Category Archives: Economics

Gavin asks in the comments, can we have a negative Pigou Tax?

Sure, we call it a subsidy.

Needed an image from a photo library just moments ago. Wanted something for “work” so put “work” into the sites search engine.

Which gave me rows and rows of images of people in meetings or sitting in nice dry and warm offices. Absolutely no one at all standing out in the rain shovelling shit at all.

No, not complaining at all. It’s just an interesting little sign that this is what work is these days. The imagery is perhaps a little in advance of reality in that there are some still out there in the environment among the ordure but not that far.

Cambridge is so unequal, compared with other cities, is because it has a much greater share of highly-paid, high-skilled jobs. The question for policymakers is: does everyone in Cambridge have the skills and opportunities to access those jobs?”

The skills to be a professor of nuclear physics at Cambridge are, we tend to think, quite rare.

“We have to be bold enough to say the free-market model doesn’t produce, doesn’t work … the trickle-down effect didn’t happen,” Starmer told a meeting at the Mechanics’ Institute where the TUC was formed in 1868.

“We have to rebuild an economic model that reduces inequality and protects working people.”

Whether the trickle down effect works or not doesn’t mean that free markets work or not. Further, whether free markets reduce inequality or not isn’t the decisive test of whether they work or not either.

Instead of the impact of recession being concentrated in pockets of unemployment – as it was in the mid-1970s, the early 1980s and the early 1990s – the pain has been spread around in the form of pay restraint for all.

This was the point of the Thatcherite labour market reforms. Good thing they worked too, eh?

They also twigged that Brexit was a revolt against austerity and free-market economics more generally

Being against the corporatist/social democratic EU is a rejection of free market economics?

But then to some that the Sun rises in the morning is a rejection of markets….

He said these include opposing “the moral injustice of poverty, inequality, homelessness” while advocating for internationalism and human rights.

This moral injustice of inequality. What, actually, is it?

Inequality of what, for a start. Peeps are born with certain attributes. For example, some lady might be enjoying the regular application of 7 inches of pork swordness, another 5. This is certainly an inequality but is it an immorality – the difference, the activity is often so described. Further, what does anyone do about it?

Then there’s the morality bit. Why is it that someone who applies themselves to life in one manner – working, saving, enjoying the fruits of such – and thus has more than someone who applies in another – friends are more important than money, who is thus rich in comrades and has no cash at 60 – is an immorality?

Answers on a postcard…..

Governing for the interests of those northerners who have “lent him their votes”? Pull the other one! How does that compare with his plans for deregulation, closer alignment with Trump’s America, and the opportunities for profiting from Brexit to which his financial backers look forward?

Perhaps being more American, less European, more free market, will be beneficial to uppity northerners as well as everyone else? After all, the European method ain’t so great for those in the other rust belt areas of the continent, is it?

UK has lost trillions by letting ‘home-made’ innovations slip through its fingers

This is the usual we’re great at research, at inventing stuff, but not so good at making or owning it.

The mistake that is always made here being that it’s the existence of the thing, the possibility of it being used, that creates the wealth. As Bill Nordhaus has pointed out the entrepreneur usually ends up with about 3% of that total value.

Which does mean that it doesn’t actually matter who owns, we’re much more interested in whether the product hits the market or not. It also means that the Mazzucato like stuff that govt should gain more of the value created is nonsense. At least, if anything people do to gain a greater portion for govt reduces the amount of or speed with which stuff hits the market then it’s nonsense. For whatever might be gained oin the 3% will quickly be swamped by the losses on the 97%.

And we all do believe that government is equally efficient at launching new products, right?

This manifesto makes practical sense of green necessity, turning housing need and decarbonisation into an industrial strategy with a million good jobs.

A million good jobs is a million costs of the strategy, not a benefit of it.

If we’re not getting you to understand that then it’s difficult to have a chat about economics…..

The two Harolds, first Macmillan then Wilson, both reached more than 300,000 new homes a year, many of which were council-owned, in an era when the country was by many multiples less wealthy – but paid higher taxes.

Tax as a percentage of GDP – the only useful measure – wasn’t higher back then. Sigh.

Don’t really know who this is other than it’s the son of someone who knows me:

Labour's promise to the future generation pic.twitter.com/SCCwBt7jHk

— Capitalist Worker (@capitalistworkr) 18 November 2019

Of necessity, that means more public spending and borrowing and the rules Labour proposes serve that goal. The framework – a cap on public debt interest of 10% of GDP,

How in buggery does that work? We repudiate debt when interest rates rise?

‘People are dying every day’: the perilous job of sanitation workers

The fatbergs are fighting back?

Sanitation workers – people whose job brings them into direct contact with human waste – are risking their lives through accident and disease because of poor workplace protection, a report has warned.

The report highlights the plight of workers in some of the world’s poorest countries and is the most indepth study to date on a group of people who do vital but dangerous and dirty work, risking their lives every day.

Ah, right.

Yep, shitty job in poor place. The solution is? Make the place less poor.

Sigh:

It’s the second point which is more interesting. If we use pre-tax income as our measure of inequality then changing the taxation system doesn’t change inequality, does it? We could double the taxation of the rich and the Gini, as we’re measuring it, would still be 0.50. We could halve the taxation of the rich and our Gini would still be 0.50.

That is, the action you’re proposing would have sod-all effect on the problem you identify and wish to correct.

Now, it’s true that you made good money in business. Well done you. You didn’t have that success by diverting scarce resources to pissing up a rope. So, why are you proposing for the body politic what you’d laugh out of your own boardroom?

The role of government is not to subsume markets. Rather, it is to set vigorous regulatory frameworks that attack monopoly, promote competition and outlaw noxious practices. It can also empower countervailing forces, notably trade unions

Thought we were against monopoly and privilege? And a trade union is?

As the mayor explained to journalists, “No-one owns a permanent property in any part of Istanbul.”

Not sure whether that’s just a reference to how places always change, nothing is permanent. Or that it really is true, that there are no secure property rights. If the second that would seem to explain some of Turkey’s problems.

As is too infrequently noted, the Ottoman Empire is what you get with a 100% inheritance tax.

Motorists are being sent on a 41-mile diversion because of a 65ft stretch of roadworks.

The small section of the A352 in Godmanstone, Dorset, will be closed between Monday and Friday next week for work on a sewage system.

Just over 65ft of the carriageway will be closed off by workmen but Dorset County Council have given an official diversion measuring an incredible 41 miles that goes via another county.

Be the first time many of the locals will have been out of the county.

One of the things many don’t know. Dorset was one of the poorest places in England from the industrial revolution up to, hmm, perhaps the 1960s? Precisely and exactly because it didn’t actually take part in that industrial revolution.

From a book I recall – agricultural wages there were some 8 shillings a week when up north, in Lancashire and the collection area of labour for the mills they were 25 shillings. Meaning that one group of beneficiaries from the Satanic excrecences was the peeps who didn’t go work in them but could have done.

Or, alternatively, Marx was right about what raises wages, capitalist competition for the profits to be made by employing labour.

Berlin’s state cabinet has agreed on a rent freeze for five years to counter rising housing costs in the German capital.

The city’s leftwing coalition government wants to freeze the rent for apartments built before 2014, according to a report by the German news agency dpa.

Only a minority of Berliners own their homes or apartments and rent has been rising sharply in recent years, forcing many to move outside the city.

The city had been a low-rent mecca for many years, after the fall of the Berlin Wall in 1989 opened the gates to the economically depressed former communist east of the city. This gave rise to an influx of artists and others seeking a more bohemian way of life.

I’ll go with a curtailment then ceasing of all maintenance on buildings from before 2014. Thus the progressive – in both senses, for it’s a result of a progressive policy – return of the city to East German standards of housing.

San Francisco is losing residents because it’s too expensive for nearly everyone

It’s been known for people over here to do the same thing:

The eye-catching result here is they have consumption taxes being *sharply* regressive, e.g. 12% for the lowest income group. I’m not aware of any US state that has state + average local sales rates tax that high. And lots of goods are exempt from sales tax. So how do they get this? Well, suppose someone earns $1k in labor earnings and gets $9k in transfers, and consumes it all paying a 5% sales tax = $500 in tax. What sales tax rate have they paid (as a % of their income)? The method Treasury uses says 500/(1k+9k) = 5% (this is also what Auten-Splinter do). Saez-Zucman exclude transfers from the denominator, and thus say 500/1k = 50%. This is a matter of definition, so it’s hard to call it right or wrong, but it does seem misleading and yield some rather nonsensical implications. For example, it means that if welfare to the poor is increased, this will be measured as an increased tax rate.

Pikety, Saez and Zucman just aren’t even trying to do science. They’re just politics.

And get this:

As I noted the other day, excluding the EITC breaks from multiple standard tax-data reporting conventions including the treatment that the CBO has been using for the past 40 years. Zucman’s defenses of making this change amount to a tendentious argument that the credit — as a transfer — cannot be differentiated from other forms of public spending such as defense and health care. He therefore claims it is necessary to remove the EITC from consideration as a feature of the tax system

Yet on their new website, Saez and Zucman are all too eager to incorporate different aspects of health care into their total “tax” estimates — provided it further augments the patterns in their new data.

This practice may be seen through their bizarre treatment of private health insurance premiums as a component of taxation. A PowerPoint slideshow on the new website includes an Orwellian rebranding of private insurance payments as a “health insurance poll tax,” and Zucman has deployed similar language while defending this designation.

Tax credits aren’t part of the taxation system while health care insurance is?