Economic Rockstar

Connecting Brilliant Minds in Economics and Finance

137: Rakesh Ramachandran on Crypto Economics and How Knowledge of Austrian Economics Created His Blockchain Company QBRICS

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137: Rakesh Ramachandran on Crypto Economics and How Knowledge of Austrian Economics Created His Blockchain Company QBRICS

Rakesh Ramachandran in co-founder and CEO of QBRICS, an enterpreise blockchain platform company.

Rakesh is self-thought in economics and created QBRICS based on his readings of Austrian economics.

He is a long-time listener to the podcast and I’m thrilled to to share this conversation with you.

In this episode Rakesh mentions and discusses:

Books:

Patreon

If you’re a fan of the podcast and would like to show your support in anyway, please check out my Patreon page at www.patreon.com/economicrockstar where you can sign up for any of the awards for as little as $1 a month or you can simply follow me on the Economic Rockstar Facebook page or on Twitter or simply recommend the show to a friend, especially if they have never had the opportunity to study economics.

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108: Steve Horwitz on Spontaneous Order, the Microfoundations of Macroeconomics and Three Economic Myths

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108: Steve Horwitz on Spontaneous Order, the Microfoundations of Macroeconomics and Three Economic Myths

steve-horwitz-rush-economic-rockstar

Steven Horwitz is the Charles A. Dana Professor of Economics at St. Lawrence University in Canton, NY and is currently Visiting Scholar at Ball State University, Indiana.

Professor Horwitz is also an Affiliated Senior Scholar at the Mercatus Center Virgina, a Senior Fellow at the Fraser Institute in Canada, and a Distinguished Fellow at the Foundation for Economic Education.

Steve is the author of three books, Monetary Evolution, Free Banking, and Economic Order, Microfoundations and Macroeconomics: An Austrian Perspective, and Hayek’s Modern Family:  Classical Liberalism and the Evolution of Social Institutions.

He has written extensively on Austrian economics, Hayekian political economy, monetary theory and history, and American economic history.

Steve has a series of popular YouTube videos for the Learn Liberty series from the Institute for Humane Studies and blogs at Bleeding Heart Libertarians and writes regularly for FEE.org.

A member of the Mont Pelerin Society, he has a PhD in Economics from George Mason University and an AB in Economics and Philosophy from the University of Michigan.

Economics:

In this episode, Steve discusses and mentions: Austrian economics, spontaneous order, microeconomics, macroeconomics, free markets, capital markets and government.

Economists:

In this episode, Steve discusses and mentions: Adam Smith, F. A. Hayek, Karl Menger and Ludwig von Mises.

In this Episode, you will learn:

  • whether macro problems are the result of micro problems or is there a reverse causality.
  • Menger: the link between Adam Smith and F. A. Hayek.
  • the micro foundations of Adam Smith’s ‘Spontaneous Order’.
  • how the private sector responded better than government to the devastation caused by Hurricane Katrina. Is this a case for free market economics?
  • the three economic myths, including the gender wage gap and the rich getting rich and the poor getting poorer according to Professor Horwitz.
  • and much much more.

Where to Find Professor Horwitz:

Links:

Writing Tips:

  1. Write something everyday. Be in the habit of writing. Don’t feel like you’ have to edit everything as you go along.
  2. If you have writer’s block, just push through. Just start writing. There’s an old aphorism among writers: “How can I know what I think ’til I see what I say”.

Pedagogy:

Think about teaching as coaching. Like a coach, help students develop a skill. In this case the skill is the economic way of thinking – Steve Horwitz.

Books:

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104: Russ Roberts on How Adam Smith Can Change Your Life and the Theory of Moral Sentiments

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104: Russ Roberts on How Adam Smith Can Change Your Life and the Theory of Moral Sentiments

Russ Roberts is Associate Editor, founder and host of the popular and much loved podcast EconTalk, russ-roberts-economic-rockstarand founding advisory board member of the Library of Economics and Liberty.

Russ is the John and Jean De Nault Research Fellow at Stanford University’s Hoover Institution.

His two rap videos on the ideas of John Maynard Keynes and F.A. Hayek, created with filmmaker John Papola, have had more than eight million views on YouTube.

Russ’ latest book How Adam Smith Can Change Your Life: An Unexpected Guide to Human Nature and Happiness takes the lessons from Adam Smith’s The Theory of Moral Sentiments and applies them to modern life.

Russ is also the author of three economic novels teaching economic lessons and ideas through fiction. The Price of Everything: A Parable of Possibility and Prosperity, The Invisible Heart: An Economic Romance and The Choice: A Fable of Free Trade and Protectionism.

Russ blogs at CafeHayek.com and archives his work at russroberts.info.

A three-time teacher of the year, Russ has taught at George Mason University, Washington University in St. Louis, the University of Rochester, Stanford University, and the University of California.

He earned his Ph.D. from the University of Chicago and his undergraduate degree in economics from the University of North Carolina at Chapel Hill.

Economists:

In this episode, Russ discusses and mentions: Adam Smith, F. A. Hayek, David Hume, Vernon Smith, Milton Friedman and Nassim Nicholas Taleb.

Economics:

In this episode, Russ discusses and mentions: Austrian economics, classical economics, spontaneous order, pricing, supply, demand, surge pricing, unintended consequences, price controls, taxes and subsidies.

In this episode, you will learn:

  • about Adam Smith and how the application of Smith’s philosophical and economic thinking can change your life.
  • what the market forces are and the positive and negative examples of the spontaneous order.
  • the invisible hand and prices.
  • what surging prices are.
  • what Smith describes as the impartial spectator and the power of our conscience.
  • Adam Smith’s advice on how to be happy.
  • two ways to get people to pay attention to you and what Smith believed is the most ethical way.
  • what Smith believed was the cultural norm to accept behaviors.

Two Ways to Get People to Pay Attention to You:

Be rich, famous and powerful. It works. But don’t be fooled. You have a natural tendency to pursue money, fame and power because it will get you attention, respect and love. But that’s the wrong way to get there.

The right way to get there is through wisdom and virtue. Understand the world and treat people well. If you do that, you’re also going to be loved, respected and praised. But you won’t be doing the things along the way that people do when they want to become rich, powerful and famous that are not so good for you that cold lead to regret, shame and misbehavior. The temptation to do the unethical thing to pursue fame, power and money is always there.

Writing Tips:

  • Write everyday.
  • The trick to being a good writer is being a good editor.

Where to Find Russ Roberts:

Recommended Books:

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085: Michael Roberts on Understanding Karl Marx and His Thinking on Capitalism

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085: Michael Roberts on Understanding Karl Marx and His Thinking on Capitalism

Michael Roberts

Michael Roberts has worked as an economist for over 30 years in the City of London. He is author of The Great Recession: Profit cycles, economic crisis A Marxist View and The Long Depression: Marxism and the Global Crisis of Capitalism.

Economics:

In this episode, Michael mentions: Marxism, capitalism, Austrian economics, GDP, multinationals, inflation, printing of money, booms, busts, profitability, recession, depression, inequality, wealth, means of production, private property, competition, externalities, unintended consequences, bailout, austerity and unemployment.

Economists:

In this episode, Michael mentions: Karl Marx, Friedrich Hayek, Adam Smith, John Maynard Keynes, Brad DeLong and Paul Mattick.

Links:

Books:

 

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082: Peter Boettke on Smith and Keynes and Why We Should Be ‘Living Economics’

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082: Peter Boettke on Smith and Keynes and Why We Should Be ‘Living Economics’

Peter Boettke is Professor of Economics and Philosophy at George Mason University, the BB&TPeter Boettke Economic Rockstar Professor for the Study of Capitalism, and the Director of the F.A. Hayek Program for Advanced Study in Philosophy, Politics, and Economics at the Mercatus Center at George Mason University.

Peter is now the co-author, along with David Prychitko, of the classic principles of economics texts of Paul Heyne’s The Economic Way of Thinking.

Professor Boettke’s most recent book, Living Economics, provides a resource for how teachers and students can engage in many fascinating questions in economics and illuminates the core principles that should guide our thinking.

Peter’s efforts in the classroom have earned him a number of distinctions including the Golden Dozen Award for Excellence in Teaching from the College of Arts and Sciences at New York University and the George Mason University Alumni Association’s 2009 Faculty Member of the Year award.

Peter’s research has primarily been in the area of comparative political and economic systems and the consequences with regard to material progress and political freedom.

Economics:

In this episode, Peter mentions: Classical economics, Austrian economics, Keynesian economics, credit transmission, institutions, the invisible hand, mainline economics, mainstream economics, private property, public choice, rent-seeking, opportunity cost, scarcity, exchange, markets, negative externalities, laissez-faire, Coase theorem, Pigouvian tax, reciprocity, inflation, stagflation and Malthus’ theory of The General Glut.

Economists:

In this episode, Peter mentions: Adam Smith, F. A. Hayek, Ludwig von Mises, Milton Friedman, Paul Samuelson, John Maynard Keynes,Frédéric Bastiat, David Hume, Vernon Smith, Thomas Robert Malthus, J. K. Galbraith, Paul Heyne, Hyman Minsky, Thorstein Veblen, Steve Keen, Ben Bernanke, Arthur Pigou, Gordon Tullock, James Buchanan, Robert Coase, Elinor Ostrom, Vincent Ostrom and Major Douglas.

Papers:

Books:

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078: Arnold Kling on the Hidden Story of How Markets Work, the Mortgage Crisis and How We Pay for Health Care

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078: Arnold Kling on the Hidden Story of How Markets Work, the Mortgage Crisis and How We Pay for Health Care

Arnold Kling is a Mercatus Center–affiliated senior scholar at George Mason University and a member of the arnold kling economic rockstarFinancial Markets Working Group.

Arnold specializes in housing-finance policy, financial institutions, macroeconomics, and the inside workings of America’s federal financial institutions. He also is an adjunct scholar at the Cato Institute in Washington, DC.

Arnold has testified before Congress on the collapse of Fannie Mae and Freddie Mac

He has authored five books, including Crisis of Abundance: Rethinking How We Pay for Health Care and Invisible Wealth: The Hidden Story of How Markets Work.

Arnold has published articles in the Economist, the Wall Street Journal, the New York Times, the Atlantic, and Forbes, among others, and he blogs at arnoldkling.com/blog/.

Previously, Arnold served as a senior economist at Freddie Mac and a staff economist on the Board of Governors of the Federal Reserve System.

He started Homefair, one of the first commercial websites on the Internet.

Arnold Kling received his PhD in economics from Massachusetts Institute of Technology.

“If you want to live a good lifestyle, you can find hobbies and interests that don’t cost very much. So it’s not hard to enjoy life. But if you want to make yourself miserable, watch politics.” – Arnold Kling

Economics:

In this episode, Arnold mentions and discusses: information rules, economic information, marginal cost of information, advertising, versioning, bundling, Austrian economics, risk measurement, capital, tax, mortgage-backed securities, loans, bubbles, crashes, excess leverage, marked-to-market, economics of health care, labor, capital, land, institutions.

Economists:

In this episode, Arnold mentions and discusses: Hal Varian, Carl Shapiro, Brad deLong, Tyler Cowen, Paul Krugman, Paul Volker, Douglass North, Robin Hanson, Bryan Caplan, James Buchanan, Adam Smith, F. A. Hayek and Robert Solow.

In this episode you will learn:

  • about Moore’s Law and what it means for the economy.
  • why economists are being lured into the world of start-ups and tech companies.
  • about the power of freemium and why companies need to build up trust to create a loyal customer base.
  • the difference between versioning and bundling.
  • what the future holds for the accessing information online.
  • about Arnold’s company online Homefair and how it was one of the first internet companies.
  • what really went on behind closed doors at Fannie Mae and Freddie Mac that resulted in their demise.
  • why Fannie Mae and Freddie Mac were bailed out.
  • how changing the culture at Freddie Mac caused its collapse.
  • about the state of health care in America today.
  • how Americans are to pay for the higher costs of health care.
  • about the fibre-bubble in the 1990s.
  • why we are richer today than a couple of hundred years ago.
  • why ideas are the foundation to economic growth and prosperity.
  • why nations like Cuba and North Korea are poor (bad institutions).
  • about the work being done at George Mason University.

Where to Find Arnold Kling:

Books:

Links: 

  • 23andMe: www.23andme.com
    • View reports on over 100 health conditions and traits
    • Find out about your inherited risk factors and how you might respond to certain medications
    • Discover your lineage and find DNA relatives

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074: Peter Leeson on The Invisible Hook: The Hidden Economics of Pirates

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074: Peter Leeson on The Invisible Hook: The Hidden Economics of Pirates

Peter T. Leeson is Duncan Black Professor of Economics and Law at George Mason University.Peter Leeson

He is also a Senior Fellow at the F.A. Hayek Program for the Advanced Study of Philosophy, Politics, and Economics as well as the North American Editor of Public Choice.

Formerly, Peter was Visiting Professor of Economics at the University of Chicago, Visiting Fellow in Political Economy and Government at Harvard University, and F.A. Hayek Fellow at the London School of Economics.

Peter is author of The Invisible Hook: The Hidden Economics of Pirates and Anarchy Unbound: Why Self-Governance Works Better Than You Think.

Peter can be found at PeterLeeson.com.

Economists:

In this episode, Peter mentions and discusses: Ludwig von Miss, F. A. Hayek, Gary Becker, Karl Menger, Steven Levitt, Robin Hanson, Karl Marx, Adam Smith and Peter Boettke.

Economics:

In this episode, Peter mentions and discusses: price theory, human behaviour, Austrian Economics, Chicago School of Economics, economics of self-governance, rational thinking, profit maximisation, incentives, social insurance, externalities, unemployment, governance, self-governance, public goods and rational choice theory.

Pirates were economic actors but they were criminals. Criminal behaviour, as some had suggested, is not very amenable to the economic way of thinking.But Gary Becker pioneered research demonstrating that that wasn’t so.

In this episode you will learn:

  • about the similarities and differences between Austrian Economics and Becker’s thinking in the Chicago School of Economics.
  • why Peter decided to study the economics of pirates.
  • about the scientific approach to economic thinking.
  • how limitations to data restrict analytical research and how historical economic thinking can be used as a form of empirical analysis.
  • how using the economic narrative is just as effective as the mathematical regressions to explain theoretical concepts.
  • the similarities between The Invisible Hand and The Invisible Hook.
  • how pirates were rational thinkers and social revolutionaries.
  • how a hierarchy was established on a pirate ship using the Pirate Code.
  • how the Pirate Code created a social order that was economically beneficial to the crew.
  • about the constitutional democracy that pirates established onboard their ship and the misperceptions we had of an autocratic captain.
  • about some rules, codes of conduct and dispute resolution mechanisms that existed on a pirate ship.
  • how pirates were incentivised to engage in battle with a social fund (moral hazard) that was a predecessor to today’s social insurance policy.
  • how the pirate code minimised or eliminated the impact of a negative externality on a crew member or the whole crew.
  • how Peter’s book dedication, in the form of a marriage proposal, worked out.
  • when did piracy at sea begin and when did the romanticised period of piracy, as we know it, occur.
  • how are the pirates of the early 18th Century, such as Captain Blackbeard, so different to the pirates of today, such as the Somali pirates.
  • how sailors found solace and refuge as buccaneers and pirates after wars, such as the War of the Spanish Succession.
  • why unemployed sailors became buccaneers and pirates.
  • the risk-reward ratio of becoming a pirate.
  • whether pirates actually buried their treasure.
  • how an enterprising society was established at the land bases of pirates.
  • what pirates spent their spoils and treasures on.
  • the signalling effect of the Jolly Roger flag and why pirates used it as they approached a merchant ship.
  • how an ‘honor among thieves’ and collusive agreements between pirate groups allowed them to avoid attacking each other.
  • how coast guards, who were legally allowed to plunder merchant ships, often used the Jolly Roger flag as a signal to deceive their subjects into thinking they were pirates for the purpose of avoiding a bloody battle.
  • why coast guards used the Jolly Roger flag to cash in on the reputation of pirates.
  • if self-governance is effective and more successful that government.
  • whether the free-rider problem would exist in a self-governed economy regarding public goods.

Links:

Papers:

Books:

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048: Steve Hanke on Currency Boards, Moral Hazard and the Benefits of Privatization

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048: Steve Hanke on Currency Boards, Moral Hazard and the Benefits of Privatization

Steve Hanke is a Professor of Applied Economics, specializing in currency boards. He is Co-Director of the Institutesteve hanke for Applied Economics, Global Health, and the Study of Business Enterprise at The Johns Hopkins University in Baltimore.

Steve is a Senior Fellow and Director of the Troubled Currencies Project at the Cato Institute in Washington, D.C. and a member of the Charter Council of the Society of Economic Measurement and the Financial Advisory Council of the United Arab Emirates.

Previously, Professor Hanke was a Senior Economist on President Reagan’s Council of Economic Advisers and was also an Advisor to the Presidents of Bulgaria, Venezuela, and Indonesia.

He played an important role in establishing new currency regimes in Argentina, Estonia, Bulgaria, Bosnia-Herzegovina, Ecuador, Lithuania, and Montenegro. Professor Hanke has also advised the governments of many other countries, including Albania, Kazakhstan and Yugoslavia.

In 1998, Steve was named one of the twenty-five most influential people in the world by World Trade Magazine.

Professor Hanke is a well-known currency and commodity trader and serves as Chairman of Hanke-Guttridge Capital Management, LLC.

Steve Hanke’s most recent books are Zimbabwe: Hyperinflation to Growth (2008) and A Blueprint for a Safe, Sound Georgian Lari (2010).

Influencers:

Friedrich Hayek, Kenneth Boulding of the University of Colorado  and Bob Mundell

Economics:

In this interview, Steve mentions and discusses: currency boards, monetary policy, inflation, hyper-inflation, interest rates, currency reserves, optimum currency area, common currency, fiscal policy, moral hazard, eurozone, ECB, the World Bank, property rights, investment, central bank, dollarisation, interventionist policy, privatisation, hedging, Chicago Mercantile Exchange, futures contract and bitcoin.

Economists:

In this interview, Steve mentions and discusses: Kirk Schuller, Milton Friedman, Friedrich Hayek, Adam Smith, Robert Mundell and Kenneth Boulding.

There have only been 56 hyper-inflations in world history and I think I’ve stopped more of them than any living economist – Professor Steve Hanke

In this episode, you will learn:

  • what is a currency board and the reason why a country should resort to one.
  • about Bulgaria’s currency crisis in 1997, how hyper-inflation hit 142 percent per month and what Steve Hanke did to solve the problem.
  • the successful use of currency boards in Bulgaria in 1997 to significantly reduce inflation and interest rates.
  • why Bulgaria has one of the lowest fiscal deficits of any country.
  • about Yugoslavia’s hyper-inflation of 313 million percent in 1994.
  • why Montenegro dumped the Yugolsav Dinar for the Deutschmark during Slobodan Milosevic’s presidency of Yugoslavia.
  • how Montenegro will join the euro currency without having to do a currency changeover.
  • if it makes sense to leave a currency board to join a monetary union and giving up fiscal autonomy.
  • why it’s best for Bulgaria to stay outside the eurozone due to the issue of moral hazard.
  • why Greece ran up a fiscal deficit of 12.7% of GDP when the Maastricht Treaty stated a strict adherence to a maximum level of 3%.
  • about the Greek bailout of $472 billion and how it amounts to almost $43,000 for every man, woman and child in Greece.
  • how a currency board removes the moral hazard of a unified currency area by financing spending with current taxes or the private bond market.
  • if Greece should abandon the euro and set up a currency board and pegging their currency with the euro.
  • how a Greek currency board would operate if Greece left the eurozone.
  • about the success of the Hong Kong currency board and how it operates without a central bank.
  • if we are heading toward a one world currency.
  • why most small countries should abandon their currency and anchor it to the euro, dollar, yen or yuan.
  • whether Greece should sell off its ports, lands and other property to private investors just as Hayek proposed and Ronald Reagan did in the US in the 1980s.
  • about Ronald Reagan’s privatisation programme in the US in the early 1980s.
  • about the Bureaucratic Rule of Two and why privatisation is an optimal outcome for government, enterprise and society.
  • what Hayek was like as a person and what he thought of Ronald Reagan, The Intellectual.
  • about candling in the old days when grading eggs for futures contracts.

On Currency Boards:

A currency board system is a system in which you issue a domestic currency, which is anchored to a sound currency at a fixed exchange rate that’s fully convertible. The local currency is backed up with a 100% anchor currency’s reserves. So the local currency really becomes a clone of whatever the anchor currency happens to be.

The currency board is not allowed to emit credit to the government. If the government needs money for fiscal expansion, the only way to get this finance (in the form of your local currency) is to take hard currency in (like the euro) and exchange it for the local currency. Bulgaria has been doing this since 1997. The government cannot sell bonds to raise finance. They convert the euro (previously the Deutschmark) into their local currency, the lev, and can then carry out fiscal stimulus. Consequently, Bulgaria has one of the lowest fiscal deficits in Europe.

On Bulgaria and Why It Should Not Join the Eurozone:

“With the currency board, they (Bulgaria) ‘clone’ the euro, so they’re in a unified currency area with the eurozone but they’re not formally part of the eurozone itself. I’ve counselled the Bulgarians, and the best thing to do is to stay with that arrangement. And the reason why is that the eurozone, the common currency area, has a huge moral hazard associated with it. That is, something that creates bad behaviour encourages bad behaviour and Greece is a perfect example.” – Professor Steve Hanke

On the Greek Deceit and Its Fiscal Deficit:

“Greece entered the eurozone in 2001 on false pretences. They cooked the books and got in. They were allowed in the club even though the club knew the Greeks were lying in terms of their economics statistics.”

“The Greeks calculated that they could spend like drunken sailors, which they did and ran a completely irresponsible fiscal operation.”

“The moral hazard is you join a club and if you think the club won’t enforce its rules and won’t force you to tow the line, you will just go on your merry way spending and deficit spending and knowing, or at least thinking that, in this case the eurozone, would bail you out.”

Greece ranks 151 out of 189 countries for the ability of doing business. If you make a contract in Greece, the probability of having that contract enforced is very low by international standards. It’s like being in Zimbabwe. Greece is supposed to be part of the European Union and a modern country but it isn’t.

Greece should leave the eurozone, set up a currency board and re-introduce the Drachma. This would create fiscal discipline just like the situation in Bulgaria.

Quotes by Steve Hanke in Episode 048 of the Economic Rockstar Podcast:

I was hedging and trading when I was 14 years of age. I was trading with my grandfather – @steve_hanke

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Hong Kong was aways a unilateralist free trader. That encourages competition, entrepreneurship and productivity. The countries with open trade tend to be more free market in general and they grow more rapidly. – Steve Hanke

“About 90 Central Banks should just be done away with completely and either a currency board be put in or a stronger foreign currency like the dollar, the euro or the yen.” – Steve Hanke

“If you want lower fiscal deficits, lower inflation and higher rates of growth you adopt with a currency board system or dollarize” – Steve Hanke

If you want to reduce corruption you privatise. But the potential gains in terms of economic prosperity are enormous – @steve_hanke

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Europe’s lands are “a mere waste and loss of country in respect both of produce and population.” – Adam Smith

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Bitcoin has a unit of account problem – @steve_hanke

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On Hayek:

“He was delightful and charming and very interesting, particularly for Mrs Hanke and myself. One of Mrs Hanke’s Great Aunts was one of Hayek’s earlier loves of his life.”

Recommended Books:

Resources:

Where to Find Steve Hanke:

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019: Mark Thornton on the Decriminalization of Marijuana and the Skyscraper Curse

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019: Mark Thornton on the Decriminalization of Marijuana and the Skyscraper Curse

This is the part 2 of an interview with Mark. Part 1 can be found as episode 18 on iTunes, Stitcher Radio or at www.economicrockstar.com/markthornton

Mark has withdrawn himself from politics and concentrates now on education, primarily of the general public because the Austrian perspective says:

the world works according to the ideology of the masses so we have to change that mindset of the masses before we’re ever going to get political reform of the type Austrians would like to see – Dr. Mark Thornton

Mark Thornton

In this episode, you will learn:

  • a little about Dr. Mark Thornton’s ancestral history.
  • Mark’s views on why Ron Paul should be the next US President or even the Speaker of the House of Representatives.
  • the Skyscraper Index and how a correlation exists between a record-setting height and a global economic crisis.
  • how Mark predicted the economic crises from 2007/08.
  • how the ending of the alcohol prohibition in 1933 cut homicides by 50% and how the countries can learn from this with the drugs industry.
  • the social-economic benefits of the decriminalization of drugs in Portugal.
  • the benefits of marijuana and why it should be legalized.

The Skyscraper Curse: How a Record-Breaking Skyscraper is Ominous for an Economic Crisis

There appears to be a correlation between record-setting skyscrapers and world economic crises (Table 1 below). There may not be any rational reasoning as to why this correlation may exist but it has implications of the Austrian Theory of the Business Cycle.

Source: Thornton, M. (2005). Skyscrapers and Business Cycles. The Quarterly Journal of Austrian Economics, 8 (1): 51-74

Source: Thornton, M. (2005). Skyscrapers and Business Cycles. The Quarterly Journal of Austrian Economics, 8 (1): 51-74

Mark, in his writings, outlines the theoretical reasons and history of why the Skyscraper Index and crises are related. He also explains why it takes artificially low interest rates by the central banks to cause prosperity, speculation and exuberance which leads to record-setting skyscrapers.

In 2006, the Burj Dubai Tower in the Middle East set the record for the highest building in the world. This skyscraper wasn’t open to the public until 2010, but the record was set in 2006.

The Skyscraper Curse is great tool to see what’s going on in the most significant bubbles and busts over the last 100 years. The diagram below shows the tallest buildings at Mark’s time of writing in 2004/05. He has highlighted the correlations between the record-setting heights and the economic crises that followed. In Table 1 above, Mark questioned whether the next tallest building was to occur in China. In hindsight, the Burj Dubai Tower set the record in 2006 signalling the Great Recession. China is currently building 40% of the world’s skyscrapers. It had planned to build the tallest building in the world, reaching 838 metres, 10 metres higher than the Burj Dubai Tower. This was planned to be completed in 90 days. However, building has been postponed until safety examinations have been passed and building permits gained. Is China postponing its inevitable economic crisis?

Source: Thornton, M. (2005). Skyscrapers and Business Cycles. The Quarterly Journal of Austrian Economics, 8 (1): 51-74

Source: Thornton, M. (2005). Skyscrapers and Business Cycles. The Quarterly Journal of Austrian Economics, 8 (1): 51-74

The Economics of Prohibition and The Case for Legalizing Drugs

In the 1920s, the US government introduced The Prohibition on the manufacture, trade and consumption of alcohol. Consequently, there was an upsurge in the illegal manufacture and distribution of alcohol, creating a black market economy and the formation of mafia gangs. Crime and homicide rates increased.

In his book, The Economics of Prohibition, Dr. Mark Thornton takes a look at the consequences of todays prohibition – that of drugs – and how this has impacted on the economy, the counterfeiting of money and the lives of people.

By 1933, murder rates in the United States doubled to 10 in 100,000 of the population. When Prohibition did come to an end then, the murder rate fell back to normal levels of 5 in 100,000. There were virtually no organised crime outside New Orleans and New York City prior to The Alcohol Prohibition but it was everywhere after prohibition was put in place. By repealing prohibition, organised crime was reduced. Crime, corruption and bribery was and still is greatly enhanced by prohibition.

Today we see the same thing in the United States, most prominently in Centra America and South America where the drugs are grown, manufactured and transported to the US and Europe. Drug traffickers use Mexico, the land bridge of South America, to bring drugs into California and Texas and the murder rate in these states have increased substantially.

Civil societies in countries such as Nicaragua, Guatemala and Honduras have broken down completely. The drug gangs and drug cartels dominate those areas and they either bride the politicians, police and military or they threaten them. It has come to the point that young children are emigrating from Central America to the United States through Mexico given how bad the situation is for them and their families.

Mark is in favor of decriminalising and legalizing drugs which would have the effect of reducing organised crime, corruption and bribery. Portugal, for example, have decriminalised all drugs and have experienced improvements in all social indicators. There is less drug abuse, less needle-bourn diseases, less addiction, less drug consumption and less crime.

American’s are waking up to the fact that it is insane to make marijuana illegal: Dr Thornton

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Marijuana is now legalized for recreational use in four states in the US, including the District of Columbia where Washington is. It can be used for medicinal purposes, in industry and in textiles and has many commercial uses. People’s ideology about marijuana, the prohibition and the war on drugs has changed.

Close to 80% of Americans support legal medical marijuana in the US.

Books and Papers by Mark Thornton:

Where To Find Mark Thornton:

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