Puerto Rico and Economic Independence

Hindsight is the best economist. It always has the solution for everything. On the 1994 Tequila crisis that started in Mexico: “They should have either managed capital inflows through capital controls, or they should have let their exchange rate adapt to those inflows.” On Latin American hyperinflation: “Policy makers should have recognized that domestic debt issuances used to support ISI policies and an overvalued exchange rate led to unsustainable inflationary pressures once the exchange rate was devalued”. On the European debt crisis: “Governments should get their fiscal policies in sync…

Rare Earth Metals: Not So Rare After All?

Pick up your iPhone, turn on the television or drive a hybrid car, you will find a common thread among these products: rare earth metals. Suddenly the focus of several converging trends in the global economy, rare earth metals have become as ubiquitos as the very consumer products they are used to create. Don’t let the name fool you. These unpronouncable metals are relatively plentiful in the Earth’s crust, and can be extracted from a diversity of sites around the globe, from southeastern Nebraska, to Western Australia. Yet the demand…

Reworking the U.S. Corporate Income Tax Rate

One of the hottest questions in U.S. politics today is, “Does the high U.S. corporate income tax rate relative to other countries, act as a disincentive for multinational firms to invest in the U.S.?” “Has the U.S. corporate tax rate make American firms less competitive globally and cause them to export jobs and capital overseas?” To examine these questions, it is important to know just how much U.S. corporations must pay in total corporate income tax. According to the Organization for Economic Development’s Centre for Tax Policy and Administration, the…

From Washington to Islamabad

Relations between the United States and Pakistan have degraded steadily over the course of this past year, as the fractious and at times antagonistic allies have butted heads in a number of diplomatic incidents, ranging from the detention of CIA contractor Raymond Davis in January to the assault of Osama Bin Laden’s compound in May by U.S. Navy SEALs. Each side’s response has been to resort to a strategy of tit-for-tat reprisals. Pakistan in recent months has moved to expel hundreds of U.S. personnel believed to be working for the…

The Price of Learning

Due to new legislation, college students in the United Kingdom will be required to pay higher tuition fees starting in the fall of 2012.  While 2011 tuition rates for universities will cost students up to £3,375 (approximately $5,400) annually, the new policies will nearly double most tuition to £6,000 per year and allow some universities to charge £9,000 per year in exceptional cases. The tuition increases set off waves of protests and debate throughout the country as students and politicians try to cope with conflicting interests in the midst of…

US Exports: A Prescription for Economic Growth?

In an increasingly complex global economic landscape, there are no easy prescriptions for economic growth.  The debate over China’s currency devaluation and the decline of the U.S. manufacturing sector has prompted many economists and policy makers to champion U.S. exports as a key to economic growth.  Yet it seems that the U.S. manufacturing sector remains bound by both intractable economic realities in the developing world and a domestic monetary policy (undermined by instability in the Euro-zone) that has unwittingly led to a stronger dollar.  In his 2010 State of the…

Earmarks Misunderstood

The debate over Congressional earmarks has reached a new height with the announcement by President Obama during his State of the Union Address that, “If a bill comes to my desk with earmarks inside, I will veto it.” This is generally supported by conservative members of Congress, especially those that were voted into office with the support of the Tea Party movement. In fact, Obama’s earmark ban was likely prompted by the influx of these conservative votes as a measure to placate or even diffuse their aggressive fiscal campaign promises…

What Happened to Argentina?

Since the middle of the twentieth century, the Argentine economy has presented economic historians with a narrative rich with paradox. Argentina has served as both darling and pariah of the South American economy, enjoying robust growth, but also jettisoning her bondholders nearly six times in her modern history. At the outset of the twentieth century, Argentina seemed poised to become one of the world’s great powers. In fact, around that time, Argentina and the United States were quite similar.  Both absorbed large influxes of European immigrants that helped to fuel…