by Rick Lowe
One of my favourite international blogs is Cafe Hayek and this recent post by Russell Roberts provides some food for thought for the newly elected FNM government.
Roberts points out that:
The road to prosperity for a nation is to find ways to get more from less. To make the pie bigger, you have to find a more effective way to combine people, machines and raw materials. Technology is one way this happens. Trade is another. In modern America, we get richer, paradoxically, by putting people out of work, by finding production techniques that make the remaining labor force in a particular factory or industry more productive. Sometimes that happens by using a new production process. Sometimes it happens by importing something more cheaply than we can make it domestically.
Later on he notes:
All political systems must fight the tension between reducing the short-run hardship and enjoying the longer-run benefits. When the benefits come quickly, the short-run adjustments are easier to endure. In America, new jobs come along so quickly (fueled by the resources that are freed-up by the improvements in productivity), that there is limited political traction to stop short-run hardship. In Europe, it appears, the demand to allay short-run hardship is more effective in making their economies less dynamic. So while national borders are a red herring in discussing the economics, they are important in generating the political forces that discourage or support economic change.
The blog and embedded links make for some interesting reading.
Enjoy.
