Kruse Kronicle

The European Refugee Crisis and Syria Explained

An excellent video that will make you an expert on what has happened with Syria.

Double-Edged Denmark: What we Should Learn

Denmark became a central topic during the Democrats' debate last week. Bernie Sanders calls himself a democratic socialist. Hillary Clinton loves Denmark but dismisses the idea that America can be Denmark. This inspired several articles by various commentators about the truth behind Denmark's economic model (or the Nordic model more generally.) Progressives like the high taxes, low inequality, and high government spending. Conservatives counter by noting that the Nordic countries rank among the countries highest in free trade and low corporate taxes. I've been linking articles on Facebook, but I thought this piece in Niskanen was the best. Double-Edged Denmark

Right-leaning arguments about the free-market marvel that is Denmark cut both ways. Denmark shows us that a much larger public sector and a much more robust social-insurance system need not come at the expense of a dynamic market economy. In other words, Denmark shows us that capitalism and a large welfare state are perfectly compatible and possibly complementary.

The lesson Bernie Sanders needs to learn is that you cannot finance a Danish-style welfare state without free markets and large tax increases on the middle class. If you want Danish levels of social spending, you need Danish middle-class tax rates and a relatively unfettered capitalist economy. The fact that he's unwilling to come out in favor of either half of  the Danish formula for a viable social-democratic welfare state is the best evidence that Bernie Sanders is not actually very interested in what it takes to make social democracy work. The great irony of post-1989 political economy is that capitalism has proven itself the most reliable means to socialist ends. Bernie seems not to have gotten the memo. But Bernie Sanders isn't the only one failing to come to terms with the implications of Danish social-democratic capitalism.

The lesson free-marketeers need to learn is that Denmark may be beating the U.S. in terms of economic freedom because it's easier to get people to buy in to capitalism when they're well-insured against its downside risks. That's the flipside irony of free-market "socialism. ...

... the reason the U.S. is lagging so far behind big-government Denmark on free trade, corporate taxation, ease of doing business, and more may very well be that the American safety net isn't good enough, and economic insecurity at the bottom and middle makes free-market policies a tough sell to anxious American voters.

I don't know that this is true. But, then again, libertarians and free-market conservatives don't know that it's not. Mostly, ideological American capitalists really badly want to believe it's not true that we're falling behind Denmark as capitalists because we're not redistributive enough. (I mean, the previous paragraph made me feel like I was channeling E.J. Dionne, which was … unsettling. But let us put away childish things.) Because if it is true, and social insurance and capitalism are complementary in this way, then champions of economic liberty will be forced to face up to the possibility that attacking the welfare state undermines support for laissez faire economic policy. Some of us might even be forced to choose between our love of capitalism and dislike of the welfare state. Awkward. ..."

Economic development always includes, in some broad sense, an embrace of trade and freedom from arbitrary interference in market activity. Yet when you look at the various nations that rose to affluence in the last century, diverse paths were taken to get there. The particular way toward trade and freedom seems less important than the stability issue. When the various players in the economy and society behave in predictable patterns, they can better predict and coordinate their behavior, even if the patterns are not optimal regarding trade and freedom. The imposition of trade and freedom that generates too much instability may be worse than simply staying with less effective economic models in the short run and letting things evolve.

This need for security and stability is a piece that most libertarians frequently undervalue at both the macro and micro levels. Economic historians will tell you that one of the pivotal developments in history (among several) was the emergence of limited liability. People could pool their resources and form joint ventures without risking their entire assets. Bad choices or unforeseen developments would not leave you destitute.

If the aim is a dynamic, risk-taking economy leading to high productivity and economic growth, then we need security and stability for citizens. With a basic safety net in place (here, I'm thinking mostly of a guaranteed minimum income as opposed to our wasteful welfare industry), people would become less risk-averse, knowing that trying new stuff doesn't lead to destitution if you fail.

But if libertarian conservatives are blind to security issues, progressives are blind to productivity and economic growth. Take the living wage debate. It is said that Walmart's low wages are possible because taxpayers subsidize the workers through the welfare system. Nonsense. Welfare support drives up wages. If the wages aren't at least comparable to welfare options, then why work?

Furthermore, while each business should have the aim of helping their employees flourish (improving their skills and providing opportunities to gain more responsibility in a safe environment), businesses are neither benefactors nor aid agencies. They are the institutions responsible for transforming matter, energy, and data from less useful forms to more useful forms on a sustainable basis. Sustainability means creating more value than the value of resources being used. Wages artificially set above the economic value contributed by labor are unfavorable to productivity and sustainability.

I know of no country, including the Nordic countries, which presumes that every job in every circumstance should provide a "livable" income "unsubsidized" by the government. The minimum wage is a temporary introductory wage people earn as they develop skills and experience. Few earn it for more than a period of a few months. Excessively high introductory wages compel businesses to adapt in ways that reduce the amount of this labor they use and decrease the opportunities for the least-skilled to find an on-ramp into the economy.

So while precisely replicating the Danish or Nordic model in a large, diverse nation like the United States may not be feasible, there are lessons here. To the degree the Nordic models have worked, they have done so because they have successfully married security and growth. This is a managed polarity for them, like breathing embraces both inhaling and exhaling. In America, our partisan factions grasp one polarity pole and demonize the other. To the degree they succeed, we are in deep trouble. That is the lesson I learn from double-edged Denmark.

 

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The Danish Don't Have the Secret to Happiness

The Atlantic: The Danish Don't Have the Secret to Happiness

A common meme in economic discussions is that we must make America more like Scandinavian countries, where things are more equal, and people are happier. Denmark, the land of my ancestors, is often the poster child.

There is much to debate about economic policy, but few seem to question what is meant by "happy." "Happy" is one of those words everyone knows the meaning of until you try to define it. Happiness is shaded different ways in different cultures.

Michael Booth writes:

These rules set out the Law of Jante, a kind of Danish Ten Commandments, the social norms one should be aware of if one is planning a move to the north:

1. You shall not believe that you are someone.
2. You shall not believe that you are as good as we are.
3. You shall not believe that you are any wiser than we are.
4. You shall never indulge in the conceit of imagining that you are better than we are.
5. You shall not believe that you know more than we do.
6. You shall not believe that you are more important than we are.
7. You shall not believe that you are going to amount to anything.
8. You shall not laugh at us.
9. You shall not believe that anyone cares about you.
10. You shall not believe that you can teach us anything.

The truth is, Sandemose really nailed the Danes. My experience has been that Jante Law, which has become a national social manifesto of sorts, operates everywhere in Denmark on some level or another.

On the face of it, the Danes have considerably less to be happy about than most of us. Yet, when asked, they still insist that they are the happiest of us all.

What is one to make of this?

The obvious response is, "Define happiness." If we are talking heel-kicking, cocktail-umbrella joie de vivre, then the Danes do not score highly, and I suspect not even they would take their claims that far. But if we are talking about being contented with one's lot, then the Danes do have a more convincing case to present.

Over the years I have asked many Danes about these happiness surveys—whether they really believe that they are the global happiness champions—and I have yet to meet a single one of them who seriously believes it's true. They appreciate the safety net of their welfare state, the way most things function well in their country, and all the free time they have, but they tend to approach the subject of their much-vaunted happiness like the victims of a practical joke waiting to discover who the perpetrator is.

On the other hand, these same Danes are often just as quick to counter any criticism of their country—of their schools, hospitals, transport, weather, taxes, politicians, uneventful landscape, and so on—with the simple and, in a sense-argument-proof riposte: "Well, if that's true, how come we are the happiest people in the world?" (This usually accompanied by upturned palms and a tight, smug smile.) The happiness argument does come in handy sometimes, I guess.

Newspaper editor Anne Knudsen had an interesting theory relating to why the Danes continue to respond positively to happiness surveys: "In Denmark it is shameful to be unhappy," she told me. "If you ask me how I am and I start telling you how bad I feel, then it might force you to do something about it. It might put a burden on you to help me. So, that's one of the main reasons people say things are all right, or even 'super.'"

Here's another convincing theory, posited by a Danish friend of mine: "We always come top of those surveys because they ask us at the beginning of the year what our expectations are," he said. "Then they ask us at the end of the year whether those expectations were met. And because our expectations are so extremely low at the beginning of the year, they tend to get met more easily."

Later he writes:

With that in mind, I had a standard question that I asked most of my interviewees: "What are your fears for the future of Denmark?" One word cropped up more than any other in their responses: complacency. Many of my interviewees were worried that the Danes had it too good for too long, that they were now content to sit back in their Arne Jacobsen San armchairs and watch the plates wobble and fall. Worryingly for the Danes, the latest OECD Better Life Index of life satisfaction saw them plummet to seventh place, behind Norway and Sweden, among others. ...

... Danish society appears to have reached maturity, some would argue to a state of perfection, others to a perilous halt. The fear is that the next stage will be stagnation and decline. What happens when you develop a genuinely almost nearly perfect society in which there is nothing left to achieve, nothing to kick against, or work for?

But I had one other question I always asked, which, in its way, was even more revealing. Whenever I asked my Danish interviewees whether they could think of a better country to live in, the answer was invariably a thoughtful silence.

My point is not so much about which society is better, America or Denmark. The point is that I think "happiness" and how we report it, is different. It strikes me that Denmark is more about keeping expectations low and being content with things staying mostly as they are. That is what will make you happy. While in America, I am not "happy" with my life as it is, but I am "happy" that I have an unalienable right to "life, liberty, and the pursuit of happiness" and that I will one day have a "happier" life. Happiness is found in striving and achievement. I'm painting with broad brushes, but hopefully, you see my point. Consequently, comparing surveys about how "happy" people say they are, is not as clarifying as advocates of Scandinavian economics would make it seem.

Why the West Progressed in Ways No One Else Had

I just read Cathedral, Forge, and Waterwheel: Technology and Invention in the Middle Ages by Frances & Joseph Gies. The book focuses on technological development during the 1,000 years from 500-1500 C.E. The Middle Ages was once cast as an age of regression from the golden age of Greece and Rome until the Renaissance and the Enlightenment saved the day. Furthermore, capitalism is often seen as a product of the last two or three centuries. Modern scholarship debunks these characterizations. This book does a great job at showing the cultural and technological ferment of the Middle Ages, as well as showing how many of the key components of the modern economic world (companies, risk management, double-entry bookkeeping, finance, technological innovation, labor specialization, factories, to name a few) were already coming to flower by 1500. Here are two insights from the end of the book:

… "Asian priority in a wide range of [technological] innovations is established. Asia, however, showed little inclination to borrow, and so, after giving much to others, allowed its own technology to wither, as demonstrated in the history of the two epoch-making inventions of printing and firearms. Each originated in China, but each was allowed to languish, while Europe seized them in both hands to make them major instruments of change. An authority [Timo Myllyntaus] on technology transfer in the modern world asserts that the process 'is not just a matter of moving some piece of hardware from one place to another… A material infrastructure is not enough. There must also be sufficient nonmaterial infrastructure.' In the 'nonmaterial infrastructure' of medieval Europe was a spirit of progress whose ingredients included intellectual curiosity, a love of tinkering, an ambition 'to serve God' and also 'to grow rich as all men desire to do.'

A sense of progress implies a sense of history, something missing among the Egyptians, Greeks, and Romans. 'Lacking any objective understanding of the past – that is, lacking history,' says [D. S. L.] Cardwell, 'the hierarchical and slave-owning societies of classical antiquity failed to appreciate the great progress that had been achieved by and through technics.' On the contrary, the ancients were fond of looking back to what they conceived as a vanished 'golden age,' a conception the reverse of progress. The Christian Church, whose pioneering monastic orders made many practical and material contributions to medieval technology, also supplied a noncyclical, straight-line view of history that allowed scope for the idea of progress." (287-288)

The book concludes with this paragraph:

"' Technology,' says Melvin Kranzberg, founder of the Society for the History of Technology, 'is neither good nor bad; nor is it neutral.' It is what each age and each society make of it. The Middle Ages used it sometimes wisely, sometimes recklessly, often for dubious purposes, seldom with a thought for the future, and with only a dim awareness of the scientific and mathematical laws governing it. But operating on instinct, insight, trial and error, and perseverance, the craftsman and craftswoman, the entrepreneurs, the working monks and the clerical intellectuals, and the artist-engineers all transformed the world, on balance very much to the world's advantage." (291)

I've read a number of books on the history of technology. This is one of the best short surveys I have read, reading more like a novel than a history book.

Economic Development Links

1. You Decide: Save the People or Save the Planet #StopTheMyth

2. New York Times: The End of the ‘Developing World’

BILL GATES, in his foundation’s annual letter, declared that “the terms ‘developing countries’ and ‘developed countries’ have outlived their usefulness.” He’s right. If we want to understand the modern global economy, we need a better vocabulary.

Mr. Gates was making a point about improvements in income and gross domestic product; unfortunately, these formal measures generate categories that tend to obscure obvious distinctions. Only when employing a crude “development” binary could anyone lump Mozambique and Mexico together.

It’s tough to pick a satisfying replacement. Talk of first, second and third worlds is passé, and it’s hard to bear the Dickensian awkwardness of “industrialized nations.” Forget, too, the more recent jargon about the “global south” and “global north.” It makes little sense to counterpose poor countries with “the West” when many of the biggest economic success stories in the past few decades have come from the East.

All of these antiquated terms imply that any given country is “developing” toward something, and that there is only one way to get there.

It’s time that we start describing the world as “fat” or “lean.” ...

3. Huffington Post: The Paradox of Africa's Growth

... So why is Africa's job growth so weak while its economic growth outlook is just fine, even robust? The reasons are structural in nature and three-fold.

First, much of that 'robust' economic growth in the past decade in Africa has been driven by export of commodities or natural resources. ...

... Second, while Africa needs investments in sectors such as infrastructure, technology and education, much of its finances keep leaking out to the rest of the world. ...

... Third, there is no industrialization, not even in agricultural production, taking place when it should. ...

4. The World Post: Amartya Sen: What India Can Learn From China

The implication of your most recent book is that while democracy, as in India, prevents the worst man-made famine such as we've seen in China during the Great Leap Forward, it does not do well at all in building "human capability" -- literacy, rights of women, basic health care or effective public services and infrastructure.

Both China and India are characterized by rapid GDP growth, widespread corruption, inequality and the princeling problem -- 30 percent of India's parliament members are "princelings"

Yet, as you point out, "China made enormous progress -- even before market reforms -- towards universal access to elementary education, health care and social security." After dismantling and then starting to rebuild its safety net, 95 percent of Chinese today are covered by a publicly funded health care system."

And none of this is to speak of physical infrastructure -- the energy grid, bullet trains, roads, Internet access, sewage systems, etc.

You conclude quite decisively that "Indian democratic practice has failed."

What is the key differentiating factor between India and China with respect to building "human capability?" ...

5. BBC: India's family firms modernise to stay in business

... The family is integral to Indian culture and business. Nearly 85% of all companies in the country are family businesses - and these include big conglomerates such as Tata, Reliance and the Wadia Group.

"In other businesses, what is important is competence and profit. That is the measure of success. But in family businesses it's different," says Mr Bahl.

"What is important is that you are together, that you're working together and living together.

"You care for the reputation, you care for the principles of your forefathers and success or profit or that kind of yardstick is not paramount." ...

6. NewJersey.com: Opinion: Muhammad Yunus reaveals social business as powerful weapon against poverty

Muhammad Yunus pioneered microcredit loans to the poor without requiring collateral, empowered poor women worldwide and won the 2006 Nobel Peace Prize in recognition. Through his newest innovation, social business, Yunus has declared all-out war on the nefarious blight that is poverty.

The objective of social business is to augment healthcare, housing and financial services for the poor, education and nutrition for malnourished children and safe drinking water for all, and introduce renewable energy, such as solar power, to the poor.

Yunus realized that, like cancer, poverty is a multi-layered systemic malady whose cure requires a holistic approach. Microcredit loans alone are not the panacea. To obliterate poverty, microcredit must be bolstered with multi-pronged assaults against all of its components.

Existing business models focus on making a profit and have failed to mitigate poverty. Free-market capitalism is thriving worldwide, yet half of the world’s population lives on $2 a day or less. Centuries of experience have demonstrated that government alone cannot eliminate poverty. Trickle-down economics practiced by charities administered through aid agencies and non-governmental organizations fails when the money supply dries up. International agencies, such as the World Bank, set up to assist developing nations, focus solely on economic growth as the antidote for poverty.

Mixed models that conflate a non-profit model with some profit are inherently antithetical. To those who say, “Why can’t social business investors take some profit, such as a 1 percent dividend?” Yunus’ response is: This is like someone trying to quit smoking asking, ‘Can I take just one puff occasionally?’” Yunus argues that someone willing to take a small profit can be persuaded to take zero profit.

Yunus concluded that poverty cannot be eliminated through economic growth or philanthropy; it has to be targeted exclusively. ...

7. Bloomberg: The Best Way to Spread Democracy Abroad? Welcome Foreign Students

... As it turns out, soft power may be far more effective. In particular, educating future leaders here in the U.S. could be one of the most powerful and cost-effective ways to spread democracy that we have. In 2008, about one in five of the 3.3 million foreign students enrolled worldwide were studying in the U.S., and while that’s still a tiny share of the planet’s 7 billion population, foreign-educated students have an outsize impact on their home countries. Not least, a lot of them end up in very important positions. As many as two-thirds of developing country leaders in the middle of the last decade had studied abroad. A few years ago, a State Department list of senior government officials worldwide who had studied in the U.S. included more than 40 presidents and about 30 prime ministers. The full total may be more than 200. ...

8. Business Insider: Two Simple Charts Show Why China Is Losing Business To Its Emerging Market Neighbors

9. Conversable Economist: Latin America: Modest Progress on Inequality

 

10. Associated Press: Mexico to Trump Japan as NO. 2 Car Exporter to US

CELAYA, Mexico (AP) — Mexico is on track to become the United States' No. 1 source of imported cars by the end of next year, overtaking Japan and Canada in a manufacturing boom that's turning the auto industry into a bigger source of dollars than money sent home by migrants. ...

11. "Immigration Myths Debunked" | LearnLiberty

12. Matt Ridley: William Easterly's new book explores the aid industry's autocratic instincts

... This book is not an attack on aid from rich to poor. It is an attack on the unthinking philosophy that guides so much of that aid from poor taxpayers in rich countries to rich leaders in poor countries, via outsiders with supposed expertise. Easterly is a distinguished economist and he insists there is another way, a path not taken, in development economics, based on liberation and the encouragement of spontaneous development through exchange. Most development economists do not even know they are taking the technocratic, planning route, just as most fish do not know they swim in a sea. ...

13. Mashable: 5 Organizations to Support on World Water Day

In honor of this year’s World Water Day, a number of organizations are working on forward-looking clean-water initiatives.

These initiatives are helping protect our planet's water supply in a variety of ways, from providing water-filtration systems to inventing dynamic clean-water technology. ...

14. Atlantic Cities: Air Pollution Now Linked to 1 out of Every 8 Deaths in the World

According to a new report by the World Health Organization, air pollution is the cause of 7 million deaths a year worldwide, and is the single largest environmental health risk in the world today.

The staggering number — one in eight of all deaths, globally — is more than double previous WHO estimates of those killed by air pollution. WHO says that there is a stronger link between pollution and cardiovascular diseases like stroke and heart disease, and between air pollution and cancer, than previously thought. ...

15. USA Today: Blindness rates plummet in developed countries

Blindness is not a thing of the past, but rates have plummeted in developed countries in the past two decades, thanks largely to the spread of cataract surgery, a new study shows.

Visual impairment that falls short of blindness also has become less common in places such as the USA, Canada, Western Europe, Australia and Japan, says the report published Monday by the British medical journal BMJ.

The international research review, which includes Eastern and Central

Europe, shows rates of blindness dropped 50%, and rates of moderate to severe visual impairment fell 38% overall from 1990 to 2010 in 50 countries. Declines in the USA and Canada have not been that big, but rates already were low by international standards in 1990, the analysis shows. ...

16. Huffington Post: This Invention That Uses Aquarium Pumps Could Save 178,000 Babies Each Year

A new invention uses fish tank aquarium pumps to save the lives of babies in the developing world.

In an effort to battle the high cost of medical equipment, a group of Rice University students developed an affordable machine to help premature babies breathe. Machines called bubble Continuous Positive Airway Pressure (bCPAP) devices help struggling babies born prematurely by breathing for them, but the machines cost thousands of dollars and are, therefore, too expensive for many hospitals in developing countries, according to Rice News.

The design team at Rice invented new bCPAP machines by using affordable aquarium pumps -- making them a fraction of the cost and easier to maintain than the traditional machines. The device costs about $350 to make, while the cost of traditional bCPAP machines used throughout hospitals today is about $6,000, according to CNN. ...

17. BBC: World now 80% polio free, World Health Organization says

The World Health Organization has declared its South East Asia region polio-free.

The certification is being hailed a "historic milestone" in the global fight to eradicate the deadly virus.

It comes after India officially recorded three years without a new case of polio.

The announcement means 80% of the world is now officially free of polio, although the disease is still endemic in Afghanistan, Nigeria and Pakistan. ...

18. Business Insider: Bill And Melinda Gates Think These Are The Most Important Charts In The World

 19. Applied Methodology: Thoughts About Norm Borlaug on the 100th Anniversary of His Birth

Norman Borlaug would have been 100 years old today.  He has been called "The Man Who Fed The World," and "The Father of The Green Revolution."  Norm Borlaug was the first plant pathologist to be awarded a Nobel Prize (1970) - for contributions to world peace. For all of use who are fellow plant pathologists, his work has been particularly inspiring. ...

Demography Links

1. Washington Post: Robert Samuelson: America’s demographic denial

... For proof, see Paul Taylor’s new book, “The Next America.” Taylor oversees many of the Pew Research Center’s opinion surveys. His masterful synthesis of polls shows that three familiar mega-trends lie at the core of America’s political and social stalemate. First, immigration. By 2050, immigrants and their U.S.-born children are projected to represent 37 percent of the population, slightly higher than in 1900, when the country last experienced mass immigration. ...

... Second, family breakdown. In 2011, unmarried women accounted for 41 percent of U.S. births, up from 5 percent in 1960. The trend affects all major groups. The rate is 29 percent for whites, 53 percent among Hispanics and 72 percent among African Americans. Although 60 percent of single mothers have live-in boyfriends, half of these relationships end within five years. Single parenthood’s stigma is gone. ...

... Finally, aging. Every day 10,000 baby boomers turn 65. The retiree flood is swamping the federal budget. ...

2. Economist: How divorce and marriage compare internationally

3. NPR: Walking Down The Widening Aisle Of Interracial Marriages

... More than 5.3 million marriages in the U.S. are between husbands and wives of different races or ethnicities. According to the 2010 Census, they make up between opposite-sex couples, marking a 28-percent increase since 2000. ...

4. Pew: Record share of wives are more educated than their husbands

5. NPR: Older Americans' Breakups Are Causing A 'Graying' Divorce Trend

For baby boomers, divorce has almost become, like marriage, another rite of passage. The post-World War II generation is setting : Americans over 50 are twice as likely to get divorced as people of that age were 20 years ago. ...

6. Atlantic Cities: The Developing World's Urban Population Could Triple by 2210

... A new working paper (PDF) by my colleagues Brandon Fuller and Paul Romer of NYU’s Marron Institute projects that the world’s urban population will reach 9.8 billion people by 2210, with nearly 87 percent of the 11.3 billion people on Earth living in cities. That urban population will be split unevenly, with just 1.2 billion people living in the cities of what we now think of as developed countries, and a whopping 8.6 billion making their homes in the cities of the developing world. These projections, based on UN Department of Economic and Social Affairs Data, are some of the largest that I’ve seen to date. ...

7. Conversable Economist: U.S. Teen Birthrate Plummets

8. The Diplomat: Japan's Demographic Crisis: Any Way Out?

... However positive the macroeconomic outlook for the Japanese economy and however successful Abe might be at normalizing Japan’s military stance, Japan isn’t back — its falling birthrate and shrinking population will significantly damage its international competitiveness. Japan’s population fell by a record 244,000 last year, further evidencing that this trend is accelerating. Is it all doom and gloom for Japan from here on out or is there a possible way out? ...

... The immigration solution to demographic problems presents a novel scenario for Japan, which has traditionally been ethnically homogenous despite its high level of integration with the global economy. According to the Japanese government, the number of foreign residents in Japan is slowly but surely rising. Should the government’s plan to add an additional 200,000 immigrants per year succeed, Japanese society will begin to look very different within a decade, raising possible national identity issues. Currently, less than 2 percent of Japan’s population is non-ethnically Japanese. Should immigrants comprise a greater percentage of the whole, the idea of Japan will have to change, incorporating its new residents into the fold. That change won’t be easy, but it might be necessary to avert the alternative scenario: a country that shrinks its way into ruin.

9. USA Today: 'Do it for Denmark' ad encourages Danes to have more sex

... Denmark has the lowest birth rate in 27 years, according to the "Do it for Denmark" campaign the travel company launched Wednesday. "The Danish government has not found a solution," the ad says. "But there has to be one."

That solution, according to the company, is to travel, see your partner in the light of a different city and get romantic.

The ad claims that Danes have 46% more sex on vacation and that 10% of all Danish children are conceived on getaways. It's unclear where these stats came from, so take them with a grain of salt. ...

10. Atlantic: There's Something About Cities and Suicide

As more people move to a city, you’d expect about a one-to-one increase in shirts being worn, for instance, or the number of house keys issued. If something doubles as population doubles, that’s not surprising. What is unusual, though, is when something grows faster or slower than a population. That means people seem to be doing more or less of it, on average, and that could signal an interesting societal quirk. ...

... The authors found that if they doubled the size of a Brazilian city, car-crash deaths would also double, as predicted. But the rate of murder would grow by 135 percent—that is, homicides would more than double.

The rate of suicides, meanwhile, increased slower than population growth, rising just 78 percent when population went up by 100. A similar trend was true among the U.S. counties. There seems to be something about big cities that makes murder more likely but suicide less so. ...

11. New York Times: Why Black Women Die of Cancer

SINCE the early 1970s, studies have shown that black Americans have a higher death rate from cancer than any other racial or ethnic group. This is especially true when it comes to breast cancer. A study published last week in the journal Cancer Epidemiology found that, in a survey of 41 of America’s largest cities, black women with breast cancer are on average 40 percent more likely to die than their white counterparts.

The principal reason for this disparity is the disconnect between the nation’s discovery and delivery enterprises — between what we know and what we do about sick Americans. ...

12. Christian Science Monitor: Why African-Americans are moving back to the South

... The Coxes' decision is one unfolding in African-American households across the nation. After decades of mass exodus, blacks are returning to the South in one of the most notable migrations of the new century.

It's a subtle but significant shift that experts say provides not only a snapshot of the changing economics and sociology of the nation but of an emerging new South and, in some cases, of a growing disillusionment with the urban North. ...

13. New York Times: Population Growth in New York City Is Reversing Decades-Old Trend, Estimates Show

New York City may be an expensive place to live. Jobs are not easy to find, even as the city rebounds from the recession. And the public transit system is not always reliable or comfortable.

But despite the challenges of city living, the city’s population is growing in ways not seen in decades.

For the third consecutive year, New York City last year gained more people than it lost through migration, reversing a trend that stretched to the mid-20th century. ...

14. Business Insider: How The American Population Changed In One Year

15. Carpe Diem: Today’s new homes are 1,000 square feet larger than in 1973, and the living space per person has doubled over last 40 years

16. Watch as 1000 years of European borders change

17. Business Insider: Here's What The World Would Look Like If It Were Divided Into Regions Of 100 Million People

18. Business Insider: 6 Land Transformations That Are Changing The World (GIFs)

As the global population grows past seven billion, our cities continue to expand, increasing the need for natural resources while simultaneously decreasing the supply.

Google's Earth Engine team created these time-lapse maps to illustrate a few of the trends reshaping the world right now. ...

19. Aljezzera America: How the north ended up on top of the map

Why do maps always show the north as up? For those who don’t just take it for granted, the common answer is that Europeans made the maps and they wanted to be on top. But there’s really no good reason for the north to claim top-notch cartographic real estate over any other bearing, as an examination of old maps from different places and periods can confirm. ...

... The McArthur map also makes us wonder why we are so quick to assume that Northern Europeans were the ones who invented the modern map — and decided which way to hold it — in the first place. As is so often the case, our eagerness to invoke Eurocentrism displays a certain bias of its own, since in fact, the north’s elite cartographic status owes more to Byzantine monks and Majorcan Jews than it does to any Englishman.

There is nothing inevitable or intrinsically correct — not in geographic, cartographic or even philosophical terms — about the north being represented as up, because up on a map is a human construction, not a natural one. Some of the very earliest Egyptian maps show the south as up, presumably equating the Nile’s northward flow with the force of gravity. And there was a long stretch in the medieval era when most European maps were drawn with the east on the top. If there was any doubt about this move’s religious significance, they eliminated it with their maps’ pious illustrations, whether of Adam and Eve or Christ enthroned. In the same period, Arab map makers often drew maps with the south facing up, possibly because this was how the Chinese did it. ...

Economics Links

1. Quartz: Globalization really means countries just trade with their neighbors

2. Business Insider: Europe's Share Of Global Profits Is At A 28-Year Low

3. USA Today: Europe widespread corruption 'breathtaking'

... Meanwhile, the report, which was the first published by the EU to detail people's perceptions of corruption in the union, also said that 76% of Europeans think corruption is widespread, with another 56% saying they thought the level of corruption in their country had increased over the past three years.

"I think the perception is almost as important as the reality of how much corruption there is because if people feel that the national or EU institution is corrupt, it clearly is an indication of a lack of confidence, a lack of trust and a lack of respect for those governing institutions," said Ben Tonra, a professor of European foreign, security and defence policy at University College Dublin. ...

4. National Review: Welfare, Here and Abroad

How bad have things become? The British newspaper the Telegraph recently looked at the growth in welfare spending in industrialized nations and found that such spending (including health-care and pension programs) had grown faster in the United States since 2000 than in any country in Europe except Ireland, Spain, and Portugal.

Of course, European welfare states were larger to begin with, but the Telegraph’s report is reflective of an important trend. While the Obama administration presses forward with efforts to combat “income inequality” by expanding the American welfare state, the European nations and other industrialized welfare states are moving in the other direction.

A few examples: ...

5. Economist: The parable of Argentina

There are lessons for many governments from one country’s 100 years of decline ...

... Why dwell on a single national tragedy? When people consider the worst that could happen to their country, they think of totalitarianism. Given communism’s failure, that fate no longer seems likely. If Indonesia were to boil over, its citizens would hardly turn to North Korea as a model; the governments in Madrid or Athens are not citing Lenin as the answer to their euro travails. The real danger is inadvertently becoming the Argentina of the 21st century. Slipping casually into steady decline would not be hard. Extremism is not a necessary ingredient, at least not much of it: weak institutions, nativist politicians, lazy dependence on a few assets and a persistent refusal to confront reality will do the trick. ...

 6. Matt Ridley: Few people know that global inequality is falling and so is poverty

...  None of this is meant to imply that people are wrong to resent inequality in income or wealth, or be bothered about the winner-take-all features of executive pay in recent decades. Indeed, my point is rather the reverse: to try to understand why it is that people mind so much today, when in many ways inequality is so much less acute, and absolute poverty so much less prevalent, than it was in, say, 1900 or 1950. Now that starvation and squalor are mostly avoidable, so what if somebody else has a yacht?

The short answer is that surely we always have and always will care more about relative than absolute differences. This is no surprise to evolutionary biologists. The reproductive rewards went not to the peacock with a good enough tail, but to the one with the best tail. A few thousand years ago, the bloke with one more cow than the other bloke got the girl, and it would have cut little ice to try to reassure the loser by pointing out that he had more cows than his grandfather, that they were better cows, or that he had more than enough cows to feed himself anyway. What mattered was that he had fewer cows.

7. Huffington Post: A Post-GDP World? How to Measure Real Progress in America

... GDP actually tends to rise with societal problems such as crime, pollution, household debt, commuting time, and family breakdown. As a short-term measure of economic output, it increases with the depreciation of machinery and the extraction of finite resources, while failing to reflect the long-term contributions of education and entrepreneurship.

In light of these shortcomings, we seek to answer an overarching question in a report to be released in spring 2014: How should the US government institute supplemental national accounts that better reflect the well-being of the nation? The question, like the broader push for GDP reform, stems from a central premise that new comprehensive indicators would lead to better-informed policymaking, and, in turn, genuine advances in the nation's prosperity. We do not presume to replace GDP, which still serves an important although limited purpose, but to supplement it with modern measures of progress. ...

8. Business Insider: Half Of US GDP Comes From The Orange Spots On This Map

9. Legatus Magazine: Business and the option for the poor

... What does living out the option for the poor mean in practice? We must engage in works of charity — those activities that often address specific dimensions of poverty in ways that no state program ever could. And this means giving of our time, energy, and human and monetary capital in ways that bring Christ’s light into some of the darkest places on earth.

Yet this does not mean that Catholics are required to give something to everything, or even that Catholics must give away everything they own. As Fr. James Schall, SJ, writes, “If we take all the existing world wealth and simply distribute it, what would happen? It would quickly disappear; all would be poor.” Put another way, living out the option for the poor may well involve those people with a talent for creating wealth doing precisely that.

The option for the poor, however, does not rule out any form of government assistance to those in need. Yet lifting people out of poverty — and not just material poverty but also moral and spiritual poverty — does not necessarily mean that the most effective action is to implement yet another welfare program. There is no reason to assume that the preferential option for the poor is somehow a preferential option for big government. Often, being an entrepreneur and starting a business which brings jobs, wages, and opportunities to places where they did not hitherto exist is a greater exercise of love for the poor (and usually far more economically effective) than another government welfare initiative. ...

10. New York Times: Can Marriage Cure Poverty?

... “It isn’t that having a lasting and successful marriage is a cure for living in poverty,” says Kristi Williams of Ohio State University. “Living in poverty is a barrier to having a lasting and successful marriage.” ...

... In an economy that offers so little promise to those at the bottom, family planning in the name of upward mobility doesn’t make much sense. “Engaging in family formation by accident rather than by design, you get a story of low-opportunity costs,” says Kathryn Edin, the poverty researcher at Johns Hopkins. “We’ve created the situation where pregnancy is not the worst thing that can happen to you. It can be seen as a path to redemption in an otherwise violent, unpredictable, hopeless world.”

Similar forces might also spur some young couples not to get married, even if they want to. Many poor women opt not to marry the poor men in their lives, for instance, to avoid bringing more economic chaos into their homes. And the poor women who do marry tend to have unstable marriages — often to ill effect. One study, for instance, found that single mothers who married and later divorced were worse off economically than those who did not marry at all. “These women revere marriage, they want to get married,” Williams says. “They aren’t making an irrational choice not to marry.” ...

11. Atlantic Cities: How Anti-Poverty Programs Marginalize Fathers

... U.S. government programs designed to help such families, however, haven't evolved with the population. Based on decades-old stereotypes that single mothers are raising children alone and single dads are "deadbeats," the majority of United States anti-poverty programs almost exclusively serve women and children, says Jacquelyn Boggess, co-director of the Center for Family Policy and Practice,* a Wisconsin-based think tank that focuses on supporting low-income parents. The welfare system, as a result, can become a muddled mess of rearranging rather than relieving poverty. Single, non-custodial fathers bear the brunt. But dads don’t suffer alone. Because the poor pull together to support one another, everyone absorbs the pinch. ...

12. Investors: Low-Wage Hours At New Low As ObamaCare Fines Loom

... It's impossible to know how much of the drop relates to ObamaCare, but there's good reason to suspect a strong connection. The workweek has been getting shorter in many of the same industries where anecdotes have piled up about employers cutting hours to evade the law's penalties. ...

13. Business Insider: Very Few American Workers Actually Make The Minimum Wage

... "We do not know the share of individuals (or wages) who are just above the minimum wage and whose wages might also rise with an increase, but we do know that it is likely still a small proportion," they write.

"The current minimum wage is well below the economy-wide average. Even for low-paying sectors like retail trade and leisure and hospitality — where the average hourly wage in 2013 was $13.50 and $16.60, respectively — the current minimum is a fair bit lower. These data also suggest a relatively small share of total wage income that would be directly impacted by any increase in the federal (or various state) minimums."

So while the minimum wage debate may be a hot-button political issue, it is somewhat irrelevant from an economic perspective.

14. The Atlantic: Liberals Need to Think Beyond the Minimum Wage

A new report from the Congressional Budget Office says a hike would help the working class, but less than many might hope.  ...

15. New York Times: Evaporating Unemployment

Before the recession, in December 2007, about 63 percent of American adults had jobs. Six years later, in December 2013, less than 59 percent of adults had jobs.

And a new analysis says that the recession has very little to do with it.

The study, by two economists at the Federal Reserve Bank of New York, asserts that workforce participation is in long-term decline. If the recession had never happened, or the economy had since returned to complete health, the authors estimate 59.3 percent of adults would have jobs, instead of 58.6 percent. ...

 

16. Business Insider: Why 12.7 Million Americans Dropped Out Of The Workforce

17. Conversable Economist: Halfway to Full Economic Recovery

... In short, although the prediction is that the U.S. economy is roughly halfway from the end of the recession to a full economic recovery, this is a case where the glass is actually half-full, rather than half-empty, because the heartier period of economic growth is coming. Here are a few of the details. ...

 18. Carpe Diem: When it comes to spending on food as share of total consumer expenditures, Americans have the most affordable food on the planet, and it’s gotten better over time.

19. Forbes: Charitable Giving Grew 4.9% In 2013 As Online Donations Picked Up

... Charitable giving revenue grew 4.9% in 2013, the largest gain since the 2008 recession. U.S. based organizations with annual fundraising over $10 million saw 5% growth. Those that receive $1 million to $10 million in gifts gained 3.8% and the smallest nonprofits – less than $1 million raised annually – grew 3.6%. ...

... The tables, however, turn with online giving revenue which, at 13.5% growth overall, had its second consecutive year of double-digit gains. ...

 20. NPR: Economist Says Best Climate Fix A Tough Sell, But Worth It

... "When we did our first calculations, they actually spun out these 'shadow prices,' " he says. "And I remember looking at them and trying to think ... what in the world does that mean?"

The shadow prices, he realized, actually represented the cost of putting carbon dioxide into the atmosphere. And with that, climate change suddenly became a problem that could be attacked with the tools of economics.

"Actually from an economic point of view, it's a pretty simple problem," he says.

If people would simply pay the cost of using the atmosphere as a dump for carbon dioxide, that would create a powerful incentive to dump less and invest in cleaner ways to generate energy. But how do you do that?

"We need to put a price on carbon, so that when anyone, anywhere, anytime does something that puts carbon dioxide in the atmosphere, there's a price tag on that," he says.

His colleagues say that inspiration — now taken for granted — makes Nordhaus a prime candidate for a Nobel Prize. A lot of his work has been figuring out how big a price we should pay, and what form it should take. ...

21. New York Times: Your Ancestors, Your Fate

Inequality of income and wealth has risen in America since the 1970s, yet a large-scale research study recently found that social mobility hadn’t changed much during that time. How can that be?

The study, by researchers at Harvard and Berkeley, tells only part of the story. It may be true that mobility hasn’t slowed — but, more to the point, mobility has always been slow.

When you look across centuries, and at social status broadly measured — not just income and wealth, but also occupation, education and longevity — social mobility is much slower than many of us believe, or want to believe. This is true in Sweden, a social welfare state; England, where industrial capitalism was born; the United States, one of the most heterogeneous societies in history; and India, a fairly new democracy hobbled by the legacy of caste. Capitalism has not led to pervasive, rapid mobility. Nor have democratization, mass public education, the decline of nepotism, redistributive taxation, the emancipation of women, or even, as in China, socialist revolution.

To a striking extent, your overall life chances can be predicted not just from your parents’ status but also from your great-great-great-grandparents’. The recent study suggests that 10 percent of variation in income can be predicted based on your parents’ earnings. In contrast, my colleagues and I estimate that 50 to 60 percent of variation in overall status is determined by your lineage. The fortunes of high-status families inexorably fall, and those of low-status families rise, toward the average — what social scientists call “regression to the mean” — but the process can take 10 to 15 generations (300 to 450 years), much longer than most social scientists have estimated in the past. ...

Nordic welfare state being cut down to size

Yahoo! News: Nordic welfare state being cut down to size

Copenhagen (AFP) - The Nordic model, known for high taxes and its cradle-to-grave welfare system, is getting a radical makeover as nations find themselves cash-strapped.

During the post-war period, the Scandinavian economies became famous for a "softer" version of capitalism that placed more importance on social equality than other western nations, such as Britain and the United States, did.

But globalisation, economic necessity and an ideological shift to the right has led to a scaling back of the public sector.

In Sweden, visitors are sometimes surprised to learn about year-long waiting times for cancer patients, rioting in low-income suburbs and train derailments amid lagging infrastructure investment.

"The generosity of the system has declined," said Jonas Hinnfors, a professor of political science at the University of Gothenburg.

"Much of this already started changing in the 1980s and especially in the 1990s," he added. ...

The Dutch Rethink the Welfare State

New Geography: The Dutch Rethink the Welfare State

When the Netherlands’ newly coronated king made his first annual appearance before parliament, he turned some heads when he addressed the deficiencies of the Dutch welfare state.   “Due to social developments such as globalisation and an ageing population, our labour market and public services are no longer suited to the demands of the times”, the king said in a speech written by Liberal prime minister Mark Ruttes cabinet. “The classical welfare state is slowly but surely evolving into a ‘participation society’”, Willem-Alexander continued. By this he meant that the public systems should start encouraging self-reliance over government dependency.

It is worthwhile to reflect on the challenges faced by the Dutch welfare system. In a knowledge based economy, influenced by strong global competition and dynamic economic development, public policy must encourage thrift, education and build-up of social capital. Discouragingly high taxes and encouragingly high benefits are no way of doing so. Such policies are therefore likely to become even greater obstacles to social and economic development as they are today....

... Privatisation of social security and a shift from welfare to workfare have been coupled with the introduction of elaborate markets in the provision of health care and social protection. Not only other European welfare states, but in some regards even the US, can learn much from the Dutch policies of combining a universally compulsory Social health insurance scheme with market mechanisms. Netherlands has, similarly to Denmark, moved towards a “flexicurity” system where labour market regulations have been significantly liberalized within the frame of the welfare system. Taxes in the country peaked at 46 percent of GDP in the late 1980s, but have since fallen to ca. 38-39 percent. The Netherlands has moved from being a country with a large to a medium-sized welfare system, something that still cannot yet be said about culturally and politically similar Sweden and Denmark. The Dutch seem to have been earlier than their Nordic cousins in realizing that overly generous welfare systems and high taxes led to not only sluggish economic growth, but also exclusion of large groups from the labour market. ...

... There is a good chance that the Netherlands will continue on a long-term route towards smaller government and greater prosperity. This does not mean abandoning the idea of public welfare for its citizens but focusing more on enabling people to take care of themselves. The positive experience of past changes, coupled with the realization that change is needed, can catalyze change. If change indeed happens, it will likely not occur over-night. Continuous small steps towards change are more likely. The direction of European nations such as the Netherlands might not excite a US audience, but perhaps there is a lesson to be learned about the value of pragmatic and steady reforms?  ...

Economics Links

1. Timothy Taylor (The Conservable Economist) has several interesting graphs on The Global Wealth Distribution

2. Britain Just Privatized Its Mail Service at a $1 Billion Discount

The largest initial public offering in Europe in more than two years could have been even larger. The privatization of the Royal Mail, in which around two-thirds of the company’s shares began trading Friday morning, raised £1.7 billion ($2.7 billion) for the government.

Frenzied trading pushed the Royal Mail’s shares up by nearly 40% within minutes of the opening bell. This followed enormous demand for the initial allocation of shares, with the retail portion of the offering oversubscribed by seven times and institutional investors bidding for 20 times as many shares as they were allowed. ...

3. The CPI for clothing has fallen by 3.3% over the last 20 years, while overall prices increased by 63.5%

4. Staying Put: Why Income Inequality Is Up And Geographic Mobility Is Down

MARTIN: In the early 1950s, you say in your piece, about 3.5 percent of all American households moved from one state to another in any given year. You said that this held up through the '70s and then started to fall around 1980. You're saying that the latest available data shows that interstate migration is stuck at about 1.7 percent. This is about the lowest level in...

NOAH: Yeah.

MARTIN: ...about, what, three decades?

NOAH: Yeah. Less than half. ...

... MARTIN: So what does? NOAH: Well, I think it's two things, and one is the familiar story of income inequality. And the other is - has to do with housing prices. Incomes have been stagnant for, really, going back to the late 1970s. They've been stagnant relative to the income growth that we saw before 1979, and they have been literally stagnant for about a dozen years. Median income is now a little below what it was in the late 1990s. And you combine that with rising housing prices, then it becomes difficult for people to move to jobs because they can't afford to live where the new jobs are. ...

... NOAH: Yes, that sounds to me like a very common experience. And yes, obviously people are moving, you know, but in the aggregate, people are moving a lot less than they used to. And, you know, when you look back through American history, I mean, you sort of think - American history really is the story of a succession of movements. There was the westward movement. There was the movement, in the early part of the 20th century, from farms to the cities. There was the great black migration of the early and middle 20th centuries. There was the move to the Sunbelt in the 1970s. That was really the last time people were, in large numbers, moving to jobs. People are still moving to the Sunbelt today, but now it's not moving to jobs. They're moving there for the warm weather or for the cheaper housing. ...

I'm not endorsing his solutions, but the analysis is interesting.

5. Why Did Jews Become Moneylenders? Because They Could

6. One reason C.E.O. pay keeps rising: Open Season

... the drive for transparency has actually helped fuel the spiralling salaries. For one thing, it gives executives a good idea of how much they can get away with asking for. A more crucial reason, though, has to do with the way boards of directors set salaries. ...

... This isn’t just an American problem. Elson notes that, when Canada toughened its disclosure requirements, executive salaries there rose sharply, and German studies have found something similar. ...

... Transparent pricing has perverse effects in other fields. In a host of recent cases, public disclosure of the prices that hospitals charge for various procedures has ended up driving prices up rather than down. And the psychological causes in both situations seem similar. We tend to be uneasy about bargaining in situations where the stakes are very high: do you want the guy doing your neurosurgery, or running your company, to be offering discounts? Better, in the event that something goes wrong, to be able to tell yourself that you spent all you could. And overspending is always easier when you’re spending someone else’s money. Corporate board members are disbursing shareholder funds; most patients have insurance to foot the bill. ...

7. Americans Significantly Overestimate The Percent Of People On Food Stamps

... Around 14.3% of the nation is on SNAP — roughly 1 in 7 Americans — but still people thought participation was much higher, with the average being 22.5%. ...

8. Europe Can’t Find Balance Between Green Goals and Growth

... Europe hoped to act as a global leader by setting its ambitious 2020 climate goals, but its position as a first mover in green policy has only managed to put European industry at a competitive disadvantage relative to the rest of the world. Green energy is more expensive than brown energy and must be propped up by government subsidies to gain significant market share. The costs of these subsidies get passed on to consumers, meaning households and businesses must pay out the nose for electricity. If you’re a decent-sized widget manufacturer in Germany, options in the developing world and shale-rich America start to look more appealing. ...

9. Yes, Economics Is a Science by Raj Chetty

... But the headline-grabbing differences between the findings of these Nobel laureates are less significant than the profound agreement in their scientific approach to economic questions, which is characterized by formulating and testing precise hypotheses. I’m troubled by the sense among skeptics that disagreements about the answers to certain questions suggest that economics is a confused discipline, a fake science whose findings cannot be a useful basis for making policy decisions.

That view is unfair and uninformed. It makes demands on economics that are not made of other empirical disciplines, like medicine, and it ignores an emerging body of work, building on the scientific approach of last week’s winners, that is transforming economics into a field firmly grounded in fact.

It is true that the answers to many “big picture” macroeconomic questions — like the causes of recessions or the determinants of growth — remain elusive. But in this respect, the challenges faced by economists are no different from those encountered in medicine and public health. Health researchers have worked for more than a century to understand the “big picture” questions of how diet and lifestyle affect health and aging, yet they still do not have a full scientific understanding of these connections. Some studies tell us to consume more coffee, wine and chocolate; others recommend the opposite. But few people would argue that medicine should not be approached as a science or that doctors should not make decisions based on the best available evidence. ...

Norway Breaks with Social Democracy

New Geography: Norway Breaks with Social Democracy

Largely uncommented on in the US press, Europe’s long-standing social democratic tilt has changed. During recent years, almost all Western European nations have seen a dramatic fall in support for the traditional Social Democratic parties, which for so long have dominated the political landscapes. In response, the centre-left parties have morphed, moving towards greater emphasis on the benefits of free markets and individual responsibility. In several countries the former communist parties now claim that they fill the role of traditional Social Democrats. A new breed of modernized centre-left parties is likely to replace several centre‑right governments during coming years. The third consecutive loss for the German Social Democrats illustrates the continuing difficulties for Europe’s labor movements to gather the strong support that they previously almost took for granted.

Until recently oil-rich Norway has remained unique, as the only nation where Social Democrats have resisted change to highly generous welfare benefits. In 1999 the former Swedish social democratic minister of business, Björn Rosengren, famously called Norway “the last Soviet state” due to the lack of willingness to adopt market policies. But now even Norway is shifting with the recent election of a centre‑right government formed by Erna Solberg. Making the transition from a full-scale welfare state to a system which consistently rewards work more than public handouts will be a difficult one for Norway. Hopefully, the newly elected government will draw inspiration from the neighbor to the east.

Politicians in Norway for long admired the Swedish social system, seeing their larger neighbor as a pioneer of Social Democratic policies.

Recently however, particularly the left has begun to emphasize the uniqueness of the Norwegian Welfare Model rather than the Scandinavian Welfare Model. Swedish policies have even been used in the recent election as deterrence by the left. It is easy to see why. The current centre-right government in Sweden, elected in 2006 and re‑elected in 2010, has focused on a broad reform agenda. The workfare policies introduced include: somewhat less generous benefits, tax reductions aimed particularly at those with lower incomes, liberalizations of the temporary employment contracts and a gate-keeping mechanism for receiving sick and disability benefits. ...

I always think of articles like these every time I hear American conservatives complain we are becoming more like Sweden or liberals highlighting how we need to adopt socialism based on how happy the Scandinavians are. Both sides may want to look a little closer.

 

Saturday Links

 1. Population Reference Bureau has a great resource that maps their 2013 World Population Data Sheet on an interactive map. Here is one example:

2. Modern family redefined: Say 'goodbye' to the typical American family

A New York Times story looking at the skyrocketing rate of birth outside of marriage among women under 30 (now over 50 percent of such births) pointed up one of the key differences between marriages and cohabitating couples:

Almost all of the rise in nonmarital births has occurred among couples living together. While in some countries such relationships endure at rates that resemble marriages, in the United States they are more than twice as likely to dissolve than marriages. In a summary of research, Pamela Smock and Fiona Rose Greenland, both of the University of Michigan, reported that two-thirds of couples living together split up by the time their child turned 10.

The research, in aggregate, says that things are changing for the American family, and quickly. There may be ways for the government to address the trend: increased financial benefits for getting and staying married, for example, or a macro-effort to actively battle rising economic inequality, but systematic change will be a long hard fight. The research seems to suggest that such a fight is worth the effort.

3. The Aging of the Baby Boom and the Growing Care Gap: A Look at Future Declines in the Availability
of Family Caregivers

4. Young People Are Still Dropping Out Of The Labor Force

Kids are likely staying in school for longer (or avoiding work altogether) thanks to a tough labor market. On the other hand, the 65-and-over crowd has seen the sharpest uptick in participation. The financial crisis bled retirement savings, forcing older Americans to stay on the job for longer.

5. How Big Data Is Transforming The Mobile Industry

6. Millennials Now Bringing Their Parents Along On Job Interviews

7. Why Bigger Is No Longer Better

Every manager and entrepreneur wants to grow their business.  Get bigger and more powerful, the thinking goes, and you'll have it made. The added heft will give you the upper hand in negotiations with suppliers and the doors of customers will swing wide open.

That used to be true to a certain extent, but not so much anymore. Digital technology has markedly evened out the playing field. Startups become billion dollar companies overnight while venerable brands like Kodak and Blockbuster hit the skids.

This turn of events presents considerable challenges for managers.  While there are still some advantages to scale, the disadvantages often outweigh them.  You have lots of customers, a large workforce and stodgy institutional investors to keep happy, all of which contribute to strategic rigidity.  To compete in the new economy, we need a new playbook. ...

8. Can For-Profit Corporations Have Religious Purposes?

...Okay, some may respond (e.g., here), churches and other organizations have free exercise rights, but for-profit corporations do not.  But why would this be?  An individual sole proprietor — of, say, a kosher deli, to use Will's example — would clearly be able to press a religious liberty claim, whether or not she hopes the deli will make her rich (and whether or not she commits to donate her earnings to a religious charity).   Does this individual lose such rights if she incorporated?   Does that somehow make her religious motivations any less sincere? Any less judicially cognizable?  I can't see how.   What, then, if the deli owner formed a partnership with her equally devout brother?  Would that matter?  And, again, if an informal partnership would be okay, why would the adoption of a corporate form and limited liability matter?

The consequence of the "no religious liberty for corporations" position is that individuals who would like to go into business are penalized if they seek to go into business without any potential recourse, under RFRA or otherwise.  The choice presented by the state is go into business or stay true to your religious beliefs.  Although I suggested otherwise before, it seems to me this approach imposes a substantial burden on the exercise of religion.  Whether this burden can be justified in a given case is a separate question, but the burden is there. ...

9. Five Insights About Private Property from Aquinas

1. God designed creation to support life, especially human life. ...
2. Private property engenders good stewardship. ...
3. Private ownership supports order in society. ...
4. Private property helps maintain peace in communities. ...
5. Private property benefits the community. ...

10. Germans Revolt Against Germany's Green Energy Revolution

11. Brussels fears European 'industrial massacre' sparked by energy costs

Europe's industry is being ravaged by exorbitant energy costs and an over-valued euro, blighting efforts to reverse years of global manufacturing decline.

12. What If Roads Lasted Twice As Long?

If there were a better way to take care of roads in the Lone Star State, it would be a very valuable idea.

Enter Sahadat Hossain, an associate professor of civil engineering at the University of Texas at Arlington and the man behind a new state program to shore up crumbling roads using an underground support system of recycled plastic pins.

"Just think about it," Hossain says. "You need one million dollars to repair something. Or you can use a sustainable recycling material and do it for $200- or $300,000. You don't need to be an engineer to see that."

The scheme's low price is matched by its high effectiveness. In a two-year feasibility study that concluded this August, sections of Texas Route 287 with 10-foot-long pins drilled into the roadway slope moved only one to two inches. The control sections, left unsupported, moved 15 to 16 inches. ...

... The input cost of the pins, which have previously been tested in Missouri, is less than 50 percent that of traditional highway support measures like retaining walls. And because they are made from recycled plastic—each pin contains about 500 soda bottles—the pin concept turns plastic's non-decomposition from an environmental headache to an engineering solution. ...

13. This Map Shows Which Countries Are Going To Make The World Cup, According To Nate Silver's Prediction Model

 

Learn About Tableau

14. Why So Many Articles Have Terrible Headlines Online

15. The 11 Most Common Grammatical Mistakes And How To Avoid Them

16. What would happen if your church was reviewed on TripAdvisor?

Churches spend a lot of time on the big things, like a glorious anthem and prophetic preaching. But a UMC pastor says small details matter, too, like lights that burn brightly, signs that make sense and greeters who greet. ...

Saturday Links

1. Conventional wisdom says wearing the red shirt in Star Trek will get you killed. Not so fast. Statistical analysis in Significance Magazine disagrees. (Keep your redshirt on: a Bayesian exploration)

"... In spite of wearing a redshirt, there is only an 8.6% chance of a member of the operations or engineering departments becoming a casualty. These personnel should ensure that their life insurance plans are based on their departments and not their uniform color.

Although Enterprise crew members in redshirts suffer many more casualties than crew members in other uniforms, they suffer fewer casualties than crew members in gold uniforms when the entire population size is considered. Only 10% of the entire redshirt population was lost during the three year run of Star Trek. This is less than the 13.4% of goldshirts, but more than the 5.1% of blueshirts. What is truly hazardous is not wearing a redshirt, but being a member of the security department. The red-shirted members of security were only 20.9% of the entire crew, but there is a 61.9% chance that the next casualty is in a redshirt and 64.5% chance this red-shirted victim is a member of the security department. The remaining redshirts, operations and engineering make up the largest single population, but only have an 8.6% chance of being a casualty.

Red uniform shirts are safe, as long as the wearer is not in the security department."

 2. Interesting piece on automation in the Economist: Robocolleague

Robots are getting more powerful. That need not be bad news for workers. ...

... Historically, technological advances have been relatively benign for workers. Labour-market trends through the 19th and 20th centuries show surprising continuity, according to Lawrence Katz of Harvard University and Robert Margo of Boston University. In recent decades, for example, computerisation and automation have displaced “middle-skilled” workers at the same time as employment among high- and low-skilled workers has increased. This “hollowing out” is not new, Messrs Katz and Margo note. Early industrialisation had similar effects. Middle-skilled artisans, like trained weavers, were put out of work by industrial textile production, but the fortunes of less-skilled factory workers and white-collar factory managers steadily improved. Mechanisation’s insatiable appetite for routine work of all types has yet to create mass unemployment. Quite the opposite.

The worry is that technology now has its sights set on non-routine tasks as well as mundane ones. Yet Mr Autor notes that just because a skilled job can be automated does not mean it will be. The number of workers used to build Nissan vehicles varies a lot between Japan, where labour is expensive, and India, where it is abundant and cheap. The relative cost of different types of workers matters for firms as they choose how to deploy new technologies. ...

3. Speaking of technology and its impact on industries Technology Upends Another Industry: Homebuilding

4. Businessweek has a piece about Indie Capitalism

Indie Capitalism has three foundational principles:

• Creativity generates economic value. Creativity is the source of profit. Yes, efficiency can squeeze more out of what exists, but creativity gives us originality, which translates into a market advantage and big margins.

• Creativity drives capitalism. These past few years we have been victimized by the disastrous results of “creativity” applied to the financial sector (mortgage-backed securities, for starters). What we lost sight of is that the scaling of creativity to actually make things of value sold in the marketplace is the true heart of our economic system. It is the true generator of net new jobs, wealth, and tax revenue.

• Creative destruction is crucial to economic growth. Crony capitalism, which relies on monopoly and political power, is antithetical to entrepreneurial capitalism. A faster cycle of birth, growth, and death of companies boosts creativity, economic value, and growth.

5. Business Insider reports on Why Manufacturing Jobs Are Returning To America For The First Time In Decades

 The bottom line: For the first time in decades, several key economic drivers have created a competitive advantage for the U.S. that will encourage corporate strategic decisions on capital allocation and acquisitions for generations to come.

Here's why:

1. Cheap and abundant natural gas. ...

2. Innovation. Despite talk of a brain drain, the U.S. remains the global innovation leader, maintaining a position enjoyed for 50 years. ...

3. Rule of law. Without the means to protect intellectual property, it cannot be exploited for competitive advantage. ...

4. Human capital. The wage gap between the U.S. and China has been shrinking. ...

5. De-complexity. Western multinationals continue to struggle with management of operations in developing countries. ...

6. Public policy and abundance. The federal government appears to be seizing the opportunity to promote job growth at home.

7. Credit, currency and the coming wave of mergers and acquisitions.

6. 3-D Printed Car Is as Strong as Steel, Half the Weight, and Nearing Production.

"Picture an assembly line not that isn’t made up of robotic arms spewing sparks to weld heavy steel, but a warehouse of plastic-spraying printers producing light, cheap and highly efficient automobiles.

If Jim Kor’s dream is realized, that’s exactly how the next generation of urban runabouts will be produced. His creation is called the Urbee 2 and it could revolutionize parts manufacturing while creating a cottage industry of small-batch automakers intent on challenging the status quo. ..."

7. And more about 3-D Printing. 3D Printing On The Frontlines — Army Deploying $2.8M Mobile Fabrication Labs.

Throughout history, war and innovation have gone hand in hand, whether it’s breakthroughs out of heavily funded R&D programs or makeshift contraptions thrown together with spare parts. Soldiers are trained to use the technology on hand to get the job done, one way or the other.

But how would military operations change if soldiers on the battlefield could have the best of both worlds: access to expert engineers able to fabricate custom-designed fixes right on-the-spot and in very little time? ...

8. And how about 4-D printing? 4D Printing Is The Future Of 3D Printing And It’s Already Here

"It may sound strange and far out, but it’s actually quite simple. 4D printing is being billed as a process where synthetic objects can change and adapt themselves to the environment. In a recent TED interview, Tibbits compared the process of 4D printing to the process of natural adaptation:

Natural systems obviously have this built in — the ability to have a desire. Plants, for example, generally have the desire to grow towards light and they generate energy from the translation of photosynthesis, carbon dioxide to oxygen, and so on. This is extremely difficult to build into synthetic systems — the ability to “want” or need something and know how to change itself in order to acquire it, or the ability to generate its own energy source. If we combine the processes that natural systems offer intrinsically (genetic instructions, energy production, error correction) with those artificial or synthetic (programmability for design and scaffold, structure, mechanisms) we can potentially have extremely large-scale quasi-biological and quasi-synthetic architectural organisms."

7. The New York Times reports that Music Industry Sales Rise, and Digital Revenue Gets the Credit

The music industry, the first media business to be consumed by the digital revolution, said on Tuesday that its global sales rose last year for the first time since 1999, raising hopes that a long-sought recovery might have begun.

The increase, of 0.3 percent, was tiny, and the total revenue, $16.5 billion, was a far cry from the $38 billion that the industry took in at its peak more than a decade ago. Still, even if it is not time for the record companies to party like it’s 1999, the figures, reported Tuesday by the International Federation of the Phonographic Industry, provide significant encouragement.

The Economist also posted this chart this week:

8. Teleworking: The myth of working from home from the BBC. "Yahoo has banned its staff from "remote" working. After years of many predicting working from home as the future for everybody, why is it not the norm?"

9.  Europe's Youth Unemployment Nightmare Started Long Before The Euro Crisis 

"Reasons for high unemployment among the young include ineffective education systems (the share of early school dropouts is 20% in Italy and 30% in Spain) and dual labour markets with highly protected jobs for older employees. The good performance of Germany is not least a result of the German apprenticeship system, which facilitates labour market access for school leavers by lowering the company’s costs for employing them. The OECD’s latest “Going for Growth” report recommends reforms to strengthen the vocational training systems as one of the most effective ways to fight structural youth unemployment. This would also be a reasonable starting point for the EU’s youth employment programme."

10. Benjamin Wright - Book Review: God at Work: Your Christian Vocation in All of Life by Gene Edward Vieth, Jr.

11. Rough Type: Students to e-textbooks: no thanks

"What’s most revealing about this study is that, like earlier research, it suggests that students’ preference for printed textbooks is reflects the real pedagogical advantages they experience in using the format: fewer distractions, deeper engagement, better comprehension and retention, and greater flexibility to accommodating idiosyncratic study habits. Electronic textbooks will certainly get better, and will certainly have advantages of their own, but they won’t replicate the particular advantages inherent to the tangible form of the printed book."

12. How Many Ph.D.'s Actually Get to Become College Professors?

13. Top 10 Causes of Death in the U.S.

14. ABC reports that Young Hispanics Leaving Catholic Church for Protestant Faith

The Catholic Church has struggled to bring in young members in the United States. Less than half of U.S. Hispanics between 18 and 29 identify as Catholic, compared with the 60+ percent of Hispanics older than 50.

15. Robert Jones says Don't write off mainline Protestants

The narrative of decline in the mainline church underestimates the continuing influence of its members, says a religion researcher.

16. Some interesting observations by NYU psychologist Jonathan Haidt. He says we tend to process our social world through three lenses: Social distance, hierarchy, and disgust. Conservatives tend to have a lower threshold of revulsion, while liberals, and particularly libertarians, have a higher threshold.

17. Bruce Fieler has an interesting piece in the Atlantic. Want to Give Your Family Value and Purpose? Write a Mission Statement

The Nordic countries: The next supermodel

The Economist: The Nordic countries: The next supermodel

Politicians from both right and left could learn from the Nordic countries.

...The idea of lean Nordic government will come as a shock both to French leftists who dream of socialist Scandinavia and to American conservatives who fear that Barack Obama is bent on “Swedenisation”. They are out of date. In the 1970s and 1980s the Nordics were indeed tax-and-spend countries. Sweden’s public spending reached 67% of GDP in 1993. Astrid Lindgren, the inventor of Pippi Longstocking, was forced to pay more than 100% of her income in taxes. But tax-and-spend did not work: Sweden fell from being the fourth-richest country in the world in 1970 to the 14th in 1993.

Since then the Nordics have changed course—mainly to the right. Government’s share of GDP in Sweden, which has dropped by around 18 percentage points, is lower than France’s and could soon be lower than Britain’s. Taxes have been cut: the corporate rate is 22%, far lower than America’s. The Nordics have focused on balancing the books. While Mr Obama and Congress dither over entitlement reform, Sweden has reformed its pension system (see Free exchange). Its budget deficit is 0.3% of GDP; America’s is 7%.

On public services the Nordics have been similarly pragmatic. So long as public services work, they do not mind who provides them. Denmark and Norway allow private firms to run public hospitals. Sweden has a universal system of school vouchers, with private for-profit schools competing with public schools. Denmark also has vouchers—but ones that you can top up. When it comes to choice, Milton Friedman would be more at home in Stockholm than in Washington, DC.

All Western politicians claim to promote transparency and technology. The Nordics can do so with more justification than most. The performance of all schools and hospitals is measured. Governments are forced to operate in the harsh light of day: Sweden gives everyone access to official records. Politicians are vilified if they get off their bicycles and into official limousines. The home of Skype and Spotify is also a leader in e-government: you can pay your taxes with an SMS message.

This may sound like enhanced Thatcherism, but the Nordics also offer something for the progressive left by proving that it is possible to combine competitive capitalism with a large state: they employ 30% of their workforce in the public sector, compared with an OECD average of 15%. They are stout free-traders who resist the temptation to intervene even to protect iconic companies: Sweden let Saab go bankrupt and Volvo is now owned by China’s Geely. But they also focus on the long term—most obviously through Norway’s $600 billion sovereign-wealth fund—and they look for ways to temper capitalism’s harsher effects. Denmark, for instance, has a system of “flexicurity” that makes it easier for employers to sack people but provides support and training for the unemployed, and Finland organises venture-capital networks. ...

Nordic Countries Reinventing Their Model of Capitalism

The Economist: Nordic Countries Reinventing Their Model of Capitalism

... Sweden has reduced public spending as a proportion of GDP from 67% in 1993 to 49% today. It could soon have a smaller state than Britain. It has also cut the top marginal tax rate by 27 percentage points since 1983, to 57%, and scrapped a mare’s nest of taxes on property, gifts, wealth and inheritance. This year it is cutting the corporate-tax rate from 26.3% to 22%.

Sweden has also donned the golden straitjacket of fiscal orthodoxy with its pledge to produce a fiscal surplus over the economic cycle. Its public debt fell from 70% of GDP in 1993 to 37% in 2010, and its budget moved from an 11% deficit to a surplus of 0.3% over the same period. This allowed a country with a small, open economy to recover quickly from the financial storm of 2007-08. Sweden has also put its pension system on a sound foundation, replacing a defined-benefit system with a defined-contribution one and making automatic adjustments for longer life expectancy.

Most daringly, it has introduced a universal system of school vouchers and invited private schools to compete with public ones. Private companies also vie with each other to provide state-funded health services and care for the elderly. Anders Aslund, a Swedish economist who lives in America, hopes that Sweden is pioneering “a new conservative model”; Brian Palmer, an American anthropologist who lives in Sweden, worries that it is turning into “the United States of Swedeamerica”.

There can be no doubt that Sweden’s quiet revolution has brought about a dramatic change in its economic performance. The two decades from 1970 were a period of decline: the country was demoted from being the world’s fourth-richest in 1970 to 14th-richest in 1993, when the average Swede was poorer than the average Briton or Italian. The two decades from 1990 were a period of recovery: GDP growth between 1993 and 2010 averaged 2.7% a year and productivity 2.1% a year, compared with 1.9% and 1% respectively for the main 15 EU countries. ...

... The other Nordic countries have been moving in the same direction, if more slowly. Denmark has one of the most liberal labour markets in Europe. It also allows parents to send children to private schools at public expense and make up the difference in cost with their own money. Finland is harnessing the skills of venture capitalists and angel investors to promote innovation and entrepreneurship. Oil-rich Norway is a partial exception to this pattern, but even there the government is preparing for its post-oil future.

This is not to say that the Nordics are shredding their old model. They continue to pride themselves on the generosity of their welfare states. About 30% of their labour force works in the public sector, twice the average in the Organisation for Economic Development and Co-operation, a rich-country think-tank. They continue to believe in combining open economies with public investment in human capital. But the new Nordic model begins with the individual rather than the state. It begins with fiscal responsibility rather than pump-priming: all four Nordic countries have AAA ratings and debt loads significantly below the euro-zone average. It begins with choice and competition rather than paternalism and planning. The economic-freedom index of the Fraser Institute, a Canadian think-tank, shows Sweden and Finland catching up with the United States (see chart). The leftward lurch has been reversed: rather than extending the state into the market, the Nordics are extending the market into the state. ...

Saturday Links

(Like the Kruse Kronicle on Facebook if you want links to daily posts to appear in your Facebook feed.)

1. Several articles I saw this week reflect on data presented in The Pew Forum's The Global Religious Landscape: A Report on the Size and Distribution of the World's Major Religious Groups as of 2010. Here is one interesting chart from the survey showing what percentage of each religion's adherents live in minority religious status in their own country.

2. This is really fascinating. Smithsonian: Why Japan is Obsessed with Kentucky Fried Chicken on Christmas. “Kurisumasu ni wa kentakkii!” (Kentucky for Christmas!)

3. Four Harvard and MIT grads are experimenting with direct aid to the poor. "GiveDirectly, the brainchild of four Harvard and MIT graduate students, is so simple, it's genius. Give poor Kenyan families $1,000 -- and let them do whatever they want with it." Can 4 Economists Build the Most Economically Efficient Charity Ever?

4. From the Guardian, Private healthcare: the lessons from Sweden

"... Despite its reputation as a leftwing utopia, Sweden is now a laboratory for rightwing radicalism. Over the past 15 years a coalition of liberals and conservatives has brought in for-profit free schools in education, has sliced welfare to pay off the deficit and has privatised large parts of the health service.

Their success is envied by the centre right in Britain. Despite predictions of doom, Sweden's economy continues to grow and its pro-business coalition has remained in power since 2006. The last election was the first time since the war that a centre-right government had been re-elected after serving a full term.

As the state has been shrunk, the private sector has moved in. Göran Dahlgren, a former head civil servant at the Swedish department of health and a visiting professor at the University of Liverpool, says that "almost all welfare services are now owned by private equity firms". ..."

5. Scott Annan writes in The Future Of Business Is Morality, And The Future Is Now

"... We have reached a point in our economy where it is becoming increasingly clear that businesses are being measured not just for their profit, but also for their impact. And I'm not just talking about writing a check or funding a charity; I'm referring to business models for which community involvement and inspirational brand building are the profit centers. (Think Warby Parker, TOMS, and startups such as SOMA.) I recently went to a conference where the founders of a startup posited a powerful idea: the future of marketing is philanthropy. But I think the even bigger idea is the future of business is morality. My grandfather saw this early on.

At a time when the moral framework of America appears to be fractured – or at the very least confused – businesses are in the propitious position to espouse cultural standards that can help restore values that our youth can use to build the next generation of positive enterprise. In fact, whether businesses succeed in creating and promoting positive cultures might determine whether they stay in business at all. The future of business is morality, and the future is now.

Whether it's the job of the corporation or not to set the moral tone for society, the expectation is trending towards companies setting the right example for others to follow. With the sharp rise in entrepreneurship, young companies have the opportunity to establish strong cultures early on and share them with their communities. Money must have a moral center, and from greater consciousness in business, greater profit will follow. ..."

6. Scientific American asks, After 40 Years, Has Recycling Lived Up to Its Billing?

7. AOL has a short piece about the rise of small nuclear reactors. The Next Big Thing in Nuclear Power: Going Small

8. Scientific American has a list of The Top 10 Science Stories of 2012.

9. Depression Surpasses Asthma as Top Disability Problem among U.S. and Canadian Teens

"New data show an increasing contribution of mental and behavioral disorders to deterioration in the health-related quality of life among teens in the U.S. and Canada over the past two decades, and increases elsewhere around the globe."

10. Robotic arm controlled by the mind allows paraplegic woman to feed herself

11. Interesting piece on Why We Prefer Masculine Voices (Even in Women).

12. Atlantic Cities looks into The Mystery of Our Declining Mobility.

13. People Are Leaving California In Record Numbers

More people moved out of California in 2011 than moved in, according to the latest report from the U.S. Census Bureau, signaling that the Democrat-run state's economic woes continue to drive residents away.

Most statisticians attribute California's net loss of 100,000 people last year to its high cost of living, increased population density and troubling unemployment rate.

The widening middle class in Mexico is also encouraging some immigrants to remain in that country instead of moving to California.

Texas — home to lower taxes, less regulation and what the Manhattan Institute calls a "labor pool with the right skills at the right price" — is one of the most attractive destinations for companies departing from California, according to the Census Bureau. ...

14. The United States Has Seen A Huge Drop In Executions Since 2000.

"The country reported 85 executions in 2000 but only 43 in 2012, according to a new report released by the Death Penalty Information Center. Plus, far fewer people are being sentenced to death row in the first place. The year 2000 saw 224 new inmates sentenced to death, while 2012 saw only 78, according to the report."

15. Conor Friedersdorf at the Atlantic had a great piece: Why 'If We Can Just Save One Child ...' Is a Bad Argument, referring to President Obama's statement at Newtown, CT. When dealing with complex topics like gun control, we always talk about tradeoffs. For instance, I know how we can save more than 30,000 lives. There were 32,367 traffic fatalities last year. Let's set the speed limit to 5 miles per hour. Nearly all those lives would be saved. Should we do this "if we can save just one more life"? I, like Friedersforf, am not advocating any particular policy. I'm just pointing out the absurdity of making such statements, as politicians often do.

16. The New York Times has an opinion piece by John Dickerson, The Decline of Evangelical America

"I found that the structural supports of evangelicalism are quivering as a result of ground-shaking changes in American culture. Strategies that served evangelicals well just 15 years ago are now self- destructive. The more that evangelicals attempt to correct course, the more they splinter their movement. In coming years we will see the old evangelicalism whimper and wane."

He speaks of an Evangelical "collapse" having happened. That may be a bit premature, but his articulation of trends is right.

17. I saw two interesting posts on the sociology Facebook this week. The New York Times had a piece about announcing bad news on Facebook: On Facebook, Bad With the Good. Mashable reports that Socioeconomic Status Predicts Number of Facebook Friends.

18. Gangnam Style hits one billion views on YouTube. K pop rules!

The Rise of "No Religion" in England and Wales

Economist: You gotta have faith

The latest British census shows the country's increasingly secular tilt

Read more on the Census here.

Global Trends 2030

AP: Report: Asian economies will surpass US, Europe

AP has a story summarizing Global Trends 2030, a report put out by the U.S. Intelligence community.

... The study said that in a best-case scenario, Americans, together with nearly two-thirds of the world's population, will be middle class, mostly living in cities, connected by advanced technology, protected by advanced health care and linked by countries that work together, perhaps with the United States and China cooperating to lead the way.

Violent acts of terrorism will also be less frequent as the U.S. drawdown in troops from Iraq and Afghanistan robs extremist ideologies of a rallying cry to spur attacks. But that will likely be replaced by acts like cyber-terrorism, wreaking havoc on an economy with a keystroke, the study's authors say.

In countries where there are declining birth rates and an aging population like the U.S., economic growth may slow.

"Aging countries will face an uphill battle in maintaining living standards," Kojm said. "So too will China, because its median age will be higher than the U.S. by 2030."

The rising populations of disenfranchised youth in places like Nigeria and Pakistan may lead to conflict over water and food, with "nearly half of the world's population ... experiencing severe water stress," the report said. Africa and the Middle East will be most at risk, but China and India are also vulnerable.

That instability could lead to conflict and contribute to global economic collapse, especially if combined with rapid climate change that could make it harder for governments to feed global populations, the authors warn.

That's the grimmest among the "Potential Worlds" the report sketches for 2030. Under the heading "Stalled Engines," in the "most plausible worst-case scenario, the risks of interstate conflict increase," the report said. "The U.S. draws inward and globalization stalls." ...

Here is the overview from the report:

Over the next two decades, the relative power of major international actors will shift markedly.  Around 2030,  after nearly a century as the preeminent global economic power, the United States will be surpassed by China as the world’s largest economy. With its trade in goods expected to nearly double that of the U.S. and Europe, China’s international economic clout will reach new heights.  By 2030, India will become the world’s most populous country and third-largest economy, while Brazil’s economy will rank fourth in size.  India and Brazil will join China at the high table of 21^st century international politics alongside the United States, even as the relative weight of Russia and Japan diminishes.  The European economy will remain in the top tier, but it is not clear whether Europe will be able to act with common purpose to leverage this source of strength.

With its enhanced economic base, Beijing could rival Washington in overall military spending, even as a slowing Chinese economy and internal political conflict complicate China’s ability to lead internationally.  The United States will remain primus inter pares in light of its continued advantages across the full spectrum of national power and the legacy benefits of its leadership.  It will, however, be operating in a post-Western world in which the bulk of global economic power is held by countries whose per capita incomes are far below those of the traditional great powers.  This reality will leave China, India, Brazil, and other players focused on internal development and domestic challenges, torn between their desire to be global powers and their interest in free-riding on Western management of the interna­tional system.

How will the rise of the rest impact the international system?  The National Intelligence Council’s draft Global Trends 2030: Alternative Worlds maps out three broad scenarios:

Reverse Engines. Under this scenario, the international system would consist of several powerful countries — but no single state or bloc of states would have the political or economic leverage to drive the international community toward collective action. Such a world, characterized by a global vacuum of power, assumes that the United States will no longer be willing or capable of sustaining the predominant leadership role it has assumed since 1945.   With no other country able to step in to replace the U.S. as a global leader, the resulting diver­gence of interests would lead to fragmentation and the inability of great powers to work cooperatively to solve global issues.  Mercantilism and protectionism could lead economic globalization to go into reverse, constraining technological breakthroughs required to manage scarce global resources.  Conflict and disorder would follow.

Great Power Convergence.  An alternative scenario is what the NIC calls a “fusion” world, in which major powers work together to adopt and enforce a set of globally accepted rules and norms. As U.S. predominance over the international system recedes, other emerging powers would step in to assume greater responsibility for the management of international affairs commensurate with their swelling economic might.  Emerging powers emerge as full stakeholders in a global order that is transformed by power shifts but remains liberal and pluralistic.  Great power concert (perhaps enabled by democratization in China) to meet global challenges increases the stability of the international system even as power is diffused within it.  U.S. resilience enables it to create enduring partnerships with rising powers to sustain the basis of liberal order.   Technological advances create new possibilities for joint management of key global challenges, rewarding positive-sum behavior by the great powers.

Multipolar Divergence—U.S. Primacy.  A third scenario, one the NIC calls “fragmentation,” involves a multipolar system characterized by a divergence of views among great powers that challenges global governance.  The United States would continue to maintain disproportionate global influence and leverage that influence to address global challenges by working through coalitions of like-minded states.  A multispeed global economy accelerates the diffusion of power but an alternative coalition to the West does not form, with developing giants consumed by their domestic challenges – even as the global middle class explodes in ways that transform politics within the rising powers.  With inclusive global institutions effectively stalemated, the United States instead turns to its old and new allies in Europe and Asia, who would continue to see Washington as their partner of choice in advancing the norms and rules of a liberal order.  The risk of conflict increases with the continued rise of new powers like China and the rapid pace of technological change.

One key conclusion of the NIC study is that the future role of the United States in the international system is a decisive variable in determining what kind of “alternative world” will exist in 2030.  The choices U.S. leaders make – about how to marshal (and preserve) domestic resources, how vigorously to assert U.S. military and economic leadership overseas, and how much to invest in alliances old and new – will be central to determining which of the above pathways the international system will follow over the coming 20 years.  To a certain extent, the answer to the question of how the “rise of the rest” impacts the U.S.-led international system is that it is not up to them… so much as it is up to us.

Africa For Norway: Viral Video Pokes Fun At Stereotypes In Aid Efforts

NPR: Africa For Norway: Viral Video Pokes Fun At Stereotypes In Aid Efforts

A group of South African students and an aid agency in Norway are challenging the stereotypical image of Africa as a continent riddled with conflict, disease, corruption, poverty, and brutal dictatorships needing rescue from developed nations. ...

... The video is humorous, but there is a serious message. The point is that images of helpless Africans are just as inaccurate as the idea of helpless freezing Norwegians. A lot of Africans cannot relate to the patronizing videos and development initiatives.

The organization says it has certain goals with the video. Among them, that fundraising "should not be based on exploiting stereotypes" and that media should have more respect in portraying suffering children.

"We want to see more nuances," it writes on its website. "We want to know about positive developments in Africa and developing countries, not only about crises, poverty and AIDS. We need more attention on how western countries have a negative impact on developing countries."

The Nordic Economic Model: Do Americans Know What They Are Arguing About?

Ever heard something like this? "Obama is going to make America a socialist country like those Europeans." or "We need a more just economic system like they have in Europe." Whenever discussions of economic systems arise in the U. S., we always seem to be comparing to "Europe." I write Europe in quotes because there is no European economic system. There are nearly four dozen countries in Europe. The economies of the United Kingdom, Russia, Greece, Germany, France, and Sweden vary widely. But when I hear Americans get more specific, I typically hear them reference the Nordic economic model (Denmark, Finland, Iceland, Norway, and Sweden), with Sweden being the poster child.

 I don't consider comparative economics my strong suit, but I try to read up on different economic systems. As I listen to both left and right employ Sweden in their debates, I wonder if pundits on either side have looked at what has happened in Sweden in the past fifty years.

Recently I came across an article, A Swedish Lesson For Ed Balls, written by conservative Swedish economist Anders Aslund. I don't know much about him. From what I know, I'm not sure I would entirely agree with him on economic issues, but I think he does a good job of capturing the shifts in Swedish policy over recent decades. I think most Americans, left and right, are about twenty years behind the curve in their perceptions of the Nordic economic model, with Sweden of the 1970s and 1980s frozen in their minds as our present reality. Aslund begins his article in the Salisbury Review:

To Brits, Sweden with its tightly regulated social welfare state is often a byword for socialism. But in the last two decades the country has been transformed. today it offers a flexible and dynamic European model with ever falling public expenditure, lower taxes, economic growth and budget surpluses.

After many years of absence from the Swedish debate, I attended a conference on the Swedish economy in the southern city of Malmö in May, organized by Swedbank. The 180 speakers represented the full range of Swedish views, which have moved amazingly far to the free-market right, not least social democrats and trade union leaders. Key values are competition, openness and efficiency, while social and environmental values remain. The idea is not to abolish social welfare but to make it more efficient through competition among private providers. A new consensus has emerged on having a social welfare society rather than a social welfare state. ...

Read the whole piece. It may challenge your perceptions. If you are Swedish and know intimately about the Swedish system, I'd like to hear your take on Aslund's claims.

 Related: What to Look For in the Nordic Model

What to Look For in the Nordic Model

New Geography: What to Look For in the Nordic Model

The Nordic nations, and Sweden in particular, are seen by many as the proof that it is possible to combine innovative and entrepreneurial economies with high tax rates. It is often argued that nations such as the US can gain the attractive social features of Denmark, Sweden, Norway and Finland — such as low crime rates, high life expectancy, and a high degree of social cohesion — simply by expanding the welfare state. An in depth analysis, however, shows that this line of reasoning is flawed. ...

... Taxes still remain high in the Nordic nations, particularly in Denmark and Sweden. The high tax pressures create high costs for the societies. ...

... So how come the Nordic nations are so prosperous? A key reason is that they, particularly since the 1980s, have compensated for high tax regimes by implementing a range of market reforms. These reforms range from Flexicurity — a combination of strategies to provide flexibility for employers and security for workers — in the Danish labor market, to partial abolition of rent-control in Finland, to school vouchers and partial privatization of the pension system in Sweden. Indeed, the Nordic nations have risen sharply in both the Heritage/WSJ and the Frasier Institute indexes of economic freedom over the years.

It is also important to realize exactly why the Nordic nations have been able to implement large welfare states, and what the benefits have been. The cultural and economic systems in the Protestant Nordic nations have historically given rise to very strong norms related to work and responsibility. Coupled with uniquely homogeneous societies, these norms made it possible to implement larger welfare states in the Nordic nations than those in other industrialized countries. Since the norms relating to work and responsibility were so firmly rooted, Nordic citizens were not as likely as other Europeans or Americans to try to avoid taxes or misuse generous public support systems. Also, the "one-solution-fits-all" systems of the welfare state are typically less disruptive in a strongly homogeneous social environment, since most of the population has similar norms, preferences, and income levels.

However, with time the norms have evolved. In the World Value Survey of 1981-84, almost 82 percent of Swedes responded that "claiming government benefits to which you are not entitled is never justifiable", but in the survey of 1999-2004, only 55 percent held the same belief. It is no coincidence that much of the public policy debate in Norway, Sweden, Denmark and Finland has focused on curbing overutilization of welfare systems.

Many of the favorable social outcomes in the Nordic nations relate to our unique culture, and the policies cannot simply be copied. ...

U.S. Income Inequality: It's Worse Today Than It Was in 1774

Atlantic: U.S. Income Inequality: It's Worse Today Than It Was in 1774

Here's a finding that would have made for great occupy sign last year: American income inequality may be more severe today than it was way back in 1774 -- even if you factor in slavery.

That stat's not actually as crazy (or demoralizing) as it sounds, but it might upend some of the old wisdom about our country's economic heritage. The conclusion comes to us from an newly updated study by professors Peter Lindert of the University of California - Davis and Jeffrey Williamson of Harvard. Scraping together data from an array of historical resources, the duo have written a fascinating exploration of early American incomes, arguing that, on the eve of the Revolutionary War, wealth was distributed more evenly across the 13 colonies than anywhere else in the world that we have record of. 

Suffice to say, times have changed. ...

... We are much richer nation, and much better off today, than 240 years ago. In the 1770s, America was a heavily agrarian country of yeoman farmers, merchants, and tradesmen, with an economy that accounted to just a few billion dollars in present values. Like India or Russia today, both of which technically enjoy more income equality than the United States, early Americans were relatively poor compared to us. They were just relatively poor together. The first wave of industrialization in the 19th century increased living standards, but also offered bigger rewards to factory owners than their workers. That pattern neatly fits our classic understanding of what's supposed to happen when economies move from farming to manufacturing. And by now, we've gone through several epic rounds of economic upheaval that have left us with a vast gulf between the rich and the rest, as well as a welfare state that tries to mitigate some of the side effects of that difference. 

So, awful as it might sound, the fact that the United States is less economically egalitarian than during its rural, slave-society ancestors is not inherently a reason to fret. ...

They offer this chart (among others):

 

 

EU to limit use of crop-based biofuels - draft law

Reuters: EU to limit use of crop-based biofuels - draft law

(Reuters) - The European Union will impose a limit on the use of crop-based biofuels over fears they are less climate-friendly than initially thought and compete with food production, draft EU legislation seen by Reuters showed.

The draft rules, which will need the approval of EU governments and lawmakers, represent a major shift in Europe's much-criticized biofuel policy and a tacit admission by policymakers that the EU's 2020 biofuel target was flawed from the outset.

The plans also include a promise to end all public subsidies for crop-based biofuels after the current legislation expires in 2020, effectively ensuring the decline of a European sector now estimated to be worth 17 billion euros ($21.7 billion) a year. ...

Are free markets the secret to Sweden's success?

Christian Science Monitor: Are free markets the secret to Sweden's success?

Nima Sanandaji has written an interesting paper about Sweden. It largely points to the same historical facts that I have mentioned in my previous writings, namely that Sweden during its most free market oriented era, from 1870 to 1950, had the highest rate of per capita economic growth in the world. After massive tax and spending increases during the 1950s and 1960s, Sweden stopped outperforming other countries, and after a dramatic leftist shift in economic policies implemented by Socialist Olof Palme after he became prime minister in 1969, Sweden started to seriously lagg other countries. However, free market reforms implemented in the 1990s, and in recent years, have enabled Sweden to once again outperform other Western countries in growth.

He also discusses possible cultural factors, and also points out that Sweden in 1920 had a relatively low level of economic inequality, despite the fact that government spending and taxation at that time was only 10% of GDP.

Here is the conclusion from the Sanandaji report, The surprising ingredients of Swedish success – free markets and social cohesion:

Conclusion:

Scandinavian societies have developed a unique culture with a strong work ethic and strong ethical attitudes regarding the claiming of welfare benefits. There are also high levels of trust and social cohesion. This social capital, which was built up before the advent of the modern welfare state, has played an important role in the success of Scandinavian countries.

For many decades, this pre-existing culture, allowed countries such as Sweden to have extensive welfare systems without the social difficulties, rise in worklessness and other effects that many would have predicted. Scandinavian countries have also reaped the rewards of relatively free market policies in some areas of economic life to reach impressive levels of wealth creation.

To characterise the Swedish model either as a social democratic utopia or a failed socialist experiment is a mistake. Sweden is a successful country in terms of having a low poverty rate and long life expectancy. However, these factors have much to do with non-government facets of Swedish society that pre-existed the welfare state.

As Milton Friedman has previously noted, the millions of US residents of Swedish descent also display low rates of poverty. They combine this with a living standard that is significantly better compared with Swedes living in Sweden. The transformation of Sweden from an impoverished agrarian society to a modern industrialised nation is a rarely mentioned, but quite significant, example of the role of free markets in lifting a country out of poverty and into prosperity. Low levels of inequality and low levels of government spending characterised this period of economic transformation. The golden age of Swedish entrepreneurship - when one successful firm after another was founded in this small country and gained international renown – occurred at a time when taxes and the scope of government were quite limited.

Sweden shifted to radical social democratic policies in the 1960s and 1970s, with a gradual reversal beginning in the mid 1980s. The social democratic period was not successful, as it led to much lower entrepreneurship, the crowding out of private sector job production and an erosion of previously strong work and benefit norms. The move towards high taxes, relatively generous government benefits and a regulated labour market preceded a situation in which Swedish society has had difficulty integrating even highly-educated immigrants, and where a fifth of the population of working age are supported by various forms of government welfare payments.

It is also important to remember that Sweden, like other Scandinavian nations, has compensated for policies of high taxes and welfare benefits by improving economic liberty in other fields. Some reforms, such as the partial privatisation of the mandatory pensions system and voucher systems in schools and healthcare surpass reforms in most developed nations. Since these reforms, and the reduction in taxes from the very-high levels of the 1970s to mid 1980s, Swedish relative economic performance has improved.

Swedish society is not necessarily moving away from the idea of a welfare state, but continual reforms are being implemented that increase economic liberty and incentives for work within the scope of the welfare system. Such trends are also visible in Finland and Denmark, with only oil-rich Norway being an exception.

How tiny Estonia stepped out of USSR's shadow to become an internet titan

Guardian: How tiny Estonia stepped out of USSR's shadow to become an internet titan

The European country where Skype was born made a conscious decision to embrace the web after shaking off Soviet shackles.

... In a tiny (population: 1.4 million) and newly independent country like Estonia, politicians realised computers could help quickly compensate for both a minuscule workforce and a chronic lack of physical infrastructure.

Seventeen years on, the internet has done more than just help. It is now tightly entwined with Estonia's identity. "For other countries, the internet is just another service, like tap water, or clean streets," said Linnar Viik, a lecturer at the Estonian IT College, a government adviser and a man almost synonymous in Estonia with the rise of the web.

"But for young Estonians, the internet is a manifestation of something more than a service – it's a symbol of democracy and freedom."

To see why, you just have to go outside. Free Wi-Fi is everywhere, and has been for a decade.

Viik says you could walk 100 miles – from the pastel-coloured turrets here in medieval Tallinn to the university spires of Tartu – and never lose internet connection.

"We realised that if the government was going to use the internet, the internet had to be available to everybody," Viik said. "So we built a huge network of public internet access points for people who couldn't afford them at home."

The country took a similar approach to education. By 1997, thanks to a campaign led in part by Ilves, a staggering 97% of Estonian schools already had internet. Now 42 Estonian services are now managed mainly through the internet. Last year, 94% of tax returns were made online, usually within five minutes. You can vote on your laptop (at the last election, Ilves did it from Macedonia) and sign legal documents on a smartphone. Cabinet meetings have been paperless since 2000.

Doctors only issue prescriptions electronically, while in the main cities you can pay by text for bus tickets, parking, and – in some cases – a pint of beer. Not bad for country where, two decades ago, half the population had no phone line. ...

... To a British audience, the ID card will have a whiff of Big Brother. But many Estonians argue the opposite: that it allows them to keep tabs on the state, rather than the other way round.

"You'd think, given our history, we'd have a problem with it," said Ilves, in an oblique reference to the days when the KGB had an office down a cobbled street in central Tallinn.

"But I feel much more secure with a digital ID. If anyone goes into my files, they're flagged. Whereas if my files – which would exist anyway – were made of paper, no one would know who was looking at them."

Every Estonian can see who has visited their data, and they can challenge any suspicious behaviour. In one famous case, a policewoman was caught accessing information about her boyfriend. ...

The story mentions Mart Laar, the first Estonian Prime Minister after the Russian occupation. He was 32 at the time. I had the privilege of having dinner with him a few years ago at an Acton Institute event. What an amazing story. Then I had an opportunity to see a screening of the documentary The Singing Revolution with the director present. If you have never seen the documentary, you need to get it on your list. One of the most amazing stories of hope and reconciliation in the face of incredible threats. I hope to visit Estonia someday. Here is a trailer for the documentary.

Decline and small

The Economist: Decline and small

Small firms are a big problem for Europe’s periphery

... Greece stands out among European Union countries as having the most stunted firms. Around a third of Greek manufacturers are “micro” firms with fewer than ten workers, compared with 4.3% of firms in Germany (see left-hand chart). But the small-firm problem also afflicts the other troubled economies at the euro zone’s southern periphery. Spain lacks biggish manufacturers; Italy’s small-firm bias derives in part from a reverence for family firms. Only 19% of Portuguese manufacturers have 250 or more workers, compared with 55% of industrial firms in Germany. “The incredible shrinking Portuguese firm” is the title of a research paper* by three economists at Carnegie Mellon University, which shows that Portugal had more small firms and fewer big ones in 2009 than it had in the 1980s. The authors find the trend has been towards larger firms in America, as well as in Denmark, a country of comparable size to Portugal.

A bias to small firms is costly. The productivity of European firms with fewer than 20 workers is on average little more than half that of firms with 250 or more workers (see right-hand chart). The deeper roots of the euro-zone crisis lie with the loss of competitiveness in the region’s trouble spots. This problem owes more to dismal productivity growth in the past decade than to rapid wage inflation. If the best small firms were able to grow bigger, Greece and the rest might solve their competitiveness problems without having to cut wages or leave the euro.

The periphery’s productivity malaise is the result of the rigid rules that govern jobs and goods markets. In theory the key to prosperity is the amount of physical capital and skilled workers in an economy, and how they are combined. But the quality of companies will vary so it matters greatly where—as well as how well and how much—capital and skills are deployed. If restrictive rules mean that resources are trapped in inefficient firms, it leaves the best companies starved of them. The result is sluggish productivity. The Carnegie Mellon economists blame Portugal’s shrinking firms on its employment laws, which are among the strictest in the OECD (though becoming more forgiving) and act as a tax on firm size, because small firms are sheltered from them. ...

In 2005-2008, Poverty has fallen in all regions of the world

The Economist: Now for the good news

Poverty has fallen in all regions of the world

THE past four years have seen an economic crisis coincide with a food-price spike. That must surely have boosted the number of the world’s poor (especially since food inflation hits the poor hardest)—right? Wrong. New estimates of the numbers of the world’s poor by the World Bank’s Development Research Group show that for the first time ever, poverty—defined as the number and share of people living below $1.25 a day (at 2005 prices)—fell in every region of the world in 2005-08. Half the long-term decline is attributable to China, which has taken 660m people out of poverty since the early 1980s. But the main contribution to the recent turnaround is Africa. Its poverty headcount rose at every three-year interval between 1981 and 2005, the only continent where this happened. But in 2008, it fell by 12m, or five percentage points to 47%—the first time less than half of Africans have been below the poverty line. The bank also has partial estimates for 2010. These show global poverty that year was half its 1990 level, implying the long-term rate of poverty reduction—slightly over one percentage point a year—continued unabated in 2008-10, despite the dual crisis.

 

America Is Europe

New York Times: America is Europe  David Brooks

We Americans cherish our myths. One myth is that there is more social mobility in the United States than in Europe. That’s false. Another myth is that the government is smaller here than in Europe. That’s largely false, too.

The U.S. does not have a significantly smaller welfare state than the European nations. We’re just better at hiding it. The Europeans provide welfare provisions through direct government payments. We do it through the back door via tax breaks. ...

... David Bradford, a Princeton economist, has the best illustration of how the system works. Suppose the Pentagon wanted to buy a new fighter plane. But instead of writing a $10 billion check to the manufacturer, the government just issued a $10 billion “weapons supply tax credit.” The plane would still get made. The company would get its money through the tax credit. And politicians would get to brag that they had cut taxes and reduced the size of government!

This is essentially what’s been happening in sphere after sphere. Government controls more and more of the economy. It just does it by getting people to do what it wants by manipulating the tax code. Politicians get to take credit for addressing problem after problem, but none of their efforts show up as unpopular spending. ...

... And because they are hidden, many of the tax expenditures go to those who need them least, the well connected and established over the vulnerable and the entrepreneurial.

The good news is that change might finally be coming. The Obama administration has always theoretically supported a simpler tax code even while operationally it has often muddied it up. Nonetheless, this week, Treasury Secretary Timothy Geithner unveiled a modest but sensible plan to simplify the corporate tax code. The plan is not perfect. The Obama technocrats love tinkering and complexity. But Geithner’s plan moves us a small step in the right direction and provides a sensible foundation for the big tax negotiations to come.

Mitt Romney has a bigger proposal, which reduces individual rates across the board and closes some loopholes. It’s more comprehensive than the Geithner approach, but it suffers from two weaknesses. First, it’s politics as usual. Romney is specific about the candy — lower tax rates — but vague about the vegetables — what loopholes would have to be closed to pay for them.

Moreover, it’s unimaginative. Republicans are perpetually trying to do what Ronald Reagan did. But top tax rates today aren’t as onerous as they were in 1980, so lowering them won’t produce as many benefits. Imagine if Reagan ran for office promising to recreate the glory days of Thomas Dewey and you get a sense of how much G.O.P. thinking is stuck in the past. ...

Seven things I learned about transition from communism

Vox: Seven things I learned about transition from communism by Harvard Economist Andrei Shlefier

Twenty years ago, communist countries began their shift towards capitalism. What do we know now that we didn’t know then? Harvard's Andrei Shleifer, the Russian-born, American-trained economist, provides his answers and their relevance for contemporary policymakers.

First, in all countries in Eastern Europe and the former Soviet Union, economic activity shrunk at the beginning of transition, in some very sharply. ...

Second, the decline was not permanent. ... So lesson learned: have faith – capitalism really does work.

Third, the declines in output nowhere led to populist revolts – as many economists had feared. ... Instead of populism, politics in many countries came to be dominated by new economic elites, the so-called oligarchs, who combined wealth with substantial political influence. ... But the lesson is clear: a reformer should fear not populism but capture of politics by the new elites.

Fourth, economists and reformers overstated both their ability to sequence reforms, and the importance of particular tactical choices, eg, in privatisation. ...

Fifth, economists have greatly exaggerated the benefits of incentives by themselves, without changes in people. Economic theory of socialism has put way too much weight on incentives, and way too little on human capital. Winners in the communist system turned out not to be so good in a market economy. Transition to markets is accomplished by new people, not by old people with better incentives. ...

Sixth, it is important not to overestimate the long-run consequences of macroeconomic crises and even debt defaults. ...

Seventh, it is much easier to forecast economic than political evolution. Although nearly all transition countries have eventually converged to some form of capitalism, there has been a broader range of political experiences, from full democracies, to primitive dictatorships, to just about everything in between. ... Lesson learned: middle-income countries eventually slouch toward democracy, but not nearly in as direct or consistent a way as they move toward capitalism.

Fascinating insights. Read the whole thing.

 

Inequality Street

The Economist: Inequality Street

Income inequality is rising in rich countries

THE gap between rich and poor has grown ever wider in wealthy countries over the past three decades. A new report by the OECD has reams of data on this phenomenon and is well worth looking at. The Gini coefficient, a measure of inequality in which zero corresponds to everyone having the same income and one means the richest person has all the income, increased by almost 10% from 0.29 in 1985 to 0.32 in 2008, for working-age people in OECD countries. The trend is caused by earnings: the pay of the richest 10% of employees has increased at a far greater rate than that of the poorest 10% of employees. Within the upper echelons, the top 1% have reaped the greatest gains. Technology has disproportionately benefited high-earning workers, who also spend far longer at work than do low-earners. High earners marry other high earners. And governments are doing less to redistribute wealth than they have done in the past. So far, so familiar. But the report also argues that globalisation is not a significant cause of inequality, and that one of the many reasons for the rise in income inequality is that more people are in work now (or at least they were before the financial crisis hit) compared with the 1970s.

Free Market Sweden, Social Democratic America

The American Spectator: Free Market Sweden, Social Democratic America

... But two things distinguished Sweden's welfare state from the very beginning. First, Sweden's progressives cleverly marketed their ideas as a way of realizing what they called a folkhemmet (people's home). The emphasis was upon realizing a once-overwhelmingly peasant society's traditional values in a context of industrialization. This helped the Social Democrat governments that ruled Sweden between 1932 and 1976 avoid being labeled as soft-Marxists in a country deeply wary of an expansionist Soviet Union.

The second distinguishing feature was Sweden's vision of state-provided social protection as a right. This led to successive governments insisting upon universal coverage and the costs being covered by general taxation.

It took several decades, but the relentless logic of these commitments eventually eroded the Swedish economy's competitiveness. The situation was worsened by the decision of governments in the 1970s to hasten Sweden's long march towards the Social Democratic nirvana. This included expanding welfare programs, nationalizing many industries, expanding and deepening regulation, and -- of course -- increasing taxation to punitive levels to pay for it all.

Over the next twenty years, the Swedish dream turned decidedly nightmarish. The Swedish parliamentarian Johnny Munkhammar points out that "In 1970, Sweden had the world's fourth-highest GDP per capita. By 1990, it had fallen 13 positions. In those 20 years, real wages in Sweden increased by only one percentage point." So much for helping "the workers."

Facing severe economic stagnation, Sweden began implementing several rather un-social democratic measures in the early 1990s. This included curtaining its public sector deficit and reducing marginal tax-rates and levels of state ownership. Another change involved allowing private retirement schemes, a development that was accompanied by the state contributing less to pensions.

These reforms, however, proved insufficient. In the early 2000s, according to James Bartholomew, author of the best-selling The Welfare State We're In (2006), more than one in five Swedes of working-age was receiving some type of benefit. Over 20 percent of the same demographic of Swedes was effectively working "off-the-books" or less than they preferred. Sweden's tax structure even made it financially advantageous for many to stay on the dole instead of getting a job.

But with a non-Social Democrat coalition government's election in 2006, Sweden's reform agenda resumed. On the revenue side, property taxes were scaled back. Income-tax credits allowing larger numbers of middle and lower-income people to keep more of their incomes were introduced.

To be fair, the path to tax reform was paved here by the Social Democrats. In 2005, they simply abolished -- yes, that's right, abolished -- inheritance taxes.

But liberalization wasn't limited to taxation. Sweden's new government accelerated privatizations of once-state owned businesses. It also permitted private providers to enter the healthcare market, thereby introducing competition into what had been one of the world's most socialized medical systems. Industries such as taxis and trains were deregulated. State education and electricity monopolies were ended by the introduction of private competition. Even Swedish agricultural prices are now determined by the market. Finally, unemployment benefits were reformed so that the longer most people stayed on benefits, the less they received.

So what were the effects of all these changes? The story is to be found in the numbers. Unemployment levels fell dramatically from the 10 percent figure of the mid-1990s. Budget-wise, Sweden started running surpluses instead of deficits. The country's gross public debt declined from a 1994 figure of 78 percent to 35 percent in 2010. Sweden also weathered the Great Recession far better than most other EU states. Sweden's 2010 growth-rate was 5.5 percent. By comparison, America's was 2.7 percent. ...

The World of Seven Billion

National Geographic has a fascinating interactive map on its website that gives some valuable socio-economic perspective. The World of Seven Billion

 

Fewer and fewer European countries are run by left-leaning governments

Economist: Fewer and fewer European countries are run by left-leaning governments

Searching for a Way to Share History

New York Times: Searching for a Way to Share History

KALININGRAD, RUSSIA — On a balmy Saturday afternoon, there was a real sense of anticipation among the hundreds of students sitting in a lecture theater at Immanuel Kant State University, awaiting a rare chance to quiz the foreign ministers of Germany, Poland and Russia — Guido Westerwelle, Radek Sikorski and Sergey V. Lavrov.

Kaliningrad was once called Königsberg, the first capital of Prussia and birthplace of Kant. In 1945, it was conquered and annexed by the Soviets. Since the end of the Cold War and the independence of Lithuania from the Soviet Union, Kaliningrad has been an exclave of Russia. It is 320 kilometers, or 200 miles, from Russia proper and sandwiched between Lithuania and Poland, both E.U. and NATO members.

Here, the students witnessed the establishment of a German-Polish-Russian forum designed to encourage a rapprochement among three countries with fundamentally different historical narratives of World War II.

Any such process would ultimately mean Russia confronting its past, particularly Stalinist crimes and the gulags, and reassessing its role as victim and victor during and after World War II. It would also mean Russia embracing the European idea of dealing with memory and the past, now so much a part of the European identity.

“Being European is about being aware of what we did,” said Ivan Krastev, historian and chairman of the Center for Liberal Strategies in Sofia. ...

A New Way to See Sicily (Mafia Free)

New York Times: A New Way to See Sicily

... But on a stoop right next to our cheerfully oblivious children sat our tour guide, Edoardo Zaffuto, chatting away loudly about how “the Mafia has robbed Sicily of its dignity.” To underscore that point, across Mr. Zaffuto’s chest was a T-shirt reading “Addiopizzo!” The catchphrase means “Goodbye, protection money” and is the name taken by an organization determined to use tourism as a means to return some of that stolen dignity to Sicily.

Don’t you ever get nervous, I asked, nodding at the glarers. “Never,” Mr. Zaffuto said. “There are too many of us.”

“Us” are fellow Addiopizzo members, part of a social movement that, according to Mr. Zaffuto, now covers more than 700 businesses, including a travel agency whose mission is to guide tourists toward establishments that refuse to pay the Mafia’s protection money.

Given the duration and reach of the Mafia’s influence on Italy (and on Sicily, in particular, where it is said to have started), trying to quantify the group’s economic impact is an inexact science. That said, a 2007 study by SOS Impresa, the anti-rackets office of the retailers’ association, found that 70 percent of Sicilian retailers pay the Cosa Nostra protection money. The average payment is about 880 euros (about $1,275) a month, according to the anti-Mafia research foundation Fondazione Rocco Chinnici.

And if they didn’t pay?

“Arson, vandalism, harassment,” said Mr. Zaffuto. By whom? “The Mafia,” he said with a laugh, finishing his ice cream.

In July 2004, a group of Mr. Zaffuto’s friends wanted to open a bar without paying protection money (or pizzo, in Italian). Outraged that this seemed nearly impossible, they plastered Palermo’s walls and phone booths with black-and-white stickers and fliers reading, in Italian: “An entire people that pays the pizzo is an entire people without dignity.” The group then formed Addiopizzo, enlisting businesses that refused to pay, and showing up en masse at Mafia trials to cheer police cleanup efforts. ...

German exports rise to all-time high

BBC: German exports rise to all-time high

German exports surged in March to their highest level since records began, as the growing global economy lifted demand for its products and services.

The country's exports for the month totalled 98.3bn euros ($142bn; £87bn), 7.3% higher than February.

Its imports also reached an all-time high, up 3.1% to 79.4bn euros. Both imports and exports are the most since data started to be collected in 1950.

Germany is the world's second-largest exporter.

Only China exports more than the European nation, and the latest monthly figure for German exports was much higher than market expectations. ...

 

Fertility Decline Continues

Zenit: Fertility Decline Continues

ROME, APR. 10, 2011 (Zenit.org).- Low fertility rates and an aging population will present Europe with a big economic challenge. This was one of the points made in a study published by the European Commission at the start of the month.

The "Third Demography Report" found that the number of children per woman has increased from 1.45 children, at the time of the last report in 2008, to 1.6. Nonetheless, this is still substantially below the level of 2.1 children that is required to maintain a stable population.

As well, life expectancy is increasing, which will push the trend to an aging population. Already in 4 countries -- Bulgaria, Lithuania, Latvia and Romania -- the population is decreasing due to a combination of more people dying than are born and emigration. ...

Impact of Low-Wage Emerging-Nation Exports on Developed Nations

Vox: Low-wage countries competition, intra-firm reallocation, and the quality content of French exports

With exports from low-wage countries like China on the rise, the question of what this means for trade and jobs in developed countries is a furious war of words. This column, using firm-level data for France between 1995 and 2005, shows that competition from low-wage markets actually boosts the sales of high-quality goods – but it concedes the benefits are not universal. ...

Consequences

Our results show that, over 1995-2005, a period characterised by the surge of low-wage countries in international markets,

• France has specialised in the production of higher quality goods.
• This specialisation has had a positive impact on France’s export performances, dampening the fall of its market share in foreign markets.

Beyond the effect on aggregate trade, such adjustments in specialisation patterns are likely to have important macroeconomic consequences. Hausmann et al. (2007), for example, discuss how countries that specialise in higher quality goods can enjoy better growth performances in the long run. However, changes in the structure of production can also have important transitory effects. In particular, if the relative content of production in skilled and unskilled labour is not the same depending on the produced quality, a reallocation of production in favour of high quality goods is likely to modify labour-market equilibria (see Verhoogen 2008).

This may be part of the story when it comes to explaining the rising wage premium and employment inequalities between skilled and unskilled workers observed over the last 20 years in most developed countries.

The state of the world's forests

The Economist: The state of the world's forests

THE Food & Agriculture Organisation, a UN body, estimates that the world's forests covered 4.03 billion hectares in 2010. Although the world as a whole continues to lose forests, the annual rate of deforestation in the past decade has fallen to 5.2m hectares, compared with 8.3m hectares a year between 1990 and 2000. Some large countries, including China and India, increased their forest cover between 2000 and 2010. China’s increased at an average annual rate of 1.6%, while India’s went up by 0.5% a year. Norway and Sweden have also added forests over the past decade. With forests covering nearly 70% of its area in 2010, Sweden is one of the world’s most sylvan countries. Nigeria, by contrast, has been chopping its forests down at a rate of 3.7% a year. By last year only one-tenth of its land remained forested.

Why Americans Are More Religious Than Europeans

Huffington Post: Why Americans Are More Religious Than Europeans

Religion declines with economic development. In a previous post that rattled around the Internet, I presented a scholarly explanation for this pattern: people who feel secure in this world have less interest in another one.

The basic idea is that wealth allows people to feel more secure in the sense that they are confident of having their basic needs met and expect to lead a long healthy life. In such environments, there is less of a market for religion, the primary function of which is to help people cope with stress and uncertainty.

Some readers of the previous post pointed out that the U.S. is something of an anomaly because this is a wealthy country in which religion prospers. Perhaps taking the view that one swallow makes a summer, the commentators concluded that the survival of religion here invalidates the security hypothesis. I do not agree. ...

...In my own (as yet unpublished) research on this question, I have looked at several other facets of the security hypothesis that go some way toward explaining why Americans remain more religious than their European cousins.

The conclusions are not very flattering so far as the quality of life in this country is concerned. In her recent book, Third World America, Arianna Huffington made the case that this country is regressing to the inequitable conditions more typically found in a far poorer country.

Despite having great wealth, the riches are unevenly distributed. Such income inequality is typical of developing countries and it has worsened considerably in recent decades. Moreover, we lack the well-developed welfare state found in Europe that serves to redistribute wealth and provides a safety net for the poor. ...

... The bottom line, then, is that Americans feel far less secure economically, and in relation to their health and well-being, than would be expected given the overall wealth of the country in terms of GDP per capita. This existential insecurity provides a fertile ground for religion. Scholars might appeal to historical factors such as the Puritan founders but history counts for little in these matters given that virtually every country has a devout past. ...

My response in a comment was:

You might do well to read a book like Larry Witham's, "Marketpla­ce of the Gods: How Economics Explains Religion," or Robert B. Eckland, Jr. et al's "The Marketplac­e of Christiani­ty," or any number of other books that touch on the same topic.

Unlike most European societies, the USA has had a "free market" economy for religion. Religions and denominati­ons, and their institutio­ns, must compete for adherents since none of them have monopolist­ic power or the coercive power of the state. That creates a mix of vibrant adaptive competitor­s. This is different from the monopolist­ic and subsidized religious environmen­t in Europe. As a nation with monopolist­ic religion becomes wealthier, I think it likely that society will become more secularize­d. Not so where there is open competitio­n.

Selected European Homicide Rates for 500 Years

European homicide rates for 500 years.

The world economy: Three-way split

The Economist: The world economy: Three-way split

America, the euro zone and the emerging world are heading in different directions.

THIS year has turned out to be a surprisingly good one for the world economy. Global output has probably risen by close to 5%, well above its trend rate and a lot faster than forecasters were expecting 12 months ago. Most of the dangers that frightened financial markets during the year have failed to materialise. China’s economy has not suffered a hard landing. America’s mid-year slowdown did not become a double-dip recession. Granted, the troubles of the euro area’s peripheral economies have proved all too real. Yet the euro zone as a whole has grown at a decent rate for an ageing continent, thanks to oomph from Germany, the fastest-growing big rich economy in 2010.

The question now is whether 2011 will follow the same pattern. Many people seem to think so. Consumer and business confidence is rising in most parts of the world; global manufacturing is accelerating; and financial markets are buoyant. The MSCI index of global share prices has climbed by 20% since early July. Investors today are shrugging off news far more ominous than that which rattled them earlier this year, from the soaring debt yields in the euro zone’s periphery to news of rising inflation in China.

Earlier this year investors were too pessimistic. Now their breezy confidence seems misplaced. To oversimplify a little, the performance of the world economy in 2011 depends on what happens in three places: the big emerging markets, the euro area and America. (Yes, Japan is still an economic heavyweight, but it is less likely to yield surprises.) These big three are heading in very different directions, with very different growth prospects and contradictory policy choices. Some of this divergence is inevitable: even to the casual observer, India’s economy has always been rather different from America’s. But new splits are opening up, especially in the rich world, and with them come ever more chances for friction. ...

Never enough

The Economist: Never enough

Emerging economies continue to drive energy demand

 

Does culture affect long-run growth?

Vox: Does culture affect long-run growth?

Does culture affect long-run growth? This column argues that countries with a more individualist culture have enjoyed higher long-run growth than countries with a more collectivist culture. Individualist culture attaches social status rewards to personal achievements and thus provides not only monetary incentives for innovation but also social status rewards. ...

Two interesting graphs:

 

The void within

The Economist: The void within

Catholicism is hollowing out in its traditional European strongholds. But signs of intriguing new life are springing up at its periphery.

... Since the start of the year Abbé Francis has been at war with the region’s bishop—in church terms, a liberal—who has been trying to close the parish and move him to other duties. Uproar ensued in January when the bishop came to mass and tried to give the priest his marching orders. Most villagers followed Abbé Francis as he strode off to another church and celebrated in the old-fashioned way. He has made two appeals to Rome, both rejected on technicalities; a third is pending.

To Father Francis’s admirers Thiberville is a pinpoint of light against a sombre background: the near-collapse of Catholicism in some of its heartlands. In the diocese of Evreux, Christianity has been part of the fabric of life for 15 centuries. Of its 600,000 inhabitants, about 400,000 might call themselves, at least loosely, Catholic. But the number of priests under the age of 70 is a mere 39, and only seven of those are under 40. That is just a bit worse than average in a country that, as recently as the 1950s, boasted 40,000 active priests; in a few years, the number under 65 will be a tenth of that. This suggests a body that is not so much shrinking as dying.

On closer inspection French Catholicism is not dead, but it is splintering to the point where the centre barely holds. The brightest flickers are on the fringes: individuals like Abbé Pierre, founder of the Emmaus movement for the homeless; “charismatics” whose style draws on Pentecostalism, and traditionalists who love Latin rites and processions. Meanwhile, the church’s relatively liberal mainstream is almost in free fall. As conservatives like Abbé Francis see it, it is largely the liberals’ own fault: “They keep selling and closing properties, while we [traditionalists] are busy building and restoring.” ...

... But in many European places where Catholicism remained all-powerful until say, 1960, the church is losing whatever remains of its grip on society at an accelerating pace. The drop in active adherence to, and knowledge of, Christianity is a long-running and gentle trend; but the hollowing out of church structures—parishes, monasteries, schools, universities, charities—is more dramatic. That is the backdrop against which the paedophile scandal, now raging across Europe after its explosion in the United States, has to be understood. The church’s fading institutional power makes it (mercifully) easier for people who were abused by clerics to speak out; and as horrors are laid bare, the church, in many people’s eyes, grows even weaker. ...

Britain Plans to Decentralize Health Care

New York Times: Britain Plans to Decentralize Health Care

LONDON — Perhaps the only consistent thing about Britain’s socialized health care system is that it is in a perpetual state of flux, its structure constantly changing as governments search for the elusive formula that will deliver the best care for the cheapest price while costs and demand escalate.

Even as the new coalition government said it would make enormous cuts in the public sector, it initially promised to leave health care alone. But in one of its most surprising moves so far, it has done the opposite, proposing what would be the most radical reorganization of the National Health Service, as the system is called, since its inception in 1948.

Practical details of the plan are still sketchy. But its aim is clear: to shift control of England’s $160 billion annual health budget from a centralized bureaucracy to doctors at the local level. Under the plan, $100 billion to $125 billion a year would be meted out to general practitioners, who would use the money to buy services from hospitals and other health care providers.

The plan would also shrink the bureaucratic apparatus, in keeping with the government’s goal to effect $30 billion in “efficiency savings” in the health budget by 2014 and to reduce administrative costs by 45 percent. Tens of thousands of jobs would be lost because layers of bureaucracy would be abolished. ...

Liberals one seat ahead of Labour in Dutch election

BBC: Liberals one seat ahead of Labour in Dutch election

A centre-right party has emerged narrowly on top in the Netherlands' election, with the Liberal Party (VVD) winning one seat more than Labour.

With almost 90% of votes counted, the VVD had 31 of 150 seats, and appeared to be heading for coalition talks.

Geert Wilders' anti-Islam Freedom Party won 24 seats, its best-ever finish.

Outgoing PM Jan Peter Balkenende resigned his seat after his Christian Democrats suffered a crushing defeat, trailing in fourth place with 21 seats.

Mr Balkenende also stepped down as leader of the party, which plummeted to a historic low losing 20 seats.

The AFP news agency reported Mr Balkenende as saying he took "political responsibility" for the result.

Shift right

As results emerged it became clear that Dutch voters had shifted to the right in Wednesday's national elections, dominated by concerns over the rising national debt and discontent over immigration. ...

So now the Tea Party has spread to the Netherlands. Who knew! Just like in America, it is probably just a racist response to their first black prime minister. Oh ... wait ... they don't have a black prime minister?  ;-)

End of Communism Cheered but Now with More Reservations

Pew Research: End of Communism Cheered but Now with More Reservations

(I just discovered this report from six months ago. Interesting stuff.)

The Pulse of Europe 2009: 20 Years After the Fall of the Berlin Wall.

Nearly two decades after the fall of the Berlin Wall, publics of former Iron Curtain countries generally look back approvingly at the collapse of communism. Majorities of people in most former Soviet republics and Eastern European countries endorse the emergence of multiparty systems and a free market economy.

However, the initial widespread enthusiasm about these changes has dimmed in most of the countries surveyed; in some, support for democracy and capitalism has diminished markedly. In many nations, majorities or pluralities say that most people were better off under communism, and there is a widespread view that the business class and political leadership have benefited from the changes more than ordinary people. Nonetheless, self reported life satisfaction has risen significantly in these societies compared with nearly two decades ago when the Times Mirror Center1 first studied public opinion in the former Eastern bloc.

The acceptance of — and appetite for — democracy is much less evident today among the publics of the former Soviet republics of Russia and Ukraine, who lived the longest under communism. In contrast, Eastern Europeans, especially the Czechs and those in the former East Germany, are more accepting of the economic and societal upheavals of the past two decades. East Germans, in particular, overwhelmingly approve of the reunification of Germany, as do those living in what was West Germany. However, fewer east Germans now have very positive views of reunification than in mid-1991, when the benchmark surveys were conducted by the Times Mirror Center for the People & the Press. And now, as then, many of those living in east Germany believe that unification happened too quickly.

One of the most positive trends in Europe since the fall of the Wall is a decline in ethnic hostilities among the people of former communist countries. In a number of nations, fewer citizens say they hold unfavorable views of ethnic minorities than did so in 1991. Nonetheless, sizable percentages of people in former communist countries continue to have unfavorable views of minority groups and neighboring nationalities. The new poll also finds Western Europeans in a number of cases are at least as hostile toward minorities as are Eastern Europeans. In particular, many in the West, especially in Italy and Spain, hold unfavorable views of Muslims.

Concern about Russia is another sentiment shared by both Eastern and Western Europeans. A majority of the French (57%) and 46% of Germans say Russia is having a bad influence on their countries; this view is shared by most Poles (59%) and sizable minorities in most other Eastern European countries. The exceptions are Bulgaria and Ukraine, where on balance Russia’s influence is seen as more positive than negative. ...

Lots of interesting tables:

England will win World Cup 2010: J.P. Morgan

Christian Science Monitor: England will win World Cup 2010: J.P. Morgan

Financial wizards at J.P. Morgan have used 'Quant Models' to determine that serial underperformers England will win World Cup 2010, taking out Spain in the final match. Could it be?

Move over, Brazil.

Step aside, Italy.

England will win World Cup 2010.

IN PICTURES: Ready for the World Cup

Stop snickering, you. The financial wizards at J.P. Morgan have used "Quant Models" to determine that the Three Lions will sink their teeth into Spain in the World Cup final. The world will hear them roar.

J.P. Morgan describes Quant Models as "mathematical methods built to efficiently screen and identify stocks" and says it has applied that method to soccer data such as FIFA rankings and historical match scores to come up with its result.

Still, England?

Although every Englishman seems to fancy the national team's chances in every World Cup, few outside Old Blighty see them as favorites when the cup rolls around every four years. ...

Keep in mind this prediction was brought to you be the same people who presided over the 2008 finance collapse. :-)

Two Cheers for the Bishops of England and Wales

Acton PowerBlog: Two Cheers for the Bishops of England and Wales

Choosing the Common Good from Catholic Westminster on Vimeo.

In today’s Acton Commentary, I review a new statement titled Choosing the Common Good (download it here) from the Catholic Bishops’ Conference of England and Wales. In the introductory video linked above, The Most Rev. Vincent Nichols, Archbishop of Westminster, introduces Choosing the Common Good and discusses the key themes in Catholic Social Teaching “as a contribution to the wide-ranging debate about the values and vision that underpin our society.”

Here is the text  of my commentary: ...

... Choosing the Common Good’s strength is that it speaks to what the Church is best qualified to discuss when it comes to social and political questions: the moral-cultural dimension. In this regard, three dominant themes pervade this concise text.

The first is the limits of politics. “Have we allowed ourselves,” the bishops write, “to be seduced by the myth that social problems are for the government to deal with?. No government can solve every problem, nor make us more generous or responsive to need.”

That’s a marked departure from much of the post-war British political consensus about government’s role that not even Margaret Thatcher could overturn.

A second theme is the centrality of truly free associations (as opposed to NGOs). “Local institutions,” the bishops state, “expressing good citizenship and neighbourliness, which are not beholden to government, form a vital part of civil society.” These networks of solidarity embody valuable social capital, the vitality of which “requires our society to rediscover the centrality of personal responsibility and the gift of service to others.”

This linkage between personal responsibility and concern for our neighbor (rather than delegating it to the state) underpins the bishops’ emphasis on trust. Trust’s significance as a force for genuine social cohesion is underscored by social and economic research. According to the bishops, the undermining of trust as a living force in much of contemporary Britain has proved costly, including in the economy.

While stressing that the causes of the financial crisis are complex, the bishops argue that a decline of trust helped facilitate the financial sector’s meltdown. It follows “that new and sweeping regulation [will not] of itself solve these deep-seated problem.” “[S]ystematic flaws in the economy,” they add, “cannot be repaired unless it is recognized that they stem from, and contribute to, equivalent flaws in our wider society.”

Yes, many irresponsible choices were made by people working in the financial industry. But, as the bishops observe, there was plenty of irresponsible behavior on the part of others – including politicians and ordinary folk – that contributed to the meltdown. Regulation in itself cannot solve this problem: indeed it can significantly worsen matters.

Then there is the theme of the indispensability of virtue for any decent society. Here the bishops really hit their stride. “In place of virtue”, they insist, “we have seen an expansion of regulation. A society that is held together just by compliance to rules is inherently fragile, open to further abuses which will be met by a further expansion of regulation.”

The bishops then detail how the classical virtues of prudence, justice, courage, and temperance have real and practical consequences for economic and social life. That’s an important argument which many on the British left and right presently seem incapable of articulating. It also makes a welcome contrast to those – including some Catholics – who invariably reduce morality to whatever happens to be the latest fashionable lefty cause. ...