Economically minds
"White Elephants" of Development
A paper by Robinson and Torvik called White Elephants tries to solve the puzzle of why many developing countries fail to turn investment into economic growth:
Developing countries seem to be plauged by extreme resource misallocation. Evidence of this comes from both econometric work showing large gaps in total factor productivity between rich and poor countries and from numerous case studies of rent seeking, the rise of the informal sector and inefficient parastatals. Many of these distortions seem to be created by politicians and the state. Following Bates most scholars have seen such outcomes as politically rational, even while they are socially disastrous..."
(Hat tip to Mahalanobis)
Speaking of social disasters in developing countries, commercial farmers kicked off their land in Zimbabwe are now being wooed by Ghana and Nigeria. Ghana's GDP growth is now at 5.8%, as opposed to Zimbabwe's GDP plunge of an average 6% each of the last five years.
US Old Age Entitlements to Expand Significantly
Stanley Kurtz writes: "By 2050, the combined cost of Social Security, Medicare, Medicaid, and interest on the national debt will rise to 47 percent of gross domestic product — more than double the level of expected federal revenues at the time."
This is because by 2050, 20% of Americans will be over 65. Or as Kurtz puts it, "markedly older than Florida’s population today."
Of course, I think by 2050 that the economic output of the elderly will rise, and I suspect there will be a lot of immigration into the US by both high-skilled and low-skilled people (India and China come to mind for large sources of both).
In other news, the Medicare Drug Benefit may cost more than $1.2 trillion in the coming decade, up from the previous estimate of $534 billion.