DISQUS

Theres no evidence for this claim whatsoever. Australia has workplace participation rates mirroring that of the USA and an unemployment rate that is lower. The dole has fairly stringent conditions in terms of applying for a minimum ammount of jobs per weeks and has cancellations of payments for failure to take jobs or if they leave jobs for no good reasons. The 'Baby Bonus' is ill conceived, but has had little impact on the birth rate which has only increased nominally.

I'd argue that the practice of offering resetting mortgages needs to be adressed as well. Surely they contributed to the growth of the bubble (by delaying bankruptcy of people who couldnt afford the houses they bought, therefore increasing demand and prices). As well as giving the CDO's with the bad mortgages time to spread through the system.

Theres some good research on this at the moment.
Another good article is 'Brain Drain and Human Capital Formation in Developing Countries: Winners and Losers' by Michel Beine, Fre´deric Docquier and Hillel Rapoport, in the Economic Journal

They used data across 127 countries and found that skilled emigration had a positive effect across the developing world as a whole, however there was certain regions which lost significantly from emigration. The losers were Sub-Saharan african countries and Central American countries.

The found that where skilled migration was less than about 20% (figure is off the top of my head, might be slightly different) of total skilled workforce that countries gained from increased investment in education however when migration was of a larger proportion, the 'brain drain' from the loss of skilled labour outweighed these positive effects.

'True equality of opportunity is unachievable'
Noone claims it is achievable, however that does not mean its not a worthy goal

actually the lower and upper...

the formatting of the numbers didnt turn out well. Just so you know the first number is the 'preferred measure' and the second and third, are the upper and lower bounds of elasticity.

Firstly, great post topic!

Secondly, while you rightly point to the inconsistency on focusing on individual examples, I think that if you aggregated some sort of a measure of success across society you could see that people from different socio-economic backgrounds have vastly different opportunities for success. I think this post points to the need for greater study into the determinants of social mobility. I've been researching some of this recently but havent been able to find a good set of numbers for comparative purposes.

However you might be interested to know that in study on intergenerational earnings elasticity’s the USA has relatively low social mobility. I.e. the causal effect of a fathers earnings on his sons earnings is greater, than all countries study except the UK. (elasticities below). While Denmark has the lowest.

Country Preferred Lower Bound Upper Bound
Canada 0.19 0.16 0.21
Denmark 0.15 0.13 0.16
Finland 0.18 0.16 0.21
France 0.41 0.35 0.45
Germany 0.32 0.27 0.35
Norway 0.17 0.15 0.19
Sweden 0.27 0.23 0.30
United Kingdom 0.50 0.43 0.55
United States 0.47 0.40 0.52

from 'Do Poor Children Become Poor Adults? Lessons from a Cross Country Comparison of Generational Earnings Mobility' by Miles Corak

'Any sane privitization of SS will allow people to choose a wide variety of investments: stocks, bonds, REITs, T-Bills'
Yep and this is the case in Australia. Those people who invested in fixed interest government bonds havent lost anything, but of course this doesnt get on the news.

just to clarify the superannuation is to cover costs of living in retirement and cannot be accessed (unless youre a politician) until you reach retirement age.

Not quite sure what the social security system exactly refers to in the USA so correct me if I'm working from the wrong assumptions. Re. Australia, it doesnt have privatised social security, rather it has means tested publicly funded social security. Australia has old age disability and unemployment benefits that are all publicly funded but all means tested. However we also have compulsory superannuation (which I think may have been what you were referring to?) which is paid by all employers at a rate of at least 9% of pre-tax income.

If the rewards are not distributed in such a way that they reflect the contributions of those in society then surely there is a role for redistributionary policy. No one, no matter how smart, thrifty or hard working can engage in a profitable exchange without the contribution of the rest of society in upholding the institutions that allow for that exchange. Thus democratic government, as the representative of society, is justified in taxing some of the profits to undertake actions that are beneficial to society.

'Complex systems of exchange and social organization exist and have existed absent a governing sovereign power'

This doesnt negate his point. These systems can only exist due to the social insitutions that govern the exchange of goods and services. If one person in society doesnt go by these rules than the conditions for exchange unravel, so although there isnt govenrment involvement it is still in a sense 'governed'. Contract laws are just the official formulation of such arrangments

yes lots of actors do contribute, and its the contribution of all society's individuals and government which legitimates the collection of taxes. Where the rewards of society are going to the few, while all contribute to the conditions that allow for the creastion of those rewards then there is a role for government and redistribution. While a 'shoe shine' is probabaly not a legitimate use for tax revenue, I'd argue public health and education expenditure is.

Firstly it wasnt interventionism that cause the crisis, it was the lack of regulation. Secondly the role of economists isnt to be a cheer squad for free markets but rather to analysis the effect of different policies. Economics is a decision making tool that needs to be taken into account when governments made policy decisions (including whether or not to regulate). Krugman has helped in refining that tool and thus deserves the award, and his role in bringing economics to the masses should be applauded.

Also, Marx did make some important economic breakthroughs, it was his political philosophy that was sub par, and Nobel prizes cant be awarded postumously

Its simply the case that the insitutions of government contributes to the conditions of civil society that allow one to profit form their own endeavors. Therefore all who make money within that society can legitimately be taxed, the level of tax is just a matter of function. If the tax taken can and does, improves the lot of society on the whole than that is legitimate. If the level/usage of the tax doesnt than it is illegitimate.

re. millions vs billions, I just dont see how its relevant to the article, The only examples of social democratic states are states in the millions of people hence the focus on that.

I'm not 100% sure on the banking regulations, but there tends to be a correlation between social democracy and increased regulation on the whole. And its not just the levels of regulation but the impact of the whole system on the wider society. Eg. more equitable incomes may increase poorer households abiltiy to repay loans, it may lead to a smaller subprime market, socialised health costs means that there less costs on households, we need to look at the impacts things like this may have on economic and social outcomes.

Icelands been having problems for at least the last year, the last 2 weeks have just pushed it over the edge.

'If it did, she would be forced to conclude that even the most watered down version of Mr. Friedmans free market "Utopian" ideas have resulted in greater material well-being, protection of human rights (via capitalism's relationship with democracy) greater personal freedom and individual autonomy than any other attempted economic system'

Personally I would attribute this more to Keynes than Friedman.

'Why only millions and not billions? What makes you think it's okay to force some people to share while excluding billions of others from sharing in the system you favor?'

Because policy is the realm of states, and states are generally in the millions of people, no-one suggested changing the prevailing world order.

Successful social democracies lets see, Sweden, Norway, Finland? It depends how you measure success. If you measure it as per capita GDP then maybe, If you equate it to the levels of social mobility then probably.If you measure it on happiness it depends which study you use.

Failed libertarian/ liberal/ whatever you want to call it. USA, Iceland.

But enough semantics, the point is there is a real challenge to the Neoliberal consensus with the failure of deregulated/less regulated financial systems. This article doesnt address that point, rather its just a tirade against some pop-left thinker who doesnt really know what shes talking about. Will, can you please adress the actual issue, how will liberal financial systems survive or change given the current situation? What implications does the financial meltdown have for other areas where markets have replaced government policy?

what is important is not just that rights are guaranteed by te constitution but that people have the abiltiy to exercise those rights. Here i think the USA fails. While they may have individual liberties enshrined in law, they also have much lower social mobility than other (less economically free) nations. Surely when one talks about liberty, the abiltiy to transcend ones place in society at birth must be taken into account.