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Money for nothing, and chicks for free

By Owen Paine on Thursday July 2, 2009 09:11 PM

Despite the moans and wails that abound today in pwog circles, talk about plans vs. markets doesn't always have to be melodramatic, though Stigelasaurus Rex might not agree. Here's a postively positive note, and it's on the planning side -- hot stuff, and right out of the academy.

By now you all know the great fox of emerging world progressive productivism, Doctor Dani Rodrik. Here he spends about 30 pages showing us well-intended one-world lugs how an aggressive but shrewd global-south country might substitute a neighborly, balanced-trade, parity-forex regime for the east Asian nasty fiddle gimmick -- and still grow with Han-like speed toward the white man's living standard.

And to think -- it's positively Hamiltonian! (Couldn't resist the bust -- never could resist a bust -- but keep reading after the photo):

According to Dani boy, what the Southern states need now is a set of comprehensive national subsidy plans for rapid local industrial transformation.

The idea is simple enough, really: just contrive a relative price shift between domestic and foreign trade goods, and also between domestic trade and non-trade goods; then let the local markets and entrepreneurs do the rest.

This can be pushed to any desired level; you only need to "show me the money" -- "me" being that local entrepreneur, of course -- and watch "me" -- Mister Mister of Bongoville -- work the work and jerk the jerk errr umhh -- for the benefit of the whole nation.

Just where will these lovely catalytic public subsidy funds come from? In Dani's model they come from -- where else -- the policy economist's universal non-distorting can opener, "lump sum taxes".

However, since this is the People's Republic of Southeast Utopia we're talkin' here, why not go for broke? I recommend a universal ground rent tax as the nicest base for the subsidy. As the local currency rises, it touches off a lot boom, and the cycle turns virtuous, eh?

But trust Dani here -- he has a toy general equilibrium model, nicely illustrated toward the end of the piece, to soundly prove it's a lead-pipe cinch.

The acid test in these matters of high economic policy is of course how one answers this one straightforward question: can you fit this gubmint-type "plan" comfortably within the Limited liability Incs' world wide optimal design?

Whaddya think, rangers?

Comments (4)


as an avatar of GIGANCORP, i think it builds a lot of markets at a time when markets are a little hard to come by, digs money out for me to suckle, and potentially pays me to go green. but i'm going to wait until someone offers me a better deal.


Why does it have to fit with Limited Liability Inc's optimal plans? If southern countries can invest in themselves, borrowing against future revenues (see Ellen Hodgson Brown on California in yesterday's Counterpunch) then all they have to worry about is spinning off enough excess profit to keep the people happy and healthy, and also develop a nuclear capacity to keep us out of their oil fields.


Your talents are thrown among swine here


Always with the irony

Get mad u kool bastard


dear dr dani,

is "big brother and the holding company" the most prophetic band name ever?

-a fan-

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