Economists tend not to pay enough attention to this sort of thing, in part because it's hard to measure. We argue about taxes and government spending because we can at least try to measure them. We acknowledge that government mandates are the same as taxing and spending, but tend to leave them out because it's hard to get numbers. Intrusive regulation, just as damaging, is even harder to quantify. And pervasive corruption harder still. Yet it's just as much, maybe more, sand in the gears as are headline taxing and spending.
It just looks like mysterious "low productivity." Keynesians see low output and employment and ask for more stimulus. That's not the problem.
Saturday, June 9, 2012
Crony Capitalism and Economists
The Grumpy Economist has a great post on the economic effects of crony capitalism. Some quotes:
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Well, we all know crony capitalism hurts. If we can't quantify it, all the more reason to argue the moral case against it.
ReplyDeletearhooley, good point. Being sort of wonky myself, I am always looking for the statistics to back up my position. But more people respond to moral argument, as you seem to be pointing out.
ReplyDeleteBTW, do you go by anything shorter? I often am addressed simply as B in emails and on line.
Heh, usually I go by something longer, but if you want to cut down my handle I'll be curious to see what comes off.
DeleteGovernment debt is a proxy for how much "stimulus" has been tried. GDP growth has slowed from 4.5% in the "40's and 50's", 3.5% in the "60's and 70's", 3% through the "80's and 90's" and is now around 2%. Debt has not worked in the long run.
ReplyDelete