Economics

This is interesting

Now we health workers know how empty Boris Johnson’s ‘clap for heroes’ really was
Rachel Clarke

We’ve had a traumatic year and lost patients and colleagues. But all he offers us is a derisory 1% pay offer

So money does matter then?

How glorious!

Musk, who lost his briefly held title of the world’s richest person last month, has seen his paper fortune drop by $7.5bn so far this year to an estimated $162bn.

America is now a better place, right? Because it is inequality that makes it a bad one, less inequality makes it a better…..

This always annoys me

The 33-year-old founder of In The Style, an online fast fashion website, is in line for a bumper payday as it explores a £100m stock market listing.

Adam Frisby, who set up the retailer in 2013, currently owns 40pc of the firm. He is understood to be seeking to sell a small proportion of his shares in the float, likely becoming a millionaire in the process.

No.

Today he owns 40% of something worth £100 million. He’s a millionaire.

After the float he will own less than 40% of something worth £100 million and have some cash equal to the 40% minus x% of £100 million.

Yes, clearly, the float might increase the value of the company – liquidity – and all that. But it’s still clearly and obviously true that the swap – cash for shares – doesn’t make him a millionaire. It might crystallise it, recognise it, whatever, but the swap of one asset for another doesn’t make it.

Fair enough

However, this success in bringing people out of abject poverty is not simply down to the government, he says.

“Chinese people, by working extremely hard, lifted themselves out of poverty – in part because some of the stupidest economic policies ever created, by Chairman Mao, were abandoned in favour of versions of capitalism.”

There’s a solution here

The gurus aren’t just predicting that working from home is here to stay, they’re also prophesying that it’ll be great and cheap. Not only will commuting costs disappear, homeworking will make housing cheaper, as not living near the office will mean everyone is paying small-town rents while earning city-centre salaries. Back in the real world, new research shows that homeworking households actually spent about 7-10% more on housing compared with similar non-remote households in the same region. Why? Homeworkers need more space so have bigger houses. The only thing less fun than a pandemic spent at the kitchen table is a lifetime at one. Homeworkers also tend to live in more expensive areas. Maybe you care more which neighbourhood you live in if you never leave it.

We could stop building the smallest new housing in Europe perhaps….

Unimportant macroeconomic numbers

Rocketing fire safety costs are forcing leaseholders to accept up to £200,000 price discounts from cash buyers as the cladding scandal threatens the wider housing market.

House prices have so far been largely insulated from the fire safety crisis that has trapped hundreds of thousands of flat owners because they are unable to sell on the open market. But as ballooning insurance premiums and waking watches escalate even before remediation works begin, leaseholders are being pushed to breaking point.

Stephen McPartland, the Conservative MP for Stevenage who has pressed the Government to free leaseholders from remediation costs, said: “This is a £20bn issue, and that is going to play through the system somewhere – that £20bn could come off house prices.”

£20 billion is real money and £200k is an issue for most households. A crippling one for many. But as a macroeconomic number?

UK property is worth some £6 trillion (number from memory but that’s of the right order). We’re talking of 0.3% o0ff the top of property values.

Sure, it’s a problem in detail but it’s not a macroeconomic problem.

Oh dear Carrie

Regulatory capture

Hmm:

The hate group is the Alliance Defending Freedom, which you may remember from its campaign against Scotland’s hate speech laws, or its witnesses in the case that banned puberty blockers for trans teenagers.

The ADF is viciously anti-LGBT+, as its its fellow Christian Right organisation the Heritage Foundation. That has its hooks in the UK government too: in the same month equalities minister Liz Truss decided to ignore public support for GRA reform, she was a guest speaker at a Heritage-funded event. Both groups have pretty obvious links to the highest profile anti-trans groups here too, and are often deeply involved in the legal cases aimed at removing trans people’s healthcare and human rights.

Ah, no, that’s not what regulatory capture means. Rather, it means that those who should be regulated end up controlling the regulatory system.

As and when Mermaids controls the regulation of kiddies getting their knackers cut off then that is regulatory capture. When people object to Mermaids gaining that control this is known as “free speech”.

Whether either side is right or wrong about what the policy should be is irrelevant to the point being made here. Regulatory capture means that those who should be regulated control the regulation.

ADF International’s UK office has publicly opposed protest-free ‘buffer zones’ around abortion clinics, supported calls for “freedom of conscience” provisions to enable medical staff to independently object to providing legal abortion services

And that second? That’s the law. Working for the NHS does not mean that you must perform abortions. That’s actually right there in the law right now.

Purchasing power parity

Prices differ across geography. So, in order to compare living standards we fiddle with our unit of currency to try to equate prices. Thus we can compare living standards using our now fiddled currency – that’s purchasing power parity.

An example of prices differing. In Bangladesh right now:

Each cabbage and cauliflower are being sold at Tk15-20, white radish, carrot and brinjal at Tk10-15, Tk15-30 and Tk10-25 per kg respectively.

Fine rice is available at Tk58, medium-quality rice at Tk52 and coarse rice at Tk48.

1Tk is about once pence UK or even, at this level of accuracy, 1 cent US.

50 pence a kilo for rice isn’t far out of the Costco or the like price range. This makes sense, rice is a globally traded item, the law of one price comes into effect. Fungible items will be about the same price, including the costs of transport, across geography. This isn’t because they ought to be but because arbitrage through trade across those geographic price differences will make them so. Brinjal is aubergine/eggplant. That’s not so much an internationally traded item. Ten to twenty pence/cents a kilo is pretty damn cheap.

Which is why we use PPP and also how it is calculated.

Surprise!

Shoppers who do their weekly food shops at supermarket convenience stores pay £320 more a year than at big branches, a study by Which? found.

The consumer group tracked prices for an average basket of goods at Tesco Express and Sainsbury’s Local stores for five months and compared them to the prices for the same items at their bigger counterparts.

The Sainsbury’s shopper would have paid £6.18 extra a week equating to £322 a year, while the Tesco customer would have paid an additional £5.37 a week, or £279 a year.

Err, yes?

Sir Partha

In Chapter 13 we show that inclusive wealth increases if and only if aggregate consumption is
less than net domestic product (NDP), that is, GDP less the depreciation of all capital assets. We
will also show that to be the criterion that should be used to check that development has been,
or is expected to be, sustainable. So, one is naturally led to ask: Is GDP growth compatible with
sustainable development?
The question can be answered only within the context of complete macroeconomic models of
the long run, in which natural capital plays an essential role – from source to sink. The model we
construct here contains those features and so can serve as a prototype of the kind governments
and international organisations should now construct. As the model economy is bounded,
unbounded growth in output, consumption and inclusive wealth is not possible. Nevertheless,
one may ask whether, while keeping consumption at politically acceptable levels it is possible for
both GDP and inclusive wealth to grow indefinitely even as they tend to finite limits. The answer
is “yes”, provided the stock of natural capital is large.

Or, as we might put it, infinite growth is possible on a finite planet.

Not read it yet but yes, obviously

The Dasgupta review urged the world’s governments to come up with a different form of national accounting from GDP and use one that includes the depletion of natural resources.

It should be net national income, not gross domestic product. This is well known enough that – for I think it was he – Dan Davies was making jokes about it more than a decade back.

Cretin

Ms. Malik:

In a country already riven by economic and class inequality, Trump proved how easily such divisions could be exploited to benefit rightwingers promising economic prosperity for some at the cost of the rest.

The final pre-covid Trump year saw the lowest unemployment rates in two generations, the lowest black unemployment rate ever recorded, significant real wage growth, a fall in the poverty rate…….those rightwing bastards profiting from everyone else, eh?

So here’s a question for the economic statisticians

Poverty is less than 60% of median household income, equivalised.

OK. It’s also usually measured by looking at disposable income – after taxes and benefits. OK, should be, obviously.

But here’s the question. The median household income that that is supposed to be 60% of. Is that also disposable income? After taxes and benefits?

I’m sure it must be but on the other hand given the casuistry around poverty numbers it might, might, just, not be.

So, anyone know?

Allow me to translate this

Drew Nelson, the chief executive of IQE, one of Britain’s few semiconductor manufacturers, says the UK’s lack of production capacity leaves it exposed. “If the UK has to rely on foreign countries, which may or may not be friendly in the future, for all of its semiconductor hardware, it is going to be in a strategically extremely weak position,” he says.

“It’s an absolute tragedy because 30 years ago, when TSMC was founded, the UK led in the manufacture of silicon chips.The Government hasn’t really grasped the importance of investment in sovereign capabilities, in its own semiconductor industry.”

Nelson says the UK’s ability to produce its own chips should be a matter of national importance. The idle car factories and laptop shortages caused by the current shortage may well be seen as evidence of that.

All your money are belong to us”

A new silicon fab costs of the order of £5 billion. The UK doesn’t use enough chips of any one kind to make domestic production sensible – exports would have to happen to make a line economic. And if exports have to happen then we’re back to being reliant upon the rest of the world, aren’t we?

Erm, yes?

The UK’s lowest-paid workers are more than twice as likely to have lost their jobs in the coronavirus pandemic than higher-paid employees, according to a study revealing rising inequality amid the crisis.

The Institute for Employment Studies said one in 20 low-paid workers had fallen out of a job in each quarter since the pandemic struck – equivalent to 250,000 workers across Britain – compared with one in 50 of those on higher wages.

The lower paid are, by definition, more marginally attached to the labour force.

And?

It’s gonna be an interesting test of MMT

Over the last year there has been a veritable explosion of the money supply. In the US, M2 has surged by 24pc. In the UK, M4 has increased by 12.8pc. And in the eurozone M3 has grown by 11pc. (In all three cases the expansion of the ultra-narrow measure of the money supply has exceeded 50pc.)

Me, I say inflation returning is likely. Spud that it’s all under control.

Hmm.

So, what’s new?

The Italian health ministry has been criticised after a draft of the country’s new pandemic plan revealed medics would be permitted to choose which patients receive life-saving care.

This is the first time Italy has updated its pandemic plan since 2006. The absence of an adequate plan is thought to have contributed to Italy’s coronavirus death toll of more than 79,000.

The draft copy of the pandemic plan for 2021-23, seen by the Guardian, stipulates that while health workers are obliged to provide the best and most appropriate care to patients, there are circumstances that may make it necessary to prioritise who to try to save.

Everything is always rationed. Those £30,000 per year QUALYs for example.

All that changes is how you ration, not whether. We do, after all, live in a resource constrained universe.

Horrors, horrors!

UK retail sales suffered the biggest decline in 25 years last year as the closure of non-essential shops during lockdowns more than outweighed the online spending boom fuelled by Covid-19.

The British Retail Consortium (BRC) said total sales fell by 0.3% last year from the level in 2019 – the worst performance since records began in 1995 – reflecting the impact of government lockdowns and shifting consumer spending trends.

A vast pandemic leads to a rounding error change in retail sales. Gosh, that is terrible, isn’t it?

Not the answer being looked for

Can you answer Manolo Makaveli’s question: “What are the limitations of market intelligence?”

The average IQ in a population is, by definition, 100. Half the people are more stupid than that. Markets are, therefore, not notably intelligent.

Their saving grace is that it’s the more stupid half that always ends up occupying the decision making positions in any non-market system.