Monthly Archives: April 2016

Why the Panama Papers Scandal Isn’t Such a Scandal After All

Posted on April 7, 2016 by | 1 comment

Crossposted from vice.com

By John Dyer

When news of the Panama Papers broke earlier this week, it was a bombshell. But it later emerged that German prosecutors had reportedly launched an investigation into the Mossack Fonseca law firm at the center of the controversy a year ago. (The investigation is ongoing.) American officials have also for years been trying to track money shifted around the world through shell companies that the firm specializes in establishing.

Though governments around the world have long decried tax havens and have aggressively pursued big banks in Switzerland and other countries, they have not pursued high-profile lawsuits against Mossack Fonseca or its clients despite knowledge of its business dealings.

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Panama: Cheating “Epidemic” Crowds Out Honest Business, Implicates Banks

Posted on April 7, 2016 by | Comments Off on Panama: Cheating “Epidemic” Crowds Out Honest Business, Implicates Banks

Cross-posted from ineteconomics.org

The Panama Papers are not simply a story of public corruption as depicted in news outlets like the Wall Street Journal, says former financial regulator William K. Black. They’re a reminder that such corruption destroys the possibility for honest businesses to succeed.

“Markets become completely perverse when cheaters prosper,” explains Black, a leading expert on corruption and finance and frequent speaker at Institute events. When cheating brings a competitive advantage, the victims are not only middle class taxpayers who have to shoulder a heavier burden, and the wider public that suffers from schools not being built and roads not being repaired. A less obvious victim is the honest business person.

“Those who want to do business honestly simply can’t compete against people who don’t pay taxes,” says Black. A company may start out with strong values and principles, but if all of its competitors are cheating, that business will either just fail, or else will “grit their teeth and go for it.” Thus, still more cheaters, and fewer straight shooters.

Read rest of the post here.

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AEI Pushes Government Propaganda Telling Women to Marry Schlubs

Posted on April 6, 2016 by | 6 comments

By William K. Black
April 5, 2016     Bloomington, MN

I wrote a two-part column on the joint report by AEI and Brookings on poverty reduction.  Part two of my column focused on the policy that report pushed most prominently – a government program of propaganda urging pregnant women to marry.  My first article, however, criticized Eduardo Porter’s February 2, 2016 column in the New York Times for ballyhooing the supposed wondrous nature of Brookings and AEI working together.  Porter portrayed them as “leading thinkers on opposite sides of the ideological divide.”  I pointed out that a majority of the group had hard-right views and that the group had an exceptionally weak member pushing a single idea – marriage propaganda.  I also pointed out that Brookings had, for decades, played the same very junior partner role of giving AEI cover for “joint” proposals with Brookings to cripple financial regulation.

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Is there a solution to Brazil’s crises?

Posted on April 5, 2016 by | 1 comment

By Felipe Rezende

This is the first of a series of posts on the Brazilian crises.

There are two major crises Brazil’s president Dilma Rousseff is facing: one is a political crisis and the other is Brazil’s sharpest recession in 25 years.

Brazil’s Political Crisis

The political crisis has two main pillars: a) a vast corruption scandal (with evidence of a kickback scheme funneling billions of dollars from state-run firms and, more recently, in a massive data leak over possible tax evasion, Brazil politicians linked to offshore companies in Panama leaks); and b) impeachment proceedings to move forward against President Dilma Rousseff.

The Federal Court of Accounts (TCU) announced in 2015 that it had rejected the accounts of Rousseff’s administration for the year 2014. In a unanimous vote, the federal accounts court, known as the TCU, ruled Dilma Rousseff’s government manipulated its accounts in 2014 to “disguise fiscal deficits” as she campaigned for re-election. The allegation is that Ms. Rousseff manipulated Brazil’s account books to hide a growing fiscal deficit.

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Krugman on the Corruption of our Nation via Perverse Incentives

Posted on April 5, 2016 by | 5 comments

By William K. Black
April 4, 2016      Bloomington, MN

Paul Krugman April Fools’ Day column launched another attack on Bernie Sanders.  In it he announces that he, a strong Hilary Clinton supporter, is “Dad” and gets to set the rules for candidates – “it’s time to lay out some guidelines for good and bad behavior.”  This is a lot like John McEnroe giving lectures on tennis etiquette.  Two sentences later, Krugman mocks voters for Sanders in “very white states,” which is a pretty clear example of “bad behavior.”  Tellingly, Krugman is oblivious to his bad behavior.  Krugman ends with this patronizing and insulting sentence:  “Sanders doesn’t need to drop out, but he needs to start acting responsibly.”  Krugman is obviously itching to instruct Bernie to “drop out” and hand the contest to his candidate.

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Money and Banking – Part 11: Inflation

Posted on April 5, 2016 by | 6 comments

By Eric Tymoigne

We are done with the study of banking operations. The next step is to incorporate them into the analysis of macroeconomic issues and this post begins on such topic by focusing on inflation. When inflation is mentioned, it is usually in relation to the cost of buying newly produced goods and services for consumption purpose. Another type of inflation concerns asset prices, i.e. the price of non-producible commodities and old producible commodities. This post does not study asset-price inflation, which concerns theories of interest rate.

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BWU Support for WARN Act

Posted on April 4, 2016 by | Comments Off on BWU Support for WARN Act

April 3, 2016

Chairman Jason Chaffetz
House Committee on Oversight and Government Reform
2157 Rayburn House Office Building
Washington, DC 20515

Ranking Member Elijah Cummings
House Committee on Oversight and Government Reform
2471 Rayburn House Office Building
Washington, D.C. 20515

Dear Chairman Chaffetz and Ranking Member Cummings:

We, the founding members of Bank Whistleblowers United (BWU), write to express our support for the “Whistleblower Augmented Reward and Nonretaliation (WARN) Act of 2016,” introduced by Ranking Member Cummings and Senator Tammy Baldwin. We are co-signatories of the joint letter of support with the Bill of Rights Defense Committee/Defending Dissent Foundation, the Government Accountability Project, OpenTheGovernment.org, the Project On Government Oversight, and Public Citizen.

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White-Collar Criminologists Answer the call of Conventional Macroeconomists: An Open Letter to Dr. Kartik Athreya, Research Director of the Richmond Fed

Posted on April 3, 2016 by | Comments Off on White-Collar Criminologists Answer the call of Conventional Macroeconomists: An Open Letter to Dr. Kartik Athreya, Research Director of the Richmond Fed

By William K. Black
April 3, 2016     Minneapolis, Minnesota

I want to thank two prominent “freshwater” macroeconomists, Dr. Narayana Kocherlakota (until recently the President of the Minneapolis Fed and previously the Chair of the University of Minnesota’s economics department) and Dr. Kartik Athreya (Research Director of the Richmond Fed) for their article (2010) and book (2013) , respectively, designed to convey the current status of macroeconomics.  Reading their descriptions, and reviewing the work of Oliver Williamson, Roger Myerson, and Leonid Hurwicz in light of the discussion of macroeconomics has made it clear to me that the central difficulties in micro and macroeconomics are with concepts that are the core of what we study as white-collar criminologists and what I dealt with as a financial regulator.  There is, therefore, an opportunity for substantial advances should economics draw on the findings of the discipline (white-collar criminology) and the insights of the professionals (successful financial regulators) with the preeminent expertise in these problem areas.  Athreya also stresses the key role of law and how the effort to contain fraud explains significant portions of the legal rules for commerce.  I also have expertise in law.

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