Tribes.OnTwitter @TrahantReports.

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September Will Be a Mess in Congress; Budget, Spending and Debt Fights Ahead - Indian Country Today Media Network

RALEIGH So far in 2017, North Carolina is adding jobs at a slower pace than the national and regional averages. Thats a noticeable change from recent trends but its a reason only for concern, not for panic or pontification.

Through July, the states economy has added about 32,000 net new jobs this year, with total employment growing by .7 percent. Thats a rate of increase lower than the national average (.9 percent) and the average of the 12 Southeastern states (1.1 percent). During 2016, by contrast, North Carolinas rate of job growth exceeded both averages. The same is true for the longer-term trend, measured from 2012 to 2016.

Republicans might like to pin our job-creation slowdown on Democratic Gov. Roy Cooper, who took office in January. But that would be premature. Regardless of whether you like Coopers picks or policies, its too soon for them to have affected significantly a state economy estimated at $530 billion in goods and services.

Democrats might like to blame the Republican legislatures conservative fiscal and regulatory policies, which began in 2011 and then dramatically expanded in 2013. But that would be logically incoherent. Did these policies first boost North Carolinas job-creation rate above the national and regional averages, and then suddenly pull it down in 2017?

Moreover, it would be odd to attempt to disprove the economic benefits of smaller government, lower taxes, and less-burdensome regulation by pointing to the higher employment growth being enjoyed by regional competitors such as Florida, Georgia, and Tennessee, as these states rank even higher than North Carolina does on measures of economic freedom.

So trying to turn the states relatively weak performance in job growth since the beginning of the year into a political bludgeon is unjustified and unhelpful.

I would similarly urge North Carolinians against panic. The future of the state, and the prosperity of its residents, can be neither measured nor determined in seven-month increments of time. We face significant challenges, due primarily to structural changes in the national and international economy. Some jobs and industries that were viable in the past are no longer viable and politicians who tell you otherwise are fooling you, themselves, or both.

What we should focus on is a comprehensive, long-term strategy for encouraging sustained economic growth. Governors and legislatures dont control the money supply, set trade policy, or run fiscal deficits. They affect economic growth by influencing the creation and deployment of valuable capital assets that make it much easier and less expensive to produce goods and services, make those goods and services much higher in quality, or some combination of the two.

Some of these assets are physical ones. Others are forms of human capital, such as the education and skills of workers and entrepreneurs or the social trust that allows households and businesses to make plans and strike deals with confidence.

Governments clearly have a role to play in building and maintaining physical assets such as highways. Governments also have a role to play in human capital, such as funding schools and establishing a fair and consistent system for enforcing contracts and adjudicating disputes.

But most capital assets are privately created, privately owned, and privately managed. The private sector is the lead actor in the story of economic growth and job creation, with the public sector playing an important but supporting role. Fiscal conservatives never forget that when governments collect taxes to spend on a public program, that removes dollars from the pockets of their original owners, at least partially supplanting an investment that would otherwise be made voluntarily and skillfully.

North Carolinas future rests on wise investment by both the public and private sector, with a strong emphasis on the latter and on innovators hatching new ideas and turning them into new industries.

State leaders have prudently built up the governments cash reserves, just in case the current slowdown in job-creation rates leads to something worse. More importantly, however, they have enacted policies to welcome and foster private investment in North Carolina over time.

John Hood is chairman of the John Locke Foundation and appears on the talk show NC SPIN. You can follow him @JohnHoodNC.

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Focus on long-term growth - The Mountaineer (subscription)

To the casual observer, it certainly seems like the Republican Party is in an identity crisis. After years of consensus and sweeping the 2016 national elections on the promise of repeal and replace of Obamacare, Republicans in a stunning 11th-hour failure failed to pass even the so-called "skinny" repeal.

Amid this failure and the apparent chaos in Washington, many have drawn the conclusion that Republicans are in disarray and unable to govern. Others wonder if we are witnessing the end of the GOP. Many people I've met on the campaign trail have asked me why at a time like this I would choose to join the Republican party.

It's a fair question. For years, I was a big-L Libertarian, competing in a crowded field for the party's nomination for the presidency in 2016. Changing parties especially at this time might seem like a counterintuitive move.

But although turncoats like John McCain and Susan Collins have taken center stage and confused the party's image, several Republican leaders remain faithful to basic conservative principles. Leaders like Ted Cruz, Rand Paul, and Mike Lee in the Senate and the Freedom Caucus in the House have refused to budge on Obamacare and have made their dedication to individual liberty and limited government clear.

I'm running for Senate from Missouri as a Republican in order to work alongside leaders like these. At its core, the Republican Party is supposed to be a liberty party that's why it was the party of Abraham Lincoln and Ronald Reagan. For a Republican, so long as you are not violating the lives and liberties of other human beings and that includes the lives of human beings in the womb the government should give you the freedom to do as you see fit. The party strives to put the trust and the power back in the hands of the people instead of handing it over to unelected bureaucrats.

I believe in these core conservative principles. I've spent my whole career speaking on and fighting for freedom the freedom to spend as you see fit, worship as you see fit, study as you see fit, and speak as you see fit. And I'm eager to partner with liberty-loving Republicans and President Trump in restoring federalism, freedom of faith, and fiscal responsibility in this country.

Above all, however, I found that a move to the Republican Party was the move my fellow Missourians wanted me to make. Before launching my campaign, I called hundreds of Missourians to lay out the principles of liberty that form the bedrock of my political beliefs and to ask for their support. Not only did I receive a consistently positive response, but I also was asked by many to run as a Republican instead of as a Libertarian. They want to beat Sen. Claire McCaskill, D-Mo., as badly as I do, and what better than to replace a Democrat with a liberty-loving Republican?

Missourians want and deserve the kind of Republican who will stick to his guns, both literally and figuratively. They want a Republican in the model of the Freedom Caucus, Cruz, Paul, and Lee a Republican who has the grit to withstand the pressures of political gamesmanship and special interests and the gumption to vote by principle and for the people every time.

I know I can be this kind of leader, and I'm ready to represent my fellow Missourians faithfully from within the GOP. And I know that by working together, we can bring about real reform.

That's why I'm a Republican. And it's why I'm asking my fellow Missourians to join me in restoring the GOP and returning the country to the constitutional principles of justice and liberty for all.

Austin Petersen is a candidate for the United States Senate. Learn more at austinpetersen.com.

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Austin Petersen: Why I became a Republican - Washington Examiner

SPRINGDALE -- The U.S. House has until the end of September to pass a budget, a debt ceiling increase and a bevy of bills important to Arkansas, said Rep. Steve Womack of Rogers.

Disputes within the Republican majority in the House are still a major obstacle, Womack said. The strongly conservative Freedom Caucus wants deep spending cuts, while the so-called Tuesday Group of moderates is more moderate than the bulk of Republicans, he said.

These factors have plagued congressional budgeting for the past six years, Womack and others said, often leading to "continuing resolutions" of whatever an appropriation was the previous fiscal year rather than new appropriations that meet changing needs.

"Go ask Kelly Johnson how important FAA reauthorization is," Womack said, referring to the Northwest Regional Airport director and reauthorization of the Federal Aviation Administration. "Go ask J.B. Hunt Inc. about the same thing, because that reauthorization includes meal and rest requirements for our trucking industry."

Womack made his remarks in an interview at the Northwest Arkansas Democrat-Gazette offices in Springdale on Thursday, during Congress' August recess. Congress will resume session Sept. 5 and has until Sept. 30, the end of the current federal fiscal year, to appropriate money for the fiscal year that begins Oct. 1.

A budget tells each department of the federal government how much it can spend, but appropriation bills such as the FAA bill gives those agencies the money and authorizes them to spend it.

Working out a deal with Democrats and bypassing both groups might gain some support from the Tuesday Group, but at a cost of mainstream Republican member votes. Then there is the matter of getting anything the House passes through a divided Senate.

The FAA appropriation, Johnson said in an interview Friday, has had 23 continuing resolutions in a row. Johnson affirmed the importance of reauthorization for the FAA. The resolutions mean airports are never on completely solid ground in long-term planning for construction projects, she said.

"So you complete part of a project at a time because you can only count on the money six months at a time," she said. "Well, when you have to rebid a project under competitive bids, everybody knows what your last bid was." The chances of getting a lower-than-normal bid for work disappears, she said.

Two other bills Womack mentioned as particularly important to Arkansas are authorizations for flood insurance and for the State Children's Health Insurance Program. The program spent $178 million in Arkansas in this federal fiscal year to provide assistance to parents who are low income but make too much money for their families to be eligible for Medicaid, federal figures show.

"Over half of the kids in the state receive benefits" from the program, said Marquita Little, health programs director for the nonprofit Arkansas Advocates for Children and Families.

Another piece of congressional business to settle is whether Womack will enter the race to become House Budget Committee chairman, he confirmed.

Rep. Diane Black, R-Tenn., the House Budget chairwoman, announced her bid Aug. 2 to become her home state's governor. Black and Womack entered Congress in 2011 and have been close political allies throughout their terms. House tradition and rules dictate that a candidate who intends to leave the House has to leave committee chairmanships.

"Leading contenders to replace Black include GOP Reps. Steve Womack of Arkansas and Bill Johnson of Ohio," the newspaper Roll Call, which tracks Congress, said on Aug. 14. "Meanwhile, Reps. Rob Woodall of Georgia and Tom McClintock of California could also make the list if they decide to seek the post."

Womack confirmed Thursday he has an appointment to talk with House Speaker Paul Ryan, R-Wis., on Aug. 24. He expects the chairmanship of budget will be the topic of that call. He said there are factors he would have to consider before seeking the chairman's slot.

For example, he does not want to lose his position on the Appropriations Committee.

"Appropriations is where you write the bills" authorizing specific spending. He also wants the budget Black hammered out with her committee to get a vote on the House floor.

Congress will raise the debt ceiling, Womack said, allowing further federal spending. Whether it passes a budget, though, depends largely on the Senate. The debt ceiling, the amount set by Congress as the maximum amount the government can have in its total debt, is currently $19.81 trillion. How much it should be raised or whether the limit should be suspended for a time is in dispute. Womack also warned interest payments on the debt have reached $250 billion a year during a time of historically low interest rates. Historically normal interest rates could double that, he said.

Recent events make passing a budget uncertain, Womack said. The failure to repeal and replace Obamacare adds to the urgency for Republicans to pass a budget with serious tax reform, he said.

"We really can't take any more heavy defeats on the agenda," Womack said of his party, which holds the majority in both chambers of Congress. "I don't think we can afford to have another big ticket item fail," he said.

Despite the looming deadlines, "budget and authorizations are not what people are calling my office about," Womack said. On Tuesday, President Donald Trump gave a news conference where he was asked about a rally in Charlottesville, Va. last weekend organized by white supremacists. A counter-protester, Heather Heyer, was killed. The president condemned violence and bigotry, but went on to say: "You also had some very fine people on both sides."

The backlash to the president's remark is severe, said Womack, who represents one of the safest Republican districts in the country. Arkansas' 3rd Congressional District has sent Republicans to Congress in every election since 1966, usually by large margins.

"Ninety percent of the calls to my office are about his remarks about Charlottesville," Womack said. By far most of those calls strongly disagree with what the president said and want much clearer condemnation of white supremacy than he gave, Womack said.

"A clear and overwhelming majority of the people I represent are not conflicted on the subject," Womack said, and neither is he. "We as Americans reject racism and anti-Semitism. That is not who we are," he said.

NW News on 08/20/2017

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Congressional plate full, Womack says - Arkansas Online

To the editor: Grover Norquist and Patrick M. Gleason seem to suffer from the delusion that taxes are evil both in form and function. (Angry taxpayers, leave Mitch McConnell alone and turn your attention to California's Republicans, Opinion, Aug. 17.)

They decry the fact that we have a rational government here in California (unlike in Kansas and Oklahoma), which understands that some revenue raising is needed to keep us a first-class state. Thus, raising the gas tax a few cents per gallon to maintain roads, bridges and related infrastructure is, to these people, an unacceptably onerous burden.

As the adage goes, when looking for the motivation, follow the money. I sense a whiff of the extraction businesses behind these men and their sycophants.

Jan Rainbird, Irvine

..

To the editor: Norquist and Gleason attack our state GOP legislators who courageously supported extending Californias cap-and-trade program. I am proud of Assembly Republican leader Chad Mayes, who understands that climate change is real and must be addressed.

By raising the cost of fossil fuels, cap-and-trade and the gas tax encourage the transition to clean energy. To reduce our fossil fuel use and to slow global warming, we need to pass a carbon fee and dividend nationally, which would return all revenue to American families; until that happens, California must lead the way.

Norquist calls cap and trade an economically disastrous policy, but Californias economy has surged under its system. The effects of ignoring global warming will make the costs of cap and trade seem like chump change, as coastal regions and major cities will have to fight rising seas and extreme weather.

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If you want to talk about economically disastrous policies, President Trumps denial of global warming and withdrawal from the Paris accord are excellent examples.

Anita Rivero, Downey

..

To the editor: There appears to be a growing disconnect between the ideological principles of conservatives and liberals, and how the two political parties address these values.

On the conservative side, Norquist and Gleason depict all taxation as bad. However, a fiscal conservative might respond that taxation can be worthwhile, depending on the purpose, and that Californias cap-and-trade program provides useful economic incentives to reduce pollution.

On the liberal side, identity groups are becoming increasingly assertive in advance of overall cultural acceptance. However, a social liberal might question where the trend leads; for instance, might people one day be forced to accept anyones behavior in public?

Political behavior by the two parties is increasingly responsive to the passionate fringes, which results in divisiveness at the expense of our common goals: freedom, justice, peace, prosperity and a clean world.

Ed Salisbury, Santa Monica

Follow the Opinion section on Twitter @latimesopinion and Facebook

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California Republicans face reality on climate change and the ire of their party - Los Angeles Times

Another debt ceiling fight is just around the corner. The governments borrowing limit will need to be raised yet again by the end of September to avoid default. Indications suggest that there will be enough support between Democrats and moderate Republicans to pass a clean increase, meaning no spending limits or cuts will be attached. However, this fiscal status quo is absolutely unacceptable, especially because it would be easy to take a small step toward much-needed fiscal discipline.

Debt is piling up, and it is doing so at a faster pace than the economy is growing.

The gross national debt is already well past 100 percent of gross domestic product. Under very optimistic assumptions, the Congressional Budget Office projects that under current law, the debt will reach 150 percent of GDP in 2047 thanks primarily to an aging population and poorly structured entitlement programs. Significant change is clearly needed if were to avoid fiscal catastrophe.

The first step of addressing ones issues is to admit that you actually have problems. Say it along with me: We have a debt problem. The next step is to adopt small solutions as opposed to unrealistic goals that would be abandoned within days. Such a big goal would be to implement fundamental reforms to the programs that are the drivers of our future debt. There is no debate that this is what needs to be done and what should be done, and I will never stop advocating that goal. But it is also painfully obvious to me that in the current political environment, where neither party is willing to be the adult in the room, such a noble goal is out of reach.

What isnt out of reach, however, is the smaller and more realistic short-term goal of implementing spending caps. The logic is simple. Debt is just a symptom of Washingtons excessive spending problem, so we must address the latter to solve the former.

To get the nations finances on the right track, we simply need to ensure that government is growing more slowly than the economy.

A spending cap would do this by limiting the growth of government to a set percentage of GDP, perhaps 2 percent. As a recent video from the Center for Freedom and Prosperity shows, maintaining such limits would bring the budget into balance in less than 10 years.

Of course, there would have to be trade-offs. Washington cannot live within these limits without making some small changes to Medicare, Social Security and other programs. But the advantage is that the spending caps would finally force lawmakers to think about these trade-offs. Also, seeing as the caps would explicitly continue to grow by some percentage each year, they would make it harder for proponents of big government to moan about savage budget cuts. They would allow lawmakers to focus on reforms, as opposed to cuts.

The case for spending caps isnt just based on theory. The evidence shows that a focus on reducing spending works better than rules aimed solely at reducing deficits and debt. Both Switzerland and Hong Kong have seen positive results from their spending caps. Hong Kong is one of the richest countries in the world, and Switzerland is rare among European nations in its fiscal strength.

On the other hand, balanced budget amendments havent saved states such as California, New York and Illinois from bloated governments and debt accumulation. The uncertain nature of economic performance and tax collection makes yearly balanced budgets much harder to achieve than long-run spending limits. Perhaps more importantly, the seductive call for a tax hike tends to sap the political will for spending reform. Its easy to lock in repetitive cycles of new spending programs followed by tax increases to fund them.

Debt and deficits are bad, but they are symptoms of an underlying spending problem. Focusing narrowly on reducing debt can lead to counterproductive policy choices, whereas spending caps would most likely achieve the desirable goals of reducing excessive government and finally getting the nations debt under control.

Veronique de Rugy is a senior research fellow at the Mercatus Center at George Mason University. She writes a column for Creators Syndicate.

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De Rugy: In the fight against debt, spending caps are low-hanging fruit - TwinCities.com-Pioneer Press

It was the third freedom of navigation operation conducted during the presidency of Donald Trump.

A U.S. Navy warship, theArleigh Burke-class destroyer USSJohn S. McCain, reportedly sailed within 12 miles of Mischief Reef, host to one of seven artificial islands built by China in the Spratly Islands Group in August, U.S. officials told Reuters.

The U.S. Navy conducts so-called freedom of navigation operations (FONOPs), a principal of customary international law, to challenge Chinas excessive maritime claims in the South China Sea. As my colleague Ankit Panda points out, it is a measure of legal signaling and not used a deterrence tool.

The U.S. Navy has not publicly confirmed Reuters report, and no additional details about the FONOP have emerged as the U.S. Department of Defense is no longer publicizing details of such operations.

The Pentagon releases an annual FONOP report describing specific operations. However, the Fiscal Year 2017 report will not be released until 2018.

The U.S. Navys modern FONOP program begun in 1983. U.S. Navy FONOPs were not publicized and the service was careful not to specify the specific locations of operations until 2015 when U.S. Senator John McCain revealed that the U.S. Navy had not conducted FONOPs against Chinese-held islands in the South China for over three years.

The August 10 FONOP constitutes the third such operation conducted under the presidency of Donald Trump. The other two FONOPs occurred on in July and May respectively. Interestingly, the U.S. Navys May FONOP also took place within 12 miles of Mischief Reef. There is almost certainly careful legal reasoning behind this.

As The Diplomat has pointed out, Mischief Reef presents an opportunity to conduct a high-seas assertion FONOP, as under international law it is a low-tide elevation not entitled to any exclusive maritime zone, and it also not within a 12-nautical mile radius of another feature. As The Diplomat reportedin May:

The difference between a high seas FONOP and an innocent passage FONOP is not an academic distinction. In the former case, a military vessel would have to specifically operate in a manner not consistent with Article 19 of UNCLOS, which delineates a range of activities that are lawfully permitted for foreign vessels exercising innocent passage within the rightful territorial sea of a coastal state.

An explicit high seas assertion could include the vessel undertaking a range of activities, ranging from overt military actions like a live-fire exercise to the activation of fire control radars or even the launching of ship-based aircraft, helicopters, or drones.

Should it turn out that the USSJohn S. McCain conducted an innocent passage FONOP, it would likely reinforce Chinas legal position. The Chinese government has so far not publicly commented on the purported thisFONOP of the Trump presidency.

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South China Sea: US Navy Conducts Freedom of Navigation ... - The Diplomat