Dunno really

I have lost count of the number of times over the last twelve years that I have been told that if only I was more reasonable I would be so much more successful.

Fine with unreasonable. I’d hope for informed – maybe not ignorant is a more realistic target.

And that if only I realised my arguments were wrong I could achieve so much more.

Well, yes, having the right arguments might indeed mean that more useful was achieved.

One of us did some research – and it ain’t him

The UK fails to join the WTO and heads for limbo

No. A phone call to the relevant people produced this some months back:

To insist, meanwhile, that we must raise tariffs on the imports we desire is to misunderstand the WTO system. As a source in Geneva explains, Britain is a WTO member in its own right and will still be so even after Brexit happens.

So, therefore, no.

An attempt to get fast track entry by copying and pasting the EU’s terms of membership, through which we have WTO access now, failed. The result is that we will be in limbo for years.

What has happened is that some countries – Russia, amusingly enough, among them – have objected to the method of apportioning some portion of the EU’s quotas to a newly liberated United Kingdom. The UK is still a WTO member, still has MFN status.

The usual justification for the universities – the non-undergraduate teaching part of them – is that we need publicly supported people to go do that research that the private market unadorned won’t produce. The thing is, I’m in the private market and I’ve done that very research, the Professor hasn’t. So, do we get to close the universities down then for being not fit for purpose?

Non Sequiter

Faced with the claim that there has been no austerity you realise you are up against what might best be described as a small world, and decidedly selfish, view of economics.

Whether or not there has been austerity is a simple empirical fact. By the Wren Lewis definition – government not ballooning he deficit out to whatever level means no rise in unemployment – then yes, there has been.

By a more reasonable one, there hasn’t been. Government spending is about where it was before the crash as a percentage of GDP. Which is what should have happened along entirely standard Keynesian lines of course. Recession, deficit rises, recovery, it falls.

Fun thing I was told

Varied people are telling broadcasters that they simply will not appear on a programme that includes Richard Murphy. Which, given how he’s himself supported no platforming seems rather fun. For I am at least told that the broadcasters are tending to prefer having the not-Spuds rather than the Great Tuber.

The problem here is that we do already know this

I would suggest that the observation (not set up as an experiment, but by chance offering a large scale observation of actual behaviour as if an experiment was intended) is capable of extrapolation. Whenever suppliers are price takers (as in competitive markets they should be) taxes on suppliers will always be paid by suppliers and the suggestion that they are passed on to others makes no sense at all. This is now seen to be true for rents. I think it will be elsewhere.

So the next time you hear some rightwinger argue that tax is not paid by capital but is passed on to consumers or workers just note that what they are actually saying is that there are non-competitive markets in existence and that this fact should be their real focus of concern. But oddly, it never is. Right wingers are the last people who want competitive markets. They do not permit abuse, after all.

He’s confusing “capital pays this tax” with “capital pays all taxes I think should be incident upon capital.”

Ritchie is, himself, insistent that employer’s national insurance is actually incident upon wages. Who pays the tax thus being a question of “it depends.”

Plus he’s missing what the damn point was in the first place. More taxation of landlords will mean fewer landlords, thus fewer places to rent an thus higher rents. Could happen too – and pointing to rents falling doesn’t change that. Because that’s to ignore ceteris paribus, something we never should in economics.

It’s as if he’s never read Keynes

We are twentieth. And ignore Ireland: its GDP data is so distorted by being a tax haven even Walt Disney would dismiss it as incredible.

We are also the slowest growing country in the EU.

That is not a coincidence.

Tax rises? Bring them on, I say. We will all be better off.

It is the deficit – or surplus of course – which is stimulatory or contractionary. For tax is, as MMT says, taking money out of the economy, reducing demand.

So, the MMT man tells us that more tax is going to make us better off.


Oh, and those places which do send more of GDP through government. Are they better off than we are? Hungary? Croatia, Greece?

Interesting concept really

Stock markets are trying a little recovery this morning.

But the question remains as to by how much they are over-valued, since few would really dispute that they are. The answer is, by a long way

Given that around and about half of all market transactions are people buying at the current price I’d suggest that some, around and about you understand, half of all people think the market is currently undervalued. Or at least not over so.

But then I’m not a professor of economics, so what do I know?


The simple reality is that the premise of the report is wrong. The way to fund £20bn of extra healthcare spending is for the government to create the necessary funding for that purpose. And it can do this at any moment. The fact is that tax does not precede spend. It is always, and inevitably, true that spend precedes tax. In that case the hypothesis that extra tax must be raised before the NHS can be funded is incorrect. What actually happens is that if the government spends an extra £20 billion into the economy, and increases GDP directly as a result (because government spending is part of GDP, because it creates wealth) then the government can, if it so wishes, claim back some, all, or even more of that spend in tax if it so wishes, with the possibility that it might claim back more than is even spent being made possible by multiplier effects, which are quite high in the case of NHS expenditure.

Ritchie’s new theory. We don’t have to tax £20 billion in order to spend £20 billion more on the NHS.

No, no, don;’t be silly, MMT and all that.

Instead we should tax £30 billion extra in order to spend £20 billion on the NHS.

Much, much, better and MOAR TAX, d’ye see?


What the IPCC delivered on Monday was the most massive warning. We have twelve years to save the planet from global warming. And Shell’s response is to avoid discussion of oil and instead suggest we plant trees without providing the slightest indication of where, who would fund it and why countries will be persuaded that they should do this when deforestation has been the trend throughout human history.

What he did not do is discuss the only obvious solution to this crisis. That is to leave oil in the ground. Of course, he can’t do that. His company is valued on the basis that it can burn all the oil reserves that it claims to have. The only slight problem with that plan is that it burns the planet as well. It is simply not possible for him to admit that controlling climate change and the continued existence of his oil company in anything like its current form are incompatible goals.

But there is a solution to this issue. It comes in three parts.

The first part is to ration oil. It can be done directly, or it can be done indirectly, but either way it needs to be done. So, we can ration flights. And car usage. We could even ration some food stuffs – like meat, in particular. We have, of course, done such things before, and I’m well aware that the immediate response will be that there will be a black market. And I agree, there will be. Which is precisely why each person’s ration could be traded. The person who wants to fly a lot could buy the ration of the person who does not want to fly at all. The person who does not have a car should be able to sell their right to have one. And so on. A meat ration might be tradeable as well. The goal is achieved, and virtue would be rewarded. Indeed, the whole policy could be progressive: the sale of rations could redistribute income to those less well off. Externalities could literally be priced.

The second point to note is that rationing would also increase the price of oil: that is what happens when a product is in short supply, which would have to be the case if fixed quotas for production were imposed, as would have to be the case. In other words, oil company values need not be imperilled by this. But they would be required to invest in clearing up their own past messes.

And third, government revenues need not be imperilled. If the oil price increases, so might government revenue.

Oil companies are not valued on the basis of their reserves. Rather, on their likely level of profits over a forseeable time span. Also, they don’t burn oil, we do. They sell it to us so we can burn it.

Rationing the price of oil will reduce its price, not increase. Oil is notably inelastic to price in its demand over the short and medium terms.

The Tuber manages to get one thing right, the solution is indeed rationing. Which is why William Nordhaus has just been awarded the Nobel for suggesting we ration it with a carbon tax. Something he’s been saying for at least two decades now. But then Nordhaus knows something about economics….

Political perspicacity

And, of course, there was the approval of Brett Kavanaugh. Even if he never committed a crime, that a person so deeply misogynist could be confirmed as a member of the US Supreme Court on the basis of a strictly partisan vote shows a break down in all the norms of decency that underpin representative democracy as the price of loyalty to a party that has lost touch with the most basic of respect for large parts of the population, and women in particular.

What is depressing is that this does not even seem like an accident. It appears very deliberate. And that to me stinks.

But it also suggests something else: it suggests that breakdowns such as this, grim as they are, can and, I think will, be the catalyst for the changes that are coming closer.

Of course I can misread mood, and I am under no illusion about the fact that the Republicans and populists in general have significant support, but what I think will happen is that a moment will arrive when anger will spillover and people will simply declare that they have had enough of being abused.

There is a chance that will be brutally suppressed.

Entirely missing why Trump/Brexit happened, which was “a break down in all the norms of decency that underpin representative democracy as the price of loyalty to a party that has lost touch with the most basic of respect for large parts of the population”. You know, the progressives deriding 90% of the population as hicks and rubes?

Dear Lord, seriously, this person teaches economics?

Third, and for me most tellingly, the article is wrong. Of course most bank loan portfolios are valued at cost. What else would you value them at? They are assets, and very few people choose to repay more than they are lent, in which case cost is the maximum value at which they might be stated in most accounts.

Is he actually that much of an ignorant?

He has, I suppose, heard of the concept if interest? Which is something additional which people pay over and above the amount they borrow. And, if it’s a fixed rate of interest (as would often be true of bonds) then the capital value can indeed rise above cost if interest rates fall.

True, loans tend not to be at fixed rates of interest. But they can certainly be at fixed premia to a floating rate. And if the company’s credit rating improves it may well be that the premium doesn’t change. Producing a loan which should righteously be valued at above cost if we are to gain a true and fair view.

True, that last is somewhat specialist. But the idea that loans can only ever be at cost and no more because people don’t pay back more than what they borrow is just ridiculous.

I’m sympathetic to the idea but…..

In the UK the sense is that the core desire is to dismantle the effect of 1945. The aim appears to be the destruction of the welfare state. The object is to recreate the raw brutality of inter-war Britain where poverty was used as an economic and social weapon of control. It did not work. But that does not matter. Ending the idea that the state should provide any form of safety net or have a role in society would appear to be the goal of the Brexiteers and their libertarian funders.

Rilly? Who is saying this? Who is going to disassemble the welfare state? The closest I’ve seen is people suggesting a universal basic income…..

In the States this message is already easier to deliver because welfare provision never made such progress.

Eh? They’ve near 100 million gaining some form of welfare. What’s he on about?

This may or may not be a good reason

I am often asked why I will not stand for political office. I clearly have some of the attributes that might incline me to do so. And then something comes along to remind me of the sheer ghastliness of politics, which I have known of since the time I was a student.

That ghastliness being why politics and politicians should have more power as in the Curajus State no doubt.

That is the base calculation of politics that I could not abide. I cannot reconcile that baseness with doing the right thing, when in this case what is right is obvious. And as a result I do not wish to participate in the sordid calculations that are a part of the politician’s life, and which seem to be getting more sordid by the day.

Murphism – it’s shite so let’s have more of it.

Worstallism – it’s shite so let’s have less of it.

If only he knew some economics

This chart shows the labour share of GDP (or national income) over more than two centuries……And that long-term downward trend is precisely why Labour has to take radical action now. People are simply not paid enough. And that has to end.

So when people say Labour will destroy the economy by giving people a fair share the simple response is, ‘no they won’t: they’re repairing the damage that’s brought us to our knees’.

Great, OK, the bit of national income that has risen is taxes upon consumption – VAT. So, lower VAT and the labour share will rise again. Over to you Murph.

Entirely wondrous

And this time the prospect of anything positive coming out of that readjustment programme looks remote precisely because last time most sleep-walked into the crisis. This time we have no such excuse.

The trade wars are deliberate.

So too is Brexit.

As are inappropriate interest rate rises.

And a debt boom.

If we’ve a debt boom then interest rates aren’t inappropriate, are they?

Cower Ye Peasants!

Second Rees-Mogg was wrong to say that beating the tax gap meant more tax had to be paid. It might, of course. But I strongly suggest that since tax is primarily a tool of fiscal policy designed to beat inflation above all other goals then revenue maximisation is not the goal of any government. Rather the aim should always be to raise the required amount of tax as equitably as possible to achieve that fiscal goal in ways that achieve the secondary (but vital) goals of redistribution, repricing market failure, reorganising the economy and reinforcing the relationship between the citizen and the state.

That being, I suggest, what the Senior Lecturer thinks is the correct relationship which should be reinforced?

Astonishingly, official and other research data on tax is frequently inaccurate.

So too often is GDP data, which makes tax gap estimation hard.

And even the number of taxpayers is frequently subject to misreporting between data sources.

At its most basic level understanding tax is hard because official statistics seem to be perversely dedicated to ensuring that we cannot know the truth.

And when it comes to tax gaps, there is too little research and even too much denial that the issue is of consequence.

There’s the pitch for the next series of grants.

But it’s an amusing confirmation of Hayek, isn’t it? Which leads to an interesting question. How can the State be Curajus if no bugger knows what is going on?


Amongst the many things I do not claim to be is a fashion aficionado. If style is your thing then this is probably not the place to be. However, I have been aware since being a teenager that there are some who suggest that the national economic mood can be assessed by the mean skirt length of those who choose to wear them. The shorter the length, the more optimistic the mood is the unsurprising theory.

Sitting in the Eurostar departure area this morning with a sample of hundreds to observe I could not help but notice how much closer to the ankle many hem lengths are when compared to those of recent years. There were exceptions, of course, and I accept the sample is biased. But the portent is not good if the theory holds true.

The federasts – for that is who will be getting onto a train to Brussels early in the morning – are depressed.