May 25, 2008


Immigrants and the young: Left behind by Swedish left?: Sweden's political left should embrace free market reforms if it is to achieve its goals for a more equitable society (Nima Sanandaji, 5/20/08, The Local)

The political left should embrace free-market reforms. At least according to the Italian economists Alberto Alesina and Francesco Giavazzi. The argument is based on the notion that some aspects of classical right of centre economic politics, such as de-regulation of the service industry, lower taxes and privatization, clearly benefit the less fortunate members of society. People who oppose these reforms often talk about social justice, but are in fact using centralized economic planning to maintain the interests of various privileged societal groups.

According to Swedish economists Stefan Fölster and Fabian Wallen, this argument holds for a number of free market reforms that have come to the fore in the Swedish public debate. One example is rent control; a policy based on the notion that low income earners should be able to live in the same neighbourhoods as the wealthy. In practice, rent controls subsidize the cost of renting in expensive parts of cities, which in turn leads to less housing construction rent hikes in less affluent areas.

Understandably, those living in rent control apartments in well-off areas are typically far from low-income earners, but are rather wealthy members of society. Here policies of rent control might be viewed as a far-fetched socialist vision of integration between various segments of society, or perhaps simply an example of so called rent-seeking policies that benefit a small group at the expense of the rest of society.

A similar situation exists in the labour market. Regulating the labour market is one of the favourite policies of the left, who claim to be looking out for average workers. But economic studies clearly show that these policies benefit those having jobs, while shutting out marginalized groups of workers – such as immigrants and the young – from the labour market.

Posted by Orrin Judd at May 25, 2008 9:11 AM
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