Economics & Finance

Blog goddess Natalie Solent has written two posts that I’d like to bring to your attention, but I’m only going to discuss them in one. (What a bargain! And we pass the savings on to you!)

The first post is a fisking of a British textbook used in a Religious Studies course. Natalie tears into the material with gusto, since the author of the textbook blames the inequality of living standards between developing nations and industrialized countries on world trade and a lack of foreign aid. NATO also adds to the problem by acting as the world’s police force.

Got that? World trade creates poverty. Mean nations who happen to be rich won’t give their wealth away to those who deserve it. And NATO screws everyone over by trying to keep genocide and regional conflicts from flaring up.

If this is what they’re teaching the youth in the UK then I weep for the Commonwealth. I’m also wondering why some Socialists are writing a textbook on religion, since I thought they hated that sort of thing.

Click on the link and read the post. It’s very good, and Natalie does a very good job of pointing out the absurdity of it all. But that’s not what’s really puzzling me.

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Friedman discusses Social Security, deficits, trade, monetary policy, immigration, education and more. Very much worth reading, as always.

(via Don Luskin)

The importance of the growth rate increases, the further into the future we look. If a country grows at two percent, as opposed to growing at one percent, the difference in welfare in a single year is relatively small. But over time the difference becomes very large. For instance, had America grown one percentage point less per year, between 1870 and 1990, the America of 1990 would be no richer than the Mexico of 1990. At a growth rate of five percent per annum, it takes just over eighty years for a country to move from a per capita income of $500 to a per capita income of $25,000, defining both in terms of constant real dollars. At a growth rate of one percent, such an improvement takes 393 years.

–Tyler Cowen

Some manufacturing executives are complaining that they can’t find applicants with the right skills for the available jobs. According to John Engler, President of the National Association of Manufacturers, “A full 36 percent of our members have said they have employment positions unfilled right now because they cannot find qualified workers. This confirms what our members have been telling us: that the people applying for manufacturing jobs today simply do not have the math, science and technological aptitude they need to work in modern manufacturing.”

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My view is that innovation by trial-and-error is the most valuable economic process, and government intervention tends to be inimical to such innovation. Even when the market is producing unsatisfactory outcomes, my view is that eventually innovators will come along with better ideas. In that way, the market’s errors tend to be self-correcting. Government’s errors tend to perpetuate and to deepen.

–Arnold Kling