Blog round up

Will Davies: ‘predatory elites’

“Any society in which massive gains are privatised and massive losses are socialised is one which is suffering from a problem of predatory elites.”

Karel Williams speaking at Social Life of Methods this week. More thoughts on the conference in due course.

Dani Rodrik: (Some) economists’ topsy turvy world

Spain, where unemployment has risen to 20% and domestic demand has yet to recover, has just approved a labor reform law that makes it easier for employers to dismiss workers.

I hope someone from the IMF or OECD — the two institutions responsible for convincing the Spaniards that such a reform is an urgent priority — will explain to me how reducing the cost of firing workers can lower unemployment in the midst of a decline in labor demand.

Chris Dillow: Rooney: norms, contracts and lemons

The allegations that Wayne Rooney paid £1200 a time for sex brings a well-respected profession into disgrace. I refer, of course, to prostitution. In selling her story, Ms Thompson has broken the code that prostitutes, like priests and lawyers, do not divulge their dealings with clients.

This raises two economic issues.[…]

Jesse Walker: The Ruling Class: Scenes from the class struggle on the American right

Few essays attracted as much attention from right-wing readers this summer as “America’s Ruling Class—and the Perils of Revolution,” an extended argument that an incestuous social set “rules uneasily over the majority of Americans.” Written by Angelo Codevilla of the Claremont Institute and first published in The American Spectator, this very long article has now been expanded into a very brief book, called The Ruling Class. If you’re interested in the state of the American right, it’s an instructive document—a book that strives mightily to marry conservative cultural complaints to the libertarian case against an intrusive central government.[…]

Reihan Salam: How State Capitalism and Illiberal Democracy Will Shape the Global Economy

Ian Bremmer and Nouriel Roubini have written an absolutely terrifying essay for Institutional Investor magazine, which resonates with Stephen S. Cohen and Brad DeLong’s arguments in their excellent book The End of Influence. Bremmer and Roubini carefully explain why the rise ofbeggar-thy-neighbor state capitalism will result in “an extended period of anemic, subpar growth.”

Robert Reich: Why Obama Is Proposing Whopping Corporate Tax Cuts, and Why He’s Wrong

President Obama reportedly will propose two big corporate tax cuts this week.

One would expand and make permanent the research and experimentation tax credit, at a cost of about $100 billion over the next ten years. The other would allow companies to write off 100 percent of their new investments in plant and equipment between now and the end of 2011 at a cost next year of substantially more than $100 billion (but a ten-year cost of about $30 billion since those write-offs wouldn’t be taken over the longer-term).

The economy needs two whopping corporate tax cuts right now as much as someone with a serious heart condition needs Botox.[…]

COMMENT: Help for first-time buyers? [Chris Dillow]

Here’s another example of how the main political parties are ignoring the notion of tax incidence – stamp duty.

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COMMENT: “Relentless reformers” [Chris Dillow]

Gordon Brown claims that “Labour will be restless and relentless reformers.” This seems an oafish thing to say. Being a relentless reformer is like being a DIY enthusiast who always lives in a mess because he is forever in the middle of a job that he never actually finishes.

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ANALYSIS: Immigration and government borrowing [Chris Dillow]

If you’re serious about wanting to reduce government borrowing, you should encourage more immigration, at least of a particular type. That’s the message of an article in the latest issue of Fiscal Studies (early version here).
Christian Dustmann and colleagues show that migrants from the A8 nations “have made a significant net contribution to the UK fiscal system.” This is because even those of them who are eligible for welfare benefits are much less likely to claim them than are native  people. They are also much less likely to live in social housing.

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