Economics

‘Oi bruv, listen up innit, it’s ya boy Gazza Stevenson here, the one who made it big time back in the day. Yeah, I was that trader geezer, stackin’ mad P’s on the bond desk, livin’ the dream, flyin’ first class, birds everywhere, the full works…

But please bro, don’t even try it, yeah? I got rich but you never can do the same ‘cause I was a one-off, innit. Proper miracle, me. You lot? Nah. You’re stuck in the ends, scrapin’ by on zero-hour shifts, Universal Credit an’ dreams of a council flat upgrade. That’s just how it is now, bruv – the game’s rigged, the rich got all the ladders an’ you got the snakes. End of.

So what we gonna do about it? Tax the rich, that’s what! Hit ‘em where it hurts, take their yachts, their second gaffs in Marbella, their private jets – the lot. An’ while we’re at it, gimme some of that money too, yeah?

I mean, I’m one of the good ones now, ain’t I? I wrote the book, I do the talks, I’m on the telly tellin’ everyone how unfair it all is. But I still gotta eat, bruv. I still gotta keep the wolf from the door, keep the missus happy, keep the kids in private school so they don’t end up like you.

So bung us a tenner, or a grand, or whatever you can spare. Go on, means-test yourself, pay your bit. It’s for the greater good, innit. I’m tellin’ ya, if we don’t tax the rich proper – an’ by rich I mean anyone who’s got more than me right now – then you lot are proper screwed.

No hope, no future, just more Deliveroo gigs an’ Netflix on the electric that’s about to get cut off. But me? I’m the voice of the voiceless. I’m the one who escaped the matrix an’ came back to tell ya the door’s locked now…

So cough up, people. Donate to the cause. Subscribe to the channel. Buy the merch. Because we need to tax the rich… an’ I’m standin’ right ‘ere with me hand out, safe. You can’t make it like I did. I was special. You’re not. Simple as. Now gimme the money, bruv. For equality, yeah? For the kids. For the future. Please mate. Cheers Bro.’

Inequality is lower than commonly measured:

Councils are offering benefit claimants discounts on nights out, beauty parlours and beach huts under a spiralling “welfare culture” taking hold in Britain.
A Telegraph investigation has found Universal Credit and mental health benefits claimants can receive concessions for drinks at bars, massages and eyebrow treatments via local government schemes, with discounts for jobless claimants also extending to football matches, comedy clubs, cinemas, saunas and spas.
Concessions offered by councils or independent businesses even apply to white water rafting, rowing clubs, yoga classes and ice skating.
Local authorities are also providing benefit claimants discounts on weddings and at leisure centres, while taxpayers foot rising bills.

None of these bennies count as income. Therefore they are not counted when measuring how many people are living on incomes less than 60% of median. So, that relative poverty is over-measured.

How important this is is another matter but it’s definitely true.

It wants eVED to be the successor to fuel duty. But the numbers don’t add up. Pay-per-mile will raise £7bn a year by 2050-51, according to the Office for Budget Responsibility (OBR). That’s less than a third of the current £24bn tax take earned from fuel duty.
It seems inevitable that a dramatic increase in eVED charges will be needed to make up the shortfall. What starts as 3p per mile could soon be 10p.

A chunk of current fuel duty is that Pigou Tax upon emissions. If no emissions are being made then that tax – and that tax revenue – should not exist. But here we’ve the politcos insisting that the same revenue must be raised even if there aren’t those emissions that should be brutally taxed.

BiS is quite right that this is a problem with Pigou Taxes. No, I don’t know what the solution is. Other than yes, taxing petrrol is better than giving MadEd a free hand…..

where only 4,522 social and affordable homes were started in 2024-25, down sharply from the 26,386 starts in 2022-23, according to the Ministry of Housing, Communities and Local Government (MHCLG).

And Barrat Redrow is reducing the amount of land it buys to build upon, as Berkeley recently also did.

Summat’s wrong with housebuilding, eh?

My best guess – and it is only a guess – is that there’s no profit in it. For the planning system demands all the potential profit and more in Sec 106 bennies. So, no one builds as there’s no profit in it.

Bangladesh could become the first foreign casualty of Donald Trump’s war in Iran as it faces running out of oil and gas within weeks.
After weeks of rationing, the government in Dhaka is struggling to formulate a plan and is becoming increasingly desperate at the prospect of running out of fuel, sources have told The Telegraph.

Because they’ve been rationing, not allowing the price to rise. Making the samemistake the Americans did under Nixon.

Every time we have to re-learn the same basic lesson — price is the most efficient way to ration demand. That we have to re-learn it is because all too many think it is unfair, in some manner inequitable. Which, well, it quite possibly is but price is still efficient.

This time around it’s the jump in international fuel prices as a result of the war affecting transport out of the Persian Gulf. Should that be happening, should the war be going on? I might not be the right person to ask — the translator of an article of mine into Farsi was jailed for translating my article. I could, perhaps, be a little biased on the question of who should rule Iran.

But given that the closure of the Straits of Hormuz has happened, the prices of oil and gas (LNG) have jumped, what should we do then?

Well, we need to reduce our consumption of those items, obviously enough. What’s the best way of doing that? Economists — well, most of them — insist that price is the most efficient way of allocating that newly scarce resource.

But then no one listens to me…..

The Iran war has led to a surge in pessimism in the UK as half of households are already struggling to afford everyday essentials.

What’s an “essential”?

Savings are shifting from a safety net to a lifeline, with a quarter (26%) of households now regularly dipping into savings to bridge the gap between their income and the cost of essentials.

People far poorer than Brits manage to cope with their incomes. Sure, they might well go without things they desire – as Brits do too – but if people poorer – yea, after adjusting for the cost of living! – manage to cope then these things are not essentials.

What’s actually happened is that all the things which make up the slightly ahead of median lifestyle – because that’s the way humans work, “not poverty” is always defined as a bit ahead of reality – are now clled essentials. Which, of course, they are not. Nice to haves and essentials just are not the same thing.

A war and maybe an unprecedented depression: it’s Trump’s mania, but now all of us will pay the price
Polly Toynbee

But oil at $100? Doesn’t seem like something likely to trigger a depression to be honest. Oil’s been higher before and we didn’t have one.

Plus, the price of oil is less important to hte general economy than it used to be.

If it sounds like his economic policy has been derived from hours of scrolling on his phone in a well-crafted echo chamber where nobody dissents, it’s because it has been.

It sorta depends upon whose missives Zack has been reading on his phone. And that it’s Spud, Grace and Gazza is the problem…..

In the Pension Schemes Bill is a clause which gives Mr Bell, the pensions minister, the power to dictate where our pensions are invested. His objective is to drive more investment capital into the UK economy.

They’re going to steal your money.

And the actual answer is:

For starters: cutting regulation, reducing corporation and jobs taxes, scrapping pointless carbon levies, reducing energy costs and raising tax revenues by opening up the North Sea, making it more attractive for companies to list on the UK stock exchange. Do all these things and you won’t need to pass authoritarian laws to invest in the UK, because companies and pension schemes will happily do it of their own free will.

Quite. As with all of Spud’s schemes. The conecntration is always upon the wrong thing. Whose money? When it should be on the incentive to invest, the carrot not the stick. Devise attractive investments and the money will flow in anyway.

And then there’s the second order effect. Which is that if you force investment upon bad terms – what is called financial repression – then you will change the amount saved and therefore invested. This can go either way too. China’s 45% of GDP savings rate is because Chinese households have to save ginormous amounts for their old age yet earnings on savings are often negative. Or, if we remain a less oppressive society than that then people might well in fact save less, thus invest less. Or abroad, or…..

Concerns around the loss of jobs to new technology dates back to the Industrial Revolution and the machine-smashing riots led by “Luddites”. Workers at the time were right to revolt. The initial effect of the factory system was not only to destroy the cottage industry of handloom weaving but to drastically increase the hours and intensity of work. Average working time in Britain reached nearly 70 hours a week in the early 19th century, with some factory workers doing as much as 12 hours a day, six days a week.

But from the middle of the 19th century to the late 20th century, the benefits of technological progress were reflected in steadily reducing hours of work.

I don’t think working hours went up at the IR.

Market working hours – working for The Man for pay – definitely went up for males at the IR, yes. But when we consider total household hoursw, no I think they fell. Because hand spinning took hundreds and hundreds of annual hours for every woman. And the first automated task? Spinning. I think female household working hours fell so much that total household hours, both in the market and in the household, fell.

By 1980, the Australian Council of Trade Unions launched a push for a 35-hour working week. But the balance of power had changed, with unions much weaker, and governments, both Labor and Liberal, taking the side of employers. Standard hours were reduced to 38 per week, where they have stayed ever since. Annual leave, increased to four weeks under the Whitlam government, has also remained unchanged.

Forty to 50 years later, these conditions have been in place so long that they seem like the natural order of things. As a result, discussions of the impact of AI take for granted that any reduction in total hours worked translates directly into a loss of jobs.

But household hours have continued to fall and leisure hours to rise over this period. It is only market working hours that have been stuck. You know, like at the IR itself.

There’s little doubt now that AI will produce real productivity improvements. But there’s no guarantee that most of us will share the benefits of these improvements. A return to the long-paused process of gradual reductions in working hours is urgently needed.

Ah, but that’s a bad idea too. Assume AI increases productivity. We all therefore face a choie. Get richer on the same hours of work or be sa rich sa ew are on fewer. So, some will choose one, some the other. Pretty normal, some do, some don’t. But JQ here is insisting that everyone must take his choice – fewer market working hours. And, you know, some might prefer to do more market working hours, buy more kit to automate household working hours and gain their increased leisure that way. You know, maybe? But they can’t, ‘coz JQ says so.

Very liberal, that….

Rachel Reeves’s plan to raise the minimum wage for young people will push up the cost of hiring them by almost £7,000.
Analysis by the Institute for Fiscal Studies (IFS) warned that employers faced a 40pc real increase in costs under Labour’s proposals to scrap the youth rate of the minimum wage.

There will be some of those youngsters who are worth the extra £7k a year. There will be some who are not. Those who are not will not get a job.

Well done, eh?

Senator Bernie Sanders and Ro Khanna, a representative, on Monday introduced legislation that would impose a 5% annual wealth tax on America’s billionaires.

It didn’t, doesn’t, work in California so let’s take is nationwide!

Of course, Saez and Zucman say it will be great. Which is all we need to know to show they’ve stopped being economists and are now activists only.

The trade-weighted dollar, measured against a basket of global currencies, has lost 7% of its value over the past year despite strong US economic growth and soaring stock prices on Wall Street. That partly reflects the outlook for inflation, and therefore interest rates, but also perhaps a more nebulous sense that the US policy framework is not as solid and predictable as it may once have been.

Well, yes, etc etc.

But nowhere does she mention tariffs. Which is really pretty important. Because whjolly standard theory and observation says that the imposition of tariffs raises the FX rate. So, given The Donald’s love of tariffs the $ FX rate should be rising. Which means that the fall is doubly surprising. Something that really should be mentioned…..

But did you listen? Nooooo, no you didn’t, did you?

But whatever your first job may have been, there’s a reasonable chance it combined the thrill of hard cash with several mortifying mistakes and a crash course in handling stroppy customers, taking criticism more or less gracefully and moaning about it only out of earshot. Though teenage starter jobs have been in decline for decades – for reasons varying from academic pressures on sixth-formers to the rise of side hustles on Vinted that don’t show up in official statistics – everyone still has to start somewhere, even if it’s now more likely at 18 than 14. But getting that start is becoming harder than it was.

We really did all say that if you keep raising the minimum wage this is what would happen. Those hardest hit will be the young, untrained and untried. But you still went ahead with it anyway, didn’t you?

Tossers.

Chelsea Gods, a content creator and political activist, drove two-and-a-half hours from San Diego to attend the event. “Americans are poor. We are strapped for cash. We are struggling and we are tired,” she said. “People First-policies are the only way to win a political future for people on the left.”

So someone who makes TikTok videos for a living has enough money to drive 5 hours – there and back – for a Bernie Sanders rally?

Americans are so poor, right?

Unemployment in the UK has risen to 5.2%, the highest level in nearly five years, while wage growth continues to slow, raising the prospect of another cut to interest rates in the spring.

As we kept saying. Raise the minimum wage, increase taxes on employing people, unemployment will rise.

Did you listen? Nooooo, you didn’t did you?

Lowering interest rates won’t solve this either. So, a bt of actual economics.

Sure, lower interst rates, get more economic activity. Or at least, some stimulus to activity. Dependent upon varied things that might turn up as actual growth or just growth in prices – inflation.

So, the varied things. That microeconomic structure of the economy matters. What is the prie of labour? The risk of hiring it? The rewards to having hired it? All the laws you’ve got about taxation of those who succeed, the taxation of those trying, the bureaucratic rules that apply to people trying, the costs of doing so etc. They will determine how much of the stimulus turns up as that growth – and thus hiring – and how much will turn up as inflation.

This is the same idea – tho’ a different view of it – as Nairu, the non accelerating inflation rate of unemployment. That depends upon the microstructure of the employment market. Sure, sure, lower interest rates will stimulate but how that stimulus will express itself depends upon that microstructure.

We can even go further. Have a very liberal – in the classical liberal sense – microstructure and you can lower interrest rates more before you get inflation. Because more of your stimulus will turn up in growth and less in inflation. Equally, you can have more employment before you get inflation.

This is one of the areas where Spud goes wrong but he’s not the only one. Let’s all play with macroeconomics! OK, sure – but you’ve got to grasp that microeconomics defines – defines, note – how effective any of those macroeconomic tools are going to be. In vernacular, sure there are levers to pull but the details of what the levers are connected to matter.

Starmer tells Labour MPs his foreign trips can help fix cost of living crisis

Inflation is caused by excess money chasing limited goods and services. So, if Starmer’s demand for goods and services exits the UK economy – even for a day or two – then inflation will be lower than it would be if he’d stayed at home.

Inequality between countries has fallen sharply, a trend driven by hte end of colonialism and the rise of India and China.

No, colonialism ended 50 years back. Global inequality started dropping 30 years back.

When those newly independent places stopped listening to the idiot Fabians and started doing what the Washington Consensus said they should. Which is, as we all know, just a list of stupid things you shouldn’t do to an economy.

But as China’s development enters a new era of slower growth and the country battles “involution” – a downward spiral in the economy that means people have to work longer hours for less pay – many of those internal migrants are giving up on their big city dreams.

More hours for less pay is also known as a depression. A recession is when some lose their jobs etc, a depression is when things really do get worse for all. Not accurately, not exactly, but around and about at least.

Note that UK wages have around and about flatlined this past 15 years. Not actively fallen for more working hours….

Elon Musk on Monday became the first person ever worth $600bn, according to Forbes. The news comes on the heels of reports that his SpaceX startup was likely to go public at a valuation of $800bn.

Musk, who was the first to surpass $500bn in net worth in October, owns an estimated 42% stake in SpaceX, which is preparing to go public next year. No other person has hit the $500bn mark.

Of course, providing 90% of human space lift capacity, satellite internet to the world, this is merely hoarding wealth, right?