The heart of development economics

The reason places like Africa are poor is not because of capitalism, exploitation, the residues of colonialization, or even the long, dark shadow of the slave trade. Nor is it poor even because of idiotic socialism or the propensity of politicians to run off with the national treasury. You can blame any selection of those as you wish, and with some of them you’d even be right, but they are all proximate causes. The ultimate reason is simply that poor places are using less productive technologies, richer ones more productive. All of those varied things can be blamed for reducing the use of more advanced technologies, but it is the lack of technological advance itself that causes the poverty.

Fun and interesting

Hundreds of customers with smart meters will cook their Christmas Dinner without paying a penny for their power, after Octopus Energy said it would offer four free hours of energy.

The challenger brand said it would enable the price pause by tweaking its so-called “time of use” tariff, which is available to people with smart energy meters. Octopus is making the festive gesture following fears that smart meters might cause bills to spike at times of high demand because of “surge pricing”.

Greg Jackson, the chief executive, said the supplier wanted to show that “plunge pricing” was possible too.

Industrial usage of electricity being about nothing on this day, right?

Actually, don’t we get to see the stats on this in real time these days? Percentage of ‘leccie from different sources etc? And is the auction market price also listed? And, if it is, what was that price last Xmas Day? Anyone got this to hand?


An agreement has been reached at the eleventh hour between Chief Pleas and Sark Electricity to keep the power on and avoid any disconnection.

The two parties initially failed to reach a deal during a meeting on Wednesday evening and the power was set to be cut off at midnight tonight.

Sark Electricity had been in dispute with Chief Pleas for a number of months after the government forced the company to drop its price 14 pence to 52p per unit recommended by an independent price regulator.

The agreement reached last night now states the price of electricity will go back up to 66p per unit to allow the company to sell supplies without losing money.

Sark’s government now has three months to buy Sark Electricity.

Electricity on Sark will cost what electricity on Sark costs. Doesn’t matter who owns it. Tey can – and probably will – subsidise it thought taxes. But it’ll still cost the same.

The global 1%

When left populists rail against elites they are generally referring to economic and political power. Their target is the richest 1% that owns half the world’s wealth: the newspaper moguls, bankers, political donors and corporate lobbyists; Tony Blair, the Clintons, the Bushes, Old Etonians, Old Harrovians, Oxford, Cambridge, Yale, Harvard, Bullingdon. Those people who run things unchecked from a position of absolute and relative privilege that is often inherited. The left believes that the prospects for democracy weaken as inequalities grow and oligarchies emerge which govern in their own interests. Society then operates according to the golden rule – those who have the gold make the rules.

But when rightwing populists focus on elites they are mostly referring to culture. Their targets are filmmakers, actors, lecturers, journalists, “globalists”, spiritualists, scientists and vegans; the Clintons, Hollywood, Londoners, New Yorkers, Silicon Valley, Sussex and Berkeley.

All of those will be in the global 1%. Own a home and a pension in Britain? Global 1% pretty much.


The village was originally home to 40 staff and their families, as well as the hub of activity for the 1,200 workers who laboured on the dam. Waitaki Dam was the last in New Zealand to be constructed using , as part of a government initiative to reduce the unemployment rate.

Logic professor, logic

The late Prof Mick Moran, who taught politics and government at Manchester University for most of his professional life, had, according to his colleagues, once had “a certain residual respect for our governing elites”. That all changed during the 2008 financial crisis, after which he experienced an epiphany “because it convinced him that the officer class in business and in politics did not know what it was doing”.

After his epiphany, Moran formed a collective of academics dedicated to exposing the complacency of finance-worship and to replacing it with an idea of running modern economies focused on maximising social good.

If the officer class is clueless – obviously it is and that applies to any group we might promote to such status – then there’s no manner of “running” the economy is there? Which is, of course, why we use liberty and markets to do so, so that there’s no clueless wonder “running” things.

It’s the but which is wrong here

Self-driving lorries and digital technology will fundamentally reshape the logistics industry, slashing costs and boosting efficiency.

The claim comes in a new study from PricewaterhouseCoopers which predicts huge benefits for businesses which need to move goods around – but mass job losses among those currently working in the sector.

It’s “because mass job losses.”

The Horror, The Horror

Two big shackles hold in check the growth of more alternatives. Easily the biggest is capital: ventures such as co-ops struggle to raise the necessary cash. The holders of capital often seek short-term rewards, are unwilling to take large risks, and have no place on their spreadsheets for social purpose.

But if it has outside capital then it’s not a co op, is it?


Rilly Willy?

For markets, even though neither Gove nor Fox wants openly to concede it, don’t work as the ideology predicts. Market economies need the state, European-style.

That’s why all the richest economies in the world are in continental Europe, are they?

An interesting little proof

The west’s leading economic thinktank has warned that the expansion in the global economy may have peaked after cutting its growth forecasts for an array of rich and developing countries.

In its latest update on the health of the world economy, the Organisation for Economic Cooperation and Development said the outlook for both 2018 and 2019 was less good than it had predicted in May.

The Paris-based OECD called for immediate action to halt the “slide towards protectionism”, noting that trade tensions were already having an impact on confidence and investment.

“The expansion may now have peaked,” the OECD said in its interim economic outlook. “Global growth is projected to settle at 3.7% in 2018 and 2019, marginally below pre-crisis norms, with downside risks intensifying.”

The OECD said it was cutting its 2018 forecast by 0.1 percentage points and its 2019 forecast by 0.3 points.

Britain has had its growth forecast shaved by 0.1 points in both years to 1.3% and 1.2%, respectively – with the OECD saying the squeeze on living standards was affecting consumer spending and uncertainty about Brexit leading to soft investment.

The global economy is growing faster than the British. The poor are getting richer faster than we are – global inequality is falling.

Well, yes, maybe so, but…..

The next downturn could rival the Great Depression and wipe $10 trillion off US household assets

The but being, US household assets are about $100 trillion. A 10% decline is rather less scary really. Further, $10 trillion is about how much they’ve gone up in value in 18 months or so (about $2 trillion a quarter recently).

Such a decline ain’t nice but…..

The world’s major economies are skating on dangerously thin ice and lack the fiscal, monetary, and emergency tools to fight the next downturn.

A roster of top crisis veterans fear an even more intractable slump than the Lehman recession when the current ageing expansion rolls over. The implications for liberal democracy are sobering.

“We have no ability to turn the economy around,” said Martin Feldstein, President of the US National Bureau of Economic Research.

“When the next recession comes, it is going to be deeper and last longer than in the past. We don’t have any strategy to deal with it,” he told The Daily Telegraph.

Well, according to the best research (Milton Friedman) what caused the Depression was bad government policy. So, as long as we don’t repeat FDR’s mistakes we’ll not have another one. Sure, we might not have the stuff to fight the next recession but that’s a different matter, that being why we call one thing a recession, the other a depression.

Oh, and yes, a $10 trillion hit to household assets would cause a recession, the wealth effect would take care of that.But then the business cycle will always be with us.

Teaching banned in private shools

Private primary schools have been threatened with a Grammar school exam ban after they were caught “coaching” children for the Eleven Plus.

Schools in Kent are not allowed to teach pupils how to pass the Grammar school entry exam on the basis that this may give some children an unfair advantage over their peers.

Guess they’ll all have to stop sitting mock GSCEs as well then.

Lucky we’re in a capitalist society then really

You can make an argument that the Federal Reserve is entirely responsible for the fracking boom,” one private-equity titan told me. That view is echoed by Amir Azar, a fellow at Columbia University’s Center on Global Energy Policy. “The real catalyst of the shale revolution was the 2008 financial crisis and the era of unprecedentedly low interest rates it ushered in,” he wrote in a recent report. Another investor put it this way: “If companies were forced to live within the cash flow they produce, US oil would not be a factor in the rest of the world, and would have grown at a quarter to half the rate that it has.”

That being what capitalism is, the provision of capital to a project by outsiders to that project.

Another Guardian number stacker

An extract from a new book acomin’:

Why I came out as being poor

How poor is that then?

I stared potential landlords down with a seven-year-old standing next to me and a baby on my hip, asking to apply for a tiny studio apartment I could barely afford……while I simultaneously worked as a maid, juggling 10 clients between going to class to put myself through college. ……

Yes, a single mother of two also going to college says it’s difficult.

Hmm, yes, suppose so. We never are quite told what her actual budget is after Snap, Section 8 (maybe?) EITC, childcare credits, various church help an so on. But I’ll guarantee you it’ll be well into the top 20% of global incomes, yea even adjusting for local prices.

This is rather fun though:

Eventually, I made my way out of poverty.

After I sank deep into debt to get a bachelor’s degree in English, I stubbornly held myself accountable to it. Maybe because I felt obtaining a higher education was a privilege I couldn’t afford, and that the debt affected not only my future, but my daughters’.

This hindsight made me work harder than ever, late into the night, from home and with a baby sleeping on my lap. Gone were the days of cleaning houses. I put my degree to as much work as possible as a freelance writer. Even if it meant filling content for a local events calendar, technically I was getting paid to write words. These gigs gradually grew into ones with paychecks bigger than I’d had in years. I carried myself like a professional, even stood a little taller.

The thought that you need and English degree to do hack* journalism. Sigh.

*Note that this is the English, not American, meaning of “hack.” Competent, able to turn a hand to most types of pieces, putting in copy to length, subject and on time. Not the American meaning of lying for money.

A very good question along with the answer

How many zeros can you fit on a currency note? Yugoslavia managed 11 zeros, but the Zimbabwe went to 14 zeros. I don’t know how many zeros Venezuela has on its currency these days.

Well, they’ve just lopped 5 zeroes off the numbers. So, today, no zeroes on the low value notes.

Tomorrow though, and next week?

One of those time dependent answers……

Drivel, just drivel

It’ll take more than shopping to save our debt-addled economy
Chris Bickerton
Britain’s growth model is unsustainable, and has created scandalous levels of inequality – we should rely more on production, not consumption


If the model’s broken, what’s the alternative? The UK needs to rebalance its growth, relying less on consumption and more on production.

Everything that is produced is consumed. All consumption is produced.

What is this man talking about?

Chris Bickerton teaches politics at Cambridge University.

Ahh, he’s talking about his own ignorance, isn’t he?