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Economics

Technological change is a bitch

The other day, I got yet another job offer to “train AI”. The company had the audacity to list $15 an hour as a “perk” of the job.

I’ve spent much of my 25-year writing career as a freelancer. I was always excited to scoop a story for a major publication, but I couldn’t have survived without the bread-and-butter jobs: web copy, corporate blogging and product descriptions.

Now I can’t survive. I’ve made $3,000 this year, which is only 40% of what the US government considers a poverty level income. I’m living off my credit card while crafting an endless flurry of cover letters as my career prospects grow ever more depressing.

Fifteen dollars an hour to train AI to steal my livelihood?

There were a couple of years just back there where I was doing very well indeed (no, I am not crying poverty now!) scribbling little pieces for stock market pages. $5k a month for three hours mornings Mon to Fri. Trivially easy stuff in fact. That’s now all – all – done by ChatGPT and the like. There aren’t even any jobs advertised in the sector, let alone the pay being like that.

Technological change just is a bitch. Ho Hum.

Hmm, well

The number of households in the UK that have never worked has hit a 12-year high as the labour crisis gripping Britain’s economy deepens, official data shows.

In the first three months of this year there were 269,000 non-student households where no adult had ever been employed, the highest since spring 2012 – the aftermath of the global financial crisis.

It also represents a 12pc jump compared with the same period a year earlier, the Office for National Statistics (ONS) said.

1% of households isn’t, in fact, a lot. I’m surprised it’s so low in fact.

Between January and March, there were 4.3 million 16 to 64-year-olds living in households where no adult was employed.

Ah, that’s more like the number we probably think it is. “Ever” is doing some work there in that first one. And 20% of households (near, at least) is quite a lot.

Markets are forward looking

‘Mild positive’: markets greet prospect of Labour landslide with calm
Hazel Sheffield
Financial indexes barely flickered as the election was announced, suggesting Starmer’s move to woo the City has been a success

Sigh.

What is already known is already in market prices. This is the grand lesson of the efficient markets hypothesis. This is also a useful test of it.

We’ve all known for some time that a) the election was coming and b) that Labour were going to win it. So the price of that is already in prices.

That Starmer’s going to be PM in July rather than January is not wholly new information now, is it?

Nick Timothy whines

The scale of corporation tax Amazon has avoided in Britain is well known,

No, the claims are well known. But that’s due to fools believing idiots like Spud.

And whether we are talking about the private equity funds that extracted huge sums from water utilities while avoiding the costs of their pollution, or the mistreatment of workers in warehouses or the fashion supply chain, tax dodgers in the Channel Islands or any number of other examples,

Just the usual fool beliefs then, eh?

Our next Chancellor

Rachel Reeves, the shadow chancellor, has said she is in favour of councils having the power to cap rents.

The measure would mean local authorities could prevent landlords from raising rents above a set proportion every year.

A similar policy introduced in Scotland by Nicola Sturgeon drove landlords out of the market, reduced the supply of housing and forced up rents.

So, our next Chancellor is a complete economic loon. Aren’t we the lucky ones?

Does Kenan Malik actually believe this shit?

‘Do you think you could live on £4.87 an hour?” Liam Byrne, the chair of the Commons business and trade committee, asked Peter Hebblethwaite, the chief executive of P&O Ferries, last Tuesday. “No, I couldn’t,” Hebblethwaite replied. “Why do you think that your staff should have to live on that?” Byrne continued. Because, Hebblethwaite responded, “these are international seafarers”.

The select committee was taking evidence from business leaders, academics and officials on the protection of workers’ rights. Two years ago, Hebblethwaite faced another select committee after P&O had caused national outrage by abruptly sacking almost 800 workers, replacing them with low-paid agency staff from countries such as India, Malaysia and the Philippines. Just how low was exposed by a Guardian/ITV investigation in March that found some being paid at less than half the minimum wage in Britain. Many routinely work 12-hour shifts, seven days a week, for up to 17 weeks at a time. But no matter, they are only “international seafarers”.

That’s the scene setting.

The case of P&O exposes the problems both of globalisation and of much opposition to it. “Globalisation” is a concept with myriad meanings – and with economic, political and cultural dimensions. Mostly, as with P&O, it refers to a particular mode of capitalism that relies on an international division of labour and the diminution of controls on capital movement across borders to depreciate costs and push up profits.

You what? £1 an hour in either India or the Philippines is a damn good wage. So, here we’ve got labour from those places being paid near 5 times that to work in (OK, if you insist, right on the edges of) our economy.

This is the international division of labour? But, but, that would be insisting that those poor folk have to stay home and make £1 an hour. And the mobility of labour is in fact proof of the mobility of capital?

Seriously, does even Malik believe any of this shit?

The social consequences of such globalisation, from soaring inequality to the

How does people moving from £1 an hour labouring to £5 an hour labouring increase inequality?

It’s all complete bollocks, isn’t it? The sort of shite that would only survive in an echo chamber, the result of groupthink.

Well, yes, obviously

High levels of immigration are fuelling Britain’s housing crisis, according to the Bank of England’s chief economist, who blamed skyrocketing rents on a shortage of properties.

Huw Pill said higher interest rates were not responsible for record hikes in rental costs, which jumped by 9.2pc in the year to March.

He said “quite large increases in immigration” were piling more pressure on Britain’s housing stock, after net migration hit a record-breaking 745,000 in 2022.

The idea that it’s interest rates is crazed – Spud believes it, so, obviously – for an increase in costs does not, in fact, mean an increase in prices that can be charged.

More people chasing the same number of houses, yep, that could do it.

Social mobility

Something to celebrate here:

A mother and son behind a Fitzrovia Thai restaurant have been locked in a £6m court fight over who owns the business.

Thai Metro, on Charlotte Street, named Britain’s most loved takeaway in 2017, was at the centre of a bitter row between chef Ekk Somboonsam, 51, and his 77-year-old mother Wanda Walker over the multi-million-pound family business and their properties.

Mr Somboonsam moved to the UK as a five-year-old. The business in Fitzrovia opened its doors in 2000, which he claimed to have founded.

The success of the business allowed the family to open a second restaurant and build a multi-million-pound property portfolio.

Family fights are not something to celebrate. Observe with a certain amusement perhaps.

The court heard Mrs Walker moved to London from Thailand in 1973, working as a cleaner and then setting up her own janitorial business.

She then moved into catering, providing Thai food at outdoor music festivals, including Glastonbury, and running a restaurant in Lewisham, the judge was told.

The Thai Metro restaurant was set up 23 years ago and went on to become a major success, scooping the “Britain’s Most-Loved Takeaway” award due to its five-star ratings and “unprecedented return rate”.

Bird arrives here from an impoverished shithole (Thailand was in 1973) and ends up, therough hard work and entreprenurialism, a multi-millionairess.

And folk say there’s no social mobility in our society.

A warning against using that Magic Money Tree

Lebanon’s economy and electricity system are broken and much power is now generated locally, with devastating effects on air quality and health

Smog hangs over Beirut most days, a brownish cloud that darkens the city’s skyline of minarets and concrete towers. An estimated 8,000 diesel generators have been powering Lebanese cities since the nation’s economic collapse in 2019. The generators can be heard, smelled and seen on the streets, but their worst impact is on the air the city’s inhabitants are forced to breathe.

New research, to be published by scientists at American University of Beirut (AUB), has found that the Lebanese capital’s over-reliance on the diesel generators in the past five years has directly doubled the risk of developing cancer. Rates of positive diagnosis, oncologists say, are shooting up.

The basic Lebanese economic problem is that the government just kept printing money until it was worth nothing. A good example of the end-state of Spudnomics, no?

No. Anything else, Owen?

The Putin regime, of course, bears responsibility for Russia’s hideous invasion of Ukraine: the US isn’t the only powerful state capable of violence and destruction. But is there not more to the story? Does the neoliberal economic model that western states exported to Russia not share some of the blame?

Sigh.

That Putinism exploited Russian despair after the cold war is incontrovertible; but so is the fact that western states promoted “economic shock therapy”. This triggered a more severe crisis than the Great Depression, roaring hyperinflation, a drastic fall in life expectancy, and oligarchs pilfering the nation’s wealth. Could a more stable, post-Soviet Russia have been inured from the revanchism of an authoritarian like Putin?

Take it from someone who was there. Sure, there were mistakes, mistakes of politics (buying the second Yeltsin victory for example). But no, there was no possible alternative other than blowing up the previous economic system.

Just as we could have built an economic model that doesn’t

Nope, TINA.

The grand economic lesson of the psat century is that either you have a market economy or you don’t have an economy. Sure, you can have a bit more social democracy – Sweden, which is more free market and capitalist than we are – or a bit more laissez faire – Singapore, which is richer than we are, more market, more capitalist and more laissez faire than we are – but that’s your available spectrum. Those dreams of some sort of alternative economy that also works are the gaseous emanations from the dead corpse of socialism.

Not an appealing package really, is it?

The framework of the new political consensus is straightforward: taxes will be high, spending higher and wealthy foreigners in particular will be taxed until the pips squeak. Low-income foreigners, on the other hand, will be waved through Britain’s open borders to benefit from the generosity of the welfare state.

Can’t see that it will work all that well as a plan either.

Consumers do have agency

It’s the same old problem planners always have:

Sales of Volkswagen electric cars have plunged by almost a quarter in Europe as demand for battery-powered vehicles stalls and buyers return to petrol.

Electric vehicle (EV) sales fell by 24pc in the first three months of the year as high inflation and rising energy prices dampened demand.

Globally, all-electric sales at the owner of Audi, Skoda and Porsche dropped by 3pc to 136,400, while sales of combustion engine cars climbed 4pc to nearly two million.

The drop-off in EV demand comes as politicians in the region rollback subsidies and reconsider ambitious targets to dump petrol and diesel cars.

Consumers do, in fact, have agency. You can plan all you like but it does require, at least, the acquiesence of the people. And if they just, naaah, not doin’ that then the plans are stuffed.

You can go all the way to Soviet planning if you like – but you can then end up with them just pretending to work. Entirely possible to nudge, at the edges, consumer selection. But something that they’ll really not do, well, they’ll not do it.

Issa good question

If you’ve spent a lot of time reading about Africa, a thought may have occurred to you as it did to me: how are there no successful post-colonial African countries? By “successful,” I mean consistent strong economic growth, political stability, and a reasonable income distribution so the new oil/gold/mineral wealth isn’t all held by the dictator and his friends. For awhile, you could say South Africa or Rhodesia, but only if you ignored the apartheid. It feels like one of the other 50+ African countries should have achieved success, even if just by chance.

This is possibly true

Executives ‘demanding higher salaries to move to Scotland’ to compensate for SNP tax hikes
Around 1.5 million Scots with a salary over £28,850 are on course to pay more in income tax from April than if they lived in England

Whether they’ll get them is another matter of course.

At heart this is about what people regard as “their pay”. Their pre-tax salary or their post-tax one?

And, weeell, it’s difficult. Because once you get into those higher reaches what you pay in tax becomes something of a choice. How much is stuck into a pension makes a difference. Are savings inside an ISA or not (doesn’t change this year’s income tax but still, it changes taxation of overall income).

We can also look to London, where property prices are so much higher, and see that gross income is indeed higher to compensate. So, to some extent net income after housing costs is something that determines wages.

But then the total answer is that it’s the everything that one gains from working in a specific place, time and job. How good are the schools, the hospitals, are the bins emptied, do the ferries run on time (are there ferries?) and on and on. It’s the total utility gained by expending one’s labour.

So, the correct answer is yes, post-tax income matters for wage determination. But so do all sorts of other things and how much of each, weeell……

Yes, yes, very good

That is all very well and good, but what is really needed is an appreciation of the communities and the political alternatives that they provided. Post-steel and post-coal localities need a radical industrial policy that would bring high-paid jobs, skills and opportunities that could form the basis of a real driver of levelling up. As the Port Talbot coke ovens close, what is the government doing to fill the void?

So, what?

No, that is the big question. Forget about government or markets for a moment. Just concentrate on hte what.

So, what work – or industry or product or whatever – will provide large scale blue collar work as is being demanded?

Such a distinct, collectivist culture was crucial to the development of Wales, central Scotland and parts of England in the 19th and 20th centuries. At its peak in the 1960s, Port Talbot steelworks employed about 18,000 workers, complemented by the nearly 60,000 employed in south Wales coalmines. These industries after the second world war offered an alternative vision of industrial relations, investment, community development, and a Wales (and Britain) with working-class agency at its centre.

Great. But what?

No, windmills won’t do it. Solar won’t. No one, absoluitely no one, needs an organisation of that scale nor number of workers to produce those. Recycling is a value subtracting industry so that won’t provide either that pride or the wages. And on and on.

What is there in the modern world which will produce that large scale proletarian employment?

Anyone? Bueller?

Oh dear

The average couple with children had £26,616 to live off after housing costs in 2022 while those with no dependents had £32,238, according to new IFS analysis of figures from the Office for National Statistics.

One response is and? People do different things with their lives, they earn different amounts of money. Shrug.

Another is to think for a little bit. Incomes generally rise through a working life. Those couples – for household formation is fairly late these days – with children will, on average, be younger than those whose kids have left home. Thus we need age adjustment to these income figures.

At least as far as I can see the IFS does no age adjustment.

The numbers are, therefore, more than a little suspect. For we simply do not know how much this is the difference between a couple of 27 year olds with a babby and a couple of 55 year old empty nesters.

Ho Hum.

Hermes is paying for this

Hermes is facing a legal battle with two American shoppers who have sued the French designer over its refusal to sell them Birkin handbags.

Two Californian shoppers have accused Hermes of only selling its sought-after Birkin handbags to customers deemed “worthy” enough.

A class action lawsuit filed in San Francisco alleged that one of the complainants made “multiple attempts to purchase a Birkin bag, but was told on each occasion that he needed to purchase other items and accessories”.

Now, if I were Hermes I would be paying for this. I’d be picking up the legal bills of these shoppers. Actually, I’d have gone and found them, paid them to bring suit and lavished them with cash in fact. What better advertisement for Veblen Goods than that mere money isn’t enough?