Friday, September 23, 2016

Paul Romer’s Plan For Sweden: Are You Kidding Me?!

Paul Romer, recently appointed Chief Economist at the World Bank, has a stunning idea for Sweden described here. See the original article here.

According to Romer, Sweden should just allow a *completely independent* new state within Sweden, free from Swedish law where millions of migrants can live under their own laws without even being Swedish citizens. In other words, let’s just create a massive No Go Zone right in the middle of Sweden! Because these have worked so well in the rest of the Europe, haven’t they? Particularly in Sweden:

And, just when people thought Paul Romer was freeing himself from neoclassical economics, he has a genius plan to stimulate economic growth: within this No Go Zone, the migrants can be freed from minimum wage laws and have longer working hours, because, you know, wage and price flexibility leads to full employment, don’t you know!

Unfortunately for the neoclassical madmen, wage and price flexibility does not lead to full employment equilibrium, and a massive Third World enclave right in the heart of Europe is more likely to accelerate the massive catastrophe unfolding.

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  1. The idea of a no go zone sounds suspiciuously similar to "special economic zones" that the Indians and Chinese create where business regulations don't apply. (I support these, btw)

    When somebody suggests applying the idea of special economic zones for immigration, then a creepy feeling runs down my spine.

    Look, I can be loosely termed as a free marketer or a classical liberal on 80-90% of economic issues. But when I see other liberals applying the same ideas of business to immigration, I realize two things

    1) Many fellow liberals are not interested in solving problems of our society, but in social engineering

    2) Mass immigration was indeed a liberal plan all along, and not some accidental result

    As a moderately free market liberal, I feel like I have been associated with madmen who want to destroy society.

    1. Insane.

      It's essential to vote against such people. They dominate the mainstream parties, especially the left of centre ones. I feel I am inch by inch being driven to root for Trump, simply because *we have to start somewhere*.

    2. We *do* indeed have to start somewhere ... but I don't think the 2-party system is going to get us anywhere. Look at Trump's choice for Veep and his record on Free Trade.

    3. The Vice President is a ceremonial figure of no power, and Trump choose Pence as a sop to voters.

      Pence will dumped into obscurity if and when Trump were to win.

    4. Yeah? And how did that work out with Dick Cheney?

    5. So you think Pence has the influence over Trump that Cheney had over Bush? Eye roll.

      Anyway the point isn't to have President Trump, which I find an unappealing prospect. The point is the value of having President-Elect Trump.

    6. One of the good things about Trump is that he has exploded the current two party system. He made a hostile takeover of the GOP, and if he wins it will fracture the democrats too.

      Everyone I know except one hates Trump btw. It really is a class thing, groupthink.

    7. So you think Pence has the influence over Trump that Cheney had over Bush? Eye roll

      Keep them up there, you might find a brain. And then check this out:

      One of the good things about Trump is that he has exploded the current two party system

      No, I see that as more intransigent than ever.

      Everyone I know except one hates Trump btw

      Really, the only value he has is that he might keep Clinton out of office.

    8. Remember that Kasich reportedly was offered both the VP slot and to run foreign and domestic policy while Trump "Makes America Great again".

  2. Replies
    1. That he's not *really* crazy is the problem. He represents a large slice of elite opinion. The people running the EU and the other supranational bodies really think this way and really want stuff like this.

    2. Ken b

      even though on economics i dont agree with you much know that i respect your views.

      since you are not full nuts liberterian you are not alt rightist you are not neoconseravitve.

      haha ken b you are awesome ;)

    3. "He represents a large slice of elite opinion."

      Correct. Insanity:

  3. I guess if I'm to be consistent in that I don't want to be the "Arrogant American" who tells other cultures how to run their world, I have to support both the right nations to tighten the border controls AND this scenario in the video above.

    Although, I must say - *I* would never venture into those enclaves unless the NG was patrolling regularly ;-)


    I also have to caution here, because this is MSM. I find it quite amusing that we believe the stuff we want to and practice selective outrage on the stuff we don't want to accept, when it comes to what we take in off our TV sets & Youtube channels:

    Especially a piece that besmirches compassion yet doesn't call out US interference in the Middle East as the root of the problem.

    1. Holy cr*p. Are you sure you don't belong on the Alt Right?

    2. Ironically, within the space of the same week you've been saying that to me, someone else called me [essentially] a "Commie" lol

      One week I have no Leftist credos because I'm moderately conservative on Family Values issues, the next week I'm some "shill" trying to bring Identity Politics into the MRM - or was that Traditionalism? It's hard to figure out sometimes.

      What I like to think of myself as is a "Truthist." It gets me in trouble with all sorts of political stripes and ideologues.

    3. LK,
      That site Kevin linked reminds me of this one.

    4. Really? Don't look now but NutAndYahoo was wrong again:

  4. Hi LK,

    Agree with your last paragraph. Price and wage flexibility do not necessarily lead to full employment. There may be a series of possible equilibria with full employment the upper limit.

    Many neo-classicals assume that in the long run Say's Law applies and neoclassicals generally believe that one of the major reasons for unemployment is price or wage rigidy in the short run (This includes New Keynesians).

    If Aggregate Demand is the proceeds entrepreneurs expect to receive from offering a given level of employment whereas Aggregate Supply is the proceeds they must receive in order to induce them to offer a given level of employment (cost of production {wages, rent interest and Marshallian normal Profit), then there may be many possible equilibria and the actual equilibrium that occurs that may well below the possible full employment one.

    Unless expansionary fiscal policy is undertaken (given that monetary policy appears to have run its course for the moment, entrepreneurs' profit expectations are low, and export demand in many countries is lower than required), the economies of tbe world may nor be revived for quite some time.

    If these things are true it is pure madness to run austerity programs that will depress economies further.

    Cutting wage rates has a two edged effect. It may lower unit cost of production, but if it occurs across the board, it will probably lead to a reduction in aggregate demand. The expected stimulus from allowing wage rates to fall is likely be offset by the reduction in aggegate demand and may be useless.

    Many thanks for your article.

    John Arthur