Greg Manikiw on the Yin and Yang of Economics

December 15, 2007 at 8:50 am | Posted in competition, corporations, economics, economy, escher, free market, government, income dostribution, individual freedom, individual rights, liberty, market, market forces, Michael Kruse, MNC. economics, monopoly, poverty, right and left, selfish, socialism, taxation, trickle down, wealth distribution, world GDP | 2 Comments
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How do the right and left differ?

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The conclusion of today’s ec 10 lecture:

In today’s lecture, I have discussed a number of reasons that right-leaning and left-leaning economists differ in their policy views, even though they share an intellectual framework for analysis. Here is a summary.

  • The right sees large deadweight losses associated with taxation and, therefore, is worried about the growth of government as a share in the economy. The left sees smaller elasticities of supply and demand and, therefore, is less worried about the distortionary effect of taxes.
  • The right sees externalities as an occasional market failure that calls for government intervention, but sees this as relatively rare exception to the general rule that markets lead to efficient allocations. The left sees externalities as more pervasive.
  • The right sees competition as a pervasive feature of the economy and market power
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  • as typically limited both in magnitude and duration. The left sees large corporations with substantial degrees of monopoly power that need to be checked by active antitrust policy.
  • The right sees people as largely rational, doing the best the can given the constraints they face. The left sees people making systematic errors and believe that it is the government role’s to protect people from their own mistakes.

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  • The right sees government as a terribly inefficient mechanism for allocating resources, subject to special-interest politics at best and rampant corruption at worst. The left sees government as the main institution that can counterbalance the effects of the all-too-powerful marketplace.

    There is one last issue that divides the right and the left—perhaps the most important one. That concerns the issue of income distribution. Is the market-based distribution of income fair or unfair, and if unfair, what should the government do about it? That is such a big topic that I will devote the entire next lecture to it.

    Greg Manikiw on himself: “… a professor of economics at Harvard University, where I teach introductory economics (ec 10) among other courses.”
    Thanks to Michael Kruse for posting this up on his own exciting blog: Kruse Kronicle and that’s also a link to his excellent new series on “Living Simply in Abundance”.
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Tangled Rights

October 1, 2007 at 2:13 pm | Posted in development, freedom of speech, habeas corpus, human rights, IMF, International Monetary Fund, LRB, MNC. economics, neocononialism, Slavoj Zizek, WB, World Bank, Zimbabwe | Leave a comment

At issue across the world today is the question of basic human rights. The most endangered right is the right to freedom of speech, but freedom of opinion/religious belief, the right to a fair trial, and rights of habeas Corpus have also been shot full of holes.

The world’s political will to uphold human rights has been severely compromised by a number of factors.

First and foremost has been the change that has taken place in the West since the start of the 1970s drive to globalise.

Globalisation has primarily spawned massive international corporations that are not answerable to anyone. The bottom line is profit. And how one gets it, simply doesn’t matter. MNCs are designed to ensure their own survival and growth, while sharing a pittance of their ill gotten gains with their shareholders to keep them happy.

Secondly, the swing to right wing politics has had a disastrous effect. Bush Jr. in the U.S.A. led the way followed very closely by Blair and Great Britain. The world’s most prosperous nations, those whose corporations are reaping immense benefits from their MNC fostering and spawning neocononialism, have lost sight entirely of human rights. The open support to tyranny, backed by massive monetary support to any type of cooperating petty dictatorships has ensured hat human rights have no importance at all.

The idea of development is much touted as being the one and only route to economic prosperity for the ‘developing’ nation. In this model the involvement of MNCs is a basic requirement. The MNC brings in the technology, the knowhow, the foreign markets, and the working business models, that are together the key ingredients of success. The MNC is also well capitalised and can afford to wait until all the pieces fall into place to generate its profits. In the process, jobs are created, infrastructure is developed and a nation’s economy is supposed to ‘develop’. But that’s all a pie in the sky theory. It sounds plausible. It sounds good and so we choose to believe that this is what development means, that this is the win-win formula that the World Bank and the International Monetary Fund are all trying to promote – this holistic and positive model that will bring prosperity to poor ‘underdeveloped’ nations.

What really happens is that the absolute minimum of infrastructure is put in place to allow the MNC to remove the resources, finished/semi-finished goods that it has come there for. Technology will not be transferred. A few jobs, as few as possible, will be created. the jobs will be mostly menial and manual in nature with a lean and mean administration to extract the most for the least.

The government will be corrupted as environmental and developmental norms are given the go bye. The population will suffer as their natural resources are sucked out. There will be little to even trickle down as the majority of the earning is realised in international markets and the MNC pockets the huge profits. Local market systems that have functioned and self regulated for centuries will be shut down or subverted overnight. And when there are complaints, as there must be,

HUMAN RIGHTS WILL BE THE FIRST TO GO.

Aside: I often wonder if places like Zimbabwe are not encouraged and paid to go down the tubes to frighten the unwary. “This is exactly what will happen to you too if you don’t do exactly as the WB-IMF consultants advise you.”

I was struck by the incisive and pointed analysis in a not o recent Slavoj Žižek commentary

Are we in a war? Do we have an enemy?

Does “we were all living in a state of emergency because of the worldwide struggle between freedom and Communism, the full implementation of the Constitution was forever postponed and a permanent state of emergency obtained. This state of emergency was suspended every four years for one day only, election day, to legitimise the rule” somehow sound familiar?

in The LRB of May 23, 2002.

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