Economics

Isn’t this just great from The Guardian?

Donald Trump is culpable in the deaths of thousands of Americans by using the coronavirus pandemic to boost his electoral prospects and line the pockets of big business, Prof Noam Chomsky has said.

Well, OK, that’s the sort of thing we’d expect Noam to be saying, sure. But look who is writing this guff:

Richard Partington Economics correspondent

And there are those who wonder why we don;t believe everything that The G tells us about economics…..

This’ll work, oh yeah

For those thrown into uncertainty and unemployment, the government needs to raise the rate of universal credit and legacy benefits – to £260 a week. That’s equivalent to the value of 80% of weekly earnings on the national living wage.

GDP’s down 30% this quarter. Maybe. This is just the time to raise the reservation wage, right?

Not convinced this works

Some economists think the UK is operating at around one third of its pre-crisis levels of activity.

That’s because almost every part of the economy – outside food and drink and the public sector – has been affected.

Government spending is 40% -ish of the economy. We measure government contribution to GDP by what we spend on government – obviously, given the unflattering result of measuring it by output.

40% is more than a third.

More seriously, down by a third I’d accept as a good backoffagpacketestimation. Only a third, naaaah.

Err, yeah

The threatened loss of half of Britain’s charities could reduce the country’s GDP by five per cent, says a new analysis backed by the Bank of England’s former chief economist.

The study by Pro Bono Economics (PBE) said the true value of charities’ contribution to the economy is 12 times the official estimate of £17 billion.

The charity – co-founded by the Bank’s former economics chiefAndy Haldane – estimated the UK’s 168,000 charities and vast army of volunteers could contribute as much as £200 billion to the economy in “gross value added.”

Pity we’re interested in net value added……

Ritchie plays with identities

I make the point for a simple reason. There could be a relationship between I and S. But you have to make assumptions to make that relationship. And the fact is that if, as has been the case of late the savings ratio has been small or even negative, then investment can be financed by the government, or by government-created money or by overseas interests (to relax that condition, once more). In other words, there is nothing that says there is an immutable relationship between S and I. There is just a funding mix and it is my suggestion that the relationship is weak at best, and that other factors can be and almost certainly are more powerful, and that can and should now include government-created money to be used for this purpose.

And, of course, manages to miss the point. Savings are production in this period which are not consumed in this period, instead allocated to be consumed in a future one. Investment is the allocation of production not to be consumed in this period but to be so in a future one.

There’s a link between those two whatever MMT has to say on the subject.

No it bloody didn’t

UK manufacturing hits lowest level on record, says survey

Nonsense.

UK manufacturing collapsed in April, hitting levels lower than those during the 2008 financial crisis, according to a closely watched survey.

Speed and acceleration. The rate of contraction of UK manufacturing was higher than anything since 2008. The actual level of UK manufacturing is something entirely and completely different.

Sigh.

A truly stunning finding

Britain’s lowest-paid workers, women and young adults have jobs with the biggest health and economic risks during the coronavirus lockdown, according to a report into the uneven impact of the Covid-19 pandemic.

Those on the margins of the economy suffer most from shrinkage of the economy. The Resolution Foundation does know what “margin” means, does it?

This is probably the way to bet

No one knows for sure how the demand picture will look. Much of that will be determined by the trajectory of the pandemic and the willingness of people to return to pre-crisis activities like road trips, cruises and flights.
Trainer, the New Constructs CEO, is betting they will.
“We’re social creatures. We’re going to want to get back to normal,” he said. “There’s a significant amount of the population that will party like it’s 1999. They’re sitting at home bored out of their minds.”

Nonsense

Coronavirus is the biggest disaster for developing nations in our lifetime
Ian Goldin

The governments of developing nations have been the biggest disaster for developing nations for more than just my lifetime. From Kwame Nkrumah onwards.

Your country needs you

As is clearly and obviously true all knowledge is local. That means you know more about your part of the world than a central bureaucrat does. So, help us out here and tell us. From Madsen Pirie:

Legend has it that Drake’s drum, the one he left to the nation, can be heard to beat at times when the country is in crisis or at war. It calls for people across the nation to rise up to defend it.

We’re beating that drum now. The nation is in crisis as never before. The economic heart of the nation has slowed, and it needs major and urgent action to revive it. We are beating the drum now to rouse as many of us as possible into action. We look not to those on high to save us, but ideas and initiatives from the little platoons Edmund Burke correctly said made up a nation — the people who, added together, are all that makes us great.

That drum call goes out to you: a vast army of people with ideas and with energy. We want to hear all of them. Companies stand on the edge of ruin and our prosperity with them. The best way to ensure that our firms survive the lockdown and thrive after is to ensure that they’re as free as possible to transact and trade — provide goods, services and increase our wealth once more.

So we want to hear from you of every tax cut that can lift a burden, and every regulatory change that can lighten the load on businesses that want to grow again. Let us hear of every bureaucratic impediment that stands in the way of renewed growth and expansion, and let us hear of the ways in which it might be suspended or permanently extinguished.

What regulations should we suspend during and after the lockdown?
What taxes should we suspend and cut?
What measures could help restart the economy?
How should we unwind state interventions?
Is there anything the Government or public discourse has missed?
Let us have those ideas and initiatives from many and diverse groups, and let them collectively constitute a volume that can be a handbook for rebuilding the economy, and a blueprint for the new Britain that must emerge.

Please answer our call via the link below, send it on to anyone and everyone you know, everyone who everyone you know knows, their dog too if it has a brilliant new tax idea to shout about!

Get yer answers in here.

Just in case anyone knows

A comments discussion:

dearieme

The bit you quote isn’t all that bonkers, Mr W. A little while ago I saw the claim (can it be true?) that median wealth in the UK is little different from median wealth in the US – it’s average wealth that differs a lot. That would be consistent with US plutocrats being “extremely” wealthy, in the sense of being much wealthier than our plutocrats.

Mind you, I doubt that such figures are worth much – how the devil does anyone know enough to talk usefully about wealth? Tax tends to fall on income and expenditure, not wealth. Maybe it’s easier with a plutocrat whose wealth is mainly in shares of one quoted company, but how would anyone else know that that’s true?

Tim Worstall

The median wealth claim wouldn’t surprise me all that much to be honest. The bottom 50% of the wealth distribution usually have perhaps 5% or so of all wealth. The bottom 30 to 35% usually have negative wealth – in aggregate. So, median wealth is going to be something like someone with £5,000 or maybe £20,000 or summat like that free and clear. Really wouldn’t surprise me to find that that’s a general number that applies across most rich country economies. A bit of equity in a home, the beginnings of a pension pot, something like that, that’ll be the median wealth number.

That’s the off the top of my head answer. Does anyone actually know? Median – not mean – wealth for UK/US/some other rich countries?

Nick Timothy and economics

China has abused liberal trading rules by over-producing goods and dumping them on other markets.

To put that the correct way around, companies in China have increased our real wage.

‘N’ the next time Nick Timothy wants to tell us something about economics he can fuck off ‘n’ all.

And it has abused the openness of other economies to undercut rival businesses

It means we need to overcome our adherence to free market ideology

Why do we want to make ourselves poorer?

Yes, that’s the point of having a market based system idioto.

This requires a different approach to economic policy and, in particular, a new form of industrial strategy.

Why would we hand over the crafting of economic policy to someone clearly entirely ignorant of economics?

Similarly, one of the reasons Germany is so far ahead of Britain in its testing strategy is, ministers explain, that the Germans have Roche, one of the world’s biggest diagnostic companies.

Roche is Swiss you ignorant, ignorant, dingbat.

Together with our allies, we need to wean ourselves off our over-dependence on China, with more manufacturing production and assembly work shifting to other Asian countries, such as Vietnam, lower-cost European countries, such as Poland and Portugal, and back home in Britain.

We already tried Triumph Motorcycles (Meriden) Ltd.

We can lead the creation of new institutions to ensure peaceful economic competition between East and West.

But that peaceful economic competition is what you’re whining about!

Jeez, how’d this bloke ever get hired by a Tory?

Danny Dorling really is an ass

The general slowdown we are living through is advantageous. Recognising this requires us to shift our fundamental view of change, innovation and discovery as unalloyed benefits. We need to stop expecting ceaseless technological revolutions.

We’re in the middle of the digital revolution – which really is changing everything – and this ass wants us to believe that technological change is slowing?

Not quite and exactly the same thing

World Bank: Coronavirus financial shock in Asia-Pacific will condemn millions to poverty
New report warns that 11 million in the Asia Pacific region could be pushed under the poverty line

That’s actively going into poverty:

The financial shockwaves of the coronavirus crisis will prevent millions of people in the Asia-Pacific region from escaping poverty this year, a new report from the World Bank has warned.

That’s not escaping it.

Still, this concern for the garment workers is good. For when we get lefties decrying this – as indeed all should for who doesn’t want to see the poor of the world rise up – we can at least retort that in normal times we already do our bit. We buy the fruits of their labour, that fast fashion, which is what aids them in becoming richer.

It’s always the same answer, isn’t it?

…and another $1 trillion in an emergency federal work and infrastructure program to repair and build roads, bridges, airports, wastewater treatment plants, and mass transit systems. That money can also go toward redoing the electric grid and providing rural broadband.

The American liberal has yet to realise that the American liberal regulation of the economy through permits, investigations and studies of and for proposed infrastructure means that there is no possible emergency infrastructure plan.