The appropriate punishment for any political position

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Not in this thread.

Actually, Barro found that the effect of democracy on growth was slightly negative, but it was very small, and I didn't want to blow it out of proportions. It's on the first page. Also see below why this result is inconclusive.


I am going to go out on a limb and suggest this
http://en.wikipedia.org/wiki/Industrial ... al_effects

Also, the landed gentry's loss of social status in Great Britain due to the rise of the merchant class is a specific example of this mechanism.


That was in fact a somewhat interesting paper. But it has quite a different scope.

Barro's claim is that democracy does not cause economic growth, well functioning markets do. It is correct that there is a correlation, but see the following quote from your paper (see page 269 - taken from the previous Barro article, BTW)

Hence, political freedom emerges as a sort of luxury good.

This is what I am trying to point out, and what the comparisons with Singapore, China etc. is about. When discussing economic prosperity, growth, putting food on people's tables, people often tend to assume that "politics matters" (like on page 265).

But there is a lot of data supporting that economic, not political, freedoms are good at generating growth. (I could also refer to Sali-I-Martin and his four million regressions, but I found that paper rather silly).

However, since I risk being accused of cherry-picking one author, I did a little bit of digging... and found a meta-review (470 estimates from 81 papers):
http://www.international.ucla.edu/cms/f ... liagos.pdf

Their conclusion:

"We conclude that the empirical evidence that has accumulated over the past 30 years
points to a zero direct effect on growth and significant indirect effects on growth through factor
accumulation, economic freedom, inflation and openness, with an adverse effect through
government spending and international trade. The net effect is that democracy does not harm
economic performance."

Oh, and by international trade, they mean restrictions on international trade. So in theory, democracy could be good for the economy, but only when it supports sound (=neoclassical) economic growth policy. But apparently, politicians insist on screwing up.

Which I think is what both TM and I have been trying to get across.

That is assuming that the redistribution policies in play doesn't have the effect of reducing supply while increasing demand.

That the redistribution policies do not increase process losses and frictions for business, resulting in a reduction in each dollar of value.

That debt deflation does not need to take place and bankruptcies need to happen in order to get debt off the books.

That highly increased social mobility doesn't lead to a lack of people to perform low-skilled jobs.

That commodities do not increase in price as a result of higher demand for them, thus leading to an increasing cost of goods, again resulting at placing us back at square 1.

That people wouldn't save for a rainy day or use it to pay off existing debt, thus not relieving much of the $450.000.000 demand shortfall the U.S is experiencing.

It seems to me that all Barro proves is that the neoliberal global order dominates. Governments that are hostile to big business and multinational corporations tend to be shut out in terms of trade and thus suffer economically. Most nations just aren't large enough or don't have diverse enough resources to be economically self-reliant. I don't see the evidence abolishing social safety nets and starving the unemployed in first world countries will be good for the global economy. It will just cause political unrest.

I don't know how to answer the supply and demand problems but I have a reply for the shortage of low skilled labor problem. In the period of American history with the widest distribution of the middle class among the population, was there a significant lack of low skilled labor? What's the definition of low skilled labor that you think we could see a shortage of?