The Broader Market

by Jordan Eizenga

Recent events north of the border have caught my attention.  An Australian company - BHP Billiton - has tried to acquire Potash Corp., a Canadian potash company based out of Saskatchewan.  Since BHP made public its intention to buy Potash, the provincial governments and the opposition parties in the federal government have voiced strong opposition to the deal.  They claim that the acquisition would result in the loss of jobs and tax revenue to the province and that it would be a giveaway of a strategic natural resource.  All of these arguments are extremely dubious.

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by Jordan Eizenga

Recent research by Peter Enns and Nathan Kelly suggests that during periods of rising income inequality, society tends to be less tolerant towards social programs.  Enns and Kelly study the “policy mood” of the United States between 1952-2006 and note a shift to conservatism among both the wealthy and the poor when income inequality is higher.  While the shift among the wealthy seems intuitive, the shift among the poor does not.  After all, social programs are disproportionately utilized by those with lower incomes.  Accordingly, one would think that lower income individuals would favor these programs. 

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by Andrew Trueblood

Recently, BM sent me an interesting opinion piece about the Anglo political-economic dilemma, which happens to parallel rather closely the American one:

http://www.prospectmagazine.co.uk/2009/02/riseoftheredtories/

As far as a political analysis goes, Mr. Blond lets his ideas wallow under the constraints of the conservative-liberal divide.  Instead of letting the debate define the sides, he does just the opposite.  As the industrialized world and the U.S. face some of their most economically existential questions, I have been disappointed by the retrenchment of failed ideologies on both sides of the aisle.  Social welfarists and public sector idealists, you failed (1972). 

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by Jordan Eizenga

A book published by Benjamin Friedman, a Harvard economist, aptly noted that moral progress is often intimately linked with economic growth.   When economies are growing, the rising tide that lifts all boats generates the perception that the success of individual market participants is not a zero sum game; there is a general acknowledgment that one individual’s success has not come at the expense of another.  If such an attitude is pervasive, it makes redistributive, social welfare programs more politically palatable for sitting governments to implement.  According to Friedman, economic growth affords “greater opportunity, tolerance of diversity, social mobility, commitment to fairness and dedication to democracy.”  However, when economic growth is poor, it is argued that the reverse is equally true.  Individuals, rightly or wrongly, perceive themselves as pitted against one another.

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by Jordan Eizenga

Isaiah Berlin should be required reading for all contemporary economic policy makers. In “Two Concepts of Liberty” published over 50 years ago, the Oxford professor made a distinction that seems to have since been forgotten by those who dominate the political limelight today (on both sides of the political aisle).  Positive liberty, according to Berlin, refers to the freedom to act to fulfill one’s potential; negative liberty, on the other hand, refers to the freedom from interference or impediments. 

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by Jordan Eizenga

The broad rallying cry of Tea Partiers is constant: government is too big, taxes are too high, and deficits are out of control.  While the latter of the three is a sentiment I personally share, the general view of the movement seems to have mutated into an unhealthy sweeping condemnation of public policy as a means for social change.  The implication of this view is that government intervention into the marketplace is very much unwarranted.  The problem with such a view is that it neglects to realize that government must, logically speaking, be allowed to intervene in the economic affairs of society.  This might sound a bit esoteric, but to demonstrate my point, I turn to an argument put forward over 70 years ago by English Economist Nicholas Kaldor on the topic of compensating the losers of a policy.

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