Peter Jacobsen: Why Do Some Countries Stay Poor?

This week for Ask an Economist, I have a question from a reader named Mark. He says,

“I've worked with immigrants that recently moved to the US, and workers still living in their native country and working for me remotely.

My experience is that they're on average, much harder working and more skilled (even in technical fields) than my American colleagues. The foreigners work hard, making no excuses, grateful for the work, and take every opportunity to better themselves. Americans, on the other hand, demand much higher wages, complain about the work, and make little effort to improve themselves.

Since the people from many of these poor countries are better workers, why are their home countries so poor? Immigrants on average start more businesses and do better in the US than US born citizens. With all their skills and ambition, it seems their home countries ought to be significantly richer than the US cities, yet this isn't the case. What's the cause of these countries' poverty?”

Point of Order: IRD Minister’s tax report shows (no surprises) the benefits of getting much of your wealth from capital gains

We have waited patiently to post this ministerial press statement and some of the reaction, because the announcement was under embargo until 12.30pm and it was not then posted promptly on the Beehive website.

At first blush, the statement gives good cause for wealthier New Zealanders to brace to have more of their money taken from them by a government with an increasing debt to settle and an inclination to show “fairness” in its tax policies.

Fiona Mackenzie: Our Fatal Flaws

I’ve just read a great book – “Why Nations Fail…….the Origins of Power, Prosperity and Poverty”.  Based on 15 years’ research, it’s no light read but it has much to say that is relevant to New Zealand. I hesitate to condense it, but feel some key messages are important.

The book dispels the arguments that wealth and prosperity can be due to climate, geography or culture. Rather it’s the openness and accessibility of institutions a country operates under (both economic and political). These determine whether people feel they have a chance of being heard and, most importantly, whether it’s worth investing their time, effort and resources in trying to achieve anything. Fundamental human psychology, really!

Richard Epstein: In Praise of Income Inequality

You cannot make the poor richer by making the rich poorer.

One month into the second term of the Obama administration, the economic prognosis looks mixed at best. On growth, the U.S. Department of Commerce reports the last quarter of 2012 produced a small decline in gross domestic product, without any prospects for a quick reversal. On income inequality, the most recent statistics (which only go through 2011) focus on the top 1 percent.

Roger Kerr: No Need to Idolise the Rich

Reflecting recently on his experience as a philanthropist, Microsoft founder Bill Gates spoke about the relative failure of his efforts to promote so-called renewable sources of energy. He told Wired magazine that it was ‘cute’ and ‘kind of cool’ to have solar panels on your roof, but that the economics were ‘so, so far from making sense’. And yet, he acknowledged, that’s where the subsidies are going now. Asked if that meant there’d be no solar cells on the roof of the Gates family residence, he replied “Oh, we like to be cute like everyone. For rich people, this is OK.  Rich people can do whatever they want.”

This prompts several observations.  For a start, we should not idolise the rich. We should acknowledge that the rich can spend foolishly and self-indulgently, just as they can be wise and generous philanthropists.