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I’ve always felt that the volume of businesses that get started is lower than it should be. It seems just nont as optimal, especially in my country where there is are no social safety nets. Lower the bar for starting and then gradually phasing them out I think is a push in the right direction.

October 2, 2008, 9:44 am
An Incentive to Open and Close With Haste
By Daniel Hamermesh
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Before going to a Thai restaurant near my German apartment, I asked a long-time resident how it is, and she said it’s brand new. It was a Texas barbecue (!!) joint for a few months, and something else before that.
Why the turnover? Of course, being unable to cover variable costs matters generally, as always; but the German government apparently gives a small business an incentive to open up, and an incentive to close quickly if it cannot cover its costs: certain taxes are waived if the business is small, but only for a short period of time; thereafter, the tax break phases out.
Thus the risks of opening a new business are reduced; and, if the business is not very successful, the impending loss of the tax break provides an incentive to close it down within the time period necessary to escape these taxes.
I have grave doubts about this policy and about subsidizing small businesses generally: if there are scale economies naturally, why should the government try to offset them? And it’s hard to imagine that there are too few new small businesses — or that people are so unwilling to take risks that the government should offer subsidies.
I see no good economic rationale for these policies, but they are widespread in Germany — and in the U.S. too.
An Incentive to Open and Close With Haste – Freakonomics – Opinion – New York Times Blog.

This surprised me, It seems that I’m swinging between feelings of how easy and hard achieving the MDGs  is.

01 October 2008
What could a development economist buy for $700 billion?
Duncan Green puts the bailout in an international perspective:
To put the proposed Wall Street bailout into perspective. $700bn:
* Would clear the accumulated debt of the 49 poorest countries in the world ($375bn) twice over
* Is almost 5 times the annual amount of extra aid needed to achieve all the Millennium Development Goals on poverty, health, education etc ($150bn a year)
* Is about 7 years of current global aid levels ($104bn in 2007)
* Is enough to eradicate all world poverty for over two years (UNDP calculates it would take $300bn to get the entire world population over the $1 a day poverty line).
On the other hand it’s:
* only a quarter of the cost of the Iraq war ($3 trillion on Joseph Stiglitz’ calculation )
* a half of annual global military spending ($1339 bn)
Chris Blattman’s Blog: What could a development economist buy for $700 billion?.

Let’s see. Is this part of the 5B deal with warren buffet, do some lobbying for the bailout.

Adding to the pressure on Congress to act were some of the nation’s biggest corporations, including Verizon Communications Inc., Microsoft Corp., and General Electric Co. GE Chief Executive Jeffrey Immelt is actively lobbying politicians and finance officials in Washington to complete the financial-rescue bill, said a company spokesman. To back up his message, Mr. Immelt directed his staff to compile evidence of the “negative ripple effects” throughout America from the crisis on Wall Street, including information on what is happening to customers and employees in all 50 states.
The Price of Disgust – Freakonomics – Opinion – New York Times Blog.

History Repeating itself watch!

A petition was signed by 1028 economists in the United States asking President Hoover to veto the legislation, organized by Paul Douglas, Irving Fisher, James TFG Wood, Frank Graham, Ernest Patterson, Henry Seager, Frank Taussig, and Clair Wilcox.[5] Automobile executive Henry Ford spent an evening at the White House trying to convince Hoover to veto the bill, calling it “an economic stupidity”.[6]J.P.Morgan’s Thomas Lamont said he “almost went down on my knees to beg Herbert Hoover to veto the asinine Hawley-Smoot tariff,”[7]
Smoot-Hawley Tariff Act – Wikipedia, the free encyclopedia.