Wednesday, June 6, 2007

Cost of Capital Higher in Poor Nations
The obvious result: Growth is inhibited in poorer nations. I highly doubt that higher costs are entirely responsible for the poor diffusion of technology in between nations (the benefits are probably lower in nations as well, and internal costs and regulations most certainly play a factor), but this explains it somewhat. Solutions? I'll read this report more throughouly and see what they attribute the higher costs to.

Tuesday, June 5, 2007

Things looking up?
At least in the short-term, I suppose. Retail Sales (along with income) actually fell in April, but both may have recovered somewhat in May, suggesting that personal consumption will hold up well enough to ward off recession. Exports and business investment are also contributing to demand growth, meaning we're no longer relying on JUST the consumer to keep the economy moving.
Unemployment rates have remained low as well, though it is possible that most of the effect has been felt on independent contractors and illegal immigrants.

Overall, I'd have to say that recession chances look much lower now.

Monday, June 4, 2007

Wal-Mart, ey?

I'd just like to provide this link to point out that Wal-Mart actually isn't an evil monopoly that is exercising a slow and inevitable takeover the world. They have reached their current limit, and everyone has recognized it. When Wal-Mart finally recognized it and decided to not expand anymore, the market rewarded them by recognizing them as a better stock-buy.

Incentives are cool.

Swedish Economics
The commenters are quite right that Swedish productivity continued to rise and that the Swedish standard of living remained quite high, even through the stringent regulations of the welfare age.
The crux of the story, of course, is that the Swedish economy as a whole was growing slower in production terms under the stringent welfare state controls of the second-half of the 20th century. The Swedish economy was structured to favor consumption and unproductive investments like housing. Swedish tax reform in the early 1990s succeeded in eliminating some of these preferences, and the Swedish economy has been growing more efficiently (in production terms) since then.
The discussion we favor the standard of living...or do we favor production?
My response is obvious: We should let the market decide. And the market wasn't deciding under old rules. The Swedish government laid down law after law that effectively limited the dynamism of their economy and favored consumption over investment.