Saturday, February 8, 2014

People still respond to incentives

Casey Mulligan is surprised that some economists seem to have forgotten that people respond to incentives, that if you penalize work, you get less of it.

Monday, February 3, 2014

Socialism to our south

The results of socialism in Venezuela are what anyone who understands economics expects, but some citizens still prefer to believe that bad results must come for bad people:

Each day the arrival of a new item at Excelsior Gama brought Venezuelans flooding into the store: for flour, beef, sugar. Store employees and security guards helped themselves to the goods first, clogging the checkout lines, and then had to barricade the doors to hold back the surge at the entrance.
“The store owners are doing this on purpose, to increase sales,” said Marjorie Urdaneta, a government supporter who said she believes Maduro when he accuses businesses of colluding with foreign powers to wage “economic war” against him.
“He should tell the stores: Make these items available — or else,” she said.
Socialism is always in trouble because of sabotage--a favorite theme in the USSR and China under Mao. It is unfortunate that some people cannot understand that people respond to incentives.
Most Venezuelans are too busy just trying to secure the basics. Residents from the country’s interior say the shortages are even worse outside the capital.
“There’s nothing to buy where we live,” said Maria Valencia, a preschool teacher from the oil-producing hub of Maracaibo, near Venezuela’s western border, while shopping at a government-run Bicentenario supermarket where products sold by recently nationalized companies carried little heart symbols and the phrase “Made in Socialism.”
Valencia and three family members had filled their cart with corn oil, four bottles each, the maximum. “This stuff is gold,” she said.
Shoppers here were more inclined to blame the scarcities on badly behaved countrymen whom they said were trying to profit from the situation.
And while the government is trying to run the economy, it is not doing a very good job with a basic function of government:

But if the president’s fiscal policies are anything like his response to rising crime, the country looks to be in trouble.
The Jan. 6 roadside killing of former Miss Venezuela Monica Spear in a botched robbery attempt jolted a country long-numbed by one of the world’s highest homicide rates and near-total criminal impunity. 

In democracy people get the kind of government that they deserve, which may be very different from the kind of government that they want. 

Read the whole thing in the Washington Posts here.