Thursday, January 15, 2004


Leftists still haven't learned basic economic lessons even when delivered by one of their own. This biographical piece outlines some uncommon economic sense on minimum wages and government intervention in agriculture delivered by socialist economist Gunnar Myrdal.

New jobs for old: "It is in destroying jobs that the economy improves and makes it possible for the standard of living of all Americans to increase. This constant churning means that even a "stagnant" American job market is extremely dynamic, and that the ranks of the unemployed are not necessarily the dispossessed of the earth, as Democrats tend to portray them."

"An inevitable consequence of socialism is the division of society into two groups; those who are consuming government 'services' and those who are paying for them. As the waning and collapse of socialist countries around the globe has clearly demonstrated, those who consume eventually overwhelm those who provide. ... Every entitlement program the government ever instituted has or soon will metastasize into an open ended endowment that politicians can incrementally expand to buy votes; 'vote for me and we'll take care of you, too.' The best illustration of this point is the history of Social Security."

Too logical for his own good: "Early in our marriage, 40-some years ago, Mrs. Williams would return from shopping complaining about the unreasonable prices. Having aired her complaints, she'd then ask me to unload her car laden with purchases. After the unloading, I'd ask her: 'I thought you said the prices were unreasonable. Why did you buy them? Are you unreasonable? Only an unreasonable person would pay unreasonable prices.' The discussion always headed downhill after such an observation."

Indian economist Jagdish Baghwati has come out swinging in favour of globalization. He gives the facts and figures to show what an enormous influence it is in reducing Third-world poverty. "During the three decades that Bhagwati's India was a relatively closed economy, for example, the economy grew at 4 percent a year, and the poverty rate hovered around 55 percent. But in the two decades since it opened its economy to foreign trade and investment, economic growth averaged five percent; by 2000, the poverty rate had fallen to 26 percent. China's experience was similar: with liberalization came spectacular growth, and poverty declined from 28 to 9 percent between 1978 and 1998."

Californian stupidity is very bad for business: "Robert Peritz is no jingoist, despite how he sounds at times ... Neither is the ex-New Yorker ... some storming anti-government extremist -- despite his rants against politicians and bureaucrats: 'There is too much big government and a lot of bad policy right here in this state. The politicians and bureaucrats are making and passing regulations that are actually running businesses out of town. We need less government intrusion into our lives.' Peritz, in truth, is an inherently humble guy who knows what's what. He's clear that in business, as in life, if you do good things, good things will come back to you."

Facts don't matter to some, apparently: "Richard Florida, a Carnegie Mellon professor .. argues that cities that attract gays, bohemians, and ethnic minorities are the new economic powerhouses because they are also the places where creative workers_the kind who start and staff innovative, fast-growing companies_want to live... [BUT] Far from being economic powerhouses, a number of the cities the professor identifies as creative-age winners have chronically underperformed the American economy..."

An important reminder about free trade: "Before getting into the heart of the matter, let us remind ourselves of a basic but important fact: Tariffs are taxes. No matter how sophisticated the argument, when someone opposes free trade, what that really means is that he favors the placement of taxes (or similar restrictions) on consumers."

Unemployment: "Chronic unemployment is only and can only be caused by one thing. That is the resistance of the unemployed worker to accept employment at a rate or in an area that reflects his current market value. Remember as long as any human desire remains unfilled there is work that can be done. This means there is always work."


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