Economics

Tsk

Way back when Britain had a much bigger industrial base than today,

So, when was that?

Agreed, manufacturing used to employ many more people. Manufacturing used to be a larger portion of a smaller economy. But manufacturing output is only a shade off the record levels of the 00s. And distinctly larger than pre-Maggie etc. Like times larger.

So that screws tourism then

The UK imposed restrictions on holidaymakers returning from Spain on Saturday night in a bid to curb the surge in coronavirus infections.

No, not just to Spain. It creates uncertainty about everywhere. No one can plan now, can they?

And what’s the great enemy of an economy? Uncertainty.

It’s also going to be interesting as hell to see whether the system can cope with tens of thousands who might, just might, be of a mind to not wholly cooperate.

This is of course quite so

It’s the aim too:

Business rates are collected on commercial property and are linked to the underlying value of the premises. The tax is widely seen as outmoded because it penalises companies that need a presence in town centres, where values are higher, resulting in them paying more in rates than online and out-of-town rivals.

Given that it’s the landlords that actually bear the burden this is why we do it as well. There is a value to that land at that location. It’s a Ricardian Rent. So, tax the bugger, that’s the point if it.

Looking for the idiot bit

So, it’s Salon, it’s about economics, so, where is that idiot bit? The pure distilled nonsense, it’s gottabe there:

Capitalism requires constant consumption in order to sustain prosperity

Prosperity is consumption. You’re real income is your consumption possibility, you are able to consume more you are more prosperous, that’s just what all the words mean.

Sigh.

A thought

One that isn’t fully fleshed out you understand. But, as here:

It’s also possible to invert the entire discussion and point out that we all already agree with this thought anyway. Exactly those who tell us that, say, blood must be donated voluntarily, are likely to be those who also insist that we don’t solely rely upon charity to solve poverty and inequality.

We must instead tax and then use government to hand out that forcibly acquired revenue to solve that problem. No, this doesn’t mean I think we should use force to gain kidneys for transplant. But by insisting that voluntary action, charity, won’t solve the problem we have just agreed that voluntary action, charity, won’t solve the problem. We thus have to use some other method to do so.

We must use only voluntary donation to provide organs for transplant. OK, fine, fair enough, but that does leave some people dying.

We cannot leave it purely to voluntary and charity to alleviate poverty because some will die. OK, fair enough.

Where this falls down is that it’s only in Poul Anderson novels that forcible transplants take place. Or maybe Chinese prisons.

But it is interesting, at least I think so, that most people on one side of either of those statements will be on the other side of the other. Those who would insist that we cannot use paid markets for body bits would be, in my experience at least, those most vehement against relying purely upon charity to deal with poverty.

A note for MMTers

Not that Snippa will take note:

For it was not merely the government that had over-borrowed. The central bank had borrowed from private banks to maintain a fixed exchange rate with the dollar that kept down the price of imports: imports of food and fuel, for everyone, and of luxury goods, for the rich.

You can’t control both the quantity of the money and also its price. If you print lots more then the value will go down.

Piffle

Britain’s economy contracted by 2.2% in the first three months of 2020 – its sharpest decline in more than 40 years – as the immediate impact from the Covid-19 pandemic provided an even more severe hit to output than first thought.

That’s for the year up to March 31. Piffle, entirely an irrelevance. It’s what has happened since then that matters.

But it’s also true that this is how long it takes to produce decent GDP figures. Which does rather show how lousy is the information base we’ve got to try and plan the economy, doesn’t it?

‘N’ we can tell this bloke to bugger off ‘n’all

First, claimant unemployment – a measure of all of those who are unemployed and claiming social security benefits – has risen by 1.6 million in two months, to 2.8 million. This is the highest level since 1993, 1.2 million higher than the last recession and the largest increase since unemployment benefits were created nearly 100 years ago. Even in the first year of the Great Depression, unemployment only rose by one million.

That is from this bloke:

Tony Wilson is director of the Institute for Employment Studies

So, bugger off. ‘N’ all.

So, why? Because he’s using the number of people laid off. Which, when population has changed over the past century, is horribly misleading. UK population in 1930 was about 45 million. Today it’s more like 67 million. Further, the number of women working as a percentage of all women was rather lower then, no? Meaning that the workforce was very much smaller.

Thus 1 million unemployed now is not the same as 1 million unemployed then. Yet he compares and contrasts.

So, bugger off. ‘N’ all.

An economist speaks

And gets it wrong of course:

In April, UK GDP was 25% below its level in February. While such a rapid fall in output is unprecedented, so are the reasons for it. Unfortunately many Conservative MPs seem to think the collapse in output is due to the lockdown, whereas in reality it is due to the pandemic. If there had been no lockdown, and the epidemic had run its course unhindered, we would have seen a fall in output of similar size.

No, there are two effects going on. One is the simple and individual reaction to a pandemic, the other is the effect of the lockdown. The effect of the lockdown possibly being additional to that individual change in behaviour and at least in theory it could be a negative, reducing that effect.

To claim that lockdown had no additional effect at all is to insist that Sweden will have exactly the same GDP fall as Norway and Denmark – two broadly similar economies with different lockdown policies. That is, we can test this proposition – anyone feeling confident enough to join Simon Wren-Lewis in his claim?

An exceedingly interesting finding, don’t you think?

One of the earliest contributions to the understanding of racial discrimination was Gary Becker’s book The Economics of Discrimination, written in 1957 and based on his Ph.D. dissertation at the University of Chicago. One of Becker’s main contributions in that book was the idea that when an employer discriminates on a basis other than productivity, he misses out. Becker’s point was not that therefore employers would not discriminate but rather that the free market makes them pay a cost for discriminating.

In 1962, Armen Alchian and Reuben Kessel found, consistent with Becker’s model, that when governments regulate firms’ profits, as they do with utilities, the utilities have a diminished penalty for discriminating and, therefore, discriminate more.

That would help to explain why the Bristol bus boycott was against a state owned company…..

From Newmania

There has been economic theory that has attempted to incorporate reality ( Weber) but Adam Smith, and thinking derived from him, would not be easy to reconcile with the Christian values, their historic rise in 19th century Britain, and the abolition of slavery.

Eh? Smith on slavery is here. He was rather agin’ it.

Oh dear

Business activity picked up in May, with the composite purchasing managers’ index climbing from a record low of 13.6 in April to 31.9. Any reading below 50 indicates contraction.

The second sentence means that the first one is wrong. Actually, business activity continued to diminish but at a lower rate.

Guardian economics again

Getting it the wrong way around:

The US is by far the largest importer, and its demand has been hammered. The current strength of the dollar will go some way towards offsetting the fall in American consumption. A more valuable dollar makes it more attractive to export to the US.

No, a stronger dollar makes it more attractive to import into the United States. People paid in USD now get more hours of other peoples’ labour for the same amount of their own.

The end effect is the same, more exports to/ imports into the US. But if you get cause and effect the wrong way around you’re never going to make sense of things.

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……