The Political Economist

The immigration debate has been a long standing issue between economists and the general population. I have yet to encounter an economist who is against it, yet many in the general population fear it claiming that immigrants take away domestic jobs and/or social security benefits, in addition to lowering the average domestic wages (since they are prepared to work for less). In Bryan Caplan's excellent book "Myth of the Rational Voter" he stresses that the division of opinions on immigration is the largest between economists and non-economists (the second one is openness to trade , on similar principles really). Even though there exists a whole range of original research that has proven time and time again that immigration leads to better skills in the economy , more specialization , higher not lower wages , that immigrants tend to be more entrepreneurial than average , not to mention bring in more competition, I however feel that many in the population still fail to unde...

Tiebout model Charles Tiebout first proposed the idea of "voting with feet" in his 1956 seminal paper “ A Pure Theory of Local Expenditures ” published in The Journal of Political Econom y, as a non-political, market way to solve the free rider problem in local governance.  The idea is simple. The model basically implies that people will choose where they want to live based on local public goods and services offered in different municipalities. People differ in their individual preferences towards different services and their willingness to pay for these services. They will choose where to live accordingly. A local provision of public goods will hence depend mostly on the taste of its residents – a logical proposition.  The idea was even embraced by two of my favourite Nobel Prize laureates Friedman and Hayek :  Friedman: "...The second broad principle is that government power must be dispersed. If government is to exercise power, better in the co...

So far, most of my blog posts have been (geographically) focused around internal issues in the UK, US and selected Eurozone economies. Now I’ll move a bit “cross-country” which is why this month’s texts will be (mostly) concerning cross-country comparisons. The first post of the month on China has been in that direction. The success of the US Education has always been the creator of progress in a society. Technological advancements and innovation (based on secured property rights and the functioning rule of law which prevented new inventions from exploitation) have been the drivers of growth of the United States ever since it was founded. But the rapid accumulation of knowledge and technological innovation didn’t start in the US until after WWII. One proof of this is the disproportional size of Nobel prize winners situated in the US prior and post WWII. With Germany, UK and France leading the way in sciences prior to the War, in the last 60 years the US has outpaced them signif...