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Category Archive: 20th Century

  1. When Capitalism Fails (Why Won’t Anyone Think Of The Children?)

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    The question of how to address poverty in the United States is complicated. Steven Horwitz, chair of the department of economics at St. Lawrence University, and Jeffrey Reiman, professor of philosophy and religion at American University, debate the level of government assistance that should be given to help the poor.

    In this clip, professors Horwitz and Reiman discuss how children who are poor can best be helped. While adult poverty may, in many cases, be due to some fault of the adult, should children have to suffer their parents’ mistakes? Both argue in favor of improvements in the education system, especially in creating more choice. While Prof. Horwitz suggests this can be done outside of government, Prof. Reiman argues that government will still have to be involved, even if only to create the vouchers.

    Prof. Reiman also turns the question on its head, suggesting that perhaps the children of successful parents should not benefit from the parents’ success any more than children of poor parents should not be punished for their parents’ failings. Should all children start out on an equal footing, financially as well as educationally? What should be done to improve education opportunities for the poor? Is the government the best provider of education? What are your thoughts?

  2. A Quick History of War, OPEC, and Gas Prices

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    Historical trends in gas prices can largely be explained by changes in supply and demand. Demand for oil rose through the 20th century. Although this put upward pressure on price, supply initially increased even more rapidly as people produced newer and less expensive production methods. Professor Art Carden shows how oil prices changed based on various events that caused shifts in the demand and supply of oil.

    Political events, economic growth, and international conflicts, among other things, affect the supply or demand of oil. These, in turn, contribute to the prices we see at the pump. Prof. Carden offers several examples, including the following:

    -          The 1973 Yom Kippur war led to decreased supply as oil producers cut production to punish countries that supported Israel: prices rose.

    -          Iran’s revolution in 1979 and Iraq’s invasion of Iran in 1980 decreased supply: prices rose.

    -          The East Asian crisis led to a reduction in the demand for oil: prices dropped.

    -          Surging economies in China and India in the last decade combined with political instability in the Middle East have increased demand for oil and decreased available supply: prices rose.

    Should we be worried that we’ll run out of oil? Prof. Carden thinks not. He argues that prices, profits, and losses provide incentives for innovation and improvements. “People are pretty clever,” he says. “They come up with innovative and ingenious ways to solve problems every day.”

  3. Regulating Monopolies: A History of Electricity Regulation

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    Prof. Lynne Kiesling discusses the history of regulating electricity monopolies in America. Conventionally, most people view regulation of monopoly, such as the Sherman Antitrust Act, as one of government’s core responsibilities. Kiesling challenges this notion, and finds that government regulation of monopoly actually stifles innovation and hurts consumers.

    The American electricity industry was booming in the 1890s, with several small firms competing against one another. Over time, Kiesling argues that the fixed costs began to escalate, increasing the cost of entry into the industry. Put another way, large competitors gained a significant competitive edge over smaller competitors through economies of scale. Eventually, in places like New York and Chicago, Kiesling claims that the competitive process led to one large firm.
    These monopolies were feared by the public, and led to demands for government regulation. The electricity industry, knowing that regulation was coming, used these demands for regulation as cover to construct legal barriers to entry. Ultimately, the regulations passed by the government reduced competition by granting legal monopoly privileges to powerful firms within a certain geographical territory.
    In modern times, we are seeing the real cost of these old one-size-fits-all regulations:
    1. People aren’t adjusting their energy consumption behaviors. For instance, in peak hours, technological solutions that could smooth electricity consumption are being ignored.
    2. The electricity industry doesn’t evolve and account for new types of renewable energy.
    3. Innovations have been discouraged.
    If these archaic regulations were removed, innovations and improvements beneficial to consumers would flourish.
  4. 3 Absurd Reasons for Banning Drugs

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    Dr. Stephen Davies discusses what he feels are the three most strange and bizarre reasons for banning drugs. The first of these reasons for prohibiting drugs was to stop respectable white girls from using drugs and reproducing with men of other races. This argument was used in the United States in the 1890s to ban opiates and was used again to ban cannabis in the 1930s. The second bizarre reason for prohibiting drugs revolved around the claim that the drug trade was part of an international conspiracy run by nefarious interests. These theories ranged anywhere from conspiracies about communism to conspiracies about lizards and aliens. The third and final reason provided was to stop people from becoming unproductive members of society who only want to have a good time.

  5. Top Three Myths About the Great Depression and the New Deal

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    Historian Stephen Davies names three persistent myths about the Great Depression. Myth #1: Herbert Hoover was a laissez-faire president, and it was his lack of action that lead to an economic collapse. Davies argues that in fact, Hoover was a very interventionist president, and it was his intervening in the economy that made matters worse. Myth #2: The New Deal ended the Great Depression. Davies argues that the New Deal actually made matters worse. In other countries, the Great Depression ended much sooner and more quickly than it did in the United States. Myth #3: World War II ended the Great Depression. Davies explains that military production is not real wealth; wars destroy wealth, they do not create wealth. In fact, examination of the historical data reveals that the U.S. economy did not really start to recover until after WWII was over.