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Economics

Ed is just so up with it, isn’t he?

Davey criticised supermarkets for raking in millions of pounds in profits while food inflation has soared. Large grocers have reported a drop in profits in recent weeks, but experts have said more could be done to help shoppers struggling with rising prices.

They’re profiteering as profits fall then……sigh.

So, err, greedflation, right?

Britain’s second largest supermarket has reported a fall in annual pre-tax profits as it revealed that it had spent more than £560 million on keeping its prices low over the past two years.

Yeah, right:

Yet profits, not wages and salaries, are the main culprit here. Globally, those companies producing essentials have been doing enormously well from soaring prices. The record profits of the fossil fuel companies are notorious. But research by the union Unite has shown that the profits of the four largest agribusinesses globally, less well-known names like Cargill and ADM, rose 255% from 2019 to 2021.

Those soaring prices have then been fed down the supply chain into domestic profiteering. The big three UK supermarkets – Asda, Tesco, and Sainsbury – doubled their profits over the same time period.

Sigh.

My word, absolute shocker!

Parents of private school pupils switching to state education over 19 per cent fee increase
Governors announce the highest rise in fees in decades for the next academic year as they pass on increases in energy, food and wage costs

Prices change, behaviour changes.

If only we could have some science that would explore the implications of this extraordinary finding. Like, tax the rich more, will they stay around to be taxed? Tax high earners more will they work as hard to earn as much? Raise the minimum wage and will employers employ as much labour?

There are just so many interesting corollaries, aren’t there?

Well, it’s true, yes

British families must “accept that they’re worse off” after a surge in inflation and stop pushing for a pay rise, a senior Bank of England official has said.

Huw Pill, the Bank’s chief economist, warned that rising prices have made the whole country poorer and said that attempts to bid up wages were merely prolonging the agony.

Not politic, but true.

Slavery bollocks

They are many. Records from the 1830s show that 46,000 individuals, including two of my three-times great-grandfathers, received British governmental compensation for “giving up their slaves” at abolition, which was completed in 1838. Some put the money into land, or into shares in railways and the other tech startups of the British industrial revolution. That huge injection of cash seeded new fortunes: some of those families remain among the richest and most powerful in our country today.

It wasn’t additional capital. It was a change in the form of it. Any of those people could have sold their slaves whenever, then invested in the new businesses. So, that they got cash which they invested is not a result of the end of slavery.

Wasn’t the ANC such a good idea

How rolling power cuts have brought Cape Town – and South Africa – to its knees
An escalating energy crisis leaves Africa’s most industrialised nation with daily electricity rationing to stop the national grid collapsing

You know, nationalised industries work so well. And putting the Marxists in charge of them was even better.

One of the joys of the capitalist and free market system is that you only get paid – only make a profit – when you actually deliver the goods being paid for. Because that’s the only time you get paid, see?

Gross National Happiness as a measure of the economy

Among the world’s most isolated nations, Bhutan is known for its sweeping vistas, mountaintop monasteries and a Gross National Happiness Index that prioritizes wellbeing over economic growth.

Isn’t that lovely The clever people, with the Rolls Royce (OK, thoroughbred yak) minds will tell everyone how they are to be happy and what they may have to be happy.

Cool!

The Tiny Kingdom Of Bhutan Secretly Held Millions Of Dollars In Cryptocurrency

Ah.

According to court documents reviewed by Forbes, Bhutan’s $2.9 billion sovereign investment arm was a customer of bankrupt crypto lenders BlockFi and Celsius,

Hmm…..maybe putting it all in the hands of the Sage of Thimphu wasn’t all that good an idea then….

Why is John Rawls coopted by progressives?

First, if we really didn’t know who we would be, we would want to protect our “basic liberties”, including personal freedoms such as freedom of speech, religion and sexuality, but also the political freedoms we need to play a genuinely equal part in collective decision-making.

Second, in addition to ensuring “fair equality of opportunity”, we would want to organise our economy so that the least well off are better off than under any alternative system (Rawls called this the “difference principle”). From this perspective, higher pay for some can be justified as an incentive to work, study or innovate, but only if this ultimately ends up benefiting those who have less – not just by a little, but as much as possible.

That’s therefore classical liberalism – Hayek and Friedman all over again. It’s not that there’s anything wrong with it, it’s just what the fuck is new with it?

Very cute

Yet economists say there is a good chance the IMF’s numbers are already out of date.

“The problem with the IMF forecasts is that they tend to be quite out of date when they come out,” says Andrew Goodwin, chief UK economist of Oxford Economics.

“If you think about forecasters like ourselves, we’re constantly updating our forecasts based on the data that’s coming out. The IMF generally has to draw a line quite a long way before the time they’re released and take the data as it was then.”

Well, yes. As an argument not to take the free stuff from government but buy our private sector produce instead that works very well. The problem here is that macroeconomic forecasts are near always total toss anyway, making private and later no more use than public and earlier.

Terrors, eh, terrors

It comes from a place some might not welcome: the EU. For decades, Brussels has been levelling up Europe, with structural funds – currently more than €50bn (£44bn) a year – boosting poorer regions. This brings results: an extra half a percentage point on economic growth in those regions. But while average incomes rose, so did income inequality within the regions. Better-off households received bigger income boosts, because pay rose most for more educated workers.

So, back to that old question. Would you prefer to live in a generally richer society or one that is more equal? Here, as so often, we find that it is a choice. A both richer and also more equal society isn’t one of the available options.

Poorer and more equal is.

We can even test what people, on average, prefer. The migration flows are to richer countries irregardless of the inequality of the society once someone gets there.

We can also discuss it through the veil of ignorance. A preference for being born into a richer society or a more equal one? Again, migration flows seem to indicate the choice is richer.

So, classical liberalism it is then, the one socioeconomic system that makes places richer faster. Our useful options run from something like Hong Kong’s laissez faire through to Swedish style social democracy. We can, like the Swedes, tax the top off the economic froth to redistribute, or like Hong Kong not do so. But – unlike the UK, US and many other places – we cannot not have that classically liberal free market economy humming along underneath.

Or, as we could put it, there are economic facts and then there are sociopolitical choices. Free markets, capitalism, those are facts. Tax rates and redistribution are choices.

How many cases of Housemaid’s Knee does a GP see these days?

Larry Elliott:

with echoes of an essay John Maynard Keynes wrote in 1930, predicting that within a 100 years, increased prosperity would allow people to work 15-hour weeks.

Keynes’s vision has yet to materialise,

Running a household has gone from 50-60 hours a week to perhaps 10 to 15 these days. There, we’re done.

It’s just it’s the birds’ work that went away.

We can even do a little test here. Because, damnit, he mentions the charwoman in the essay. So, find a GP. “How many cases of Housemaid’s Knee do you see these days? And how many not caused by sporting injuries?”

Seriously, we already did this shit.

Lawson was obviously and clearly correct too

Lawson set out his beliefs in his Mais lecture of 1984. In a speech that turned the postwar economic consensus on its head, Margaret Thatcher’s second chancellor said that traditionally macroeconomic policy (the big picture stuff involving interest rates and tax) had been designed to deliver growth and full employment, while micro-economic policy (the nitty-gritty stuff such as regulation and price controls) had been used to keep inflation in check.

He argued the reverse should be the case: the job of macroeconomic policy was to keep inflation in check while micro-economic policy should be used to boost growth and employment.

Sort out the basic rules about markets and incentives and just make sure the big picture doesn’t go too far off the rails. Job done.

Jeebus, really, no, Jeebus onna Pogo Stick

You’ve got to start the analysis with reality:

Everything must go! That, at least, was the Herbert Hoover approach to a banking crisis. In 1929 he was famously advised by his Treasury secretary Andrew Mellon to “liquidate labour, liquidate stocks, liquidate the farmers, liquidate real estate” to purge the system. The ensuing Great Depression and the rampant poverty it unleashed is the reason why, nowadays, with the brief exception of Lehman’s in 2008, we don’t let banks collapse. It is also why, 15 years after the last financial crisis and thousands of pages of legislation later, we are still bailing out banks.

But Hoover didn’t follow Mellon’s advice.

Using the wrong example to gain the wrong conclusion just isn’t going to lead us to good policy now, is it?

No, no, they don’t

Life-expectancy gap: babies in wealthiest areas will live 12 years longer

People who die in wealthy areas die 12 years later, on average, than people who die in poor areas.

That’s what we actually measure – age and place of birth. There is no linkage – none, never, anywhere – in the system between place of birth and age at death.

Lifespans are undoubtedly influenced by wealth. But how much migration is there over a lifetime?

Idiots

In the 1970s, the average income was the equivalent of roughly $75,000 by today’s standards, but inflation means that salary just doesn’t cut it

The equivalent part there is already taking account of inflation. Idiots.

Missing the point

There’s life yet in the John Lewis model
Loyalty is an underrated business asset, which is why other companies might do well to extend the idea of employee ownership

Nothing wrong with employee ownership at all. It just has its advantages and disadvantages just like anything else in this life.

The disadvantage being no access to outside capital. Obviously, that’s also the point but there it is. If there are losses then they have to fall upon the workers – there ain’t anyone else around to carry them.

As long as we all understand that then super…….

So, here’s the question

The figure Desmond holds in his head is $177bn. That’s the annual cost of taking those millions of people in America living below the poverty line – without a secure roof over their head or enough to eat or keep warm and access healthcare – and getting them above it.

How is he calculating that? Before or after the hundreds of billions already spent each year?

Matthew Desmond: ‘The poverty rate in America and the UK should be zero – and I think we can get there’

Of course, it is zero when we use absolute poverty as our measure. So, what other measure is he going to insist upon using?