Is there a place for a central bank digital currency in America?

There’s no such thing as an “American-style” central bank digital currency: As Japan and other G7 countries announced this month that they are looking to keep pace with China and proceed toward central bank digital currencies (CBDCs), Florida Governor Ron DeSantis made news for taking aim at the idea of a CBDC in America. CBDCs, which combine blockchain technology and the monetary policies of fiat currencies like the dollar or euro, give government visibility into and control over all economic transactions, no matter how small. Although there are voices on both the left and right that support a CBDC of some kind for the U.S., FREOPP President Avik Roy writes that the surveillance and censorship capabilities of a CBDC cannot be reconciled with classic American notions of civil liberties. A far better option would be government-regulated “stablecoins” backed by near-cash instruments such as Treasury bonds and commercial paper. These money market mutual fund-like instruments could provide consumers and financial institutions with the speed and reliability of 21st-century technology while retaining the safeguards against authoritarianism that Americans require.

Not convinced a CBDC would be bad news? In 2021, Avik described the dangers of China’s e-CNY, which enables the government to directly send money to, and take money from, favored and disfavored individuals. People and businesses who speak out against the government can have their bank accounts instantly wiped out and find themselves de-platformed from economic life. 

And for even more on the CBDC debate, check out former CFTC commissioner Chris Giancarlo’s response to Avik’s recent Forbes article, and Avik’s replies, on Twitter. 

The colleges and majors that deliver economic mobility for low-income students: Increased earnings potential and employability are among the top goals cited by students pursuing post-secondary education. Yet, as FREOPP Senior Fellow Preston Cooper has documented in his review of more than 60,000 degrees and certificates, the return on investment (ROI) of college is not consistently positive across colleges and majors. In his latest research, Preston identifies programs that deliver strong ROI at schools enrolling large numbers of low-income students. The best performers? Programs concentrated in health care fields and offered by public community colleges and private trade schools, which serve mostly low-income students but have an ROI exceeding $250,000. Policymakers should give federally funded institutions incentives to expand programs that serve low-income students well by boosting Pell Grant aid for those pursuing high-ROI credentials. And by emulating these high ROI programs, other schools may be able to replicate their success at providing economic opportunity to prospective students who least have it.

→ Meanwhile, The Economist picks up Preston’s ROI emphasis—and cites his research—in a piece asking “Was your degree really worth it?” and noting the “puny” financial benefits of many university courses.

The new abolitionists: As reformers across the political spectrum grapple with the inequalities in America’s criminal justice system, particularly for poor people and those of color, a growing collection of activists and scholars are advocating for abolishing the police, jails, prisons, and the corporations that form a “prison-industrial complex.” But does the fact that radical change to the way the U.S. handles incarceration is needed mean that prisons are inherently unjust, as these new abolitionists claim? Harvard philosophy and African American studies professor Tommie Shelby tackles that philosophical question in his new book, The Idea of Prison Abolition. FREOPP Senior Fellow Jonathan Blanks considers Shelby’s work in the spring issue of Democracy: A Journal of Ideas and describes the book as “a sharp and sympathetic critique of the abolitionist program on its own terms.” He also notes that Shelby’s scholarship reinforces the need to address the larger societal problems within our country as part of any viable path toward true justice, regardless of where one falls on the reformer-abolitionist spectrum.

Michael Tanner joins FREOPP: We’re pleased to introduce you to yet another new FREOPP scholar! Michael Tanner joins our team this spring after nearly 30 years at the Cato Institute. Michael is an authority on health care reform and social welfare policy, with ten Congressional testimonies, 11 books, and dozens of reports, studies, and articles for outlets like The Wall Street Journal, The New York Times, and The Washington Post under his belt. His focus has always been on market-based solutions that prioritize individual choice and personal responsibility, and he is a prominent voice in advocating for innovative approaches to improve the American health care system. At FREOPP, he will build on his past work—particularly the framework laid out in his book The Inclusive Economy—to help us overhaul the welfare system in a way that improves Americans’ economic security and social mobility. “I’ve always focused on the need to help people who are struggling,” Michael says, “and I think I can do that with FREOPP.” 

Thanks for keeping up with FREOPP, and have a great weekend! 

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