Sunday, 18 October 2009

Charter cities

Paul Romer has put up a website with his suggestion for freeing people from lousy rulers: create new "charter cities" they can move to.

I am rather sympathetic. A lot of Europeans in the C19 escaped to America from their lousy rulers. And as the FAQ states, within America, increased mobility was liberating - for example, in the Great Migration, Blacks moved from the South to Northern cities like Chicago.

Also, I have a related paper.

On the other hand, there are issues. One is the effect of competition on the lousy rulers themselves (and all the people who will still be living under them). This need not always make them better, as explained by the sophisticated graph on the left. A bit of competition might make rulers invest more and try harder to keep their people happy - after all, the population provide the ruler's tax base. But if there is so much competition that there's no way the ruler can match it, he may just opt for the short-term strategy and steal everything.

Tuesday, 13 October 2009


Apparently, the UK has the lowest quality of life among 10* European countries, despite our higher income. Measures like this are important complements to the standard indicator of GDP. But as Nietzsche said, "Happiness is blessed, therefore it lies."

If a large part of our national income is invested in the future -- say, funding for social science research -- then some of our extra wealth compared to those happy-go-lucky Italians is being put into things that will benefit our children. The choice between GDP growth and quality-of-life is a choice between jam now and jam tomorrow. (In the eighteenth century, overworked English peasants probably had worse quality of life than the lucky inhabitants of Tahiti. Now the comparison is reversed, and we can go to Tahiti for our holidays.) Another way to put it: GDP levels are not very mean-reverting, so if we grow extra this year, we are likely to have that extra GDP for a long time.

That doesn't mean we are better off now. But it does mean that happiness indices and such should be taken with a pinch of salt... and we should be wary of replacing the Protestant work ethic with the ideals of those lotus-eating continentals.

* or is it 7? Great fact-checking, Grauniad.