Surrogate motherhood meets globalization.

When Reshma gives birth next month in this small
Indian town, the newborn will be immediately handed over to its
biological parents, non-resident Indians who live in London and who
have been unable to bear a child on their own. In return for renting
her womb, Reshma will be paid $2,800 – a significant sum by Indian
standards.

…"These amounts are still nearly three times cheaper than what surrogacy in the UK would cost us," [the parents] say.

A little strange but I have a lot of respect for the surrogate mother and her husband:

"I have two cherubic children of my own," says
Reshma, who withheld her real name for fear of disapproval by
neighbors. "That couple has none. Imagine how much happiness this baby
will give them."

…Reshma’s husband Vinod – not his real name – says
his paltry $50 montly pay as a painter would not be enough to educate
his two children. He says the extra money will allow him to invest in
his children’s education and to buy a new home.

Thanks to Pablo Halkyard for the pointer.

Brad Setser points to Martin Wolf’s extensive powerpoint slides on the global economy.

• The first set covers financial flows to emerging economies and the crises of the past few years.
• The second
  covers emerging market (and central) financing of the US current
  account deficit and the global savings glut/ investment drought.
• The third covers Martin Wolf’s policy recommendations – his suggests for changing the international financial system. 

Libertarians usually point to government as the source of high taxes.  But in many developing countries it’s the family that is most taxing.   In his amusing account of a "year in Casablanca," The Caliph’s House, Tahir Shah recounts what happens when his workers lost their homes and moved into his palatial estate.

I began to witness firsthand the ancient employment system of the East.  It’s sometimes known as "living off Abdul’s job."  As soon as someone gets work, everyone else gives up their jobs and leeches off the employed member of the family.  The longer you are employed, the more money you need, merely to support the hangers-on.  Anyone with a nice home and full-time job has a vast cast of characters living off them.

Before there were governments there were families that taxed (see Schoeck’s classic Envy: A Theory of Social Behavior for "taxation" in primitive societies).  Creating a market economy is about much more than eliminating regulation.

Addendum: Michael Greenspan has another nice illustration from Rhodesia.

Fuel-efficient vehicles are cutting into gas tax revenues.  As a result, some states are  experimenting with per-mile tax systems.  In Oregon, an experimental system uses GPS to monitor how many miles a car drives.  Drivers are then charged an appropriate road tax when they fuel up.

In this case, leviathan’s hunger has some benefits.  The current system breaks miles down into rush hour and non-rush hour which allows for improved congestion pricing.  But more generally, there is no reason why the tax, insurance and road pricing systems cannot be fully-integrated.   Aaron Edlin and Pinar Karaca-Mandic point out
that tort law does not fully internalize accident costs.  A fuel tax
helps but since the externality is
per-mile not per-gallon a per-mile tax is more efficient.  Insurance by the mile is also more efficient than the current system which subsidizes heavy users.  Finally, GPS can be used to price by the road and not just by the time of day.  Indeed, as pricing by the mile/road becomes more common, the idea of private for-profit roads will no longer seem so radical.

The United Nation’s Security Council has 5 permanent members and 10 non-permanent members, the latter are elected from regional groups and serve two year terms.  Yesterday Eric Werker presented a fun paper at GMU showing that US foreign aid increases dramatically to countries elected to the Security Council.

    The result isn’t that surprising but Werker did a good job of ruling out explanations other than bribery.  Foreign aid, for example, increases just as a country joins the council and drops just at it leaves.  Foreign aid also increases especially dramatically in important years, as measured by the number of New York Times stories involving the council.  Perhaps most interestingly, although US foreign aid is larger for democracies than for autocracies on average, autocracies get bigger increases in aid when they join the council.  The result makes a lot of sense.  Autocracts can sell their votes more easily than democratically elected leaders (no domestic constituencies to worry about) and transactions costs are lower – the aid goes directly to the vote seller.