I’m attending a conference at Columbia on “Philosophical Foundations of Economics and the Good Economy,” so posting will be light today. For now, I’ll leave you with a few links:
(1) As if you needed any more reason to oppose patent trolls, they’ve looted half a trillion dollars over the last two decades from the productive sectors of our economy.
(2) I suspect that Americans are getting it backwards: state and local governments waste more money than they think and the federal government wastes a bit, but not much, less, in the narrow sense that cash transfers are relatively cheap to administer, pensions for federal workers are on a sounder footing than what we see in state and local governments, etc. It’s fair to say that many transfer programs are poorly designed, and that many people receive transfers that they should not. But this question is somewhat distinct from the question of efficiency.
(3) Christopher Caldwell’s latest on the crisis in the eurozone is excellent:
The word Ponzi is on many lips just now. It may not literally describe the welfare states of Europe and America, but it is at worst hyperbole. In the United States, Democrats’ endless promises of benefits, Republicans’ idea that funding the state is optional—these amount to promises that if you, the Western consumer, just sit in front of the television eating Twinkies, the Chinese will work to supply you with the luxuries to which you’ve become accustomed, just like back in the days when the coolies built the railroads. China, apparently, views the march of history a bit differently.
The postwar European social model was viable for a long time, but it, too, has always required accounting tricks, and over time these became too elaborate to sustain. First, the demographics of the past favored the system, since the generation of those who would have retired just after World War II had been decimated in World War I. Second, the demographics of the future favored the system, too, as the unusually large Baby Boom generation paid for the generation born in the 1920s—unusually small to begin with and then decimated by another war. Finally, by the time demographics began to look more foreboding, the welfare state had been going on for so long that even people who should have been able to do the math mistook the status quo for a law of nature. They borrowed from the next generation, confident that some trick would be found such as previous generations had enjoyed. When that didn’t work, they cut the military. And when that didn’t work? Well, here we are.
(4) National Affairs has done us all a great service by running John Cochrane and Scott Sumner back to back in their latest issue.