Interesting blog bits

1. Matt Nolan on Black markets, crime, and costs

   Counting spending on illegal drugs as a “cost” to the economy is nonsensical – and that is what they have done hear. If the Australian government is annoyed it isn’t getting the tax revenue from it (which seems to be their focus), the solution is to legalise drugs and tax them.

2. Roger Kerr on Government Size And Economic Growth

   The Treasury’s focus is almost exclusively on deadweight costs and public sector productivity. The omission of any material discussion of rent-seeking, and public choice issues in general, is extremely important. The Treasury’s general framework presumes that governments spend money in order to overcome ‘market failures’ and fails to consider the more plausible proposition that they spend money in order to get re-elected or to favour their most important constituencies. There is no assessment of the level of spending that could be justified on genuine public interest grounds. Basically, incentives in the government sector are not a problem, so the paper implicitly assumes.

3. Lynne Kiesling on Next Restaurant: pricing and ticketing innovation redux

   Why are such savvy entrepreneurs as Achatz and Kokonas letting secondary sellers capture so much of the surplus that they have created?

4. Mark J Perry on Debunking the Mercantilist Trade Doctrine

   The general public, politicians, the media, and even some economists have bought into a false mercantilist doctrine that: a) exports are good for the economy and b) imports are bad for the economy, which therefore implies that: c) trade deficits are bad for the economy and d) trade surpluses are good for the economy.

5. Roger Kerr on Wages in China's Manufacturing Sector

   A positive relationship between productivity and wages. Or the days of cheap labour in China are coming to an end.

6. Peter Boettke gives Advice to Undergraduates
7. Tim Harford says Don’t blame the (mostly) efficient markets hypothesis

   The EMH has several forms. The weakest says that not only is past performance no guarantee of future performance, but nothing about the way a share’s price has bounced around in the past tells you anything about how it will move in the future. The strongest says that the market price is the correct price: that all privately and publicly available information that might be relevant to the value of a share is already reflected in today’s price. The weak form tells you not to listen to stock pickers who point to recently soaring shares. The strong form tells you not to bother doing any research into shares, because it cannot possibly do you any good.

8. Matthias Bauer, Peter Draper and Andreas Freytag on The “Seoul Consensus” on development: Substantial progress for sub-Saharan Africa or paperwork again?

   The global financial crisis also struck many developing countries, particularly in sub-Saharan Africa. In 2010, the G20 agreed on a “Seoul Action Plan”, which addresses the problems of the world’s poorest. This column analyses its message for sub-Saharan Africa. It argues that the G20 should really start energising the Doha round, taking fiscal stabilisation seriously, ensuring that exchange rates float, and guaranteeing that quantitative easing stops.

9. Matthias Bauer, Peter Draper and Andreas Freytag on After the “Seoul Consensus”: Ways to help sub-Saharan Africa return to pre-crisis economic performance

   The economic fate of developing countries since the global crisis has been in doubt. In the second of two columns on the “Seoul Consensus”, the authors argue that industrialised economies are not in a position to take the lead in initiatives to strengthen economic policy rationality on a global scale. Emerging economies should take the lead and push for the conclusion of the Doha Round.

10. Gary Becker on How to (and not to) Help Poor Families in Developing Countries Cope with Rising Food Prices

    During the current sharp run up in food prices, several food-exporting countries have banned, or greatly restricted, the ability of farmers to export their produce. This lowers the price of food to urban consumers in these countries, and thereby helps the urban poor. However, such bans reduce the prices received by poor farmers of these countries. This reduces their incentives to raise their production of food, and makes these farmers worse off. It also raises the cost of food to families in food-importing countries, and thereby hurts the poor in these countries. Since farmers in developing countries are generally much poorer than those who live in cities and other urban communities, the poor may overall be made worse off when countries greatly restrict their food exports.