Articles of total wisdom, part II

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So you have decided to outsource your thinking on trade policy and other economic policy issues to Brad DeLong. Poor choice. Although his long post has many good ideas, he concludes with his standard speech in favor of an egalitarian society. In the last sentence he says " and especially, let's cut the inequalities in our structure of pay..." I hope both DeLong and you support a cut in the salaries of all tenure professors in state-owned universities by an amount equal to any earnings they have from other academic and professional sources.

"So you have decided to outsource your thinking on trade policy and other economic policy issues to Brad DeLong. Poor choice."

Agreed. Reality based, indeed. I guess they believe if they repeat that often enough it will be true.

So, to make ourselves richer, we should legislate an arbitrary wage. All the "backwards" industries will die out and move to China, and our productivity will rise naturally to reflect the higher wage.
At least, that's the policy recommendation that is most obvious after reading that. I enjoyed it very much, except for the bits about the Scandinavian model.

I don't buy the notion that unions have lowered unemployment in Scandanavia, and the author didn't really give a logical reason to have us believe the notion that demand (for labor) rises when its price rises. The rest of Europe has unions too after all.

Scandanavia has something else going for it that countries like France, Germany, Italy and Spain don't. They have lower corporate income taxes. Such a lower tax makes investments, and their concurrent hires, profitable on a risk/reward basis that otherwise wouldn't be worth making. Hence a lower unemployment rate than otherwise would have occurred with the same set of other variables.

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