Tag: Nobel Prize in Economics

Categories
general freedom individual achievement responsibility tax policy

Plotting Progress

Angus Deaton, Nobel Prize, Economics, The Great Escape, Inequality, collage, photomontage, JGill, Paul Jacob, Common Sense

The prestige of the Nobel Peace Prize has been tarnished by some more-​than-​dubious awards, in our time … Henry Kissinger and Barack Obama, most obviously.

Same goes for the Bank of Sweden’s knock-​off “Memorial” prize for economics.

But, according to David R. Henderson, this week’s Nobel nod to Scottish-​born Angus Deaton, for his “analysis of consumption, poverty and welfare,” is “a fine pick.”

Deaton is, writes Henderson, “an important chronicler of the market’s abilities to create wealth and improve society.”

While it is all the rage, these days, to complain about increasing inequality, Deaton has been instrumental in showing that wealth, health and welfare have increased as poverty, worldwide, has decreased.

And this has been largely the result of markets. Not big government programs.

Deaton, Henderson tells us, “believes that the approximately $5 trillion given by governments of rich countries to poor countries over the past 50 years has undercut good governance by making poor countries’ leaders less accountable to their own citizens.”

ABC News seconds Henderson’s account:

In his 2013 book, The Great Escape, Deaton expressed skepticism about the effectiveness of international aid programs in addressing poverty.… China and India have lifted tens of millions of people out of poverty despite receiving relatively little aid money. Yet at the same time, poverty has remained entrenched in many African countries that have received substantial sums.

Peter G. Klein, at mises​.org, identifies a deeper insight by the latest Nobel economist: “aggregate measures of consumption and inequality conceal important differences among individuals.” This explains why Deaton came to his other (controversial) conclusions: he never took his eye off the real player in market life, the individual.

This is Common Sense. I’m Paul Jacob.

Printable PDF

Angus Deaton, Nobel Prize, Economics, The Great Escape, Inequality, collage, photomontage, JGill, Paul Jacob, Common Sense

 

Categories
too much government

Is “Less Big” Possible?

The idea of a streamlined welfare state is utterly foreign in today’s political climate. Offering some social services, but not others? Anathema — at least to our “progressives.”

It is also, even more obviously, not nurtured by current political process.

After all, we’ve witnessed two major expansions in “welfare” programs in the last decade, the bipartisan Medicare “Part D” and the Democrats’ “Obamacare.” The first was underfunded from the start, and the second was and remains a mess. Both are financial time bombs.

But if you think America has it bad, it’s worse in France.

Jean Tirole, the new (just announced) Nobel Laureate in Economics, calls the condition of the French labor market “catastrophic.” And he thinks France’s government has to be smaller.

Now, he’s no heir to J.-B. Say and Fredéric Bastiat. He does not support an extremely limited government, a “nightwatchman” state. He says he likes France’s basic model. But it has grown too far in size and scope:

Tirole remarked that northern European countries, as well as Canada and Australia, had proven you could keep a welfare social model with smaller government. In contrast, he said France’s “big state” threatened its social policies because there will not be “enough money to pay for it in the long run.”

He’s basically just demanding that government live within its means.

It’s not too far from common Tea Party sentiment.

But tell that to your average progressive pol. Or blogger. Or activist. Given protective cover for ever-​growing spending by the likes of New York Times’s Nobel columnist, Paul Krugman, any idea of federal spending cutbacks have been and remain off limits.

Maybe Professor Tirole can convince them.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets

When Good Economists Go Bad

It is weird to watch respected economists leap so far off the beam that you question their sanity.

The number who supported the federal bailout made me shake my head. I guess economists can panic, too, get all doe-​eyed in the face of a power grab.

My confidence in sanity returned when I read Nobel Laureate Vernon Smith’s amazingly insightful article in the Wall Street Journal. He argued that the Treasury Department has now committed itself to a kind of auction with which it has no demonstrated competence. Smith’s practical take on the bailout folly reminds me of another Smith, Adam, way back in 1776, explaining why markets work better than governments to create the wealth of nations.

Then, a few days later, Paul Krugman received the Nobel Prize for Economics.

I had read Krugman years ago, and was impresssed with his good sense. But then he began writing op-​eds for the New York Times, and, uh, I began questioning his sanity. On so many issues he seems to believe that the best government governs most. And he’s a very pro-​Democratic Party partisan.

It is worth remembering, though, that Krugman is a left-​winger who supports free trade, attributes Europe’s high unemployment to wage regulations, and regards anti-​globalization activists as enemies of the world’s poor.

Maybe his new prize will remind him of his good sense. He might even rethink his allegiance to Party.

This is Common Sense. I’m Paul Jacob.