Nordlinger from Davos

As you are probably aware of the annual World Economic Forum has been going on in Davos and as always anyone who thinks he or she is someone is there to mingle, listen to what seems like predictable but perhaps also interesting talks, and worry about global warming.

Jay Nordlinger has written highly entertaining reports from the spectacle the last few years, and does so this year too. Here are links to part one, and part two — more parts will be availible online over the next couple of days, I think. I highly recommend them!

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Italian oddities

The Italian economy continues to lag behind in comparison with the other eurozone economies, and has long been in need of deregulation and liberalisation. However, before reading this piece in the Economist, I didn’t quite realise how utterly bizarre some of the hurtful regulations were. A quote, concerning some of the things the left of centre government is improving on:

Big commercial outlets may now get the right to sell petrol, while existing petrol stations may finally be allowed to stay open around the clock. Some particularly petty rules, such as government regulation of the number and location of tobacconists, or a ban on insurance agents marketing the products of more than one insurer, may now be scrapped.

Most importantly perhaps, Mr Bersani would scrap the rules setting a minimum distance between rival businesses that limit competition in much of the retail sector. Such restrictions apply to cinemas, news-stands, beauty parlours, hairdressing salons and even driving schools.

Italy obviously has quite a long way to go, and as usual there doesn’t seem to be enough support to do anything about the bigger obstacles. But at least, in years to come, one won’t have to bring a yardstick to find out if it’s okay to open a news-stand on the corner.

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Energy dependence

One of President Bush’s promises in his State of the Union speech was that the United States would cut its gas consumption by 20 per cent in 10 years. A fine target, it may seem — in particular since a substantial drop in the US demand for oil would cut revenues for such nice fellows as Vladimir Putin, Hugo Chavez and the friendly oil producers of the Middle East. There are plenty of reasons to reduce oil consumption then. If one worries more about global warming than I do, that adds another one.

As both Charles Krauthammer and Greg Mankiw points out, the proposed set of regulations and subsidies is a highly inefficient way to achieve this. A much better solution would be to increase the tax on gasoline, by say $1 or $1.50. Not politically popular, admittedly, but consumers react to price, and if gasoline prices go up demand for it will go down. Evidence of that this is true in reality, and not just in fancy economic models, was given both this year and after the spikes in prices during the 1970s. US oil consumption 2006 was smaller than 2005.

If such a tax increase could be introduced gradually, and combined with a reduction in federal income taxes, then maybe it would be an easier sell. The aim of that would in part be a more efficient taxation, and in part to provide incentives for car producers to make more fuel efficient cars without creating a complicated set of regulations that impose undesireable costs.

The chances of this kind of policy happening probably aren’t too great, but I do get the feeling that the idea is becoming more popular and widely discussed. Also, these are not the only measures one could take. Another one, suggested by Krauthammer, is to switch to more nuclear power for electricity generation. I think that would be wise — even more so for the many European countries where gasoline taxes are already very high (too high, in some cases).

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Bäckström om statsfinanserna

I en intressant debattartikel skriver Svenskt Näringslivs vd, tillika tidigare riksbankschefen, Urban Bäcktröm att Sverige bör göra sig av med överskottsmålet i de offentliga finanserna. Att staten bygger upp en förmögenhet har inget värde i sig, och statsskulden är på en tillräckligt låg nivå för att inte riskera att destabilisera ekonomin. Tanken att samla ihop en reserv till när pensionsavgångar sätter tryck på systemet ger Bäckström inte mycket för.

Istället borde staten låta den privata sfären — medborgare och företag — behålla sina pengar själva.

En skattesänkning av den storlek som vi här talar om (cirka 60 miljarder kronor) skulle exempelvis skapa utrymme för ett helt avskaffande av den statliga inkomstskatten, inklusive värnskatten (45 miljarder), sänkt kapitalskatt och ett fullständigt borttagande av den skadliga förmögenhetsskatten. Detta skulle i sin tur innebära att de för företagare så olycksaliga 3:12-reglerna kunde slopas helt. Utrymme skulle även finnas för att påbörja angelägna generella sänkningar av arbetsgivaravgiften.

Värdet av sådana förändringar är svårt att förneka. Något för Anders Borg att fundera på.

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Europeans need more fruit

The European Union exists in part to ensure peace and stability in Europe, by integrating the economies and allowing the free movement of goods, services and labour. While it doesn’t quite live up to those things, they are all excellent and makes us better off.

Always looking for new things to do the European Commission has now decided that it would be great if the EU made sure we ate more fruit! Apparently the ignorant Europeans eat only 200 grams of fruit everyday even though the WHO has told them to eat at least 400 grams. The Finns and Greeks in their wisdom munches down 500 grams worth of apples and bananas. To make sure the rest of us do too, the commission suggests using taxpayer money to give to farmers who gives away fruit to charities and schools. Brilliant! Also, the commission worries that unless the farmers are given some money they will lose out to fruit producers outside of Europe, which apparently would be bad. That it would help lower prices for consumers, thereby actually increasing the amount of fruit we would buy, seems to be happily ignored. After all, if people make their own decisions politicians can’t boast about how good those decisions are.

We have too many nanny-state policies at the national level. Adding them at the EU level too will move even more decisions from the people they affect to politicians who wants to feel good about themselves. Not only will it reduce personal liberty, which is bad enough, but the current trend also risks making people ever more childlike and unable to make responsible decisions for themselves. That’s a frightening development.

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State of the Union 2007

Yesterday George Bush held this year’s State of the Union speech, and one would be hard pressed to find any surprises. The president chose a co-operative style, asking the Democrats in control of the House and Senate to work with him.

President Bush, as usual, brought up several important issues. On Iraq he re-enforced his position, and although the surge in troops probably won’t solve problems in itself, I think it can be a good strategy if combined with other measures, including putting more pressure on the Iraqi government.

Another difficult issue is that of social security reform. President Bush has had a go at it before and failed, and — unfortunately — I think it’ll be just as difficult for him to achieve much this time. Reform is necessary, as the baby-boomers all retire, but the sense of urgency still isn’t strong enough to provide incentives for painful reforms. Even so I think it’s good that the President brings this up and talks about it.

Immigration seems to be the difficult domestic issue where George Bush has the best chance of achieving something. Both parties realise something needs to be done, and the slightly softer approach that the President has goes down a bit easier with the Democrats than it does with his fellow Republicans. No amnesty (which is good), but a way to get legal status combined with some sort of temporary work permit seems like a way forward.

In conclusion, there really isn’t all that much to say about the speech. The policies presented are the ones George Bush has advocated earlier on. Many make sense and seem reasonable. It will be interesting to see what sort of balance the upcoming years will yield, when it comes to the President dealing with the Democratic Congress.

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The speech can be seen here
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Podcasts on economics

For those of you who are interested in economics I recommend the podcasts over on EconTalk. You can listen to interviews and discussions with a lot of insightful economists, including the late Milton Friedman and Harvard professor Greg Mankiw. A great way to learn a few things while making your way to work or school.

Dagens underhållning

Gudmundson bjuder på stor underhållning när han ersätter Public Service-bossen Eva Hamiltons omskrivningar i en debattartikel med vad hon egentligen menar. Nödvändig läsning! Tänk om hon någon gång också skulle utsättas för frågor med motsvarande skärpa, men det skulle förstås inte vara bra för de journalister som drömmer om att jobba för statstelevisionen.

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