Tim Worstall

Sometime ago here I mused on whether the socialist calculation problem would ever be solved. Would it be possible for computing speed and information gathering to ever become fast enough and detailed enough that it would in fact be possible to properly plan an economy? My conclusion was "not yet at least" for which I am grateful for the calculation of when it might be possible has just been done for us.

We know that everything has a price: no, not that you can buy any and everything, rather, that whatever it is that is done there is a price to that being done. Good old Bastiat and what is unseen and all that. And of course, this applies to planning laws just as much as anything else. The difficult thing is trying to work out what those unseen costs are, not their mere existence.

So, here is some research showing what the costs are of the planning laws that we impose upon supermarkets:

My apologies but I've always found it slightly difficult to award Matt Yglesias the high rating that so many others do. He's certainly right some of the time but in what I've seen of his output there's all to often a reflexive defence of "my tribe" rather than careful thought. Not, as you know, something that I am ever subject to myself.

However, on this specific point he is absolutely spot on:

It pains me to have to admit this but this is from someone who purports to teach economics in a British university:

And in recent weeks we have heard many economists argue that growth in the eurozone will come from "structural reforms" that will make it easier to collect taxes, reduce red tape, and easier to hire and fire workers.

A nice little story here about Air India. It illustrates the dangers of having either state run or monopolistic companies.

Some of the airline’s staggering losses are rooted in exceptionally generous staff benefits. Investigators discovered pilots insisted in staying in five star hotels in New York, Chicago and Mumbai during stop-overs instead of spending the night at cheaper airport hotels.

I was able to snag a copy of the new Limits to Growth report to the Club of Rome. The 40 year update of that one that said we'd all be dead already, our skeletons rocking gently in the winds that whip a shattered planet.

We do all, at least occasionally, need to poke our heads up from the readings of our own dogmas and do a little reality check. Have a look at the real world and make sure that the effects are indeed as we would have theory predict. That neoliberal globalisation thing then, perhaps that application of the Washington Consensus to the abject poverty of Africa, how's that working out then?

I've said before here that I'm deeply unimpressed with macroeconomics, stating that as the man didn't say in the long run it's all microeconomics. However, I'm coming around to the idea that the situation is worse than that. We just don't know enough about macroeconomics to know what to do. This from Noahpinion sums it up for me:

You don't have to go far into NGO land to find people arguing that poor countries need to protect their baby industries from the big bad wolves of international capitalism. That trade barriers are a good idea, that infant industries need to be nurtured and, as is the way of these things, the Washington Consensus is the imposition of the poverty that the poor suffer from.

We've been told, by a man with impeccable economic credentials no less, that red tape and regulation just isn't important to the economy at all:

The truth is that, if there is money to be made, businessmen will invest regardless of the level of regulations. This is why the 299 permits that were needed to open a factory in South Korea in the early 1990s did not prevent the country from investing 35% of its income and growing at 10% per year at the time.