Another Grand Coaltion: The Sun of Jamaica.

Over on Crooked Timber, Henry Farrell – I think somewhat accidently, because I get the impression he believes Germans do *NOT* want to change their distorted labour incentive and tax systems – writes about the fundamental reason for the result of last Sunday’s election.
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Minding the parking meters

The Czech press digest Fleet Sheet puts out a free email bulletin with blog-like observations on Czech culture, business and politics. Though it’s sometimes a bit off base, it’s worth looking at to get a sense of the scene in Prague. Today’s

Why does Prague airport have expensive self-service parking machines, when the CR is a mecca for low wages?… It’s still possible to get shoes or a broken TV repaired in the CR, but the march toward the European welfare state will soon raise taxes and wage costs so high that it’ll be cheaper to throw out the old shoes and buy new ones. Premier Spidla told Frankfurter Allgemeine Zeitung that reconciling the costs of modernizing the welfare state and the impact on common people is a European-wide problem without a solution. If the European welfare model collapses, he said, so will the EU itself. Then Czechs could go back to minding the parking lot.

An interesting statement with wide implications, although I’m not exactly sure there’s such a strong connection between parking meters, broken televisions, and the European welfare state.

Free Lunch!

What harm does running a European-style high-spending welfare state do to a country’s GDP? The answer, surprisingly, turns out to be “none at all”. Peter Lindert’s paper, “Why the Welfare State Looks Like A Free Lunch”, shows that a welfare state doesn’t depress GDP in the way that conventional economic analyses predict. Why not? Over to Lindert…
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The Price of Obesity

Economist for Dean Lerxst gets hold of something really interesting in a post yesterday ( which Calpundit also picks up on). He draws our attention to the fact that some US economists have recently been arguing that there has been a significant rise in individuals claiming disability benefits and this has taken a large number of workers out of the labor force, thus – at a stroke – reducing the “official unemployment rate”. The research by Mark Duggan and David Autor is discussed in a NYT op ed by University of Chicago Professor Austan Goolsbee.

Lerxst also highlights the significant role obesity may play in this. He cites an article in Friday’s Wall Street Journal describing a new study by RAND Health economists showing that obesity may actually be the “primary” explanation for the rise in the disability rolls. According to Dana P. Goldman, director of health economics at Rand and the principal investigator on the study cited in the WSJ there is “evidence to support (the idea) that obesity may be a primary reason.”
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