Economics Tuesday

Three little economics stories this morning:

The Washington Post finds economics at the root of the Iraqi insurgency:"I was out of work and needed the money. How else could I support my family?" As Iraq solidifies into a gangsterish set of well-armed fiefdoms, one Major tells his troops:"A good way to prepare for operations in Iraq is to watch the sixth season of 'The Sopranos.' " A case study in what happens when you destroy a country's economy and infrastructure, sack its standing army and accidentally mislay just short of 200,000 brand new AK-47s.

Dani Rodrik is asked by World Bank what he thinks the best strategy for a land-locked African country is:

Here is how I see it. Having a growth strategy that focuses on growth proper -- and on removing the most binding constraints on it -- does not mean that you don't care about poverty or inequity. It just means that you recognize different targets require different strategies. I recognize that a growth policy may not necessarily achieve significant poverty reduction in the short-run. That is why there is always room for social policy. Growth policy is not social policy--at least not necessarily in the short to medium-run (although in the long-run it probably is the most effective social policy we can think of). But it is indispensable to generate a sustainable increase in the economy's resources and long-run living standards.

As he notes in a previous post, this is just the sort of thing that makes sure he annoys both traditional neoclassical economists and lefties like me. That one sentence is so, so important: "in the long-run it probably is the most effective social policy we can think of." How long-run? T'would be good to know more on what he thinks about that 'social policy' thing. (Well, he has written a book on this stuff...)

And Greg Mankiw quotes economist Mark Perry:

The pattern of income distribution in the NFL is strikingly similar to the income inequality of the general population, and is actually slightly greater in the NFL....perhaps this pattern of income distribution is a natural and expected outcome of any extremely competitive environment where talent is scarce, valuable and highly paid, whether it's the NFL or the overall economy.

Natural and expected? Perhaps. Perhaps there's a universal mathematical law that causes a wage distribution to have exactly the same structure for different parts of the economy, as long as market signals can clearly transmit. Or perhaps, instead, this is a vague tendency one would expect from bog standard supply and demand in a market where superstars bring in all the clubs' dosh, and that comparing this distribution to anything else is facile as a duck. Perhaps.

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