Romulo Lopez Cordero

Milton Friedman did it again

Two in a row. This is another article this time an op-ed by Milton Friedman at the WSJ about the idea of Vouchers. Another practical idea in order to have less government in the education area. Once again according to Friedman an old proposal dating back to an article in 1955 on "The Role of Government in Education". Another good idea that has taken root in countries far down south like Chile.

Milton Friedman recollections on Social Security Reform

This is an interesting piece published on the SFGate regarding Milton Friedman's recollections about the begginning of a movement for Social security reform. He talked about the proposition to abolish Social Security first in 1962, with the publication of "Capitalism and Freedom", not because it was not efficient but because it was inmoral, a huge Ponzi scheeme run by the government. What I found fascinating and is not mentioned on the interview was that I always wondered how the chileans (Piñera among others) came up with the idea of changing their Social security system and to turn it into a privately funded one. Tweenty years later it has been so succesful that it has become the example for reform in the developed world. In spanish we say nobody is a prophet in their own land and I think this perfectly applies to Milton Friedman. Only if he had been heard in the USA 20 years ago like the Chileans did, how different things would be. (thanks to Marginal Revolution)

El Salvador in the Road to prosperity

Juan José Daboub former economics minister of El Salvador in this interview by Libertad y Desarrollo offers his opinion on how El Salvador in the last 15 years has positioned itself on the Index of Economic Freedom position #24. Among the sucesses achieved Daboub claims that poverty has been reduced 20%, mortality rates have gone from 47 per thousand to 25 per thousand and iliteracy have fallen from 33% in 1992 to 13% in 2004. He also outlines the work of America Libre Institute, directed by former Salvadorean President Francisco Flores.

Where would you live

Living in the Washington area I am always worried about being able to buy a home in this are. With soaring prices and yearly increases in the prices of 50 and 60% I have been looking for places outside the beltway. This WSJ graphics shows a spillover effect, sleepy cities increasingly becoming the alternative option for people that cannot afford the hefty prices. In my case I don't know if I am willing to move to Baltimore (I work in Arlington). On the TV I have seen this days ads promoting Stafford and Fredericksburg counties as good places to live south of the Capital Beltway. In any case if I decide to do something like this I will have to live close to a train and work in DC to consider it. In the meantime I will have to continue living and overpaying here.

CAFTA DR Progress

Here is an interesting link if you want to know what is going on with the Central American Free Trade Agreement (CAFTA) from the perspective of The Office of the U.S. Trade Representative (USTR). I encourage you to follow the CAFTA-DR debate as US Congress prepares to vote on the agreement. Some say that securing passage of this accord is a priority for President Bush, and it will set the stage for further achievements in advancing political and economic freedom in the Western Hemisphere. I just hope that it works and it does not becomes a straight jacket for liberalizing further the Central American countries, or an excuse to avoid doing more profound reforms in the trade aspects and other aspects.

Who is Charles Ponzi?

This is an interesting story from NPR that explains what is the story of Charles Ponzi. In my home country a Ponzi scheeme is called this "Piramidación" to make financial piramids using other people's money. That is what basically Ponzi did in the 1930's and made himself famous for that. To add an interesting twist to the story Ponzi died in Rio de Janeiro in South America, why did he went there? Listening to the story I could not stop thinking how many state institutions behave like a Ponzi scheme. Social security is the most close example. The government makes everybody pitch in, so when you are old you get in return a pension to sustain yourself. Now the problem is that as the population grows older the payments start kicking in and that is when you have a problem. Since the money that is collected was not enough to cover future desimbursements it turns out that the only way to support it is you either increase the contribution on the younger ones, break your promise of paying x amount to the older ones or start running deficits and wait until congress or the President try to salvage it so the people don't loose their savings. Why a Ponzi scheme is a crime if the government does that everyday? Check also this webpage to learn more about Ponzi

Are we better off?

Virginia Postrel author of the Book the Substance of Style has an interesting commentary on why we are better of today than 20 years ago, even if the macroeconomic numbers don't show much difference.  The key is variety and how modern world offers today more choices than before.  Just the fact of being able to choose not among 20 products but rather 100 products (what is called the consumer surplus) even if it doesn't means macroenomically speaking anything means that we are better off.  Check her commentary in NPR or on her blog where she has a transcript of the radio commentary.

Connections and all in the family

I was reading about the dead of Aaron Director, founder of Law and Economics, that is the use of economic thinking tools in Law. This last paragraph caught my attention:

He stayed at Chicago for several years as an instructor, also bringing his younger sister Rose to the University. There, she finished her undergraduate work and entered graduate school in economics, where she would meet her future husband, Milton Friedman.

It turns out that Aaron Director was also one of the great promoters of Hayek's Road to Serfdom and even convinced the editors at Chicago University Press to publish it. He also was the teacher of Supreme Court Justice candidate and legal schoolar Robert Bork.

What an influence a man can have into a movement (both through family and ideas).

Gas Prices for Washingtonians

This is an interesting website for those who live in the Washington Area

Hernando De Soto is Awarded the Milton Friedman Award

Hernando de Soto has been awarded by the Cato Institute the Milton Friedman Award that grants a prize of $500.000 US Dollars to the to an individual who has made a significant contribution to advance human freedom. Awarded every other year the prize and named to perhaps the most influential economist to advance freedom on the 20th century, Milton Friedman.