For centuries have academics and politicians debated the merits and demerits of central planning. Central planning (or economic planning, or planned economy) is a mechanism that directly allocate resources. A central authority decides how and where stuff is produced and consumed. It contrasts with its ideological counterpart, the market mechanism, in which resources are allocated indirectly by buyers and sellers who make decisions within regulated marketplaces. Continue reading
A few weeks ago I got published with an article I wrote about the role governments can and cannot play in stimulating innovation. I responded to a piece that Rutger Bregman posted for the De Correspondent about the biggest inventor and innovator in the world: the government. He claims that governments are responsible for all major technological breakthroughs in the past 100 years and that they are the ultimate venture capitalists. The government should take a stronger role as a technological innovator at the expense of the free market.
Dangerous nonsense. Continue reading
This week will be a turbulent one for the Eurozone. Greece will certainly default again on its debt, at least partially, after a first default in 2011. Here’s the cause of the problem in one picture:
If governments face a budget deficit that is deemed to be too high, two actions can be taken: government spending is lowered, or government income is increased. The lion’s share of government income comes from taxes; increasing government income as a way of reducing budget deficits therefore translates to increasing taxes. But taxes are not increased, really; tax rates are increased.
But what few people know is that in certain situations raising tax rates will actually reduce government income from taxes.
Today, Maurice de Hond (the most famous Dutch ‘pollster’) said that as of now the Freedom Party (PVV) of Geert Wilders is the biggest party in the Netherlands. Question: How can a party have become smaller or larger, without any kind of formal elections? Answer: Because a tiny fraction of the population has said so.
I am surprised how much attention polls get in media, in many countries. Every week, a new poll is published and treated as some kind of reliable, trustworthy, perhaps even (quasi-)scientic source of information. A certain politician may have made a public appearance, or made a mistake, or whatever, after which the next polls are used to see what the consequences have been by comparing them to earlier polling results. Continue reading