Reclaiming Community


I keep close attention to an Economic Blog called "Economists View". It is managed by an economic professor at the University of Oregon, Mark Thoma. What makes this blog significant is a post from Paul Krugman, "Every morning the first thing I do is review Mark Thoma's blog, Economists View." I recommend you do the same. The following post is an edited version on a Economist View post by Dani Rodrick, an economist that blogs on Project Syndicate.

Reclaiming Community – Dani Rodrick – Project Syndicate


CAMBRIDGE – Economics teaches that the measure of an individual’s wellbeing is the quantity and variety of goods he or she can consume. Consumption possibilities are in turn maximized by providing firms with the freedom they need to take advantage of new technologies, the division of labor, economies of scale, and mobility. Consumption is the goal; production is the means to it. Markets, rather than communities, are the unit and object of analysis.


Economists Raghuram Rahan (University of Chicago) and Oren Cass (Mitt Romney’s domestic policy director) revisit our economistic worldview and argue that we should instead put the health of our local communities front and center. Stable families, good jobs, strong schools, abundant and safe public spaces, and pride in local cultures and history – these are the essential elements of prosperous societies. Neither global markets nor the nation-state can adequately supply them, and sometimes markets and states undermine them.


This means ensuring that local labor markets are healthy and that there are plenty of goods jobs at decent wages. Both Authors agree we may have gone too far into hyper-globalization and paid insufficient attention to the costs for communities.


Economists’ usual answer is to call for “greater labor market flexibility”: workers should simply leave depressed areas and seek jobs elsewhere.


Alternatively, economists might recommend compensating the losers from economic change, through social transfers and other benefits. Leaving aside the feasibility of such transfers, it is doubtful that they are the solution. Joblessness will undermine individual and community wellbeing even if consumption levels are propped up through cash grants.


We do not have a good fix on what works best, and a fair amount of policy experimentation will be needed to make progress. But the urgency of action is heightened by the fact that ongoing technological trends threaten to exacerbate communities’ existing problems. New digital technologies tend to exhibit scale economies and network effects, which produce concentration rather than localization of production. Instead of diffusing gains, they create winner-take-all markets. The globalization of production networks magnifies such effects further.





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