AIG spells nationalization of entire insurance industry

With billions of government handouts, AIG is able to offer peerless premiums. In a free market, offering such low premiums would be corporate suicide. But AIG is not a free market participant. It has government backing. Bernanke and Treasury Secretary Timothy Geithner have, on numerous occasions, voiced their intent to do whatever is necessary to keep AIG from folding. In this context, risks that would normally bankrupt the company do not restrict its behavior, because its liquidity flows from a seemingly bottomless barrel, the purse of the citizenry. Losses from these risks will continue to be subsidized, and those subsidies will encourage more risks, and bring on more losses.

Keynes and the “intellectuals” v. America

I wrote an email about John Maynard Keynes a couple of weeks ago that I want to share with you.  It was to my mother.  As a university instructor, she receives emails from intellectual colleagues of all fields, who often know little or nothing of economics, but strongly support Keynesian theories.  Such professors, living comfortably [...]

Jefferson v. Hamilton, federal powers, and the Marshall Court

Alexander Hamilton and Thomas Jefferson were the most prominent representatives of two contrary interpretations of the U.S. Constitution. Two landmark Supreme Court cases, Marbury v. Madison (1803) and McCulloch v. Maryland (1819), show the relative influences of these two interpretations on American political thought.
Jefferson was a strict constructionist. He desired a limited government, [...]