Does anyone actually believe this nonsense?

For most people in the West, wages and living standards have stagnated for decades. If you were a factory worker in the north of England in 1970, for example, odds are good that your children will earn less in real terms than you did 50 years ago. The same is true for workers elsewhere in Europe and in the United States, an economic reality that is partly responsible for the rise of populist politics.

Seriously, real wages – that is, living standards – are the same now a for a factory worker in 1970?

Does anyone actually believe this shit?

Not what he does but how he does it

Mexico’s leftist Lopez Obrador wins largest landslide in country’s history

Kill off corruption, get that economy motoring, raise the incomes of pensioners…..well, that’s all fine.

The question is, how do you do it? The Venezuela method? Or the free market one?

For example, the oil industry. Re-establish the state monopoly? That’s going to lower corruption, isn’t it? Or how about let anyone play then tax the snot out of the resource rents?

The aims – largely at least – are fine. It’s the methods which matter.

Well, yes and no really

I think it is just as well for the City and the world of high finance that I lost all interest in matters fiscal after completing an A-level in economics.

Supply and demand, the multiplier effect, macro and micro economics, bull and bear markets. Basically understood. Fast forward from long ago last century to the present day… bond yields, derivatives, interim permissions, net FDI balances. Nope, not a clue.

Thus one goes to the wise men of economic interpretation, in hope of light being shed, and what do you find? A man I regularly turn to for elucidation last week had a fit of the nonsenses. Digesting Donald Trump’s trade threats, he came up with: “Deficits and surpluses must necessarily sum to zero.” A few paragraphs later, he was back on familiar ground: “In other words, the two effects will net to zero.” I’m not saying that this is complete tosh, but it certainly smells rather off.

Off? It’s a statement of the bleedin’ obvious. As Bootle says:

This isn’t exactly the justification that president Trump gives for his actions, nor indeed does it reflect what he seems to understand about international trade.

He seems to believe that the trade balance is like a company’s profit statement. Exports are good and imports are bad. Accordingly, if your exports exceed your imports then you are “winning” and if your imports exceed your exports then you are “losing”. Moreover, he seems to believe that this is true even on a bilateral basis. This is the economics of the madhouse. Since deficits and surpluses must necessarily sum to zero, the implication of Trump’s economic philosophy is that international trade brings no net benefit for the world as a whole.

Quite clearly true, no?

Dear God

This was a mistake. When the economy goes into a downturn, it is necessary for the government to increase spending and run a deficit. If it does not, as our government did not after the financial crisis,

The UK did not run a deficit after the crash?

Whut? No, whut?

Statistics, statistics

The average New Yorker now works harder than ever, for less and less. Poverty in the city has lessened somewhat in the past few years, but in 2016 the official poverty rate was still 19.5 percent, or nearly one in every five New Yorkers. When the “near poverty” rate—those making up to $47,634 a year for a family of four—is thrown in, it means that almost half the city is living what has become a marginal existence, just one paycheck away from disaster.

“Near Poverty” is defined as twice the poverty level.

As it happens, the poverty level is about 50% of median incomes.

So, our intrepid reporter has just discovered that around 50% of people are on less than median income.

Well done, well done.

Perhaps Say’s Law doesn’t hold?

Britain’s manufacturers cranked up in May, raising hopes that the economy has escaped the slow patch in the opening months of the year.

Last month factory output grew at the strongest pace so far this year. The relevant segment of IHS Markit’s purchasing managers’ index – an influential private sector survey – hit 56.9 in May, up from 55.4 in April and well above the 50-level which denotes no change on the month.

However, domestic demand remains sluggish and much of the extra output has gone into rebuilding stockpiles of goods, rather than being sold to customers.

That is, supply doesn’t create its own demand?

There is something here though. Back in that Great Moderation people were wondering why it was moderate? One point being those stock levels. JIT and all that meant that stock levels across the economy were very much lower than they used to be. We just didn’t need to have 2 or 3 or 6 month’s supply of crud in order to keep ticking over. And stock levels varying was one of the great drivers of both boom and bust.

So, lower stock levels in general and booms and busts would be less extreme – moderation.

Note that it took a financial crisis, not the more usual boom and bust of the economy in general, to have a recession.

Interesting reading of the UK economy

One of the central motivations for austerity was the idea that our deficits and debts were so high as to inspire a lack of confidence in the economy. The narrative was always that we needed austerity to ‘bring the public finances under control’ – even as the government simultaneously cut corporation tax, inheritance tax and income tax for the highest earners. By making sharp public sector cuts, the government would restore confidence and the UK would move towards a swift recovery.

This is from the Progressive Economy Forum.

There are a couple of problems with it.

1) There were no public sector spending cuts. Spending is up in cash terms, in real terms and is still higher in %ge of GDP terms than it was in 2007. What sodding cuts?

2) The stimulative effect is the size of the deficit, not the amount of spending. Cutting taxes to increase the deficit is stimulatory itself.

Not a good evidentiary base to start from, is it?

Simon Wren Lewis has been klnown to insist that even so there has been austerity. His definition being any amount of spending less than the amount which would have entirely prevented the recession.


Alternatively, researchers have shown that health spending is one of the best ways to stimulate the economy, so the government could opt against tax increases in the short term and instead let healthcare spending act as a fiscal stimulus, at least until purchasing power had increased.

Seriously? Who the hell has claimed that?

So here’s an idiot idea

Retailers are currently closing stores at a faster rate than during the recession, but despite the underlying issues being well rehearsed, no coherent plan has emerged to tackle high-street decline. Some 50,000 stores are deemed surplus to requirements and MPs have recently launched a fresh inquiry, with the goal of drawing up a vision of what high streets and town centres could look like by 2030. There is no shortage of brain power being devoted to this emotive subject; retail guru Bill Grimsey is currently leading a taskforce that is revisiting his influential 2013 review. But while MPs and retail experts bang their heads together, the pace of decline only accelerates.

Why not just liberalise the planning laws and see what happens?

Oh Aye?

Women are backing out of divorce cases because settlements are becoming less generous, experts have said.

Fewer wives are being awarded income for life and they are increasingly having their divorce settlement limited to a few years.

This is making some of them back off from going through with a split, law firms say.

Incentives matter, do they?

Howard Reed’s demand

So where do we go from here? If we accept that we need fundamental reform, what should the new economics—“de-conomics” as I’m calling it—look like? Much, of course, must be left to be determined by new research, working to new priorities within new paradigms. However, we can sketch out some desirable characteristics of a retooled economics.

First, we need to accept that there is no such thing as “value-free” analysis of the economy. As I’ve explained, neoclassical economics pretends to be ethically neutral while smuggling in an individualistic, anti-social ethos. In reality, any statement about the economy that goes beyond descriptive statistics (for example: “the annual rate of CPI inflation was 2.7 per cent last month”) is a value judgment.

Only by acknowledging that can we have an honest debate about how our economy and society work.

Guess whose, and which, values are to be embedded in the core of this new economics? Any predictions for what this new normative science will demand are the norms?

The department of the bleedin’ obvious

The average age of a car on Britain’s roads is at its highest level since the turn of the millennium with the proportion of motorists behind the wheel of an old banger surging.

UK cars and vans in 2017 had an average age of 8.1 years which is believed to be the first time that the average age has been above eight since at least 2000.

We’ve just had a deep and bad recession. People delayed replacing capital equipment.

We’re surprised, right?

Self solving problems

Varoufakis has found someone to fund his idea of contesting the EU elections as one party across the continent. He insists that this is very important:

What we need, in the UK and in the EU, is a combined municipal, national and pan-European strategy to tackle our common crises: private and public debt; the low levels of investment that contribute to precariousness, unemployment and poverty;

He is an economist. Perhaps not a ground breaking one but certainly a competent one. Thus he knows that we’ve already solved that low levels of investment problem.

As everyone continually complains, capital returns are up, capital is gaining ever more of the economy (not actually true but they keep complaining it is) and asset prices are sky high. As any economist does know that increases the incentives for capital formation and investment, doesn’t it?

Thus we’ve already solved that problem.

Some failure

The ideas of the modern left were primarily born out of a new kind of practice and some undeniable facts. Neoliberalism had failed. In the survival strategies adopted by governments it has become, as the economist William Davies writes, “literally unjustified”.

The socio-economic system which has caused the greatest reduction in absolute poverty in the history of our species has failed?

Willy Hutton’s mistake

OK, OK, just today’s mistake from Willy Hutton:

Cities have always been the load-bearers of economic and social advance: agglomerations of people are the source of creativity and scientific experimentation; they also create demand and then supply that demand. Cities are ever more important, but they need to be big – at least 2 million in population by some estimates –to create the scale on which diverse economies depend. London’s advantage, above all, is its size, although it has benefited hugely from an undeclared industrial strategy favouring financial services, the creative industries, its transport and, most recently, its education system. Being the capital doesn’t hurt either, while membership of the EU has attracted hundreds of companies to locate their headquarters there.

Birmingham and Manchester, England’s next biggest cities, need to be bigger and governed as regions to capture these agglomeration effects and organise strategies better to support themselves economically and socially.

Yep, agglomeration, all entirely true. It’s people interacting with people which create economic wealth. Great.

But note the elision there. Willy says that’s about governance. That is, he’s insisting that London’s wealth generation is coming from the GLC (or whatever it’s called now), therefore Brum should have a BLC etc.

London was one of the pre-eminent economies of the globe rather before the GLC existed. The economic wealth creation isn’t therefore reliant upon this method of governance.


So what is Galloway’s argument? Patient readers must plow through nearly half the essay — though many lovely charts will aid the journey — to find out. Before getting to his casus belli against the SVTAJKSSM, Galloway first runs through a series of “valid concerns” to whet the appetite for antitrust destruction: The Four are really, really big. The Four are addictive. “Google is our modern day god.” The Four don’t pay enough taxes. The Four are destroying massive numbers of jobs.

But destroying jobs is the very point of economic advance.