He’s really not an economist, is he?

Spend, actual and projected as per the Kings Fund, all state in 2017/18 prices, is as follows:

OK, static, pretty much, in real terms. But they have used the GDP deflator.

Ritchie then wants to tell us that medical inflation is different:

The problem is that the data does not tell the whole story. The figures are in 2017/18 prices but that’s adjusted by normal inflation. However, as the Institute of Actuaries have noted (and they’re good with numbers) medical inflation is higher than CPI.

They have actually taken changes in the NHS budget as their definition of medical inflation:

“Inflation” in the NHS context would be measured by changes in the NHS
budget from one year to the next.

Sigh.

But we can’t take numbers using the GDP deflator and then alter them by CPI:

Although at first glance it may seem that CPI and GDP Deflator measure the same thing, there are a few key differences. The first is that GDP Deflator includes only domestic goods and not anything that is imported. This is different because the CPI includes anything bought by consumers including foreign goods. The second difference is that the GDP Deflator is a measure of the prices of all goods and services while the CPI is a measure of only goods bought by consumers.

You just can’t mix and match your inflation measures in that manner.

That’s before we get to the fat that we don’t buy NHS services as consumers so we can’t compare them to the CPI in the first place.

Finally, if medical inflation is higher than general, imagine that’s true? Then we’d like to change the system of health care delivery before it swallows the entire economy, wouldn’t we?

13 comments on “He’s really not an economist, is he?

  1. Richard Murphy is a genuinely humble and humanitarian person as this comment on his blog exemplifies….

    “As I twin I genuinely feel for you

    I saw my ‘other half’ this afternoon

    And I have always sensed the injustice of another person not being the same way as me – from the time when one of us went to a grammar school and the other did not”

    Not a hint of patronising or bitterness or smugness of lack of self-awareness in there

  2. If medical inflation is measured from NHS spending, then a reduction in spending will reduce the inflation.
    In fact it doesn’t matter what we spend on the NHS, reduce it by half and medical deflation will automatically compensate.

  3. @AndrewC,

    Most people would see that as an argument for grammar schools, given Ritchie’s own noted “success” compared to his brother.

    If he feels that going to a grammar school gave him an unfair advantage, he could always quit being a tax expert professor and become an unemployed local radio DJ as well.

  4. I`m not convinced that the drop in the pound is not still having an inflationary effect. I did not notice anything that was remotely commensurate with the increased cost of importing parts in the final car sale prices offered in the year after the Brexit collapse ( for example )
    The mechanism by which increased costs are fed through to a new market price may be a long one . The price offred at market is a factor of the companies attracted to it and those which leave it and that is not a one year process
    I see Sports Direct have a massive loss of profits, for example but they may wish to retain market share through
    Is a one off increase in the UK PLCs costs the same thing as inflation caused by money anyway ? Demand inflation should be linked to x levels of employment and growth whereas an outright increase in costs shift whatever curve altogether .

  5. GDP Deflator includes only domestic goods

    Does he know what the “D” in “GDP” stands for, I wonder?

  6. Violet Elizabeth Newremainia, and SportDirect’s dive in profits had nothing to do with the expose of SD’s working practices and Mike Ashley being a complete and utter twat?

  7. Last week ice cream was £2 per litre, and I bought one litre. This week it is £1.50 per litre and I bought two litres. Candidly, there is price inflation in the ice cream market.

  8. Newmania,

    price of a Mars bar or 4 finger KitKat has gone up by about 14% since the referendum, Mars/Nestle etc. hedge against seasonal fluctuations in price but tend to move with fundamental market fluctuations.

  9. So Snippa is trying to move into the “health economist” market. The sooner he gets a pitch at a fruit and veg market the better

  10. @AndrewC it is clear that the brains in the family went to the twin brother. He has made a life for himself. Snippa has grown fat on rent seeking, eg professing expertise in accounting and tax, but is revealed as a cretin every time he speaks or cranks out another crappy blog post

  11. “NHS inflation”, which is simply poor historic cost control, is an argument/term widely used by NHS bodies when going for a bigger dollop of cash from the Department of Health.

  12. On thinking a little more, maybe they swapped 11+ papers. The brighter twin goes to secondary modern but retains his intellectual energy. The fatter twin founders. Sec Mod twin lives a self-actualised life. Fat twin seethes with resentment

  13. I’ve been agreeing with Richie all week, and none of my posts have been approved. It looks like he’s blocked me on automatic. Time to go to my history books and find another Quaker alias.

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