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Our 0.2 of a professor doesn’t even understand the word “macroeconomics”

Tuesday is teaching day.

Today is macroeconomics of the real world.

In a nutshell: what do you want the government to do?

Big, or small?

Active, or passive?

And does it really have a choice when it comes to it in a modern economy?

All the rest is footnotes.

And the political wash in political economy.

What the distinguished 0.2 of a professor at City University has just described is of course microeconomics.

Sigh:

Macroeconomics (from the Greek prefix makro- meaning “large” and economics) is a branch of economics dealing with the performance, structure, behavior, and decision-making of an economy as a whole, rather than individual markets. This includes national, regional, and global economies.[1][2] With microeconomics, macroeconomics is one of the two most general fields in economics.

Macroeconomists study aggregated indicators such as GDP, unemployment rates, and price indices, and the interrelations among the different sectors of the economy, to better understand how the whole economy functions. Macroeconomists develop models that explain the relationship between such factors as national income, output, consumption, unemployment, inflation, savings, investment, international trade and international finance. In contrast, microeconomics is primarily focused on the actions of individual agents, such as firms and consumers, and how their behavior determines prices and quantities in specific markets

While macroeconomics is a broad field of study, there are two areas of research that are emblematic of the discipline: the attempt to understand the causes and consequences of short-run fluctuations in national income (the business cycle), and the attempt to understand the determinants of long-run economic growth (increases in national income). Macroeconomic models and their forecasts are used by governments to assist in the development and evaluation of economic policy.

Double sigh:

Microeconomics (from Greek prefix mikro- meaning “small”) is a branch of economics that studies the behavior of individuals and firms in making decisions regarding the allocation of limited resources.[1] Typically, it applies to markets where goods or services are bought and sold. Microeconomics examines how these decisions and behaviors affect the supply and demand for goods and services, which determines prices, and how prices, in turn, determine the quantity supplied and quantity demanded of goods and services.[2][3]

This is in contrast to macroeconomics, which involves the “sum total of economic activity, dealing with the issues of growth, inflation, and unemployment.”[2] Microeconomics also deals with the effects of national economic policies (such as changing taxation levels) on the aforementioned aspects of the economy.

How large government is, how active, what it does, these are all microeconomic questions, not macroeconomic.

Those students are really getting value for money, aren’t they?

So, picking your brains over ad rates

Anyone running ad paid for websites? And if so, what are ad rates like these days?

From memory I used to get about $1 /000 page views from Google Adwords. And I’ve never really run a site that had display ads. But I’m just trying to figure out very generally what ad rates are like these days.

So, if you’ve got three or four ad boxes on a page, what might you be able to get as total revenue per 000 page views? $3? $13? $30?

I know that mobile is almost nothing, but what about desktop?

Prem Sikka really is a weird one, isn’t he?

Bankers face no retribution in the UK. Iceland has sent 29 bankers to prison for their role in the 2007-08 banking crash. The UK’s overcrowded prisons could have squeezed in some bankers, but there have been no prosecutions for bringing down the industry and ushering in austerity. The UK finance industry has been a serial offender, as evidenced by mis-selling of pensions, endowment mortgages, payment protection insurance and rigging of interest rates, but successive governments have failed to prosecute.

Nobody’s doing nowt to jail the criminals!

It is not only regulators, prosecutors are missing too. In the US, Citicorp, JPMorgan, Barclays, the Royal Bank of Scotland and UBS have pleaded guilty to manipulating the foreign exchange rates, and traders have also been convicted of rigging a benchmark interest rate known as the London Interbank Offered Rate (Libor). In the UK, the Serious Fraud Office has recently lost six cases of alleged rigging of Libor.

Oh, we’ve just tried some possible criminals and found out that in fact they weren’t criminals after all.

Worstall’s Guide To Economics

Over on the jungle telegraph thing I am asked the following:

And, well, this is slightly difficult because there’s vast areas of the subject where I know nothing at all. And some very limited areas where I’m right at the research frontier. And yes, I’m usually less wrong when I know nothing than when I know more.

However, an extremely idiosyncratic guide.

1) Any of the standard undergraduate textbooks. Get an old edition, yes, the joke is that the questions are always the same, it’s just the answers that change. But at Econ 101 level not much has changed for 30 years or more. Samuelson is fine, any of Krugman, Cowen and Tabarrok, Mankiw, will walk you through the basics of the subject equally well. For the UK Lipsey is fine as well.

2) There’s two things you’ve really, really, got to understand. The first comes from the game of “Two Things”. We can boil any and every subject down to two things. Boxing is “Hit, don’t get hit”. Civil engineering is “Mud, there is always mud”. Economics is:

Incentives matter

Opportunity costs, and there are always opportunity costs.

When you grasp those two concepts no, that won’t make you an economist. But it will offer the nuts and bolts of how to think and reason through an economic point or problem.

The second is what Brad Delong calls the only really important thing we’re trying to understand.

greatdivergence

Something the hell happened around 1750. Another way of reacing the same conclusion is to use Angus Maddison’s numbers. Nice spreadsheet of them here. Really worth walking through that for some time. it’s telling us that the average lifestyle for pretty much all people for pretty much all of history was around $600 per person per year. That’s in modern money, at modern prices. And that’s also the same as what the World Bank calls “absolute poverty” today. What those Africans living on maize from their acre of land are living on today.

And that’s our big question: what the hell did happen? Because we have many thousands of years when that was normal: now, only 250 years after something or other, we decry it as being so appalling that we must help everyone out of it. What the hell caused that kink in the graph? Various people have various explanations but that is the thing that we’re trying to explain.

And that’s the heart of the subject, we’ve our two things to give us a general logical structure and we’ve got our great question that we want to answer.

After that all is details. And that’s really just a matter of what interests you in the subject. If you want to understand invention and innovation then Baumol’s your man. For rent, the basic starting point is always Ricardo. And the first chapter of Tim Harford’s “Undercover Economist” is about as good an explanation of Ricardo on Rent as anyone’s ever going to give you.

PJ O’Rourke’s “Eat the Rich” is wonderfully funny but it’s trying to answer that same Delong question. What the heck happened that some places are rich and others aren’t? Another take on the same point is this. That’s the economic models that all of climate change is built upon. Chapter 4 is especially interesting. Because they’re trying to predict, not look back at what happened 250 years ago. But the answer is in fact the same. If we continue doing whatever it was that caused 250 years ago then we’re going to have that same economic growth that we’ve had which is making that chart scream off up to the right. If we don’t we won’t. The assumption is just baked into it: something like vaguely capitalist and vaguely free market makes the world richer, not doing those two things lowers how much richer it gets.

Just because they’re three great books I would recommend Parkinson’s Law, The Peter Principle, and Up the Organisation by Robert Townsend. What they’re really looking at is how organisations work internally. How incredibly difficult it is to get an organisation to do whatever it is supposed to be doing, rather than what an organisation usually ends up doing, which is whatever is of benefit to the continued existence of the organisation. And that’s the beginning of public choice economics. Why is that government doesn’t quite do either what was promised nor what we’d rather like it to do?

But again, that’s to spiral off into details.

The undergraduate textbooks do in fact inform on the basics. Because that’s simply what they’re for. Then, once you’ve grasped the two things, there’s that big question, really the only one we’re interested in (the greatest interest being, of course, how do we keep it going?). And then whatever interests you. Krugman’s essays from the 1990s? Why not, this one is excellent. Guns Germs and Steel by Jared Diamond might not strike you as economics but it’s another attempt to answer that same question, what the heck happened? Assuming that you’re interested in the subject, not trying to get a job in it, you can simply forget all the math and the macroeconomic models in detail stuff. After the undergraduate basics, simply read good economists discussing a problem you’re interested in.

Seems sensible to me

Only married men should be allowed access to erectile dysfunction medication, and only with spousal permission.

If a married man’s about to take a drug which will give him a raging hard on for the next four hours then his wife might well be asked whether she’s up for this.

She might want to brace herself.

Or investigate where he is with that raging four hour hard on perhaps.

Oh dear

The latest example of this is the tax deal between Google and Her Majesty’s Revenue and Customs (HMRC) which enabled the company to extinguish a decade of its tax liabilities with a single payment of £130m, an effective tax rate of 3 per cent on its profits.

Shouldn’t we hold an accounting professor to higher standards of evidence than that?

Prem Sikka is Professor of accounting at the University of Essex

The £130 million was in addition to tax already paid, is at the statutory rate for the jurisdiction under discussion, not 3%.

Sikka is counting stuff not UK profits as UK profits in defiance of the law. Just because, you know, he’s making shit up.

Well, yes, I agree

This time nationalisation has to mean in the public interest

Absolutely so. And given that nationalisation is not in the public interest we shouldn’t do it.

HSBC is staying in Lndon because the quality if UK bail outs is much higher than those available elsewhere.

Sir John Vickers, whose report on UK banking was too timid and allowed action far too late now says British banks are vulnerable again.

And they are. To losses dating back to 2008, still nit recognised. To losses on new loans since then. To losses from QE funded speculation. From exposure to emerging markets. To excess capacity in sectors like shipping. To the London propery market which is vastly over valued and where too much of the wrong type of property is being built. I could go on.

It is entirely plausible that the capital integrity of one or more banks will be tested to breaking point.

This can be corrected: we know now that banks can be recapitalised by governments. But never again must control of the banks impacted stay with bankers. Gordon Brown and Alistair Darling failed the UK badly by letting bankers keep control of banks last time.

Nationalisation must mean nationalisation if it happens again. And for the long term, leading to fundamental reforms of the sector. Surely we can all agree on that?

Ritchie and his mates would run the banking system better than bankers would.

Discuss.

Extra marks will be awarded for quoting that section where Ritchie says that it’s candidly neoliberal sophistry to insist that those who run the Co Op bank need to know anything about banking.

Spark a renewed sense of pride in India’s manufacturing

Well, yes, sparked something at least.

makeinindia

Ahem:

All aspects including sabotage angle will be investigated while ascertaining the cause of the massive fire that gutted the stage during a cultural programme at the Make in India Week event in Mumbai on Sunday night attended by many VIPs, an official said on Monday.
Fire brigade authority has begun an inquiry into the blaze. “We will probe all aspects, including finding out if there was a sabotage angle involved,” a fire brigade official said. No casualties were reported as the venue at the Girgaum Chowpatty area was emptied within minutes.
As the audience scrambled to safety, Firstpost reporter Sanjay Sawant heard strains of soundbites like these: “Maharashtra ki barah baj gayi” which, loosely translated, means the State’s image has taken a good beating.

This is rather fun

A record-breaking British Army sniper who killed Taliban insurgents from more than a mile and a half away has revealed it took six seconds to find out if his hit was successful.
In November 2009 Sergeant Craig Harrison, 40, recorded the longest confirmed kill ever made when he shot two militant assassins from a range of 2,475 metres – more than 900 metres beyond his rifle’s effective range.

The fun being that the bloke he took the record from, a Czech sniper, was part of the group chatting in the pub last night.

This is really most fun

So Madsen Pirie has written a little pamphlet talking about how the world will be in 2050. And he’s obviously right, as Chris Dillow so often says. Straight line projections are probably the best we can do. So, what’s economic growth like, 2% a year you say for the past 150? Great, so we’ll forecast that and so on. And the accumulation of technological change is such that:

Even if they did work out that
people could make telephone calls from a smartphone, the person
from 1984 would be awestruck to learn that the tiny instrument was
also a record player, tape recorder, CD player, DVD player, computer,
radio, television, camera, video camera, calculator, flashlight, and a
whole lot more besides.

And what I think is really fun there is that the bloke from 1984 wouldn’t have a clue what a DVD was. Weren’t invented for another 11 years, in 1995. Madsen’s point is of course that the accumulated changes, each perhaps small in themselves, produce and entirely different world in not that much time. This being underlined by our looking back, trying to emphasise these changes, and managing to underestimate them even as we do so.

Most fun.

What lunatic thought they should be?

‘Sexting’ children should not be prosecuted, guidelines say

Oh yes, now I remember. The gurning morons that rule us were swept up in a moral panic and decided to pass a law that insists on regarding the playing of doctors and nurses as a criminal offence.

Youngsters currently get a criminal record if they are found texting intimate images of themselves to others.

Somewhat sad that so many of our rulers would have been better left as a stain on their mother’s bedsheets.

I wonder if Ritchie has this in his tax gap?

European judges have forced Britain to pay back billions in tax to multinational companies, overturning the decisions of British chancellors going back more than 40 years.
The Mail on Sunday has established that major corporations including tobacco giants, insurers and hoteliers have been awarded payments running into hundreds of millions of pounds from HMRC in the past year as a series of long-running lawsuits reaches a climax.
In the most extraordinary case, HMRC handed £620 million to British American Tobacco (BAT) after the European Court of Justice (ECJ) ruled it taxed the company too heavily for more than 26 years. That bill could double if interest is added.

If you add up all that might (and “might” has a pretty elastic meaning here) have to be paid back it’s £43 billion by the Mail’s numbers. And to answer the headline no, of course this doesn’t appear in Ritchie’s numbers. But it rather shouldn, shouldn’t it?

Not just how much tax should the bastard companies be paying but the true figure, after the amount that bastard HMRC is over charging?

Just an impression

But John Kasich seems to be positioning himself as the only adult in the room.

Which may even be true. But I’m not all that sure that the voters are looking for an adult this year…..

Semiotics here

The Government confirmed it was “looking carefully” at a wind industry proposal to continue public financial support for new turbines, despite a manifesto pledge to halt expansion.
Critics described the proposal as a con, and said the Conservatives’ policy had been “crystal clear” that the subsidies would stop.
Under the plan, households would still be forced to pay millions of pounds on their energy bills to fund new wind farms – but the payments would no longer be defined as subsidies.

The wind industry’s plan hinges on the fact that no new power plants are commercially viable to build at the moment without extra financial support from bill-payers.
If wind farms can be built at lower cost to consumers than alternatives, such as new gas plants, then payments to fund them should no longer be classed as “subsidy”, the industry argues.

In one word, no. In two, fuck no.

Perhaps more importantly, think how hard you’ve got to fuck things up that absolutely no technology at all can be built without subsidy…..

Yes, I’d say that’s pretty good identification evidence

A mother-of-three chopped off her brother-in-law’s genitals before handing them in as evidence at a police station in India.
The 32-year-old woman stunned officers when she entered the station in the Sidhi district of Madhya Pradesh, clutching the severed organ.
The woman, who was accompanied by her three children, told officers that it was the only way to stop her brother-in-law attacking her.
The woman was staying with her brother-in-law as her husband worked more than 700 miles away, in Nashik, Maharashtra.
But he had allegedly assaulted her many times while she stayed in his house.
She told police that she faked consent when her brother-in-law attacked her, before hacking off his privates with a sickle.

Obviously, we don’t quite know what but we certainly know who.