Economics

Dear God No

This really isn’t sensible:

An influential conservative think tank has called for new housing secretary Michael Gove to support the construction of 250,000 homes for key workers to repay them for frontline work through the pandemic.

The Centre for Policy Studies has proposed the creation of “homes for heroes” as a new housing category, calling for land to be set aside to build 50,000 such properties annually over five years.

Having homes that a speshul for speshul workers reduces the mobility of the workforce. So, a fireman, or nurse, or more likely a politically connected bureaucrat, gets one of these speshul homes. Then a few years later decides to go try something else. Perhaps, say, become a productive member of society.

Do they have to move out of these speshul homes? Which is a drag on the mobility of labour, isn’t it? Or they don’t? Then it’s not homes for key workers, is it?

Yes, this is important. We know that “too high” a level of home ownership increases unemployment. Because there are costs associated with moving, therefore less labour moves to where the work it when there are few to no rentals to move into.

Ah, but these will be rentals you say? But social renting is based upon local authority areas. It’s near impossible to move from social in one area into social in another. That part of the system makes social housing even more of a drag upon employment than home owning.

This is all well known. So why in buggery is it being proposed?

Surely good Tories are over the idea that the peasantry just pick a job at 18 and stay in that little hole, cap doffing, forever?

Actual fascist economics

Actual fascist economics – note, economics, not the -ism itself- returns to Germany:

Professor Polleit said the relevant parallel is not what happened in Honecker’s hapless East Germany. “The risk is something more like the command and control system installed in the 1930s. They leave the ownership in private hands but there are ever more rules, ordinances, taxes, and subsidies, used to influence what can be produced and to regulate prices,” he said.

“Scholz doesn’t represent what the SPD actually stands for. My concern is that many Germans don’t yet understand what the policies really entail. We will move ever further away from what remains of the free-market system,” he said.

We also know someone who would have such a system here:

The ultra-radical youth leader Kevin Kühnert and his “Juso” brigade crowned two obscure figures from the Corbynista wing as joint leaders.

That is rather what Corbynism is. As too Murphism. Hinesism as he once complained I was near libelling him for pointing out. There’s a definite tinge of this to Mazzucato as well.

Do note, again, that this is not to say those folks are fascist. But it is to point to how their economic desires do seem to creep up very close to actual fascist economics. The State controls because, well, isn’t it obvious that the State should control? In the national interest of course?

This will be massively, outrageously, fun

15. What about my wages?

This depends on your employer. If you work for the Scottish Government, Scottish Health Service, a Council or any other public sector body then from the first month your wages will be paid in S£. You will not have a choice about that. The amount you get paid will be exactly the same as before. If you work for somebody else then it is up to you and your employer to agree whether they continue to pay you in Sterling or switch to S£. Most employers are likely to switch to the S£ within a month or two, simply because using Sterling will become inconvenient.

So the FX rate goes into freefall as the S£ is run on MMT lines. Those being paid £ see their wages rise, massively, against S£. That’ll be fun, won’t it?

This isn’t how it works, Matey

Customers will permanently face less choice in British restaurants and supermarkets because of a crippling shortage in lorry drivers which has hammered companies across Europe, the boss of the country’s biggest food trade body has warned.

Ian Wright, head of the Food and Drink Federation, said that a combination of the pandemic and post-Brexit disruption means that consumers must get used to the end of an era when “just about every product they want” was easily available.

Mr Wright said: “That’s over. And I don’t think it’s coming back.”

Do consumers desire such choice? Are hey willing to pay for it – the true definition of really desire? Then prices will adjust so that lorry driver wages rise to where there are sufficient lorry drivers to produce that variety.

Further, if prices don’t so adjust then this is proof that consumers don’t in fact want that choice.

That is, it’s not that consumers will have to get used to not getting what they want. The entire joy of a market economy is that consumers get what they really do want, the definition of really do being are willing to pay for.

This is actually true

Everyone in Hollywood is trading on the currency that these are your dreams, that everyone wants to be in this industry, and this shows the bosses that if someone isn’t willing to work for minimum wage, they can find someone else who’s willing to work for minimum wage, and it leads to the quality of working conditions going down.”

It’s hugely true of acting, still largely true of the tech side. And because it’s true those entry level jobs are going to be pretty shitty. You know, excess of supply over demand?

Brexit predictions

Brexit is about to give us a problem with this, though. Karl Marx was right: wages won’t rise when there’s spare labour available, his “reserve army” of the unemployed. The capitalist doesn’t have to increase pay to gain more workers if there’s a squad of the starving eager to labour for a crust. But if there are no unemployed, labour must be tempted away from other employers, and one’s own workers have to be pampered so they do not leave. When capitalists compete for the labour they profit from, wages rise.

Britain’s reserve army of workers now resides in Wroclaw, Vilnius, Brno, the cities of eastern Europe. The Polish plumbers of lore did flood in and when the work dried up they ebbed away again. The net effect of Brexit will be that British wages rise as the labour force shrinks and employers have to compete for the sweat of hand and brow.

That Feb 2019 prediction is looking pretty good now, isn’t it?

Just a strange little thought

We get a lot of whingeing about how the Dukes and the like still own so much land. But land has been declining in – relative at least – value for a century an a half now. Quite how much that change in value is….

Here’s a list of the Ducal estates. Albans has 4,000 acres, Somerset 2,000, Fife 1500, Richmond 21,000. OK, I’m cherry picking.

Just to use some number or other, ag land is £5,000 an acre. That’s a bit high for estates as some of it will be wood, moor, etc. But fine.

£20 million, £10 million, £7.5 million, £105 million.

The average wage of a Premier League footballer is just over £60,000 a week, which equates to more than 3 million a year.

Those lower end ducal estates are well within reach of the average premiership footballer. If that’s what they want to devote their income to of course.

Something of a change in relative values there, no?

As Professor McCloskey has been known to point out

I can’t speak for all 4 million of my comrades who have quit their jobs during the pandemic, but for those in the nonprofit sector, pre-existing conditions compounded the stressors of COVID-19. Before 2020, half of nonprofit workers were already burned out. As defined by the World Health Organization, burnout includes “feelings of exhaustion, increased mental distance for one’s job, and reduced professional efficacy.” In fundraising, competing pressures lead to even higher burnout rates, and in turn, a revolving door — the average tenure is just 16 months.

The only thing worse than being exploited by a capitalist is not being…..

Well, yes, this is true

As companies around the country call their employees back to workplaces this month – some for the first time since March 2020 – family charities warn that increasing numbers, especially mothers and pregnant women, are being made to do so against their will.

Jane van Zyl, chief executive of the charity Working Families, reports growing numbers of calls to its advice line, mostly from women “who don’t want or aren’t able to return to the office as much as their employer is demanding”.

This is rather the point about work. It’s shitty, we don’t want to do it. Which is why they have to pay us in order to get us to do it.

The idea that work might contain bits we don’t want to do is the very reason for that pay existing.

That’s not how inflationary expectations work

As it is, the Bank expects consumer price inflation to reach 4pc by the end of the year. The danger is that the surge raises inflationary expectations and therefore becomes a permanent fixture. If people expect higher inflation, it promotes a culture among companies of profiteering price rises even when not strictly justified by rising costs.

No.

Companies do not raise prices because such are justified by rising costs. Companies are run by capitalist bastards. They’ll rook the consumer. If they can of course. So, and therefore, they’ll raise prices if they think they can. At any one time they’ll charge the maximum they can get away with.

This is tempered by competition of course.

So, if other folks are raising their prices then more will think that they can get away with raising prices – that’s how cost changes get into rising prices.

But inflation expectations? No, it’s that the consumer is expecting inflation – that’s the expectations bit – and therefore can be rooked by rising prices.

The justification for price rises in a capitalist market economy is that the producer can raise those prices, nothing more. Whether they can get away with it is what changes in an inflationary environment.

Which mental disease is Aditya Chakrabortty suffering from today?

If it was staff you wanted, you could offshore your work to Asia, or outsource it to an agency that relied on imported workers from eastern Europe. Out of sight, out of mind, big companies could now make invisible large tranches of their workforce.

But no other country faces our one-two of Brexit and Covid. That has prompted a mini-exodus of eastern European workers from the UK – more than one in four Bulgarian and Romanian workers have left since the start of 2020 – which is primarily what accounts for those empty supermarket shelves, the fruit left unpicked, the small-town hotels that have just lost their second summer in a row. Perhaps slamming the door on the way out is the only way an invisibilised, underprotected and underpaid workforce gets our attention.

OK, mass immigration lowers the wages of the workers. The absence of the mass immigration will raise the wages of the workers.

Yet if you actually said to Aditya, well, does immigration damage the wages of the workers he would stoutly, even hysterically, deny it.

That’s a sufficient mental contortion to be regarded as an illness, isn’t it?

Not exactly MMT then

The Bank of England has appointed a new chief economist who is a staunch critic of limitless money printing and has railed against overmighty technocrats.

Huw Pill, an alumnus of the European Central Bank and Goldman Sachs, risks ruffling feathers at Threadneedle Street after a decade in which the Bank flirted with negative interest rates and pumped billions of pounds into the economy through quantitative easing.

Although of course such views can fit into an MMT worldview – we’re just at the wrong part of the cycle to do more of it.

Piss the P³ off tho’.

Steve Keen’s Macroeconomics

Even before the Covid-19 crisis began, the global economy was not in good shape, and nor was economic theory. The biggest economic crisis since the Great Depression began late in first decade of the 21st century. Called the “Global Financial Crisis” (GFC) in most of the world and the “Great Recession” in the USA, it saw unemployment explode from 4.6% of the US workforce in early 2007 to 10% in late 2009. Inflation turn into deflation— inflation of 5.6% in mid-2008 fell to minus 2% per year in mid-2009—and the stock market collapsed, with the S&P500 Index falling from 1500 in mid-2007 to under 750 in early 2009. The economy recovered very slowly after then, under the influence of an unprecedented range of government interventions, from the “cash for clunkers” scheme that encouraged consumers to dump old cars and buy new ones, to “Quantitative Easing”, where the Federal Reserve purchased a trillion-dollars-worth of bonds from the financial sector every year, in an attempt to stimulate the economy by making the wealthy wealthier.

This crisis surprised both the policy economists who advise governments on economic policy, and the academic who develop the theories and write the textbooks that train the vast majority of new economists. They had expected a continuation of the boom conditions that had preceded the crisis, and they in fact believed that crises could not occur. In his Presidential Address to the American Economic Association in January 2003, Nobel Prize winner Robert Lucas declared that crises like the Great Depression could never occur again because “Macroeconomics … has succeeded: Its central problem of depression prevention has been solved, for all practical purposes, and has in fact been solved for many decades. (Lucas 2003 , p. 1 ; emphasis added).

That’s not quite so much of a gotcha as some might think. Because of course we didn’t have a rerun of the Great Depression. Largely because policy makers like Ben Bernanke understood what Milton Friedman had been saying (in A Monetary History of the United States) about what caused the Great Depression – bad monetary policy.

Do note what the Lucas claim was – not that we have banished recessions, not that we’ll never have economic slowdowns or economic bad times. But that we’ll not have economic collapses like the Great Depression. Which we didn’t have, even though we could have done, and largely we didn’t because macroeconomics had advanced in understanding why depressions occur and what is necessary to avoid them doing so.

Why isn’t Sudan rich?

Sudan was largely cut off from formal commerce with the outside world. Everything from agricultural equipment to pharmaceutical goods and medical technology became hard to procure. In 2008, Sudan’s national carrier, Sudan Airways, was grounded for failing safety tests because it could not access spare parts. With very little to export – apart from gum arabic, a binding agent used in soft drinks, which was exempted from the embargo thanks to the successful lobbying of large soft drinks manufacturers – the foundations of Sudan’s already weak economy began to tremble. Unable to make money, the government began to print it, and Sudan’s economy entered a spiral of inflation.

If that combination of Colin Hines’ “progressive protectionism” and Richard Murphy’s MMT were correct then Sudan should be gloriously wealthy right now.

Just so difficult to explain, isn’t it?

The value of Mein Kampf

A French edition of Mein Kampf has become a surprise summer bestseller

Well:

“What is the use of making more people aware of the criminal delirium that it contains?” said Jean-Luc Mélenchon, leader of the left-wing Unbowed France party.

Well, having a copy of what is – as is rightly said – agreed to be criminal delirium allows us to page through other manifestos to look for people saying much the same thing. Which does indeed lead to a number of possibly unfavourable pieces of note taking. There are definite echoes of fascist economics (note, economics that fascists pursued, not fascism itself) in the progressive protectionism of Colin Hines. Mariana Mazzucatto comes much to close, in my mind, to that all in the state, nothing against the state idea in her ramblings upon innovation and invention. And there are definitely an awful lot of people for whom – please note, neither Hines nor Mazzucato – replacing Jew with capitalist works as an explanation for what’s wrong with the world. Even, over on some of those fringes of anti-Zionism, an identification of each with the other.

That is, if we agree that we’ve a collection of twattish ideas then reading it can illuminate who else is also a twat.
M. Melenchon.

Err?

Recent interest in shorter workweeks is part of a larger shift among millennials and younger workers toward “living our lives rather than making a living” and accumulating money and possessions, Benjamin Hunnicutt, a historian at the University of Iowa, told Vox.
….
The rise of “just-in-time scheduling” made retail and other service work increasingly unpredictable, leaving workers unsure if they’d get enough hours to be able to pay rent,

But that’s OK, I write at Vox, I’ll believe both.

Well, really?

Because poverty looks so different in many other countries, looking from the outside it seems like Americans have so much money. To say that a family making $40,000 a year is poor is very hard for many people to understand.

We also know that if you’re not getting any kinds of government subsidies and you are making $40,000 a year, and it’s two adults and two children, and you’re in an apartment that’s livable, it’s going to cost you much more than that. We are willfully blind to how much our systems hurt our fellow Americans.

I’m not sure it’s possible to be on $40k for 2 adults and 2 kids and not to be getting any form of government help. But OK, suppose it is:

Being in the top 15% of global incomes – yes, adjusted for local prices already – just doesn’t taste like poverty to me.

Well, yes, sorta

Al Gore’s got a Nobel Prize. Jimmy Carter’s got a Nobel Prize. Yasser Arafat’s got a Nobel Prize. I could go on. But this should be enough for anyone to gauge the decline of the old Norwegian institute that has always been as overrated by the world’s elites as Barack Obama’s salsa-dancing skills. Another controversial Nobel laureate, Paul Krugman,

Except Krugman’s came from the Swedes…..

How times have changed

It used to be that the young ladies from boring towns in the SE would travel up to London to go get the new outfit.

The granddaughter (5,10, blonde, dancer, white slavers please mention your $ amount) went with a friend today to London to potter about and they bought new outfits in which to do so.

Something has changed. Quite possibly two things. What is a la mode might be decided online these days, and so everywhere. And clothes are now so cheap that the new outfit is, well, it’s not something one needs to go and do, it’s something which one just does?