Bad Governments Kill Economies

This week in my macroeconomics classes we have been discussing what makes a country productive, and therefore wealthy. It is beyond dispute that investment in human capital, technology and infrastructure will facilitate economic growth. Also beyond dispute is that corrupt incompetent government will do just the opposite. And the worst thing that can happen to an economy is a crazy dicatator like Kim Jong Il or Hugo Chavez.

Along these lines of thought are a couple articles in today's NY Times. Tom Friedman, who I link to often on this blog because he is the most sane commentator in the country, has spent a lot of time in his life trying to figure out the Middle East. His column today has an interesting list of things that he believes has helped to incite the uprisings we are now seeing accross the Arab world, including Google Earth. Really. Go read his column HERE. In general his column cites that the Arab world, and particularly the young, have become more aware of how crappy their governments have performed compared with China (which used to be far poorer than Egypt) and their enemy Israel, where corrupt politicians are actually put in jail.

And let's not forget bad government policies here at home. One of the most egregious cases of stupid government here in the US is our subsidies for agriculture. Most of this $20B per year goes to big corporations, and also is focused on subsidizing things like corn, which is helping to make us fat. So, we spend $20B a year to be less healthy, and increase the profits of corporations who do not need our money. Brilliant! Mark Bittman writes about food for the Times. He suggests we redirect our subsidies toward the fruits and vegatables that we would make us healthier if we were to consume more of them. Like fixing our tax system, this is an idea that whose logic is so crystal clear that you can be sure our politicians will never enact it. Read it here before your enjoy your cheesesteak, fries, and corn syrup sweetened soda for lunch.