If that sounds familiar, it’s because this amounts to Mr. Corbyn’s People’s Quantitative Easing concept in all but name. The idea much derided last year is becoming so mainstream that even a leadership candidate for Britain’s Conservative Party, Stephen Crabb, could recently propose a £100 billion ($130 billion) public-works investment fund that wasn’t so different from PQE. Mr. Corbyn’s PQE is essentially indistinguishable from the suggested 50-year Japanese bonds.
This probably says more about the central bankers’ desperation than Mr. Corbyn’s prescience. With government spending and borrowing constrained by slow growth and high debt, and supply-side reforms still politically far off in many economies, the pressure is mounting on central bankers to act as magicians pulling rabbits out of their hats. The longer this continues, the deeper they’ll have to rummage around for the next rabbit. It’s enough to make one wonder what will be the next extreme idea to follow the journey from crank to orthodoxy.
– John Phelan
For those that already have, Mark Carney is the gift that keeps on giving. Borrowed imprudently and struggling to make those interest payments ? Worry not; the Bank of England has your back. For those that don’t have, the Bank of England is taking away your chance of ever realistically saving anything, now that interest rates have been driven down to new historic lows of 0.25%, and may go lower yet. For the asset-rich, for the 1%, for property speculators, and for zombie companies and banks, Carney is your man. For the asset poor, or for savers, or pensioners, or insurance companies, or pension funds, the Bank of England has morphed from being anti-inflationary fireman to monetary arsonist.
– Tim Price
Boy, the Guardian‘s commenters are not happy with this offering: “The secret life of a trade union employee: I do little but the benefits are incredible”. My respects to the paper for printing it. For all its faults the Guardian does present a variety of opinion.
Many Libertarians and like-minded folk are reflexively against trade unions. I am not. I believe that any two people, or any two groups of people, should be free to come up with whatever deal suits them, and it is nobody else’s business to tell them they cannot operate under those conditions. A single union workplace? Fine, so long as you do not impose it by force or threats. (A comment from Laird below prompts me to add that perhaps the most common sort of imposition by force is the use of law. Neither employers nor unions need hire goons any more – they hire legislators instead.) Free competition between unions will in the long term raise the general standard, just as it does between companies or nations. If they are wise, trade unions will not simply compete to provide the highest wages or the best services for their members. They should also compete to promote the prosperity of the industries in which their members work. Militant trade unions have killed whole industries – ask the old men who used to be printers or dockers in the 1970’s – and smart workers know this. It looks like the anonymous writer of this piece is dimly aware that the union for which he or she works is beginning to pay the price for featherbedding:
There are disadvantages to these perks though, as nobody feels they can leave until they retire or are offered a fantastic redundancy package. Even that doesn’t work sometimes, as people realise they are on to such a good thing that they refuse the redundancy offer and stay here to do little more than open the post for the rest of their working lives, while still picking up the same salary.
As a result we have an ageing workforce with no fresh ideas. The activists are computer illiterate, preferring to print out emails instead of send them on electronically. I was once scoffed at for suggesting that we try to have a paperless office instead of killing rainforests. “We have too many old members. They like to fill out forms,” I was told.
The Bank of England just cut interest rates to 0.25%, announced it will buy 60bn government bonds and 10bn corporate bonds, and reduced its growth predictions (for what they are worth) from 2.3% to 0.8%. There is talk of reducing the rate of VAT. There is talk of reducing corporation tax, which incidentally worries Northern Ireland pundits because a plan to do the same thing there might lose some of its advantage.
I am not sure whether to be happy or sad. I will stick to happy for now, because I am an unrelenting optimist. Could Brexit panic the establishment into turning Britain into Chris Patten’s Hong Kong to save the economy?
Edit: I should have said John Copperthwaite, not Chris Patten.
“The advocates of the minimum wage and its periodic boosting reply that all this is scare talk and that minimum wage rates do not and never have caused any unemployment. The proper riposte is to raise them one better; all right, if the minimum wage is such a wonderful anti-poverty measure, and can have no unemployment-raising effects, why are you such pikers? Why you are helping the working poor by such piddling amounts? Why stop at $4.55 an hour? Why not $10 an hour? $100? $1,000?”
– Murray Rothbard.
Has the Bank of England finished its campaign of driving down UK base rates and forcibly impoverishing savers ? On the evidence of last week’s Radio 4 programme ‘How low can rates go ?’ hosted by my dear and highly valued friend Martin Wolf, the answer is unclear. But a host of government-appointed technocrats from around the world, including Mr. Kuroda, were wheeled out in defence of a monetary policy that severed any ties it might once have had with the real world quite some time ago. (Victor Hill, reviewing the programme, calls it ‘Alice in Wonderland’ economics.)
– Tim Price writing about Monetary Terrorism.
In June, the Sun newspaper in the UK claimed that a factory in Sri Lanka that produces a line of clothing for a popular singer Beyonce is using sweatshop “slaves.” The report attracted little interest in Sri Lanka, partly because attention was more focused on the devastating floods that hit the island. But perhaps the report also failed to make waves because it simply did not ring true; the mainstream apparel factories in Sri Lanka are seen as responsible and respected employers in the formal sector.
– Ravi Ratnasabapathy, writing an article called Why Sri Lankans want to work in Beyonce’s “sweatshop”
However I think Ratnasabapathy might overestimate both the wits and honesty of the people who criticise such forms of employment in the Third World.
Attempts to stabilise the economy have frustrated capitalism’s creative-destructive tendencies. Depressed economies need disrupting, not preserving
– Phil Mullan
Via the Marginal Revolution blog, which has lots of useful and eye-catching facts, as well as more high-minded economics stuff, is this bar-chart from “Ninja Economics” showing that, according to presumably US figures, working behind a bar carries more risk of death than being a police officer.
The most dangerous occupation is that of a logger, followed by a fisher and then pilot/flight engineer.
Many of the jobs involve working outdoors with heavy machinery, in areas such as mining, or in occupations such as roofing, maintenance, agriculture and ranching. Somehow, I don’t think the “snowflake” generation is interested, but those who are interested in Mike Rowe’s “dirty jobs” might be.
Misreporting Venezuela’s economy – Mark Weisbrot, writing for the Guardian in September 2010
Venezuela’s devaluation doom-mongers – Mark Weisbrot, writing for the Guardian in March 2013
Sorry, Venezuela haters: this economy is not the Greece of Latin America – Mark Weisbrot, writing for the Guardian in November 2013
For some reason Mr Weisbrot has not written much for the Guardian comment pages on the subject of Venezuela recently, but to its credit the Guardian has covered developments in that country in the news pages:
‘At least 35,000’ Venezuelans cross border to Colombia to buy food and medicine – a story from the Associated Press appearing in the Guardian on 17 July 2016.
Tens of thousands of Venezuelans poured into neighbouring Colombia to buy food and medicine on Saturday after authorities briefly opened the border that has been closed for almost a year.
A similar measure last week led to dramatic scenes of the elderly and mothers storming Colombian supermarkets and highlighted how daily life has deteriorated for millions in Venezuela, where the economy has been in a freefall since the 2014 crash in oil prices.
I have been banging on for weeks to anyone who will listen that all this talk about the importance of getting good trade deals is nonsense. All that is needed is unilateral free trade.
Just now I stumbled upon an article in the Guardian, of all places, discussing just that. Even talking about “the unilateral free trade option”.
A group called Economists for Brexit seem to have got it in the paper. Jolly good work!
When I started writing this posting, the invaluable Guido Fawkes had, at the top of his invaluable ongoing list of “seen elsewhere” items, a link to a Conservative Home piece by David Davis MP, with a long title on top of it which includes the words A Brexit economic strategy for Britain.
It deserves to be quoted at length, so I will now do that:
… [L]eaving the EU gives us back control of our trade policy, and gives us the opportunity to maximise returns from free trade.
Because any deals currently settled are obtained by finding a 28 nation compromise, the EU is clumsy at negotiating free trade deals. That is why we currently only have trade deals with two of our top ten non-EU trading partners. This is incredibly important to us, as about 60 per cent of our trade is with the non-EU world. In fact, we sell as much to non-EU countries with which we have no trade agreements as we do to the EU.
The first order of business is to put that right. As the amicable statements coming from the US, Australia, China and India show, these countries are as keen to knock down trade barriers as we are.
Single countries, with the ability to be flexible and focussed, negotiate trade deals far more quickly than large trade blocs. For example, South Korea negotiated a deal with the US in a single year, and with India, which is notoriously difficult, within three years. Chile was even faster, negotiating trade deals with China, Australia and Canada in under a year.
The EU, by comparison, takes more than six years to negotiate trade deals; the deals which would most benefit us, such as those with Canada or the US, take even longer. And without the often conflicting requirements of 28 different countries to consider, deals negotiated by single countries tend to be broader and have more favourable terms on matters that are important to us, such as services.
So be under no doubt: we can do deals with our trading partners, and we can do them quickly. I would expect the new Prime Minister on September 9th to immediately trigger a large round of global trade deals with all our most favoured trade partners. I would expect that the negotiation phase of most of them to be concluded within between 12 and 24 months.
So within two years, before the negotiation with the EU is likely to be complete, and therefore before anything material has changed, we can negotiate a free trade area massively larger than the EU. Trade deals with the US and China alone will give us a trade area almost twice the size of the EU, and of course we will also be seeking deals with Hong Kong, Canada, Australia, India, Japan, the UAE, Indonesia – and many others.
So much for the “jump-start” bit. Now for my own additional argument that this could well happen very quickly.
→ Continue reading: How Brexit could jump-start the British economy – and do it very quickly