A Flat Tax That is Good for Families, Not Just for Business
By John D. Mueller
Posted: Monday, November 16, 1998
In light of Republican timidity, social conservatives ought to join forces with economic conservatives in a full court press to demand comprehensive budget and tax reforms to keep federal spending from rising; already, federal taxes are the highest since World War Two, representing 20.6 percent of the Gross Domestic Product. In doing so, social conservatives must not forget their unique agenda: to push for tax reform that is, in the spirit of 1948, just as good for families—especially those with children—as it is for business. They will need to highlight the anti-family bias in the existing tax code as well as in the well-intended Republican tax alternatives, shaping the legislative debate into targeting specific relief toward working families who are investing in the most important capital of the country—the children of the next generation.  [Read More]

The Asian Bubble Trouble
By John D. Mueller
Posted: Monday, January 26, 1998
For an understanding of Asia’s predicament and its disturbing implications for the United States, the first step is to grasp the Through-the-Looking-Glass nature of our international monetary system.  [Read More]

Three New Papers on "Privatizing" Social Security, One Conclusion: Bad Idea
By John D. Mueller
Posted: Saturday, October 4, 1997
The evidence presented by all three papers points to the same conclusion: It would be a costly mistake to end pay-as-you-go Social Security. The result would be a lower real return on retirement saving, a tax increase on working families, and a smaller economy. Replacing Social Security with private savings accounts is one of those issues which are more attractive, the less you know about them. Those who favor "privatizing" Social Security are ignoring the best available economic theory, and the best available economic research. In my own opinion, the political movement to "privatize" Social Security will abruptly collapse as soon as the public begins to learn what's actually being proposed: a big tax increase and a permanently lower standard of living for most American families. Instead of "privatizing" Social Security, we should maintain Social Security on a pay-as-you-go basis.     [Read More]

Can Financial Assets Beat Social Security? Not in the Real World.
By John D. Mueller
Posted: Friday, October 3, 1997
Since retirees began collecting Social Security benefits in 1941, the average real return on payroll taxes paid has been about 9% -- far above the average returns in the stock market. Moreover, until the late 1970s, most economists believed that, while future returns could not remain so high, the average long-run return on pay-as-you-go Social Security would approximate the rate of economic growth; and that this rate of return must exceed the average return on financial investments of comparable risk.   [Read More]

If Economic Growth Falls to 1.4%, What Happens to the Stock Market?
By John D. Mueller
Posted: Thursday, October 2, 1997
Measured by its "standard deviation," the stock market has been about four times as risky as the economy since 1926.  Because of people's natural aversion to risk, this higher volatility is the main reason why the risk-adjusted return on the stock market has been much lower than the rate of economic growth.  It might seem, then, that any change in the rate of economic growth would cause the stock market to decline or accelerate by some multiple.  But this is not the way things work.  [Read More]

The Economics of Pay-As-You Go Social Security, and the Economic Cost of Ending It.
By John D. Mueller
Posted: Wednesday, October 1, 1997
The debate over the economic theory of pay-as-you-go Social Security is mostly about assuming things away that really do exist. Those who seek to end pay-as-you-go Social Security base their argument on an economic theory devised about 100 years ago, for quite a different purpose. They ignore the fact that this "neoclassical" theory was challenged nearly 40 years ago as inadequate to explain economic growth, and disproven by careful research more than 20 years ago. The trouble with neoclassical theory lies not in its logic but in its assumptions, which do not match the world in which we live. The theory entirely ignores the existence and economic value of investments in people.   [Read More]

A Challenge to Conventional Labor-Market Wisdom; The "Wedge" versus "Social Wage" (Comment)
By John D. Mueller, Samuel Brittan
Posted: Monday, May 2, 1994
An international consensus is emerging on the problems of chronic unemployment and lagging real wages.  It has won the backing of powerful politicians like Jacques Delors and President Clinton's economic advisors.  Unfortunately, this new consensus is contradicted by standard theory and by labor-market reality.  [Read More]

How Can Wages Fall While Unemployment Rises?
By John D. Mueller
Posted: Friday, March 11, 1994
How can the trend of unemployment rise while the share of income received by employed workers keeps shrinking?  Unless policymakers can answer that question when they meet in Detroit on March 14-15 for their "jobs summit," they must admit they don't know how to cure workers' biggest problem, which has been worsening for a generation.  Indeed, the most striking feature of the jobs summit is its air of pessimism, particularly among those most busily launching new initiatives.  [Read More]

Why Devalue?
By John D. Mueller
Posted: Tuesday, June 29, 1993
Almost all industrial countries today are suffering from permanent unemployment, and most are suffering from currency instability. The two problems are related: an expansive economic policy which leads to a currency crisis is usually intended to reduce unemployment. This report considers how both problems might be solved at the same time -- and more specifically, the circumstances in which currency devaluation will be necessary, useful or ineffective.   [Read More]

The Curse of Being a Reserve Currency
By John D. Mueller, Lewis E. Lehrman
Posted: Monday, January 4, 1993
The European monetary system is breaking down for the same reason the gold-exchange standard in 1931 and the Bretton Woods system in 1971 collapsed: the use of domestic currencies as international reserves.  To describe the problem simply:  For other countries to increase their foreign exchange reserves, the reserve currency country must purchase more wealth abroad than it sells--i.e., run a balance-of-payments deficit.  This demand for wealth without a matching supply causes inflation of either goods or securities prices--usually both in succession.  [Read More]