Oour Wullie

Figures out next week will show that the third quarter of this year was the first to show lower growth since 1992.

What? First to show lower growth? You mean that every quarter since 1992 that growth has been going up? That it\’s been accelerating?

What is this drivel William?

You mean this is the first quarter that has shown negative growth, an absolute reduction in output.

People want to work.

Erm, no. Many do it is true, but there are some who do not, some who are entirely happy with their tithe from the State. To assert that no one at all has a preference for a low income low effort lifestyle is an extremely odd thing for an economist to say. For of course one of the basic points of the subject is that we all have different preferences.

In recessions there is always a renewed impulse for fairness.

Again, no. It works entirely the other way around. The more stress you place upon a human the more selfish they become. It\’s the fat and well fed who will offer the scraps from their table to the destitute, not those worrying about their own source of calories.

The question is how to go about it. Long years of boom have rusted the ideas of how the public budget can best be deployed to alleviate unemployment and inject crucial compensatory spending power into the economy during a recession. The best I have seen is a 2008 paper by the Washington-based Brookings Institution, \’If, When, How: A Primer on Fiscal Stimulus\’. Authors Douglas Elmendorf and Jason Furman show that by far the quickest and most effective means is to put cash into the hands of the unemployed by raising unemployment benefit, increasing temporary cash payments to them for specific items such as food and clothing, and making benefit unconditional for longer. It is not just they need the cash; they spend it fastest.

Bwahahaha. As Richard Layard (a proper economist, not just a journalistic one) has pointed out, if you subsidise something you get more of it. So if you subsidise unemployment you get more of it. For precisely the reason given above, that there really are some people who would choose not to work….and that number rises the higher the unemployment pay becomes. You know, this odd idea that incentives matter.

Chancellor Alistair Darling is working on plans to bring forward infrastructure spending planned for 2010 and 2011; he is correct, especially as already earmarked plans are more likely to be executed when they are needed than those dreamed up from scratch. He set a target of £5bn.

Snigger. £ 5 billion? A fart in a thunderstorm in a £1.4 trillion economy.

How does this man keep his column?

3 thoughts on “Oour Wullie”

  1. the quickest and most effective means is to put cash into the hands of the unemployed by raising unemployment benefit …

    Nope. The quickest and most effective way is to keep unemployment benefit as it is (about £60 a week) and reduce the level of income-means testing to, let’s say, no higher than the basic rate of tax plus NI.

  2. He is right, though.

    ‘In a recession there is always a renewed impulse for fairness’

    The renewed impulse comes, of course, from those that think they are likely to benefit from the ‘fairness’.

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