Insider Legacy Secret
Category

Economy

Category
In Economy

US Economic Growth Looks Slow — Until You Compare It to Europe’s

No Comments

Americans aren’t happy with their economy. In October, Pew Research reported that “26 percent now say economic conditions are excellent or good, while 74 percent say they are only fair or poor.” This weighs heavily on their minds. In December, Gallup reported 35 percent of Americans “naming any economic issue” as “the most important problem facing this country today,” up from 24 percent in October. 

Together, this is a significant headwind for Republicans entering an election year. But, for whatever it’s worth, it could be worse. Indeed, the average American’s economic conditions would be worse in most of the developed world.  

“I Once Thought Europeans Lived as Well as Americans,” economist Tyler Cowen wrote in the Free Press last year; “Not Anymore.”

“I went to live in Germany as a student in 1984, and I marveled at how many things were better there than in the United States,” Cowen writes. “Now, 40 years later, I’ve massively revised my original judgments. I go to Europe at least twice a year, and have been to almost every country there. More and more I look to it for its history — not for its living standards.”  

Total vs Per Capita GDP Growth 

“In terms of per capita income,” Cowen notes, “America has opened up a big and apparently growing lead over West Europe.”   

Indeed, over the last ten years, real Gross Domestic Product (GDP) growth has averaged 2.5 percent annually in the United States. This is the best performance among the G7 nations, ranking well ahead of Canada, in second place, with 1.8 percent, and Italy in third, with 1.2 percent, less than half the US rate (Figure 1).   

Figure 1: Average annual real GDP growth, 2014-2015 to 2023-2024 (PPP, constant 2021 international $)  

World Bank World Development Indicators   

But when discussing economic growth, one should always be clear whether they are discussing total GDP, given above, or per capita GDP, as Cowen is, which is what matters most for living standards. If we subtract the average annual growth rate of the population from the average annual growth rate of real total GDP, we are left with the average annual growth rate of real GDP per capita (Figure 2).   

The numbers for per capita GDP growth tell a very different story. The United States is still top of the G7 with an average real per capita GDP growth rate of 1.8 percent annually. But Canada slumps from second to bottom. Fully 1.5 percentage points — 88 percent — of its 1.8 percent average annual growth in total GDP can be attributed to increases in the population. Despite impressive total GDP growth, the average Canadian has become little better off. Italy, by contrast, rises from third to second. While its population declined at an average annual rate of 0.2 percent — the second worst performance — its per capita GDP grew at an average rate of 1.4 percent annually.             

Figure 2: Components of annual real GDP growth, 2014-2015 to 2023-2024, percentage points  

World Bank World Development Indicators   

Immigration and Economic Growth  

There is no strong relationship here between population growth and real per capita GDP growth. Indeed, many of those who propose increased immigration as the path to faster GDP growth are talking about faster total GDP growth — the dismal Canadian model — rather than faster per capita GDP growth. When it is not clear whether someone is opining on total GDP or per capita GDP, they should be pressed for clarification. 

Whether or not immigration boosts per capita GDP growth depends on two things. First, are the immigrants, on average, more or less likely than the population currently resident to be employed? Second, are the immigrants, on average, more or less skilled than the population currently resident? Consider that GDP per capita is just GDP / Population. 

If the answer to both of these questions is “more,” then the immigrants add more to the numerator (GDP) than the denominator (population), and GDP per capita increases. If the answer to both is “less,” then the opposite happens, and per capita GDP falls. The honest answer to whether immigration boosts per capita GDP growth is “it depends.” On the whole, skilled workers will increase per capita GDP, and the Trump administration’s attempts to restrict the entry of skilled workers are misguided. 

Cowen argues that the United States has been more fortunate with its immigrants, in economic terms, than Europe.  

“The problem, to put it bluntly,” he writes, “is that many of Europe’s immigrants are from quite different non-Western cultures. Furthermore, Europe is not always drawing in the top achievers from those cultures, whereas in America, Indian and Pakistani immigrants are quite successful…” 

Immigrants drawn to American opportunity add more to the numerator than to the denominator. 

Productivity and Economic Growth  

This explains part of the faster growth in GDP per worker in the United States, which, in turn, explains part of the faster growth in GDP per capita. In terms of GDP per person employed, the average annual real growth rate in the United States over the past 10 years was 1.5 percent, more than twice that of the second-placed United Kingdom, with 0.6 percent (Figure 3).   

Figure 3: Average annual real GDP per worker growth, 2014-2015 to 2023-2024 (US dollars, PPP converted, Billions, Chain linked volume (rebased), 2020) 

OECD Data Explorer  

But Cowen notes that “Paul Krugman frequently put forward the argument that American and West European living standards are roughly the same, with Americans earning more but working longer hours.” And there is truth in this. American workers, on average, work longer hours than their G7 counterparts (Figure 4).   

Figure 4: Average hours worked per year per person, 2024  

OECD Data Explorer  

But this is a level, and we have been investigating rates of growth.   

Growth in GDP per worker can be broken down into that share which comes from a worker working more hours and that which comes from a worker becoming more productive. When we break down the rates of per worker GDP growth shown above, we see, again, a different story. The United States saw a faster rate of per worker productivity growth between 2015 and 2024 than any other G7 country, more than twice the rate of Germany, in second place (Figure 5).

Figure 5: Average annual growth rates, 2014-2015 to 2023-2024    

OECD Data Explorer  

Cowen says that “as history unfolds, [Krugman’s] view seems increasingly untenable,” and he is likely correct.

American labor productivity growth does stand out among comparably rich countries and explains a good deal of why it’s per capita GDP growth stands out. Paul Krugman is wrong again.

by
Read More
In Economy

28 Homes Rebuilt in a Year: Why LA’s Fire Recovery Is Stalled

No Comments

One year after fires tore through the Los Angeles region, devastation remains etched into the landscape, not only in the thousands of empty lots, but also in the near absence of rebuilding. More than 13,000 homes were destroyed across Los Angeles County; 12 months later, just 28 have been rebuilt.

What should have been a story of recovery instead reveals deeper institutional failure. Despite political urgency, partial regulatory reforms, and repeated promises of speed, reconstruction has stalled under the weight of a collapsing insurance market, regulatory overreach, labor shortages, and soaring construction costs. This slowdown has laid bare the fundamental limitations in California’s institutional capacity to respond effectively to large-scale crises.

County records offer a sobering picture of post-fire reconstruction. As of February 5, 2026, 13,142 parcels had been damaged or destroyed, representing 14,834 housing units. Los Angeles County received 6,116 rebuild applications and issued 2,894 permits, roughly 47 percent of applications. Construction is underway on about 1,420 projects, yet only 16 buildings have reached completion.

Permitting has, to be fair, moved faster in fire zones than elsewhere in California. The average permitting timeline in Los Angeles County’s fire zones is roughly 100 days — far faster than the up to 24 months for comparable projects in the Pacific Palisades outside designated fire areas, and quicker than the roughly eight months typically required in Altadena. Even so, this expedited fire-zone process remains well above the national norm, where permits are issued in about 64 days even absent disaster-related pressures. 

California’s past performance offers little comfort that rebuilding will accelerate. In Malibu, only about 40 percent of the 488 homes destroyed in the 2018 Woolsey Fire have been rebuilt, suggesting that time alone does not resolve the state’s underlying constraints. 

Under public pressure, lawmakers moved to partially reform the California Environmental Quality Act, a statute that subjects most construction in California to lengthy and expensive environmental review. On June 30, 2025, Governor Gavin Newsom approved Assembly Bill 130 and Senate Bill 131, which capped public hearings, shortened agency review timelines, expanded the Permit Streamlining Act, and introduced a “near-miss” review process. While officials touted these changes as a turning point, their effects remain unclear. Permitting may be faster in fire zones, but high construction costs, persistent administrative friction, and minimal completed rebuilding suggest that procedural reforms have left deeper economic and regulatory barriers largely intact. 

The most immediate constraint is insurance — or, more precisely, the lack of it. Many homeowners simply cannot afford to rebuild because they are uninsured or severely underinsured. This is not a mystery, nor is it the result of homeowner negligence alone. For decades, California’s insurance market has been distorted by Proposition 103, passed by voters in 1988. The measure requires insurers to obtain state approval before raising rates and restricts them to using historical data when pricing risk. Insurers are prohibited from accounting for current or future fire risk, climate conditions, or even their own reinsurance costs. 

As wildfire damages mounted, particularly after the catastrophic 2017 and 2018 fire seasons, insurers concluded they could no longer operate profitably in the state. The response was predictable. In 2023, seven of California’s twelve largest insurers paused or restricted new policies. In late 2024, months before the fires, companies including State Farm and Allstate canceled thousands of policies or exited high-risk areas altogether, disproportionately affecting communities like the Pacific Palisades and Altadena. 

The result is a cruel paradox. The state insists on rebuilding in fire-prone regions while simultaneously preventing insurers from pricing risk honestly. Homeowners are left exposed, reconstruction stalls, and at least 600 property owners have already chosen to sell what remains of their land rather than rebuild. 

Even for those with financing, California’s regulatory environment imposes steep costs. The state is estimated to have more than 400,000 regulations, and its building codes are among the strictest in the nation. California’s building regulations routinely exceed national model codes, mandating advanced energy efficiency standards, solar requirements, and green building measures years before they are adopted elsewhere. Much of California falls into high seismic design categories, requiring structural reinforcements that substantially raise construction costs. Accessibility rules under Chapter 11B often go beyond federal ADA standards, increasing design complexity and expense. Layered atop onerous land-use controls and costly environmental review requirements, these rules make rebuilding slower, more expensive, and less accessible, especially for small contractors and middle-income homeowners. 

Labor and materials further compound the problem. The US construction sector needs to add an estimated 723,000 workers annually through 2028 just to keep up with existing demand. California’s construction labor market is particularly constrained. Construction employment is heavily regulated through prevailing wage mandates, skilled-and-trained workforce requirements, apprenticeship rules, and stringent Cal/OSHA standards. Combined with immigration restrictions and independent contractor reclassification rules, these policies raise hiring costs and reduce labor supply. 

Building material costs have increased across the country, driven by multiple factors and compounded by current trade policy. Roughly seven percent of residential construction inputs are imported. Softwood lumber, the primary material used in homebuilding, is an illustrative example. Canada supplies approximately 85 percent of US softwood lumber imports and nearly a quarter of total domestic supply. Current tariffs of 34.5 percent are up from 14.5 percent last year, pushing costs even higher for builders already stretched thin. As a result, rebuilding in fire-damaged communities becomes not only slower but increasingly unaffordable. 

A full year removed from the fires, Los Angeles has learned an uncomfortable lesson: disaster response is only as effective as the institutions that support it. Streamlined hearings and expedited permits cannot overcome a broken insurance market, regulatory overload, labor constraints, and punitive cost structures. Until California confronts these structural barriers head-on, rebuilding will remain slow, expensive, and unequal, and the next fire will likely replay the same grim story.

by
Read More
In Economy

Inflation Is Cooling: Jan 2026 Increase Below Seasonal Norms

No Comments

Inflation cooled more than expected in January, the Bureau of Labor Statistics (BLS) reported on Friday. The Consumer Price Index (CPI) rose 0.2 percent last month, down from 0.3 percent in December. On a year-over-year basis, headline inflation fell from 2.7 percent in December 2025 to 2.4 percent in January 2026 — the lowest reading since May 2025.

Core inflation, which excludes volatile food and energy prices, rose 0.3 percent in January, up from 0.2 percent in December. It eased to 2.5 percent on a year-over-year basis, down from 2.6 percent in the prior month. The January reading marks the slowest annual pace for core CPI since March 2021.

The latest inflation data are especially encouraging when viewed against historical patterns. Research from the Federal Reserve Bank of Boston shows that January inflation has consistently run higher than other months over the past quarter-century, owing to residual seasonality, the tendency for firms to change prices at the start of the year, and compositional effects in sectors that typically adjust prices in January. That January 2026 came in at just 0.2 percent (below the historical January average), suggesting that underlying inflation pressures are genuinely moderating.

The moderation in headline inflation was driven primarily by energy prices, which fell 1.5 percent in January. Gasoline prices declined, and utility costs moderated. Food prices rose a modest 0.2 percent, with food at home and food away from home both posting smaller increases than in recent months.

Shelter costs, which account for roughly one-third of the index, rose 0.2 percent — a notable deceleration from the 0.4 percent increase in December. The slower pace of shelter inflation is welcome news, as this category has been one of the most persistent sources of upward pressure on prices over the past several years.

Other components of the index showed mixed results. Airline fares surged 6.5 percent in January, continuing their volatile pattern. Appliance prices also surged in January, rising 4.4 percent. Apparel prices rose, while used vehicle prices fell 1.8 percent. Medical care services increased 0.4 percent.

While the year-over-year figures show continued disinflation, the recent three-month trend tells a more nuanced story. Inflation averaged 0.2 percent per month in November (0.2 percent, estimated), December (0.3 percent), and January (0.2 percent) — equivalent to a roughly 2.9 percent annual rate. Core prices averaged 0.2 percent monthly over the same period, also equivalent to a 2.9 percent annual rate. Both measures suggest inflation continues to exceed the Fed’s two-percent target.

Although the Federal Reserve officially targets the personal consumption expenditures price index (PCEPI), CPI data remain a timely and relevant gauge for policymakers. The two measures generally track one another closely, though CPI tends to run somewhat higher than PCE inflation. Historically, the gap between year-over-year core CPI and core PCE has averaged around 0.3 to 0.4 percentage points, meaning that January’s 2.5 percent core CPI reading likely translates to core PCE inflation in the range of 2.1 to 2.2 percent — very close to the Fed’s two-percent target. That makes the latest CPI readings particularly encouraging for policymakers as they assess the stance of policy. That said, current expectations of PCE inflation are higher than CPI inflation, potentially because measurement disruptions related to last fall’s government shutdown may have temporarily biased CPI readings downward.

Financial markets seem to have interpreted the latest inflation data as a sign that the FOMC will continue cutting its federal funds rate target later this year. According to the CME Group’s FedWatch tool, markets continue to expect the Fed to hold rates steady at its March meeting. However, the probability of a rate cut by June rose sharply to approximately 83 percent following the release — a dramatic reversal from earlier in the week, when a strong jobs report had pushed odds of a June cut below 50 percent. The shift reflects renewed confidence that inflation is moving closer to target even as the labor market remains resilient.

The January CPI report offers encouraging signs that inflation is approaching the Fed’s two-percent target. The sharp decline in energy prices and the deceleration in shelter costs are particularly welcome developments. While some uncertainty remains — particularly given methodological adjustments made to account for missing October 2025 data — the trend is moving in the right direction. Whether policymakers view current rates as neutral or mildly restrictive, the improving inflation picture provides room for the Fed to continue its gradual normalization process later this year without risking a resurgence in price pressures.

by
Read More
In Economy

AIER’s Everyday Price Index Edges Up 0.33 Percent as Inflation Shifts to Services

No Comments

In January 2026 the AIER Everyday Price Index (EPI) rose 0.33 percent to 298.0, starting the year with its largest increase since June 2025. Seventeen of its 24 constituents rose in price in January, with five declining and two unchanged. Pets and pet products, gardening and lawncare services, and housing fuels and utilities saw the largest monthly price increases, while alcoholic beverages at home, personal care products, and intercity transportation saw the largest declines. 

AIER Everyday Price Index vs. US Consumer Price Index (NSA, 1987 = 100)

(Source: Bloomberg Finance, LP)

Also on February 13, 2026, the US Bureau of Labor Statistics (BLS) released its January 2026 Consumer Price Index (CPI) data. On the month-over-month side, headline CPI rose 0.2 percent (versus a surveyed 0.3 percent) while core increased the forecast 0.3 percent.

January 2026 US CPI headline and core month-over-month (2016 – present)

(Source: Bloomberg Finance, LP)

Consumer prices in January were driven largely by a moderate rise in core inflation, with the index excluding food and energy increasing 0.3 percent for the month. Price gains were broad-based across services and discretionary categories, including sharp increases in airline fares alongside advances in personal care, recreation, medical care, communication, apparel, and new vehicles. These increases were partly offset by declines in used cars and trucks, household furnishings and operations, and motor vehicle insurance, reflecting ongoing normalization in some durable-goods and insurance-related costs. Within medical care, hospital services and physicians’ services moved higher while prescription drug prices were unchanged, contributing to steady upward pressure in healthcare costs.

Food prices rose 0.2 percent in January, led by gains across most grocery categories, including cereals and bakery products, dairy, meats, nonalcoholic beverages, and fruits and vegetables, while the “other food at home” category declined modestly. Prices for meals away from home edged up 0.1 percent, with increases in limited-service meals offset by flat pricing at full-service establishments. Energy prices, by contrast, fell 1.5 percent over the month, driven primarily by a 3.2 percent decline in gasoline prices and a slight drop in electricity, although natural gas prices increased. Overall, the mix of softer energy costs and firmer core categories left headline inflation shaped by continued resilience in services and selective goods inflation even as energy provided a temporary offset.

Over the prior 12 months, the headline Consumer Price Indices rose 2.4 percent against an expected 2.5 percent, with core year-over-year rising an expected 2.5 percent from January 2025 to January 2026.

January 2026 US CPI headline and core year-over-year (2016 – present)

(Source: Bloomberg Finance, LP)

Over the 12 months ending in January, food prices continued to firm, with grocery costs rising 2.1 percent on the year as most major categories posted gains. Prices for nonalcoholic beverages led the increase, climbing 4.5 percent, while cereals and bakery products advanced 3.1 percent and meats, poultry, fish, and eggs rose 2.2 percent. The “other food at home” category also increased 2.1 percent, and fruits and vegetables posted a more modest 0.8 percent gain, partially offset by a slight 0.3 percent decline in dairy and related products. Dining out remained a notable source of inflation, with the food away from home index rising 4.0 percent over the year, driven by a 4.7 percent increase in full-service meals and a 3.2 percent rise in limited-service meals.

Energy prices were broadly flat over the year, edging down 0.1 percent overall as a sharp 7.5 percent decline in gasoline prices was largely counterbalanced by sizable increases in electricity and natural gas, which rose 6.3 percent and 9.8 percent respectively. Excluding food and energy, core consumer prices increased 2.5 percent over the past year, with shelter costs advancing 3.0 percent and continuing to anchor underlying inflation. Additional upward pressure came from medical care, household furnishings and operations, recreation, and personal care — the latter posting a notable 5.4 percent gain — even as some goods categories such as used vehicles and certain household items showed signs of cooling.

The January report came in milder than many economists expected — especially for a month that typically runs hot as businesses reset prices at the start of the year. Yet beneath the surface, the inflation story remains uneven. Core goods prices were flat overall, masking a split between rising recreation-related items — such as consumer electronics, sporting goods, and toys — and declines in used vehicles, medical commodities, and some household goods. These crosscurrents reflect several forces at work simultaneously: lingering tariff pass-through in certain goods, AI-driven demand for electronic inputs, regulatory changes holding down medical costs, and fading supply disruptions in groceries. Services inflation, however, continues to run warmer, led by airfares, car rentals, and admission prices for sporting events. Shelter inflation moderated, with both rents and owner-equivalent rents slowing, offering a potential sign that one of the largest drivers of recent inflation is gradually cooling. Notably, prescription drug prices were unchanged — unusual for January — partly due to negotiated Medicare pricing that offset typical annual increases.

Taken together, the report suggests inflation pressures are shifting rather than disappearing. Discretionary services tied to travel, recreation, and wealth-effect spending remain firm, even as goods prices soften and everyday essentials such as energy and groceries show signs of relief. Price increases also became more widespread across categories — a common January phenomenon — but the overall pace was far more restrained than in recent years, hinting that underlying disinflation may dominate in coming months if current trends hold. Financial markets interpreted the data as supportive of potential Federal Reserve rate cuts later this year, though bond-market reactions were mixed given persistent strength in services inflation. For households, the takeaway is that while inflation hasn’t vanished, the early-2026 trend looks less like a renewed surge and more like a gradual cooling — with pockets of stubborn price growth that policymakers will continue to watch closely.

by
Read More
In Economy

Sports Betting and the Zero-Sum Trap: How Gambling Drains Wallets

No Comments

Sports betting has become an epidemic, especially among young men. The Guardian recently aggregated some alarming statistics about its prevalence. The story notes:

Somewhere between 60 and 80 percent of high school students reported having gambled in the last year, the National Council on Problem Gambling reported in 2023. A study commissioned by the NCAA found that 58 percent of 18-to-22-year-olds had bet on sports – although it should be said that in most states this is illegal before the age of 21. 

Prediction markets have contributed to the normalization of gambling by blurring the line between investment and gambling. You can now essentially place betting parlays on Robinhood, an app previously dedicated to retail stock trading. 

In order to see why this uptick qualifies as an epidemic, we can use some economics to see how sports betting will necessarily make the average participant poorer. 

Investing vs Gambling 

To see why, it is helpful to contrast gambling with investing. After all, what makes betting on your favorite team different from buying some index funds for retirement? 

Well, first of all, investing has the ability to be a positive-sum game. In other words, when you buy stock, it can be a win-win. If you buy stock in a company, the company receives money today, which it can use to grow, and in exchange, you get equity in a company that grows in value. It’s a potential win-win. If you buy from a broker, this same logic holds, just with more steps between you and the company. 

This ability to have a positive-sum game is why, when individuals diversify into a large number of stocks, their portfolios grow. If someone invests in an index fund like the S&P 500, their money has historically grown at an average of 10 percent annually. This doesn’t require any special insider information or in-depth research. It’s just riding the wave of positive-sum exchanges. 

From the perspective of monetary return, sports betting is not positive-sum. If two people bet against each other on the outcome of a game, one person wins and the other loses. This is an example of a zero-sum game. If Jon and I bet $100 on the Bears-Packers game, one person loses $100, and one gains $100. If you add those gains ($100 and -$100), you get zero. 

Betting on a sports betting platform is even worse for participants. Betting platforms need to make money on the bets as well; so, one way or another, they take out of that $200 pool. This makes the game negative sum as regards monetary return for participants. If Jon and I use a platform to bet and I win, I get $100 minus whatever the platform takes, say $5, and Jon loses $100. In that case, the net return to the bettors is $95 (my return) minus $100 (Jon’s loss). 

If you consider the platform’s $5 gain, it remains zero sum. But after the mandatory house take, the exchange is negative sum for the bettors. This is the first reason why sports betting is financially a bad idea for participants. 

Point Shaving and Efficient Markets 

The downside of gambling can be even further exposed by economic reasoning. In particular, we’re going to talk about the efficient market hypothesis (EMH). 

When economists talk about efficiency, often people scoff. People don’t like the results of markets, and therefore, they believe they can’t be efficient. 

Efficiency doesn’t mean we like the results, though. All efficiency means (for the EMH) is that markets incorporate available information when pricing assets. 

For example, let’s say Apple discovers a way to improve the speed of iPhones by 10x, and this information becomes publicly available. The company plans to implement this technology in the next-generation iPhone, which will be released next year. Let’s further say that this improvement will lead to many Android users switching phones when the new phone comes out. These sales will mean higher profits and, therefore, a higher stock price for Apple. 

Question—will Apple stock prices go up as soon as people discover this, or not until after the new version is released? If investors believe the above information is accurate, they will buy stocks immediately in order to gain from the future improvement in profits. Since everyone rushes to buy the stock today, the information about the future is incorporated into the price today, not when the new version is released. 

For an extreme example, imagine a company publicly announced it would declare bankruptcy next week. Do you think stock prices would wait a week to tumble? Of course not. 

Markets reflect all publicly available relevant information, and this includes betting markets. If a major player for a team gets injured in practice, gamblers will bet against the team in question and shift the odds. 

Since the stock market is positive-sum, others having more information than you may not be a problem. If Apple is in your diversified portfolio, you don’t need to scan headlines to learn about the company’s technological innovations before anyone else does. 

Sports betting, though, is negative sum for bettors. If someone has information that you don’t have, they can exploit that asymmetry to earn money off of you.  

On average, a person betting randomly on sports will lose money because the game is zero sum for bettors. That means in order to make money consistently, you need to have access to knowledge or information that others don’t.

Here’s the thing, the average person cannot have more information than everyone else, by definition. There are people who bet on sports for a living. Does an average Joe have access to more information and prediction tools than industry insiders? It seems very unlikely. Most participants, over the course of their lives, will be net losers in sports betting. 

The best evidence of this can be seen by the onslaught of point-shaving scams being uncovered in college and professional sports. Investigations by federal officers, coach firings, and indictments of players for point shaving saturate recent headlines in the world of college basketball. 

Many people involved in these schemes will get caught, but it seems likely that other insiders either knew about these schemes or learned about them by being close to the industry. When you compete in sports betting, you compete against people with this sort of information.

In other words, the odds in any sports betting situation are set by information that average people don’t have access to. In order to win money, you need to beat those odds. In other words, you need to have better knowledge and information than those who make the odds. 

The implication here seems straightforward. The average person in sports betting loses money. The statistics match the logic. NBC reported on a study that showed: 

…compared with states that did not implement sports gambling, states that did so saw credit scores drop by a statistically significant, though modest, amount, while bankruptcies increased 28 percent and debt transferred to debt collectors climbed 8 percent. Auto loan delinquencies and use of debt consolidation loans also increased, they found. 

The structure of sports betting laws is beyond the control of the average person as well, but personal behavior is not. The personal implications here are clear. Sports betting is bad for your personal finances, and average joes won’t win (even if you think you will). You may know a lot about basketball, but do you know as much as the professional bettor whose cousin happens to be a physical therapist or coach of a team?  

Every time you see a point-shaving headline, it should be a strong reminder. In a zero-sum game, the winners are likely those exploiting information you can’t access.

by
Read More
In Economy

Sweet Supply and Bitter Scarcity: Why Your Valentine’s Chocolates Cost More This Year

No Comments

“Life is like a box of chocolates. You never know what you’re gonna get.” 

The line from Forrest Gump is meant to capture uncertainty in love and life, but every Valentine’s Day, it accidentally describes markets just as well. Chocolate prices rise, products take different shapes, and consumers are surprised once again at the checkout line. The usual explanation immediately turns to corporate greed. Yet what Forrest Gump’s chocolate box really reminds us is that uncertainty, timing, and expectations shape outcomes, and that prices exist to navigate uncertainty, not to exploit it.

Xocolātl, the beverage we now call chocolate, originated in tropical Mesoamerica, across what is today Mexico to Costa Rica. Before it became a sweet confection, xocolātl was a bitter mixture of cacao beans, water, and spices, cultivated, traded, and consumed for elite, ceremonial, and everyday uses. Only after 1492, through the “Columbian Exchange,” a term coined by Alfred W. Crosby, did cacao enter the wider Atlantic economy, where ingredients, capital, and know-how recombined across continents. New World cacao met Old World sugar, dairy, and manufacturing, and the modern chocolate industry was born.

Although centuries removed from the Maya and Aztec civilizations, chocolate remains a symbol of affection today. The transatlantic transformation of cacao into chocolate, combined with medieval courtship traditions, helped produce Valentine’s Day as we know it. Last year, among the cards, flowers, and jewelry, Americans bought 75 million pounds of chocolate or roughly the weight of 15,000 elephants. For 2026, the National Retail Federation and Prosper Insights & Analytics project record spending: “Consumer spending on Valentine’s Day is expected to reach a record $29.1 billion…surpassing the previous record of $27.5 billion in 2025.” Record spending, however, is often mistaken for evidence of record prices. When prices rise, many are quick to draw back their bow and let their arrow fly even when the true source of higher costs lies elsewhere. 

Rising prices around holidays are often attributed to a familiar story of corporate tricks, rather than treats, known as “greedflation.” Supermarkets and chocolate companies are accused of exploiting a sentimental holiday, padding margins under the cover of romance. In recent years, this narrative has resurfaced almost reflexively whenever grocery prices rise. However, retailers do not set prices in a vacuum; they respond to constrained supply and higher input costs. To understand why chocolate costs more, we need to look past the supermarket aisle to the governments and growing conditions that shape the cocoa market itself.

The International Cocoa Organization notes that roughly 70 percent of cocoa is produced in Africa, with Côte d’Ivoire and Ghana leading output at about 1,850 and 650 thousand tons, respectively, in 2025. Cocoa is central to both economies, accounting for about 15 percent of Côte d’Ivoire’s GDP and seven percent of Ghana’s GDP. In 2018, the two nations formed the Côte d’Ivoire–Ghana Cocoa Initiative (CIGCI), informally referred to as “COPEC.” Its stated aim is to correct perceived market failures by raising prices: “Without correcting the many market failures, the cocoa economy is destined to become a counter-model of sustainability.”

Switzerland’s national broadcaster, SWI, documents a sharp price movement beginning in early 2018, coinciding with the cartel’s creation, suggesting that coordinated policy had immediate market effects.

According to World Finance, COPEC may also have served domestic political goals, with promises of higher prices timed around election cycles to win farmer support. Regardless of motivation, both countries have announced higher prices for the 2025/26 crop season. Côte d’Ivoire will raise prices by 39 percent, which pales in comparison to Ghana’s 63 percent price increase. 

These administratively set prices add to a system already strained by corruption within Ghana’s Cocoa Board (COCOBOD) and black-market activity in Côte d’Ivoire. Highlighting growing smuggling operations, Ivorian authorities last year seized 110 shipping containers, about 2,000 metric tons, of cocoa beans falsely declared as rubber, worth $19 million. ¨The tax on this shipment should have been 19.5 percent, including the 14.5 percent tax on cocoa exports and the five percent registration tax. In that case, the Ivorian state would have collected 2.9 million pounds in taxes. Meanwhile, the tax on rubber exports is only 1.5 percent.¨

Needless to say, Côte d’Ivoire and Ghana have constructed a highly interventionist system around their most important export. Compounding these policy distortions, the 2025/26 crop season is expected to see a 10 percent fall in output due to “shifting weather patterns, ageing tree stocks, disease, and destructive small-scale gold mining.” This shortage has intensified pressure in an already volatile cocoa market. According to FRED, cocoa prices have risen by more than 70 percent in the last five years. 

Last year, North America’s largest chocolate producer, Hershey, announced price increases across household names such as Reese’s, Kit Kat, and Kisses: “It reflects the reality of rising ingredient costs, including the unprecedented cost of cocoa.” In the earnings Q&A call on February 5, 2026, CEO Kirk Tanner stated, “Our actions…are anchored in consumer insights and the brands remain affordable and accessible. Seventy-five percent of our portfolio is still under $4.” Tanner framed their strategy as keeping products as affordable and accessible as possible despite rising cocoa costs.

Given cocoa price volatility, Hershey’s effort to keep chocolate affordable, and supermarket margins of just one to three percent, “greedflation” melts away like a chocolate kiss on Valentine’s Day — leaving scarcity and policy, not corporate greed, as the real culprits. The bitterness in chocolate prices comes from constraints and institutions, not from greed.

by
Read More
In Economy

Proxy Advisors Pay the Price for Their ESG Crusade

No Comments

The new year brought new developments in the world of financial services: specifically, the role of artificial intelligence (AI). In January, JPMorgan Chase announced it would replace its proxy advisory services with artificial intelligence. Chief Executive Jamie Dimon even went as far as to say that proxy advisors are “incompetent” and “should be gone and dead, done with.” 

For those who have been following issues related to environmental, social, and governance (ESG) and diversity, equity, and inclusion (DEI), this is a major event. The two major proxy advisory firms, Institutional Shareholder Services (ISS) and Glass, Lewis, & Co. (Glass Lewis), have been criticized for using their recommendations on shareholder voting to push politically motivated ESG/DEI crusades (sometimes unbeknownst to the shareholders they represent). This has made the industry the target of a recent executive order aiming to increase federal oversight in the proxy advisory industry. 

Ultimately, though, the proxy advisory industry was born out of regulation. Further government intervention could invite greater cronyism. If the proxy advisory industry wants to win customers back, it needs to focus on fiduciary obligations, not politics. If federal officials want greater transparency and accountability in the proxy advisory market, they should focus on rolling back unnecessary regulations and simplifying any regulations that remain to encourage a competitive proxy market. 

How Did We Get Here? 

A proxy vote is a vote where a shareholder of a publicly traded company authorizes another party to vote their shares at a corporate meeting. Proxy voting involves electing company directors, approving executive compensation, voting on mergers, and considering shareholder proposals. It allows shareholders to participate even if they cannot attend the meeting in person or submit a ballot electronically.

Research on proxy advisory firms notes that institutional investors – those who manage large numbers of shares on behalf of many clients – began paying attention to shareholder voting matters after a “wave of hostile takeover actions” during the 1980s. Around the same time, private retirement funds were legally required to vote their shares based on a “prudent man” standard of care. By the early 2000s, this legal requirement was expanded to include mutual funds and other registered investment companies. 

The proxy advisory industry as we know it today emerged from two main sources. Small and midsize funds sought guidance on shareholder voting practices to meet their legal obligations. Then, in 2003, the SEC introduced a regulation requiring all institutional investors—including mutual funds and index funds—to develop and disclose both their proxy voting policies and their actual votes. These policies and guidelines must be free from conflicts of interest, yet the regulation explicitly allows institutional investors to rely on third-party proxy advisors to meet this requirement. Notably, these third-party firms are not held to the same fiduciary standards as the institutional investors they advise.

Enter Glass Lewis and ISS.

Although there are technically five proxy advisory firms, the two largest (ISS and Glass Lewis) have a roughly 97 percent share of the market for proxy advisory services. These services have a major influence over corporate governance decisions, company-wide equity compensation, and a host of other issues. 

Having such a large market share made them an enticing target for political activists. Before long, activists manipulated proxy guidelines to recommend voting for political crusades such as ESG and DEI. As one of the authors wrote in a recent white paper, these ideas are often incoherent, contradictory, and even run counter to successful business performance and high financial returns. Unbeknownst to many shareholders, who put their voting on autopilot based on proxy recommendations (known as robovoting), their votes pushed political objectives to the detriment of their own financial security. 

Can Proxy Advisory Firms Win Back Trust? 

As Dimon’s comments suggest, the two big proxy advisory firms have a PR and a business problem. Institutional investors are looking for exits or have already taken them. New advisory firms are forming. And bigger clients like JP Morgan believe they can harness AI to bring their proxy work in-house. 

If ISS and Glass Lewis want to win back investor and shareholder trust, the best thing they can do is dump the political crusades. These services came about because there was a demand for providing voting guidelines that were compliant with an overbearing SEC. Proxy advisory services would do well to demonstrate that they follow a prudent man standard of care and follow the sole interest rule: that the proxy advisory services make decisions based solely on the financial well-being of their clients.

By voluntarily committing to these standards and delivering recommendations that benefit clients, they can refute claims of incompetence and prove they may be less biased than an AI program.

Markets Ensure Accountability & Transparency

Now, the White House wants to intervene again in response to the problems created by regulations and interventions. We’ve seen this pattern before: politicians see a problem, they intervene. Then the intervention leads to new, unforeseen problems, prompting a renewed urge for government intervention. Unfortunately, this approach to “fixing” problems leaves people worse off, creates unintended consequences, and gives greater power to government officials. 

If policymakers are concerned about proxy advisors and political crusades, they should focus on deregulation. Instead of adding an additional layer of regulatory complexity, federal policymakers will improve accountability for proxy advisory services by promoting market competition and removing government regulations. 

Currently, proxy advisory services can advertise their business as a means of helping funds comply with onerous regulations rather than increase the value of their shares. If the SEC relinquishes requirements to publish voting guidelines and shareholder votes, proxy advisory services will have to entice clients by showing the value they add to a potential client’s business. If they fail to do so, potential clients will happily pass them over for other service providers, bring shareholder voting guidelines in-house (as many public pension systems have done), or rely on emerging technology.  

There is no doubt that the proxy advisory industry, once firmly planted in American finance, is now facing regulatory threats and existential crises from AI. If these businesses hope to survive, they would do well to focus on serving customers instead of political ideologies.

by
Read More
In Economy

What Zimbabwe Can Learn From Chile: A Tale of Two Data Series

No Comments

In 1988, when Robert Lawson was a first-year economics graduate student at Florida State University, he was surprised one day to look up and see Dr. James D. Gwartney standing in front of him. He had come down from a different floor of the Bellamy Building to find Lawson. That was unusual, because grad students were normally summoned by tenured professors, not sought out by them.

But in this case, Gwartney had an assignment that was considerably more interesting than grading papers or returning a library book. He had received a letter inviting him into a group attempting to construct an index to measure economic freedom. Gwartney’s first reaction was that it was a “harebrained” idea. How could you quantify such a thing? Then he checked the letter’s sender: Milton Friedman. 

Gwartney decided this might be a rabbit hole worth going down. He offered Lawson the chance to go with him.

The Economic Freedom of the World Index

In 1996, the Economic Freedom of the World (EFW) Index debuted. The model aggregated dozens of variables into a single figure for each nation, between 0 (the least economic freedom) and 10 (the most economic freedom). The report officially launching the index was co-authored by Gwartney, Lawson (who had finished his PhD in 1992), and Walter Block (then of Holy Cross). Friedman wrote the foreword.

Since that time, the EFW Index has offered researchers the only objective, mathematically transparent measure of economic freedom on a country-by-country basis (a competing index from The Heritage Foundation includes a subjective component). It incorporates variables from five areas (size of government, legal system and property rights, sound money, freedom to trade internationally, and regulation).

As of 2022, the index had been cited in over 1,300 peer-reviewed journal articles. An annual report now includes readings for 165 nations, with many going back to 1970. And the data are filled with stories.

Chile

In 1970, for instance, Chile’s EFW Index was in the bottom quartile globally at 4.69. This was the year socialist Salvador Allende won the presidency with only 36 percent of the popular vote (no candidate having won a majority, the legislature chose him). A slew of socialist reforms followed. Banks were nationalized, price controls were instituted and money printed like there was no tomorrow. Predictably, private investment plummeted and inflation spiked as the nation plunged into a recession.

A military coup overthrew Allende in 1973, with an alleged but uncertain level of help from the Nixon Administration and in particular Secretary of State Henry Kissinger. The new Chilean leader, Augusto Pinochet, was no socialist. But he did wield power like one—through brutal repression. And while his advisors included free-market economists such as Hernán Büchi, the regime’s policies were at best a burlesque of economic freedom.

Consequently, in 1975 Chile’s EFW Index reached an all-time low of 3.82. But after Pinochet was defeated in a 1988 plebiscite, the nation began to liberalize its society and its economy. In 1990, it moved into the top quartile of EFW rankings for the first time, with a reading of 6.89. While the nation’s economic and political path since has not always been smooth, Chile has stayed in the top quartile every year. What does such economic freedom mean on the ground? 

According to the current CIA World Factbook, since the 1980s Chile’s poverty rate has fallen by more than half.

Zimbabwe 

Zimbabwe is another story. It began 1970 in a slightly better position than Chile, with an EFW reading of 4.96. It was known as Rhodesia then, a new republic trying to transition from British rule. The decade of the 1970s was one of political instability as a government led by Prime Minister Ian Smith contended with both Marxist and Maoist communist groups for the country’s future. The Maoist Zimbabwe African National Union (ZANU) prevailed, changing the nation’s name to Zimbabwe in 1980. ZANU has been in control of Zimbabwe ever since, with Robert Mugabe serving as prime minister or president from 1980-2017.

While ZANU has not remained strictly loyal to the Maoist model of communism, and has attempted some pro-business policies, government intrusion in the economy remains high. Property rights are not well enforced. Corruption is systemic and regulations stifle both new business formation and foreign investment. Consequently, since 2000 Zimbabwe has remained in the bottom quartile of EFW Index scores, with a 2023 reading of 3.91, a 21 percent decline from 1970. 

These numbers have tragic implications, especially for the least privileged. In 2023, Zimbabwe’s poverty rate was over 70 percent and an estimated half the population lived on less than $1.90 per day.

Apart from humanitarian concern, should we worry about these things in the US? Economic freedom here is too deep to ever uproot, right?

If the EFW Index teaches us anything, it’s that economic freedom, like freedom in general, is inherently fragile. No one understands that better than Lawson. 

Today he directs the Bridwell Institute for Economic Freedom at Southern Methodist University and continues to manage the EFW Index as a senior fellow of the Fraser Institute in Canada, which sponsors the index. In 2024, he wrote a remembrance of James Gwartney in The Daily Economy.

After decades of involvement with the EFW Index, Lawson remains optimistic about the prospects of global economic freedom, but guardedly so.

“The general trend is still toward freedom,” he says, “but since 2000 it’s less steep.”

If history is any guide, increasing the slope would have an amazing impact on human flourishing worldwide. If national leaders worried about their EFW Index the way college football teams do their playoff rankings, we might see more stories like Chile, including in places like Zimbabwe.

by
Read More
In Economy

To Save Social Security, Stop Subsidizing Wealthy Retirees

No Comments

Social Security is drifting toward a cliff, and Congress keeps pretending the shortfall will fix itself. It won’t.

Absent reform, benefits will be cut across the board by roughly 23 percent within six years. That outcome would harm retirees who depend on Social Security the most — while barely affecting the living standards of those who do not need financial support in old age. 

There is a better option: reduce distributions to the wealthiest retirees, preserving them for those most dependent on benefits. 

This should not be a radical idea. Government income transfers should be targeted to those who need financial support — not used to subsidize consumption among well-off seniors at the expense of younger working Americans. This approach is grounded in what Social Security was meant to do in the first place: “give some measure of protection to the average citizen and to his family against…poverty-ridden old age,” in the words of Franklin D. Roosevelt. 

A report by the Congressional Budget Office, titled “Trends in the Distribution of Family Wealth, 1989 to 2022,” elucidates the role that Social Security plays in total household wealth. By counting not just financial assets and home equity, but also the present value of future Social Security benefits, it becomes clear that Social Security represents a substantial share of total resources for lower-wealth families and only a marginal share for wealthy households.  

For families in the bottom quarter of the wealth distribution, accrued Social Security benefits account for about half of everything they own. For those near the top, Social Security represents only about eight percent of total assets for the top 10 percent, compared to holdings in financial assets, real estate, and business equity (see Figure 1). Yet under current law, wealthy retirees who claim at age 70 can still receive annual Social Security benefits exceeding $62,000 — roughly four times the poverty threshold for seniors. 

This is an upside-down safety net. When automatic benefit cuts kick in in 2032, the retirees who rely most on Social Security will be hurt the most, while wealthy households will scarcely notice the change.  

According to the CBO, that uniform 23-percent cut would reduce the total wealth of families in the bottom half of the distribution by more than 10 percent. For the top one percent, the hit would be barely noticeable: about two-tenths of one percent (see Figure 2). 

This outcome is not inevitable; Congress can target benefit reductions where they are most easily absorbed.  

Opponents of top-end benefit reductions argue that Social Security is an earned benefit, not welfare, and that cutting benefits for high earners violates that principle. They are right about one thing: workers pay payroll taxes with the expectation of receiving benefits. But that expectation was never a guarantee of open-ended, inflation-beating returns — especially for retirees who already enjoy substantial private wealth. 

Social Security, if it is to exist at all, should focus on preventing old-age poverty, not provide wealthy retirees with an ever-growing worker-funded annuity layered on top of substantial private savings. When benefits grow faster than inflation and flow disproportionately to those who don’t need them, the program drifts away from its stated purpose and becomes increasingly difficult to justify. 

The solution is not higher payroll taxes. Eliminating the payroll tax cap would push marginal tax rates above 60 percent in some states, reducing work and innovation, while still failing to target benefits where they matter most. Increasing payroll taxes for all workers would deprive younger working families of resources with which to grow their fortunes and build their own futures. 

Nor is the solution more borrowing. Social Security is already projected to add trillions to federal deficits over the next decade. Borrowing to preserve full benefits for wealthy retirees is fiscally reckless and economically unnecessary.

The sensible path forward is targeted benefit restraint. 

That means:

  • Slowing the growth of initial benefits for higher earners by adjusting the benefit formula and indexing those initial benefits to prices rather than wages.
  • Using a more accurate measure of inflation for cost-of-living adjustments for ongoing benefits, and phasing out adjustments entirely for high-income retirees.
  • Adjusting retirement ages to reflect longer life expectancy, with protections for workers who truly cannot work longer — which is the aim of the disability component of Social Security. 

In practice, these changes amount to a gradual shift away from an earnings-related benefit and toward a flat, anti-poverty payment. If Social Security is going to persist, its role should be limited to what market earnings and private savings cannot reliably provide. Every step that trims excessive benefits at the top moves the program closer to that defensible boundary. 

Congress should act to prevent across-the-board benefit cuts, without more deeply indebting younger generations, nor sucking up more resources from working Americans. Instead, lawmakers should focus reforms where they do the least harm and the most good — by trimming earned benefits at the top to secure endangered benefits for those at the bottom. 

It may not be “fair,” but it’s the only plausible path forward. The goal of reform should not be to preserve Social Security in its current form, but to prevent the worst outcomes. Preserving benefits for those who depend on the program, while slowing benefit growth for those who do not, is the only way to reduce Social Security’s role as a reverse transfer from younger workers to wealthy retirees who do not need the support.

by
Read More
In Economy

What Makes a Good Federal Reserve Chair? It Depends on Independence

No Comments

The nomination of Kevin Warsh to replace Jerome Powell as Federal Reserve Chair has many people wondering: What makes a good Fed chair? The answer, it turns out, depends on the environment in which the chair will operate. 

The characteristics that matter most for running an independent central bank differ from those for a central bank under pressure from political actors. Understanding this distinction is important for evaluating the president’s nominee.

The Case for Technical Competence

In an environment of genuine central bank independence, technical competence matters most. A qualified chair is a reputable monetary economist with strong academic credentials, someone who commands respect in financial markets and the economics profession.

Independent central banks with technically competent leadership achieve measurably better outcomes. They deliver lower inflation rates and more stable inflation expectations. When markets believe the Fed will respond appropriately to economic data, inflation expectations remain anchored even during temporary price shocks. This anchoring effect makes the Fed’s job easier and prevents above-target inflation from becoming entrenched in wage negotiations and pricing decisions.

When a chair’s analysis carries weight in the economics profession, its policy explanations are more persuasive to market participants. This credibility is a form of capital that takes years to accumulate and can be spent during crises when the Fed needs public trust most.

If the central bank is left to conduct monetary policy as it sees fit, a technically competent Fed chair is crucial.

The Case for Character

If the Fed lacks independence, the strength of character and a willingness to resist political pressure are more important traits. Technical competence is of little use when the central bank is not able to do what its members think it should. Indeed, it might be worth trading some technical competence for a strong spine in such a case.

History provides clear examples. Fed Chair Arthur Burns was technically competent. Prior to becoming Fed chair, he was a well-respected economics professor at Columbia University, where he taught Milton Friedman. He did pioneering work on business cycles with Wesley Clair Mitchell, which has been carried on by the National Bureau of Economic Research. Few economists possessed the technical expertise of Burns at the time. But all that expertise was of little consequence: Burns gave in to President Nixon’s pressure campaign before the 1972 election, lowering interest rates when economic conditions didn’t warrant it. His decision contributed to the high inflation of the 1970s and damaged the Fed’s credibility for years.

Paul Volcker was a sharp economist, to be sure. But he was not as technically competent as Burns. He did not hold a prestigious professorship. He had not done pioneering work in macroeconomics or monetary economics. But he had a strong spine. When President Reagan urged Volcker to commit to not raising interest rates ahead of the 1984 election, Volcker refused. In doing so, he preserved the principle that the Fed chair doesn’t make policy commitments to the White House. His unwillingness to compromise on institutional boundaries helped restore price stability and solidified the Fed’s reputation for independence.

When political pressure threatens independence, the chair’s character matters more.

The Independence Dilemma

When independence is in doubt, credibility and good policy choices may be at odds with each other. Consider a scenario where White House pressure happens to align with the economically correct policy decision. Perhaps the administration wants rate cuts, and economic data genuinely support easing. The Fed then faces a difficult choice.

If the Fed cuts rates, the public may view the decision as capitulation to political demands. If the Fed refuses to cut rates to signal its independence, it makes the wrong economic decision to preserve the appearance of autonomy. Either way, the Fed’s reputation suffers. The public will come to believe the Fed responds to political factors rather than economic data, regardless of which choice the institution makes.

The first-best solution in such a situation is clear: restore independence. An independent Fed can focus on conducting policy well, without risk to its credibility due to perceived political capitulation. But first-best solutions are not always possible.

Recent events provide much support for the view that we need a second-best solution. The president has consistently called for lower interest rates. He has attempted to fire Fed Governor Lisa Cook. He nominated his CEA Chair, Stephen Miran, who is widely believed to be a Trump loyalist, to fill the balance of Adriana Kugler’s term. And, in January, his Department of Justice subpoenaed Chair Powell. The Fed, in other words, is under pressure. 

How Warsh Stacks Up 

With all of this in mind, how should one evaluate Trump’s pick to replace Powell?

Although Kevin Warsh is not a traditional academic economist, he nonetheless possesses a high degree of technical competence. He previously served on the Fed Board from 2006 to 2011. He is currently the Shepard Family Distinguished Visiting Fellow in Economics at Stanford University’s Hoover Institution and lectures at Stanford’s Graduate School of Business. Before joining the Fed, Warsh also served as Vice President and Executive Director of Morgan Stanley & Co. in New York.

Warsh also has a strong spine. While initially on board with the Fed’s large-scale asset purchases as an emergency liquidity tool, he later came to oppose using the balance sheet as a permanent tool. Fed liquidity, he warned, is a “poor substitute” for functioning private markets. This view was decidedly out-of-fashion at the Fed. And yet, Warsh stuck to his guns. Today’s Fed, under political pressure as it is, would be well served by his strong character—provided that it is used to bolster the Fed’s independence.

How will Warsh use his strong spine? That’s an open question. If he pursues the facts as he sees them, he might deliver a much-needed dose of credibility to a struggling institution. If he does the president’s bidding—or is perceived to be doing the president’s bidding—he will further erode the Fed’s credibility.

by
Read More