The Political Economist

You might have noticed that blogging activity has been slow for the past two weeks. This was due to me getting married this weekend to my, by now wife Barbara. With the honeymoon ahead of us, blogging will be on pause for the upcoming two weeks. 

From TED talks comes this excellent presentation delivered by Hans Rosling , a professor of global health at Karolinska Institute (the institution that decides upon the Nobel prize in medicine). The focus of his talk is on disproving the myths about the developing world, which is, according to Rosling, actually quickly closing the gap with the rich countries and is moving forward the same direction (following the same pattern) of the Western world. They are now where the West was some 40-50 years ago. Basically he claims, and I agree, that we shouldn't generalize aid policies towards one area, since within this area there are huge within and across-country inequalities. The same policy on curing diseases cannot be applied towards the top income groups in South Africa and the low income groups in Nigeria (as he mentions in the video; or in this great slideshow: Africa is not a country! ). There's many more good points being made, so I recommend the video:  He has a few m...

Bryan Caplan found a disturbing graph from Edmund Phelps's new book "Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge and Change" : Source:  Brian Caplan , taken from Phelps: Mass Flourishing  Caplan infers: "At first glance, this confirms a quarter-century of steadily declining creative destruction - falling job creation and job destruction. On closer look, though, there was little trend until the small recession of the early 2000s. Since then, however, creative destruction has relentlessly fallen. Striking fact: The rate of job destruction during the Great Recession used to be perfectly normal! We experienced it as a calamity because job creation not only kept falling, but dipped below expectations." He's right, the trend is obvious only in the pre-crisis decade. One could easily link this pre-crisis decline in job creation to the outsourcing trend or even to the role of technological progress . I've covered this...

In one of last month issues of the Economist , they opened up quite an interesting topic on how the consequences of the financial crisis have affected globalization. As we all know an immediate reaction to the sudden credit stop in 2008 was a strong decline of international trade (see graph below). As jobs in the real economy were being lost, and as many companies went under, a paradoxical solution of many quack economists  and the panicking public was a plea for protectionism of domestic jobs and industries. Even though this wasn't the main debate point at the time, there were indeed strong advocates of this necessity to protect domestic industries via higher tariffs and quotas, among other things. To save domestic industries from foreign competition in these tough times - a campaign well accepted by many interest groups seeking protection.  Data taken from WTO However, despite protectionism being anticipated as a likely outcome (as it happened during the Great Depres...