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Analysis and Commentary

Why Are Minimum Wages So Popular?

by Thomas E. MaCurdyvia Hoover Daily Report
Monday, November 29, 1999

As in 1996, when we last saw an increase in the federal minimum wage from $4.25 to $5.15 an hour, political pressure is once again building to raise it by another $1.

The Case against the International Monetary Fund

via Analysis
Monday, November 1, 1999

In July 1944, delegates from forty-four nations gathered in Bretton Woods, New Hampshire, to design a postwar international monetary system that would promote world trade, investment, and economic growth. The framers created the International Monetary Fund (IMF or fund) to supervise the new "Bretton Woods monetary regime" that sought to keep national currencies convertible at stable exchange rates and to provide temporary, low-cost financing of balance-of-payments deficits resulting from misaligned exchange rates.

In reality, the framers of the Bretton Woods regime created an international price-fixing arrangement enforced by the IMF. After joining the fund, each member country declared a value for its currency relative to the U.S. dollar. The U.S. Treasury, in turn, tied the dollar to gold by agreeing to buy and sell gold to other governments at $35 an ounce; the inflation of the 1960s, however, made the U.S. commitment to sell gold at that price unsustainable. To preserve U.S. gold reserves, President Richard Nixon closed the gold window in August 1971, effectively uncoupling the dollar from gold and ending the fund's original mission of supervising a system of pegged exchange rates. Looking for a new mission, the IMF quickly evolved into a financial medic for developing countries. Beginning in the early 1970s, the IMF skillfully used a series of global economic crises to increase its capital base and financing activities.

Has the expansion of IMF financing activities alleviated the balance-of-payments problems of member countries and encouraged prudent, progrowth economic policies? The evidence, much of it supplied by the IMF, demonstrates that the fund does more harm than good. Historical studies as well as recent initiatives in Mexico, East Asia, and Russia reveal that IMF financing programs, which rarely prescribe appropriate economic policies or sufficient institutional reforms, are at best ineffective and at worst incentives for imprudent investment and public policy decisions that reduce economic growth, encourage long-term IMF dependency, and create global financial chaos.

It is time to scrap the IMF and strengthen market-based alternatives that would promote an orderly and efficient international monetary system. Key reforms include floating exchange rates, internationally accepted accounting and disclosure practices, unfettered private financial markets, and fundamental legal, political, and constitutional rules that would allow free markets to emerge and countries to achieve self-sustaining economic growth and development.

The Euro and That Sinking Feeling

by Melvyn B. Kraussvia Hoover Digest
Saturday, October 30, 1999

Hoover fellow Melvyn Krauss explains why the euro is faring so poorly in its first year—and why its future looks, if anything, worse.

Capitalist Culture

by David R. Hendersonvia Hoover Digest
Saturday, October 30, 1999

Capitalism may make us all rich, but what does it do for our cultural life? According to Hoover fellow David R. Henderson, quite a lot.

Capitalism and Its Discontents

by Michael J. Boskinvia Hoover Digest
Saturday, October 30, 1999

Socialism and central planning do not work. Capitalism and free markets do. Hoover fellow Michael J. Boskin on the outcome of one of the most important debates of the century.

What Trust Fund?

by Thomas Sowellvia Hoover Digest
Saturday, October 30, 1999

Hoover fellow Thomas Sowell exposes the accounting sleight-of-hand known as the Social Security trust fund.

My Luncheon with Bono

by Robert J. Barrovia Hoover Digest
Saturday, October 30, 1999

It’s not every day that a professor of economics gets invited to dine with a rock star. Hoover fellow Robert J. Barro on meeting a superstar who proved pleasant, well meaning—and surprisingly well versed in economics.

Inflated Expectations for the Fed

by Michael J. Boskinvia Hoover Digest
Saturday, October 30, 1999

Hoover fellow Michael J. Boskin believes the public asks too much of the Fed, expecting Alan Greenspan to keep the good times rolling on his own. Here Boskin explains why responsibility for sound economic policy still lies overwhelmingly with Congress and the president—and details what they must do to keep our economy growing.

Flying Down to Rio

by Robert J. Barrovia Hoover Digest
Saturday, October 30, 1999

Recently Hoover fellow Robert J. Barro traveled to Brazil to assess the country’s economic policies. He was not impressed.

Asia Gets Back on Its Feet

by Charles Wolf Jr.via Hoover Digest
Saturday, October 30, 1999

Just two years after the economic crisis laid them low, the economies of Asia are back up and dusting themselves off. By Hoover fellow Charles Wolf Jr.

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The Working Group on Economic Policy brings together experts on economic and financial policy to study key developments in the U.S. and global economies, examine their interactions, and develop specific policy proposals.

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