November 18, 2009, 9:00 AM
What Makes a Nation Rich? One Economist's Big Answer
Say you're a world leader and you want your country's economy to prosper. According to this Clark Medal winner from MIT, there's a simple solution: start with free elections.
Read more: http://www.esquire.com/features/best-and-brightest-2009/world-poverty-map-1209#ixzz0XPLjfQ4G
What Makes a Nation Rich? One Economist's Big Answer
Showing posts with label government. Show all posts
Showing posts with label government. Show all posts
Friday, November 20, 2009
Thursday, July 17, 2008
Confidence in Free Markets
The LA Times reported that the general attitude toward markets and government intervention may be changing:
"We're at a hinge point," said William A. Galston, a senior fellow at the Brookings Institution in Washington who helped craft President Clinton's market-friendly agenda during the 1990s. "The strong presumption in favor of markets, which has dominated public policy since the late 1970s, has een thrown very much into question."
The author of the article, goes on to observe:
Now, to a degree not seen in years, politicians and outside experts are looking with favor at more, not less, government involvement in the economy.
This article confirms a trend that I have seen in my interactions with students, fellow faculty and my circle of friends.
Kling, in a review of what he calls a must read book Happiness and Economics: How the Economy and Institutions Affect Human Well-Being points out one possibility for this procedural utility. Kling summarizes this idea in his post and Frey's book is now on my reading list.
"We're at a hinge point," said William A. Galston, a senior fellow at the Brookings Institution in Washington who helped craft President Clinton's market-friendly agenda during the 1990s. "The strong presumption in favor of markets, which has dominated public policy since the late 1970s, has een thrown very much into question."
The author of the article, goes on to observe:
Now, to a degree not seen in years, politicians and outside experts are looking with favor at more, not less, government involvement in the economy.
This article confirms a trend that I have seen in my interactions with students, fellow faculty and my circle of friends.
Kling, in a review of what he calls a must read book Happiness and Economics: How the Economy and Institutions Affect Human Well-Being points out one possibility for this procedural utility. Kling summarizes this idea in his post and Frey's book is now on my reading list.
Monday, May 5, 2008
Agricultural Subsidies
The impact of agricultural subsidies on welfare, both domestically and internationally, was a key topic discussed May 2-4, 2008 at The Understanding Liberty and Choice: Free Trade, Globalization, and Economic Development. This joint FTE and Liberty Fund colloquium discussed the neo classical view of trade as well as contemporary views of trade. Two of the texts - In Defense of Globalization and The Travels of a T Shirt in the Global Economy included analysis of the impact of subsidy in the agricultural sector.
This analysis was extended on the Becker-Posner Blog. On May 4, Posner wrote:
There is no justification for the Farm Bill in terms of social welfare. The agriculture industry does not exhibit the symptoms, such as large fixed costs, that make unregulated competition problematic in some industries, such as the airline industry, about which Becker and I blogged recently. It is true that crops are vulnerable to disease, drought, floods, and other natural disasters, but the global insurance industry insures against such disasters, and in addition large agricultural enterprises can reduce the risk of such disasters by diversifying crops and by owning farm land in different parts of the nation and the world. If a farm enterprise grows soybeans in different regions, a soybean blight in one region, by reducing the supply of soybeans, will increase the price of soybeans, so the enterprise will be hedged, at least partially, against the risk of disaster. Supply fluctuations due to natural disaster create instability in farm prices, but farmers can hedge against such instability by purchasing future or forward contracts. There is no "market failure" problem that would justify regulating the farm industry. All the subsidies should be repealed.
http://www.becker-posner-blog.com/archives/2008/05/the_outlandish.html
Becker responded:
Posner presents evidence on the sizable subsidies received by American farmers from the federal government of the United States. However, the US is not unique, for every rich country including France, Germany, Great Britain, and Japan, heavily subsidizes their farmers, no matter how small the agricultural sectors. In fact, some of these other countries subsidize farmers more generously than even the United States. On the surface, this universal tendency for rich countries to subsidize farming, no matter how different are the details of their political systems, is a paradox. For since only a small fraction of the populations of these countries work in agriculture, farmers cannot contribute much to any majority voting coalition.
http://www.becker-posner-blog.com/archives/2008/05/farm_subsidies.html
This analysis was extended on the Becker-Posner Blog. On May 4, Posner wrote:
There is no justification for the Farm Bill in terms of social welfare. The agriculture industry does not exhibit the symptoms, such as large fixed costs, that make unregulated competition problematic in some industries, such as the airline industry, about which Becker and I blogged recently. It is true that crops are vulnerable to disease, drought, floods, and other natural disasters, but the global insurance industry insures against such disasters, and in addition large agricultural enterprises can reduce the risk of such disasters by diversifying crops and by owning farm land in different parts of the nation and the world. If a farm enterprise grows soybeans in different regions, a soybean blight in one region, by reducing the supply of soybeans, will increase the price of soybeans, so the enterprise will be hedged, at least partially, against the risk of disaster. Supply fluctuations due to natural disaster create instability in farm prices, but farmers can hedge against such instability by purchasing future or forward contracts. There is no "market failure" problem that would justify regulating the farm industry. All the subsidies should be repealed.
http://www.becker-posner-blog.com/archives/2008/05/the_outlandish.html
Becker responded:
Posner presents evidence on the sizable subsidies received by American farmers from the federal government of the United States. However, the US is not unique, for every rich country including France, Germany, Great Britain, and Japan, heavily subsidizes their farmers, no matter how small the agricultural sectors. In fact, some of these other countries subsidize farmers more generously than even the United States. On the surface, this universal tendency for rich countries to subsidize farming, no matter how different are the details of their political systems, is a paradox. For since only a small fraction of the populations of these countries work in agriculture, farmers cannot contribute much to any majority voting coalition.
http://www.becker-posner-blog.com/archives/2008/05/farm_subsidies.html
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