Towards A Good Samaritan World

Monday, December 04, 2006


Economist Peter Orszag thinks we can learn from Scandinavia:

The dramatic increases in economic instability demand our response. We can learn lessons from Europe. In the Nordic economies (such as Denmark), market flexibility and competition have been combined with social insurance schemes that protect family incomes but also encourage work. In the continental European countries (such as France and Germany), governments have intervened directly in the workings of the market. The Nordic approach works better. Trying to shut down the process of creative destruction creates macroeconomic stagnation.

Should economic security be a public policy objective? It's one thing to provide a social safety net for the poor. (I'm against it because I think the moral need to serve our fellow men is more important than our physical needs, and a social safety net undermines the incentive to work. But at least I can see the moral case for it.) It's quite another for the government to seek to render the incomes of middle-class Americans more secure. Whatever the economic case for it (and even the Nordics are well behind us in GDP per capita and barely, if at all, closing the GDP), any kind of redistribution of resources to the middle class seems to me morally indefensible.


  • I do agree that simplified, fast-tracked automatic or semi-automatic savings schemes are excellent ideas, though. They shouldn't even require that much to administer, if funds are created so as to be as indexical as possible. Further, if it's created so as to have tax advantages smaller than traditional 401(k)s, then the marginal impact on savings and investment rates should distort the market less.

    By Blogger Nato, at 2:53 PM  

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