Quite wondrous logic

The risk in question comes from Janet Yellen’s stated desire to unwind US quantitative easing.

The consequences of this, much heralded and now anticipated, change in central bank behaviour will be dramatic, and almost certainly pretty ghastly.
Second, the dogma is that monetary policy is needed. We now know it isn’t. It is fiscal policy that has to be used to manage the real economy. The era of the dominant central banker is over. The trouble is that they yearn for the 1990s when they thought they ruled the universe. Now they don’t but dogmatically they do not want to let go.

Changes in monetary policy are hugely, vastly, important. Therefore we must not use monetary policy to manage the economy.



The argument against the idea is contained within the very piece recommending it.

In the UK, official statistics suggest around £77bn is passed on in inheritance each year (tax avoidance means the real amount could be even higher). That’s money that no living being has a moral claim to, according to standard justifications of wealth inequality and private property. Were that money redistributed by the state, it would cover the cost of adult social care several times over. It could plug gaps in NHS, education and police funding. It could provide the kind of comprehensive welfare state that meant nobody had to worry about their family after they passed away – because there would always be a safety net.

OK, 100% inheritance tax. Why not?

The idea that we should be able to pass on our life’s accumulated wealth to descendants is deeply embedded. It appeals to the fundamental biological urge to protect your offspring and propagate your genes.

Because human beings don’t work that way.

Which is a pretty shit hot reason why not. To the extent that we’re doing any designing at all we’re trying to aid humans in being human, not anything else.

This is an interesting attempt

In the Football Association brochure that sanctioned the breakaway Premier League 25 years ago at the dawn of the first pay-TV deal, no mention was made of the personal fortunes it would make for the owners of the bigger clubs. Led by the self-appointed “Big Five” of Manchester United, Arsenal, Liverpool, Everton and Tottenham Hotspur, the First Division clubs had angled and threatened throughout the 1980s to leave the century-old Football League, so as not to share the new TV millions with the clubs in the three lower divisions. The FA’s culture had narrowed and curdled through that decade, which ended in 96 people being unlawfully killed at the 1989 FA Cup semi-final which the governing body itself had commissioned at Hillsborough.

The general tone seems to be that there’s a connection between Hillsborough and the Sky TV deals. Been taking lessons from Laurie Penny on how the patriarchy causes everything I fear.

Well, yes, this does tend to happen

Alexis Tsipras, the Greek prime minister, has promised to defy his critics by taking the country out of its longest-running crisis in modern times. “The worst is clearly behind us,” he told the Guardian in an exclusive interview.

“We can now say with certainty that the economy is on the up … Slowly, slowly, what nobody believed could happen, will happen. We will extract the country from the crisis … and in the end that will be judged.”

Not that it’s got much to do with Syriza or the various EU bonds who have been fucking things up.

Economies do tend to recover, eventually, but that’s not actually he point. How quickly is. By that measure the whole affair has been a disaster, hasn’t it?

Default and the return of the drachma would have been a much better idea.

How do you feed lunch to 10 million people?

An interesting thought from Matt Ridley.

You don’t know what they will want to eat, nor even what they will eat. You don’t know the exact time, somewhere between 11 am and 2 pm. And there’s 10 million people going to do this.

How are you going to achieve this task?

It’s one that London manages every weekday.

Markets work, eh?


It is a polar record Pen Hadow wishes were impossible to achieve. The explorer, who was the first person to walk solo across the pack ice from Canada to the North Pole in 2003, will now try to highlight climate change by becoming the first to sail there in a yacht.

Wonder if he’ll get trapped in the ice as so many previous attempts have….

This isn’t consistent with the existence of bank runs

The difficulty in all this is multifold. First, cash saving is essentially a negative act. In times of low inflation it is a safe act and, with deposit guarantees, broadly secure but it yields next to nothing and, as importantly, does nothing for the economy. Saving in cash effectively takes money out of active use. It is a loan to a bank that then forms part of its capital (it no longer remains your money: it does belong to the bank once deposited and all you own is a loan recorded in a bank statement) but what we now know is that banks do not then lend this money on: all the loans they create are made out of new money created for the purpose. They do not therefore, effectively, need deposits to make loans.

And given that banks runs do exist therefore this explanation must be incorrect.

Am I little endian or a big endian?

Been given some lovely fresh eggs, thus soft boiled eggs this morning. Not really something I’ve eaten for decades. Which leads to the existential problem, am I little or big endian? This is, as we all know, an important decision.

So far, having had two yummies, all I can say is that further research is required.


But no I King in history saved up and then said “who shall I have a ware with?” They went to war first, issued the money and then taxed it back

Actually, Henry VII saved up and Henry VIII spent it all on war and then taxed the monasteries to fill the coffers. Very taxed the monasteries in fact.


Nope, doesn’t understand the multiplier either

That is not true of a government for two reasons. First, government spending is national income. Cutting it does then only increase the chance of balancing the books if the spending adds less to income than it incurs in costs (meaning in economists’ terms that the ‘multiplier’ is less than one). This is what the Office for Budget Responsibility has always assumed, except for investment. They are however wrong; when there is underemployment there is now a mass of evidence, from the IMF and others, that the multiplier is well over one. In other words, spending more than pays for itself and cuts impose more harm than the initial sum supposedly saved reduces spending by.

He’s looking at this as if the multiplier is the relationship between spending and tax revenue. So, more spending in a slump means more revenue, the revenue pays for the spending.

But that’s not what the multiplier is. It’s that GDP rise by more than the spending, not that tax revenue does. No, he can’t say that eventually everything becomes tax either. Because we’re already including all those iterations of respending in calculating our GDP multiplier. Given that governments tend to get 40% of GDP in tax revenue therefore the tax multiplier is about 40% of whatever he’s assuming the GDP one is. Almost certainly less than unity that is.


Nope, he’s not got Baumol either.

This we knew though. Let me now add in something many are less familiar with. This is Baumol’s law. What William Baumol suggested in the 1960s was that salaries in jobs that have not experienced growth in productivity increase in response to rising salaries in jobs where there has been productivity growth. So, for example, automation in manufacturing might increase productivity, and wages rise with it, but the salaries of string quartet players also rise as a result and there is no productivity gain to be had from playing a string quartet movement written to be played in six minutes in four minutes: in fact, you ruin it if you do. The example is of course contrived: the reality is that string quartet players have increased productivity through better transport, distribution methods and recording techniques. But the fact remains that their core product can’t be compressed in time scale.

Nor, once admin gains are won, can policing, education, nursing, social care, social work, the justice system and many other services be compressed and still function. In fact, because they require face to face contact you ruin them if you do that. But the government, dedicated to an austerity programme that demands increasing productivity, demands that we do crush the time spent on these services, which undermines their value, and that the wages of those undertaking them be cut to break the relationship Baumol observed.

You can indeed compress nursing, as an example. Old treatments for headaches were a cold compress lathed upon the forehead by a nubile maiden. Now we have aspirin, we’ve automated nubile maidens. We have and do in fact automate parts of all of these and thereby increase the productivity of the resultant labour. Baumol isn’t about it being impossible to increase services productivity, it’s about it being more difficult to do so, no more.

BTW, he other leg of Baumol’s work is on innovation, the method by which we increase productivity. Markets. Definitely markets. So, the more difficult it is to increase productivity in nursing, police etc, the more they need to be subject to market incentives so as to increase productivity. But, of course, he’s never bothered to read around the subject to find that out, has he?

The model we’re using is one that says the state has a limit to the size it can be in proportion to the private sector. And it says the state can supply all the services we need despite this constraint, even if Baumol’s law applies. And that model is wrong. We cannot do that. What Baumol’s law actually implies is that as we get richer in terms of the productivity of some labour (which, because of robotics, is likely to continue to grow even as total employment falls) the price of public services will rise and that we must accept the growth in the size of the state sector that follows if we are to still enjoy those services we once thought of as basic.

No, that’s Wagner’s Law, long before Baumol too. And see above about how we increase productivity in services.

And of course, that means we will pay more tax too. But that tax will be paid out of the proceeds of the spending, because as I argued yesterday, spend comes first and tax comes second, and unless there is full employment at fair pay (which there clearly is not in the UK) the spend does not result in inflation.

How did “fair pay” sneak in there? There’s nothing even in his own misunderstandings of the model which implies that.


Cliches much?

Grandfather, 33, kicked off plane says he was discriminated against because of his facial tattoos


Davi and Kerry-Anne were accompanied by their daughters Skyla and Shelby-Ann, Kerry-Anne’s daughter Keeley Millerchip, her partner Andrew Bostock and their sons Kenzie and Jayden.

Not actually, it appears, a grandfather. But still…..


It’s a common mental disorder that one or other of us knows what everyone else should be forced to do. Our own liberalism is based in the fact that we’ve not a scoobie about what will maximise the happiness of others, good grief, the existence of Simon Cowell proves that. Thus our basic prescription that people should be stopped from doing what damages the rights of others and after that left alone to do as they please.

Bleedin ‘Ell, the Swedish are more British than the British now

A Swedish rail operator has vowed to name one of its trains Trainy McTrainface after a public vote, saying it would bring joy to people disappointed when Britain rejected the name Boaty McBoatface for a polar research ship following a similar poll.

Trainy McTrainface won 49% of the votes in the naming competition, conducted online by train operator MTR Express and Swedish newspaper Metro, beating choices such as Hakan, Miriam and Poseidon.

“[This is] news that will be received with joy by many, not just in Sweden,” MTR wrote in a statement.

The train will run between the Swedish capital Stockholm and Gothenburg, the country’s second-biggest city.

Last year, the British government said a new £200m polar research ship would be named after veteran BBC naturalist David Attenborough even though the name “Boaty McBoatface” had topped an online poll.

Although, to be fair, ignoring the wishes of the hoi polloi does have a certain Britishness to it…..

Calling Mr. Newman

“The French have the impression that the Dutch think only of money and are always ready to fight for profit. They are not afraid of anything,” the researchers reported.

“The Dutch think that the French are attached to a hierarchy and political interests which are not necessarily the same as the interests of the company … “

Tim’s comments on French corporate culture would be welcome here.

Hey, why not, go ahead, do it!

At least ten female BBC presenters will consider legal action against the BBC if the corporation does not close the gender pay gap, in a revolt by women who did not appear on the £150,000 list.

‘T’ain’t illegal for there to be a gender pay gap. ‘Tis illegal for like work to be paid differently on the grounds of gender. A court case would be an interesting place to discuss what is “like,” no?