A new paper by Peter Blair Henry and Conrad Miller of Stanford University presents evidence that legal institutions are not the only factor influencing long-run economic growth. Government economic policy choices also play a crucial role.

Barbados and Jamaica both gained independence from Great Britain in the early 1960s and have many cultural and social similarities. Most importantly, both inherited parliamentary democracy and British common law institutions, including well-defined and enforced property rights regimes. Yet, the two Caribbean island economies saw very different growth patterns during the subsequent decades. Between 1960 and 2002, GDP per capita grew three times faster in Barbados than in Jamaica.

Henry and Miller argue that socialist economic policies adopted in Jamaica beginning in 1972 account for the difference.

In 1972 the People’s National Party (PNP) rose to power [in Jamaica] with the promise of “democratic socialism,” which translated as extensive state-intervention in the economy. The PNP nationalized companies, erected import barriers in the form of higher tariffs and outright bans, and imposed strict exchange controls. Social justice meant income redistribution through job-creation programs, housing development plans, and subsidies on basic food items.

Government spending subsequently rose in Jamaica from 23 percent of GDP in 1972 to 45 percent of GDP in 1978. Revenue did not keep pace with the rise in expenditure. From 1962 through 1972 Jamaica’s average fiscal deficit was 2.3 percent of GDP, but from 1973 to 1980 the average fiscal deficit was 15.5 percent of GDP. Much of the deficit was financed through direct borrowing from the Bank of Jamaica. Predictably, inflation also rose. From 1962 to 1972 the average rate of inflation was 4.4 percent per year. By 1980 inflation was 27 percent per year and investment had collapsed to 14 percent of GDP, down from 26 percent in 1972.

Barbados refrained from excessive government intervention in the economy.

Barbados, on the other hand, avoided nationalization, kept state ownership to a minimum, and adopted an outward looking growth strategy while keeping government spending under control.
[…]
The experience of these two Caribbean nations holds lessons for governments, both large and small, grappling with the current global crisis, says Henry, the Konosuke Matsushita Professor of International Economics at the Stanford Graduate School of Business. “While there is a legitimate and helpful interim role for governments to play in restoring the financial sector back to health,” he says, “extensive and ongoing government intervention in markets—along with the protectionist sentiment that it is likely to arouse—has the potential to cause many more problems than it solves.”

Sounds like something President Obama and his economic advisors should pay attention to.

The article has been published in the May issue of the American Economic Review. A working paper version is available from the National Bureau of Economic Research for US$5 via this page.

Now economic analysis has found evidence that petition signers paid a price in lost employment and wages. This tends to corroborate long-held suspicions that the Chavez government used the Maisanta database as an enemies list. The analysis also quantifies the loss to Venezuela’s economy due to the regime’s apparent indulgence of political vendettas.

This is the abstract posted at the National Bureau of Economic Research.

The Price of Political Opposition: Evidence from Venezuela’s Maisanta

Chang-Tai Hsieh, Edward Miguel, Daniel Ortega, Francisco Rodriguez

In 2004, the Chávez regime in Venezuela distributed the list of several million voters whom had attempted to remove him from office throughout the government bureaucracy, allegedly to identify and punish these voters. We match the list of petition signers distributed by the government to household survey respondents to measure the economic effects of being identified as a Chavez political opponent. We find that voters who were identified as Chavez opponents experienced a 5 percent drop in earnings and a 1.5 percentage point drop in employment rates after the voter list was released. A back-of-the-envelope calculation suggests that the loss aggregate TFP [total factor productivity] from the misallocation of workers across jobs was substantial, on the order of 3 percent of GDP.

One of the four authors, Daniel Ortega, is associated with an academic institution in Caracas, Venezuela. The other three have posts at American universities.

The full text of the paper can be purchased online for US$5.

Since October last year, some 30,000 Sovereign Account holders with the ministry have donated more than £24 million in support to charities, churches and mission workers.

Stewardship Chief Executive, David Jones, said: “Our clients tend to have a planned approach to their giving. As such, they are less likely to see giving as a discretionary expenditure and cut back in difficult times.”

On the negative side, donations made by British Christians to support overseas missionaries have lower value because the pound has declined.

Premier Danny Williams expropriated AbitibiBowater’s (TSX:ABH) resource rights and assets in central Newfoundland as a punitive measure for the company’s decision to close a paper mill, the newsprint giant alleged in a free trade challenge Thursday.

The Montreal-based company filed a notice of intent under the North American Free Trade Agreement accusing the Newfoundland and Labrador government of taking a “blatantly discriminatory” action when it passed legislation to expropriate its hydroelectric assets, and water and timber rights in Grand Falls-Windsor.

“The act simply singled out one such company for retaliatory expropriation, and dressed up its punitive actions with populist rhetoric designed to loosely suggest (but not really reflect) rational public policy goals,” the 40-page notice says.

“The real motivation, and the real consequence of the act, was simple. It was to kick a single foreign investor out of the province because that investor had angered premier Williams and some of his constituents.”

AbitibiBowater is seeking over $300 million in compensation for its expropriated assets and rights, an amount that Newfoundland and Labrador rejects as excessive.

Because NAFTA is an international agreement, the federal government is now dragged into a legal action because of a decision made unilaterally by a provincial government. That the feds almost certainly disagree with the expropriation only compounds the irony. (As far as I know, the federal government has not officially expressed an opinion.)

What if Ottawa were to pay off AbitibiBowater and then dock Newfoundland and Labrador an equivalent amount in equalisation payments or other federal transfers? Premier Danny Williams would no doubt take the opportunity to hit the roof yet again.

Utilising the detailed database assembled by Iraq Body Count, a team of researchers found that, of non-combatant deaths from armed violence during the five-year period from March 2003 through March 2008, one-third were inflicted by execution, 20 percent by small-arms gunfire, 14 percent by suicide bombing, with smaller proportions for vehicle bombs, roadside bombs, mortar fire, and air attacks. Of those who were executed, almost three in ten showed signs indicating torture.

The greatest proportion of victims — 19,706 of 60,481, or 33% — were killed by execution after abduction or capture. Of the bodies of those who were executed, 5760, or 29%, showed marks of torture, such as bruises, drill holes, or burns. (A typical media report about this particularly appalling form of violent death reads: “The bullet-riddled bodies bore signs of torture and their hands were tied behind their backs.”) Iraqi civilians also suffered heavy tolls from small-arms gunfire in open shootings and firefights (20% of deaths), apart from executions involving gunfire, and from suicide bombs (14% of deaths).

In events with at least one Iraqi civilian victim, the methods that killed the most civilians per event were aerial bombings (17 per event), combined use of aerial and ground weapons (17 per event), and suicide bombers on foot (16 per event). Aerial bombs killed, on average, 9 more civilians per event than aerial missiles (17 vs. 8 per event). Indeed, if an aerial bomb killed civilians at all, it tended to kill many. It seems clear from these findings that to protect civilians from indiscriminate harm, as required by international humanitarian law (including the Geneva Conventions), military and civilian policies should prohibit aerial bombing in civilian areas unless it can be demonstrated — by monitoring of civilian casualties, for example — that civilians are being protected. [footnote omitted]

Women and children were disproportionately represented among victims of attacks using relatively indiscriminate weapons—air strikes and mortar fire. Men tended to be killed using more precise methods—gunfire and executions.

Assyrian International News Agency has an additional tidbit not found in the text of the NEJM article.

One author of the study thinks many of those involving torture “had to do with trying to get people to move out of their houses” because they were from rival Muslim sects.

The article lists six co-authors, three from Iraq Body Count; two from Royal Holloway College, University of London; and one from King’s College, London.

The analysis encompassed only victims of short-duration events (two days or less). Civilians killed in prolonged violence, i.e., the two sieges of Fallujah and some episodes during the initial stage of the invasion (20 March-30 April 2003), were excluded from consideration. This was necessary because deaths occurring in those situations could not be reliably linked with type of weapons used to kill. Thus, the overall number of civilian deaths—91,358—was reduced to 60,481 included in the analysis.

h/t: personal communication from Michael Spagat

The study was led by Dr. Muazzam Nasrullah of the Aga Khan University in Pakistan. An excerpt is posted at AllVoices.com.

Now working as an Epidemic Intelligence Service officer with the Centers for Disease Control and Prevention, Nasrullah said the report is the first statistical study that attempts to quantify the problem since data about the practice are so difficult to collect. Nasrullah used local and national newspaper reports systematically compiled by the Human Rights Commission of Pakistan as the basis for his study.

Other sources of data, such as death certificates, often do not include specific enough information on the circumstances of the death, Nasrullah said. A total of 1,957 incidents of honor killings were recorded over four years, the study reported. The majority occurred in response to alleged extramarital relations. But Nasrullah said he is confident the results were lower than the actual number because not every event makes it into the media.

“The problem is much more than what is depicted in my paper,” said Nasrullah.

The mean annual rate of honour killing in Pakistan during the time period under investigation was estimated to be 15.0 per million women aged 15-64.

The study’s abstract is posted here.

h/t: International Campaign Against Honour Killing

Eija-Riitta Berliner-Mauer is married to the Berlin Wall.
[…]
Berliner-Mauer (the German name for the Berlin Wall, which she has taken as her last name) has since defined her love under the term “objectum sexual,” or OS—in other words, a person who falls in love with inanimate objects. As an animist, she, along with a growing group of others, believe that inanimate objects are sentient, intelligent beings.

Take Erika Eiffel, who is married to the Eiffel Tower. Eiffel says she recalls being attracted to objects even as a child, and realized she was different only when she saw other people at school dating each other, while she was dating a bridge.

Here is proof that an “expert” can always be found to rationalise any human fancy, no matter how deranged:

According to certified sexologist Amy Marsh, however, it could be a new sexual orientation.

God help us if Canada’s “human rights” commissions ever latch on to that idea.

Superstore change is in bag
Grocer to alter checkout routine, charge for plastic bags, offer array of reusable sacks

Shoppers may notice a slight change to the bagging procedure in Superstores as of April 22.

Rather than placing groceries in bags as they are scanned, cashiers will scan all items first, move them to the end of the checkout, and then sort and pack them there, parent company Loblaw’s said in an email.
[...]
April 22 is also the day Superstores will begin charging customers five cents for each plastic bag used, in an effort to entice shoppers to use reusable bags instead. It’s part of Loblaw’s national plastic bag reduction program.

A commenter points out that Loblaw’s Atlantic Wholesale Club sells the bags for $23 per 1000—less than 2.5 cents apiece. Superstore is using customers’ environmental concerns to pocket an outrageous profit.

The big winner from Loblaw’s rip-off won’t be the environment, but arch-rival Sobeys.

Read the whole thing.

Barack Hussein Obama has now unveiled a plan to save the world.

Yes, the entire planet earth.

How?

By buying up to one trillion of toxic bank loans.

Well, maybe not a full trillion—more like one-tenth that amount.

When all the sums are added together, rather than $1,100bn, the new commitments appear to be below $100bn and most of those were in train without the G20 summit. While the inflation of relatively small and old commitments into an enormous number does not render the summit a failure, the desire to produce large headline numbers as the main result of the gathering suggests the divisions and spats on other issues were considerable.

How might this scheme help the average Joe? Matt Pritchett of the London Telegraph has an idea.

h/t for Financial Times link: Andrew Bolt

To think that protectionism can be controlled once given official sanction is, in my view, naïve and economically dangerous.

Let’s shake off the shackles of free trade

The G20 leaders must be flexible – a little protectionism could give nations vital breathing space
[…]
We also continue to be presented with a false dichotomy – free trade versus protectionism. What we need is a nuanced analysis of where on the free trade-protectionism scale nations need and want to be positioned, and what the implications of that are.
[…]
I’m not advocating trade war, or proposing that powerful countries be allowed to erect trade barriers with impunity. It’s just that I don’t think protectionism should be seen as a taboo. Instead we should see it as a tool that can be deployed to address local economic freefall, but can also create far-reaching collateral damage.

Its use, therefore, must be sanctioned by the global community, practised with caution, within guidelines.

Allowing any protectionism risks a trade war.  If one country were given permission to raise tariffs against its trading partners, those trading partners would rightly perceive that as a threat to domestic industry and employment.  It is impossible to imagine that they would do nothing to protect their economies in the face of what they would see as unfair trading advantages.

Furthermore, the greatest benefits from trade barrier reductions in recent decades have accrued to economically underdeveloped nations.  If underdeveloped countries are to have any solid hope of improving their economic circumstances, free trade policies must continue and expand.

The Frontier Centre for Public Policy says the province has “a smart way to stimulate the economy”.

Between now and 2012, the province will eliminate the four-bracket personal tax system in favour of a two-rate system with lower rates. The province, in its backgrounder, properly brags this will make that province the one with the fewest tax brackets in the country after Alberta. New Brunswick explicitly defends the reduction and simplification with the aim of allowing people to keep more money. It also wants to improve that province’s ability to attract better-paying jobs and highly skilled labour. Memo to Premier Graham and his caucus: You’re correct on the method, justifications and goal.

On the business side, New Brunswick will drop the corporate rate to eight per cent in 2012 compared to 13 per cent now. “New Brunswick’s goal is simple,” says the Finance Department’s circular on the tax changes: “to have a globally competitive tax system that lays the foundation for the province to experience economic growth and create more jobs, moving the province toward its goal of self-sufficiency.”

Handing out public money to financially troubled companies, as the governments of Canada and the United States are doing, creates uncertainty in the business sector and discourages investment. New Brunswick’s approach, by contrast, provides incentives for investment and employment.

Chastnyi Korrespondent has an interview with Sveta Rudneva, head of the “Family and Childhood” foundation of Russia. Like many Russians, she’s worried about the demographic decline of Russia. As she rightly points out, abortion is perhaps the biggest factor driving Russia into the demographic ashbin of history.

Asked if she’s seen a spike in abortions since the economic crisis began, Rudneva answered yes, but said that the downturn only exacerbated an existing problem. In her opinion, the high abortion rate is not the result of economics or a lack of benefits, but rather a cultural problem. The current stereotype is that women marry at 22, divorce six years later, and then are left to raise the child without alimony. In such a climate, women are understandably reluctant to have multiple children. Rudneva hopes to see special pro-family television programming which will help “form a correct worldview” in young people of reproductive age.

Perhaps most interesting, she says that “often it is not the woman herself who takes the initiative, but those around her. Often her relatives bring her in almost as if ‘in convoy.’” Domestic violence is even a factor, with blackmail and forced abortions taking place.

Regarding the overall demographics of Russia, she is pessimistic, but believes it is still possible to correct the decline.

h/t: Global Voices

“We observed that dangerous driving behaviours are interrelated. Individuals scoring high on impulsivity or sensation-seeking scales demonstrated an elevated risk of driving under the influence of cannabis,” says senior author Jacques Bergeron, a professor at the Université de Montréal’s Department of Psychology.

“To our knowledge, this is the first study to investigate the association between driving under the influence of cannabis and a wide range of dangerous driving behaviours.”

The study found that men who reported DUIC during the previous 12 months were more likely to suffer a car crash with material damage.

The sample included only 83 men aged 17 to 49, so the results should be interpreted with caution.

[S]ome anthropologists say the decision is based on politics, not science.

“This is scandalous,” says Robert Bettinger, an anthropologist at the University of California, Davis, who is on the panel that oversees how archaeological remains are handled at all ten University of California campuses. The panel was not consulted on this transfer proposal.

Paleoanthropologist blogger John Hawks points out the absurdity:

So let me get this straight. The University of California has an expert panel to consult on matters of exactly this kind, matters in which University facilities and collections may intersect with federal agencies or laws regarding archaeological remains.
[…]
And the president and chancellor just decided, “What the heck? Who needs experts? Time to rebury these bones!”

Chancellor Fox offers a pathetically bogus defence of her anti-science decision:

Fox declined an interview, but said in a statement that the transfer “seems an appropriate balance between the interests of science and [those] of the Native American community”.

What nonsense! If the skeletons are handed over, they will quickly be buried at an undisclosed site. Remains of great scientific value will be lost forever. Any “balance” exists only in Fox’s mind. Political correctness trumps science.

h/t: Faith-Science News

That inane claim was made by a co-host of a morning TV talk show in Britain.

I thought Guv’mint Swill™ would be a fitting name, but ANBL is not that adventurous. The new beers have very boring names: Sélection Lager and Sélection Light.

To guarantee sales, the government is allowing Sélection to be priced consistently below what other beers may charge. Even with such outrageous manipulation of the market, however, beer remains far cheaper in neighbouring Quebec.

New Brunswick’s policy of socially responsible pricing means that the lowest allowable price for 12 cans is $18.67. That policy is designed to set a floor price for beer in the belief that any lower prices would lead people to buy too much and develop drinking problems.

But in Quebec, the lowest allowable price is much lower. Beer drinkers across the border can get 24 cans of beer for as little as $25.

The new Selection brands will be sold throughout the year for $18.67 for 12 cans. Other beer companies have to apply to sell at the minimum price for a limited time and can only do that a certain number of times each year.

Until recently, another casualty of New Brunswick’s beer war with Quebec was the environment. New Brunswick bottle return centres were forbidden to accept Quebec beer bottles, but that policy was reversed as of 24 February.

Perhaps the best-known, and certainly the loudest among them, is U2′s Bono. His efforts have won him an honorary British knighthood, no fewer than three Nobel Prize nominations and the adulation of Tony Blair. Yet one of Bono’s most significant outbursts – rude, heckling and laden with expletives – took place away from the world’s TV cameras at a small conference it [sic] Tanzania recently.

Bono had been enraged by a Ugandan writer called Andrew Mwenda, who was presenting a powerful case that international aid, far from helping lift Africa out of poverty, might in fact be the very cause of its troubles.

Even the suggestion that this might be the case sent ‘Saint’ Bono into a foul-mouthed rant, accusing Mwenda of being a comedian rather than a serious contributor to political debate.

For his own sake, then, one can only hope that the pop star never comes face to face with the author of an incendiary new book. Called Dead Aid, its very title is a bitter mockery of that great institution and celebrity bandwagon, Live Aid.

Read the whole thing.

To find out more about Dead Aid by African economist Dambisa Moyo, click here or here.

The idea of a U.S. government default has recently gone from “unthinkable” to close to 10 percent over the next five years.
[…]
[T]he United States has serious long-term fiscal challenges, between the downturn, an aging population, and major entitlement programs. None of the options for getting out of the mess looked particularly palatable. And that was before the president spoke of an extra trillion dollars for health care.

Despite claims of a new realism, the administration’s budget is loaded with optimism. It assumes the economy will have a quicker and more vigorous recovery than most private forecasters predict. It assumes that individuals won’t change their behavior much to avoid new, higher tax rates. It assumes that sacred cows such as mortgage interest deductibility and agricultural subsidies are ready to be made into hamburgers. And even with all this optimism, the administration predicts red ink as far as the eye can see.

Meanwhile the administration is trying to pretend the crises in the financial and housing sectors will go away on their own.

Some economists are predicting that a large portion of the American housing market will never recover.

h/t: Andrew Bolt

The first thing that conservatives have to tell Americans is: “You are poorer because you failed to raise enough children. The decline of the traditional family is undermining the American economy.”

Housing prices are collapsing because single-person households are replacing families with children.

Population projections indicate that , in less than twenty  years, the US will have as many single-person households as families with children. Unattached individuals do not need houses on large lots, so the housing market is set for a huge glut of large-lot houses for decades to come.

Conservatives have to cast the blame for the crisis at the culture of death. It isn’t only home prices, of course. If the labor force shrinks because the next generation simply fails to appear, who will pay taxes to support pensions and medical care for the elderly?
[…]
[T]he economic crisis stems from the culture of death and the only solution to the crisis is to restore a culture of life.

Spengler points out that, if conservatives make the economy a culture-of-life issue, they will alienate libertarians. If a long-term solution to the economic mess is to be found, however, American political coalitions will need to be reformed.

UPDATE: The post at First Things has a new byline: David P. Goldman.  I take it that is Spengler’s real name.