Economics is being talked about quite a bit these days, what with the Social Security "crisis" that
Paul Krugman and
John DeLong are spending way,
way too much time debunking. But there's plenty more beyond that that many people perhaps, well,
just don't get.
And so, below the cut, there's more economics in the news, from the tsunami to North Carolina's sweet deal for Dell. You won't find too much insight into these economic issues in the papers...
There's also the aftermath of the earthquake and tsunami, with a whole host of tangential economic issues. Can we safely agree with Richard Posner, as he claims in his new blog run jointly with Gary Becker?
But when people criticize the wealthy nations, especially the United States, for being chintzy when it comes to foreign aid . . . they want general wealth transfers to poor countries. And that is what I criticize, since the basic problem of poor countries is not that they are poor, but that they are badly managed; and being badly managed they are unlikely to benefit from handouts.
Now this is a common claim: that poor nations suffer not from being poor, but from the prevalence of bad actors, and while large sums of money can address the former issue, they cannot address the latter. Perhaps, though, such aid could be focused in ways that would increase stability and crowd out the bad actors, with the corruption, violence and instability they bring. While Posner proposes four methods by which foreign aid can be given out of rational self-interest, he doesn't address this possibility, and increasing global stability would seem a good idea on both noble humanitarian and self-interested fronts.
And finally, what is seemingly a smaller-scale issue has hit close to where I live. Dell announced its intentions to build a new computer manufacturing plant in North Carolina, Virginia, or thereabouts. NC took Dell at its word when it claimed other states were jockeying for the plant, and offered up at least $242 million in incentives to lure a planned 1,200 jobs, which will pay an average of around $28,000 a year. According to the state, that's $205,385 in incentives per job.
When the site was narrowed down to an area encompassing several counties, the counties then sought to further outbid each other, with the "winner," Forsyth County and its primary municipality, Winston-Salem, combined to offer $28 million to site the factory in the county, including what amounts to a free site for the factory. At this point, Dell just has to build a factory on land provided to it, partially with money given to it by local governments, and hire workers, then reap tax benefits from local governments. Not a bad deal.
Oh, and it turns out that Virginia's offer wasn't anywhere near what NC offered--combined state and local incentives of $35 million or so. And of course there are some thorny legal issues, given that other incentives have been overturned using arguments based in the Interstate Commerce clause, which I am inclined to believe makes this kind of interstate competition pretty obviously illegal. In this particular case, it seems that conservative NC Supreme Court Justice Robert Orr retired from the bench to become executive director of the North Carolina Institute for Constitutional Law, which intends to push free-market principles through litigation, including, of course, these incentives. And while I don't agree with too much that libertarians say about fiscal policy, this one seems like a no-brainer. I'll be curious to see where this goes, but in the meantime, the Dell plant is coming, with construction planned to start this week.