Sigh

Millions more people in Britain are without a job than shown by official unemployment figures, according to a study that suggests the jobless rate should be almost three times higher.

According to research from the Organisation for Economic Co-operation and Development (OECD) and the Centre for Cities thinktank, large levels of “hidden” unemployment in towns and cities across Britain are excluded from the official government statistics.

The study found that more than 3 million people are missing from the headline unemployment rate because they report themselves as economically inactive to government labour force surveys, saying that they believe no jobs are available.

No.

Unemployment is not having a job and desiring one sufficiently to go look for one.

Not economically active is not desiring a job sufficiently to go look for one.

We collect figures on this:

And:

Claiming that people without a job are unemployed is wrong. Because our definition insists that they must desire one sufficiently to be looking for one.

Worth noting two other things here. Even if we accept that definition being used, it’s still true that the level of such unemployment is the lowest it’s ever been. Because that employment to population ratio is higher than since we started measuring it.

That is, we’re getting the labour market right even by this critique.

Oh, and from the report:

While the UK has one of the lowest levels of economic inactivity across the OECD

We’re getting the labour market right even by the standards of this report……

Owen Jones’ weird definition of investment

First, why politics is a lousy way of running things:

Labour MPs who vote for a Johnson Brexit deal should lose the whip
Owen Jones

Whether or not to Brexit is now a party political issue. To be determined by which political party wins on it. Not by the merits – or demerits – of the policy itself.

Which is why politics is a crappy way to run things. Decisions will be made by which political party benefits rather than the actual merits of the underlying proposition.

But then there’s this:

(Even New Labour, which struck an accommodation with Thatcherism, invested in public services, the minimum wage and tax credits to improve the lot of millions of working-class people.)

Tax credits are not an investment, they’re current spending. There is also no return from them.

And the minimum wage? Forcing other people to spend more of their money as you desire isn’t investment, is it? Ad theft normally isn’t…..

A question we can answer

Why is it so hard for economists to get their forecasts right?

Because economies are complicated things. The interactions of 7 billion people simply are tough to predict.

And, obviously, if you can’t predict an economy then it’s not possible to plan one either…..

We can tell what comes next

Living next to green spaces such as parks, allotments, golf courses and playing fields can boost the price of a property by £2,500 on average, statisticians have found.

Living within 100 metres of a public green space can add thousands of pounds to property prices, the Office for National Statistics (ONS) has reported.

For I actually have seen the argument made. Which is that if parks make properties worth more then we should have lots more parks. Thus all properties will be worth more.

Err, no, the parkside thing is a relative good, the one with more parkside is worth more than the one with less. This doesn’t change according to the absolute number of parksideness, only with the relative.

Jeez

Despite its myriad problems, the Cuban economy has proved resilient when times get tough, according to Pavel Vidal, a former economist at the Cuban Central Bank who now teaches at the Javeriana Cali University in Colombia.

“In normal conditions, Cuba’s centrally planned economy impedes economic growth, progress and innovation,” he said. “But in times of crisis, having a plan to assign resources where they are needed is an advantage.”

Prices allocate resources efficiently. So, when we’re short of resources we shouldn’t use prices?

No wonder the place is fucked with that sort of insanity.

Piketty? Sowell? For the Nobel?

Big names in the economics world have missed out. Thomas Piketty, the French economist, has just published his follow-up to the bestselling Capital. Titled Capital and Ideology, it expands on the themes of the first book. Sales of Capital topped 2m copies but have not put him in the running, possibly because at 48 he is too young to have built up enough citations among economists.

Thomas Sowell, 89, has the track record and another bestselling book under his belt, but fails to make the cut. Sowell is a senior fellow at the Hoover institution, Stanford University, and his brand of laissez-faire, anti-government economics is at the opposite end of the spectrum to the leftwing Piketty.

Err, no, don’t think so. Only a few hours to find out but I really seriously doubt either of them.

Especially Piketty. As part of the process of waiting a bit is not so that the citations can build up, rather to see if anyone shoots own the hypothesis. Which ,given that most of Piketty’s data is wrong is likely to happen.

No Phil, this isn’t the argument

Whatever the outcome of the negotiations going on at the moment between No 10 and the EU, Brexiters will say that all the uncertainty was worth it, especially when a recession fails to appear.

No:

This view has become entrenched, even though the latest analysis from the Institute for Fiscal Studies shows that the post-referendum analysis by the Treasury has come to pass. That is, the UK economy has seen more downs than ups and is now 2% to 3% smaller than it would have been if the vote had never happened.

The trajectory of GDP growth from March 2016 was calculated by the Office for Budget Responsibility and showed the UK being between £40bn and £60bn bigger than it is now. That is a huge loss of income to businesses and households that would have generated significant tax receipts.

Let’s accept that for the sake of argument.

Worse are the cuts made by businesses that will deny Britain a strong recovery whenever the fog of Brexit uncertainty ends. Business investment in new plant, machinery and technology has grown 0.4% since 2016. That is barely more than 0.1% a year. Contrast that growth rate with 2015, when business investment increased by 6.5% and in 2014 when it jumped 7.3%.

Equally so.

The argument is not that the uncertainty was worth it. Rather, that sure, Brexit itself will cause some dislocation in the economy. And, for those reasons of democracy, freedom, liberty, being free of the damn Krauts, it will be worth it.

Mebbe.

The uncertainty isn’t worth it at all. And we could solve – could have solved – the uncertainty by getting on with it, taking the hit of the dislocation and thus proceeding.

Brexit is worth it, the uncertainty imposed by Remoaners in refusing to enact the will of the people isn’t.

This is Ritchiesque

The Guardian manages a fail on pensions tax relief:

Pensions tax relief will cost the government almost £40bn this year, up more than £2bn on the previous year, illustrating the growing cost of subsidising retirement saving.

According to new statistics from HMRC, tax relief on employee pension saving is set to rise to £21.2bn while the tax giveaway on employer contributions to occupational pension schemes hit more than £18bn.

It’s bollocks, of course it is. Because the income, when it’s a pension, is taxed. Therefore the cost of the delay – not relief – is the tax not collected at the point of saving minus the tax collected at the point of consumption of the resultant income.

And if you’re not doing the calculation that way then you’re lying.

I’m also a little bit worried about that employer break. Dunno if there are special breaks or not. Could they actually be saying that employer pensions contributions shouldn’t be regarded as a cost of being in business? Or is there a greater break than that?

And then, this being arts graduates writing about money, there’s this entire argle bargle:

But the average level of contributions fell, leaving the bulk of tax relief to be claimed by higher-rate taxpayers, who pay 60p from every £1 of pension contribution compared with standard-rate taxpayers who must pay 20p for every £1 of pensions saving.

Whut? What are they even trying to say? That lower rate taxpayers get a £1 pension contribution for every £0.20 they save?

But, but, Phil?

Philip Hammond believes Brexiteers should give up on their dreams of striking free-trade deals around the world after leaving the European Union because of their “very limited” economic value.

Setting out his own alternative plan to get Brexit done as talks continued to stall in Brussels, the former chancellor said that the UK should urge the EU to conclude a rapid-fire zero-tariff trade deal with Europe that would do away with the need for a backstop.

Mr Hammond – who argued for the UK to remain in a customs union during Theresa May’s government – accepted that his plan, if enacted, would rule out the prospect of the UK independently striking free trade deals.

If free trade deals have limited value then why should we have one with the EU?

And if they’re valuable, why should we be in a system that prevents us having them?

Greenland’s fertility rate change isn’t actually possible

I call data error.

Fertility rates are *lifetime* rates. It simply is not possible for a population where the women above 40 – just to use some age as an example – all had 7 kids to fall to an average for the entire population of 2.3 in only 8 years. Not unless someone’s gone out and slaughtered all the 48 year olds at least.

Why surge pricing works

From a diary of a part time Uber and Lyft driver:

Monday nights are usually slow, and since I had already made more than usual, I called it a night at 5:36 p.m. and signed off the apps.

Some people, some of the time, are driven by the income effect. I want to make $x. Some people, some of the time, are driven by the substitution effect. My leisure is worth $y to me, if people are paying my $y+ then I’ll work.

Actually, near everyone is near always driven by a blend of the two effects. As it happens, empirical studies show that cab drivers are more motivated by that income effect.

So, when traffic for rides for hire is high what do we do about it? Try to kick people over to the $y+ part by raising the pay on offer.

There is significant economic insight behind this part of the gig economy. And substantial increases in utility as a result – it’s a lot easier to get a ride in the rain….

It’s great, innit?

The main message from both organisations was directed at governments, which they believe must be prepared to step up their spending now that the private sector has seen the warning signs of recession and stopped investing.

The last time the global economy dealt with a shock, governments played a part in the rescue. That was in the days when leaders such as Gordon Brown could command the attention of his peers in arguing for a comprehensive and costly lifeboat. Then, after the 2008 crash, the job of rebuilding crisis-hit economies was left to central banks. Hence the era of ultra-low interest rates.

The justified fear is that the next crisis will be characterised by governments pleading poverty to justify inaction. Either they will argue they are bereft of the necessary funds or that borrowing is already too high.

Georgieva knows central banks have little firepower left after a decade of providing cheap money, which is why she is right to call on governments to open their wallets now, and not wait until it’s too late

When we have a recession then governments must spend lot,s lots, more. When we don;t have a recession then governments must spend lots, lots, more.

Why not just admit that you’re not doing macroeconomics about the business cycle any more you’re just shouting that there must be more government?

Skidelsky has fucked it up, yes.

As I thought he would too.

Skidelsky’s report on working hours has failed – entirely except for just one line which doesn’t go anywhere – to mention unpaid household working hours. Which, given that this is some half of all working hours is an important lacuna in a report about working hours.

It is simply not possible to make sense of what has happened – and will – without understanding this.

A pencil sketch of working hours this past century. A massive fall in female unpaid household working hours. A large fall in male unpaid household working hours. A considerable rise in female paid market working hours. A reduction in male paid market working hours.

The combination of all leading to increased leisure hours for both male and female.

Now try and parse events without reference to household working hours. Not going to make sense, is it? Today’s massively richer women are working more hours? Whut?

Skidelsky’s report ain’t worth the transient electrons its printed upon.

Skidelsky’s report on working hours

A French-style cap on the length of the working week has been rejected by a study, commissioned by the Labour party, into ways of giving employees more leisure time.

The report, by the cross-bench peer Robert Skidelsky, found a blanket limit on working hours was unrealistic and undesirable, and instead proposed a sector-by-sector approach.

John McDonnell, the shadow chancellor, who asked Skidelsky to look into the feasibility of legislation to limit work hours, said he would make use of the report to formulate Labour policy.

Anyone actually seen a copy of the report?

I’m really rather certain – not 100% but close – that I know the mistake made in it. But I want to check.

GDP is falling

I haven’t paid a long-distance telephone charge in years. Who in 1958 – or, for that matter, in 1988 – would have guessed that domestic long-distance would one day not be a thing?

What used to be monetised consumption now no longer is. GDP is falling. Yet we’re better off.

Hal Varian was right, wasn’t he? GDP doesn’t deal well with free.

Finally,

Robert Mugabe, former strongman of Zimbabwe, dies aged 95

And good riddance.

Jus’ wonderin’

Has anyone so totally screwed an economy?

Stalin did actually grow the Soviet one at gross cost. Mao never actually let one develop. Sure, German industry was a bit flat in 1945 but war and all that.

But to actually take an even modestly functioning economy and reduce it to the Stone Age? Perhaps Chavez and Maduro. But Mugabe did worse than the Castros which is a pretty hard target.

Nkrumah didn’t exactly do well in Ghana but even that wasn’t as bad as Zimbabwe.

Any contenders?

Not so much Bernie

“China is a country that is moving unfortunately in a more authoritarian way in a number of directions,” Sanders told Hill.TV’s Krystal Ball. “But what we have to say about China in fairness to China and it’s leadership is if I’m not mistaken they have made more progress in addressing extreme poverty than any country in the history of civilization, so they’ve done a lot of things for their people.”

The average American is richer than the average Chinee. Therefore America must have done more than China, no?

And a poor Chinee is much worse off than a poor American….