The Political Economist

In my  last book review  I summarized a very interesting book called The Spirit Level by Richard Wilkinson and Kate Pickett . In it the authors propose a solution that would not only lower inequality and thus correct many of the negative social outcomes related to it (but not caused by it, mind you; they don't prove causality), but also change the entire system of values in society, so that people would be less profit-oriented and would increase their levels of interpersonal trust (among other things).  Their big idea is to introduce democratic employee ownership . Hence the title: The John Lewis economy (the John Lewis Partnership is the famous UK example of an employee-owned firm ; it allows all of its employees to share the firm's profits and have oversight over management decisions through several democratic mechanisms of corporate governance). It's a belated comment since I wanted to write a piece about this ever since 2012, when UK deputy PM Nick Clegg  o...

This week's edition of the Economist has a special report on the Nordic economic model . The image of Nordic countries has too often been one of high spending, big size of government, a huge welfare system, basically a social-democrat paradise. But are their policies all that social, or are they much more pro-market than people are prepared to believe?  Their model has changed from promoting an equal society to promoting both an equal and dynamic society, where competition strives and market forces are abundant (as opposed to some Anglo-Saxon nations which carried this distinction in the past, but not anymore). This is a great message to Europe which doesn't have to look too far to find a model that comprises both a competitive economy and high levels of social mobility.  This is their main lesson: "The main lesson to learn from the Nordics is not ideological but practical. The state is popular not because it is big but because it works. A Swede pays tax more w...

A recent blog post by Brian Caplan reminded me of a great post by Scott Sumner from a about month ago about the issue of an optimal size of government. He compares the Scandinavian model, which to a narrow conservative mind presents somewhat of a paradox where a large size of government coexists with high levels of economic freedom, to the current US system of relatively smaller government, but decreasing economic (and personal) freedom . Brian Caplan has the story where he disagrees with Sumner’s distinction between the terms 'size of government' and 'market freedom'. Where Sumner makes an important difference, Caplan thinks market freedom cannot be achieved with a high expenditures to GDP ratio within an economy. Sumner responded to this soon enough , saying that expenditure to GDP ratios "vastly overstate the difference between the Nordic and Singaporean [for example] models. That's why I focus on variables like MTRs [marginal tax rates] and tax ...