When we were little my siblings and I would accompany my mother as she went from greengrocer to butcher to grocer in those pre-supermarket days. Often the first place she visited in the daily round would be the local bank, National Westminster as I recall, where she would queue to write a cheque “to cash”. (For thus it was, my children, when cash machines and internet payments were as yet unknown.) Boring though it was listening to all those grown-up conversations, at least I was learning about how the world worked.
One day my parents were moaning about lack of money. I was tired of their obtuseness in the face of the obvious. I stamped my little foot and said, “If you haven’t got enough money, go to the bank and get some more.”
What are you laughing at? I’ll have you know that my youthful economic ideas have been taken up by our government in waiting:
Labour will promise to increase spending on infrastructure and public services, the script says. Among the key pledges are a £10-an-hour living wage, a national investment bank to create £500bn to fund capital projects and infrastructure, and a guarantee on the triple lock for pensions.
Tim Newman does a fine job of fisking at length an article by Rachel Nuwer on the BBC (natch!) titled: How western civilisation could collapse.
Tim is not impressed…
Here’s my suggestion: allow British citizens to keep their money in their pockets instead of forcing them to shell out £3bn per year for the BBC to publish garbage like this. A more humane gesture I cannot imagine at this juncture.
Read the whole thing.
I’m not joking. I wrote last year about how many of the international bureaucracies are blindly asserting that higher taxes are pro-growth because government supposedly will productively “invest” any additional revenue. And this reflexive agitation for higher fiscal burdens has been very prevalent this week in New York City. It’s unclear whether participants actually believe their own rhetoric. I’ve shared with some of the folks the empirical data showing the western world became rich in the 1800s when fiscal burdens were very modest. But I’m not expecting any miraculous breakthroughs in economic understanding.
– Daniel Mitchell
…of backwardness, protectionism and cronyism. Sorry, Italy, I love you in so many ways but this is just Third World:
The International Business Times reports, “Italy court bans Uber across the country over unfair competition for traditional taxis”
An Italian court banned the Uber app across the country on Friday ruling that it contributed unfair competition to traditional taxis. In a court ruling, a Rome judge upheld a complaint filed by Italy’s major traditional taxi associations, preventing Uber from using its Black, Lux, Suv, XL, Select and Van services from operating within the country.
I liked this statement by Julian Jessop, chief economist (recently appointed) of the Institute of Economic Affairs, the classical liberal think tank in the UK:
“It’s disappointing that the decision to convert existing EU laws is again being justified in terms of continuity and certainty. Instead, Brexit should provide an opportunity to reduce the burden of regulation on UK households and firms alike.
“It’s also disappointing that the default option in the event of no agreement is being framed in terms of the most pessimistic WTO scenario, ignoring any benefits that might come from unilateral free trade. The UK will have the opportunity to lower barriers that prevent our consumers and businesses from accessing the best and cheapest goods and services, wherever they come from. What’s more, we should consider doing so even if other countries – including the rest of the EU – continue to embrace protectionism.
“However, it’s welcome the commitment to a quick agreement on reciprocal rights for people from the rest of the EU already living and working here and for UK citizens on the continent. Now that Article 50 has been triggered there is no longer any excuse for either side to delay. Indeed, this will be an early test of the willingness of politicians in the rest of the EU to put the interests of ordinary people above their own narrow political projects.”
The facts are unambiguous: despite public perceptions to the contrary, extreme poverty has declined significantly, to the point where its end may actually be in sight. So next time you hear someone bemoaning a supposed rise in world poverty, encourage them to have a look at the evidence for themselves.
– Chelsea Follet
Debt is the Fed’s basic problem, and it doesn’t know how high rates can go without triggering a financial crisis. And even if the Fed could make an assessment for America, there is the knock-on effect of the Fed’s interest rate policy on foreign dollar borrowers, as well as on the Eurozone and Japan. China has indirectly added to the West’s problems by being the largest component of global economic growth. Her massive credit expansion is contributing to higher interest rates elsewhere by financing imports, commodity stockpiles and driving up prices. It is the lack of ability of the ECB and the Fed to raise interest rates sufficiently to counter higher rates of price inflation that’s becoming the most pressing challenge.
– Alasdair MacLeod
I like those elongated cakes with raisins in them referred to on the package as “finger madeleines with raisins”. A few days ago I purchased another stash of them, from the Afghan-run corner shop nearest to me.
They looked like this:
Sorry about the strange blue reflections of something blue in the transparent but shiny packaging, but it is important that you realise that this is a photo of these finger madeleines before I opened them.
Same sized package. Same price. But, six empty spaces where there used to be six finger madeleines. Twenty four finger madeleines instead of thirty finger madeleines.
We are seeing quite a lot of this in the UK just now. Soon the packages and/or the prices will change, but meanwhile, the quickest way to adapt in the short run is just to reduce the amount in the package.
Brexit is not proving to be an economic catastrophe, and I remain very optimistic about it in the longer run, that being why I voted for it. But it is proving something of a dislocation in the short run, if only because the sort of people whose job it was to foresee it mostly did not foresee it. I don’t blame them for this. I did not foresee Brexit either. I merely voted for it.
For decades, often in word but always in deed, politicians have told voters that government debt didn’t matter. We, and many economists, disagree. Yet even if the politicians were right, the absence of available creditors would be an insurmountable problem—were it not for the Federal Reserve. But when the Federal Reserve acts as the lender of last resort, unpleasant realities follow. Because, as everyone should be keenly aware, the Fed simply prints the money it loans.
A century of arguing about how much to increase spending has left us with a debt that dwarfs the annual economic output of the planet.
A Fed loan devalues every dollar already in circulation, from those in people’s savings accounts to those in their pockets. The result is inflation, which is, in essence, a tax on frugal savers to fund a spendthrift government.
– Antony Davies & James Harrigan
If you haven’t already partaken of this bit of video, then you really should. It lasts just under twenty minutes.
Tim Harford is speaking, in 2011, at some gathering of the clever and the smug, but it’s better than that. The name H. R. McMaster comes up several times, and this is, among other things, a very good quick way to learn why McMaster’s appointment by President Trump as his National Security Adviser might turn out to be such a very good one. It certainly explains why this appointment is already so very popular. You don’t have to believe that the USA rearranging matters in faraway countries is always or even ever a wise policy to get the points that Harford is making.
Harford also mentions, in passing, Hayek. From this, you may guess that this is a talk about decentralised decision making, and how on the spot knowledge, again and again, trumps the wisdom of the Central Committee or the High Command. If that is your guess, you would not be wrong.
The story that Harford tells reminds me of another transformation of policy that happened in China, and gave rise to what is now called the Chinese economic miracle. This miracle is now starting to look rather less miraculous, but it was still a massive improvement over what preceded it. That change too is usually attributed to a change of top leadership and of its top-down policies, but that policy also, I seem to recall reading, began at the bottom of the chain of command and in spite of the chain of command.
I even seem to recall having linked to stuff about that from here. Yes, here is that posting, about teeth of all things, and here is the article at Planet Money that the posting linked to. It’s the same story as Harford tells in the above-linked-to video.
The result of [the ‘sharing economy] is that in many ways, private tech companies have ended subsidising new forms of public services, for the public good.
That ought to make them the darlings of the Left. Yet unfortunately, the Left just can’t rid itself of its urge to regulate, legislate and tax. And in their efforts to thwart consumer freedom, they have a useful ally in the shape of a legal framework which was developed for the analogue age.
Uber, for example, is the poster child of the sharing economy. Yet 2017 is make or break year for its European ambitions – and at its core is an age-old political battle of Left versus Right.
This battle isn’t on the streets of San Francisco or London; Uber has already won over consumers. Instead, the fight is moving to a soulless courtroom in Luxembourg. The question is whether the company is a technology or a transport company; and the answer is incredibly complex.
– Daniel Dalton
Below is an interesting riposte to the idea, entertained even by pro-market folk such as Kevin Dowd in a recent study of the 2008 banking crash, that a way to make banks more prudent in lending and savings policy would include weakening limited liability of the shareholders and even removing, in whole or in part, banks from listed markets, returning them to more like partnerships, so that we come back to some purer, saner age. It is not quite so simple. The article is from Tim Worstall:
But we can go one level deeper into this as well. It’s common enough to hear that the crash of 2008 was all about the quite despicable idea of shareholder capitalism. That the hunger for profits among the capitalists is what drove us all off the cliff. This is not so. Just as many, if not more, building societies went bust in the crash as did banks. The Derbyshire Building Society, Chesham, Cheshire, Barnsley, Scarborough….
Capitalists have a use. As shareholders, they provide the capital. And if things go kaboom then it’s they who lose their money. Plus, in the case of a banking organisation, what tends to drive it off the cliff is not the capitalist lust for profits: it’s bad banking.
In the US, meanwhile, Donald Trump has won some free market points – for now – by promising to reform, and hopefully roll back, the monstrosity that is the Dodd-Frank legislation of 2011.