Another total blinder from the TJN

Yup.

Still, we have good reason to believe that there is a whole lot of causation at work here. Not least because of what we like to call the Jersey Disease, whereby financial inflows from the financial sector tend to crowd out and tilt the exchange rate against other sectors.

Stunning, eh?

They\’ve just found out that if you have a successful sector of the economy then this tends to crowd out other, less successful, sectors of the economy.

As Germany\’s finance sector is stunted by the way that they\’re rather good at high value manufacturing. As Russia\’s is by the amount of oil and gas they can sell. As Iceland\’s is by all those fish. There\’s nothing specific to either the UK or Jersey in finance here.

Jeebus, what do they expect to happen when we\’ve the international division and specialisation of labour?

3 comments on “Another total blinder from the TJN

  1. So this is the Dutch disease, exactly and precisely?

    Tim adds: Dutch Disease is usually thought of as a more precise subset. It’s about exports, yes, but exports of natural resources.

    If you find loads of gas (as Holland did) then you’re going to have loads of exports. Great, this means that lots of people are buying your currency to buy the gas, raising your exchange rate. This does fuck over other sectors and their exports.

    If you have a large and successful international finance sector (us), car sector (Germany) etc, yes, the same thing happens to an extent. But this rise in your currency is as a result of the international division and specialisation of labour, not as a result of pure blind luck (ie, natural resource endowment). If you’ve got that successful sector then perhaps your currency ought to be rising: for it makes imports cheaper for all, not a bad way of sharing the export success of a part of the economy.

    So, we can say that it’s Dutch Disease, yes. But not really, for we’re differentiating between what causes it. Is it having an efficient export sector of the economy? Good. Is it from having loads of dead dinosaurs? Bad.

    Don’t forget, those who would shrink our financial sector are also those who would expand our manufacturing one: same end effect even if from a different sector.

  2. It’s the Dutch disease, apart from Jersey not having its own currency so that it doesn’t actually have an overvalued exchange rate

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