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January 26, 2012


 Luis Enrique

I like this point: some people see some varieties of adjustment cost (sorry, you have to lose your job in interests of efficiency) as perfectly acceptable, and other varieties of adjustment cost (sorry, you have to have your six-figure salary capped) as outrageous and utterly unacceptable.


"John McDonnell objects thusly to the EU-India Free Trade Agreement"

It is amazing we have an economy which works at all with idiots like this in parliament. If today's left had been in power at the time of the industrial revolution, they would have banned it.


The big flaw in Jonathan's defence of his work is that he doesn't quantify how long "the short term" is.

What we know from the plight of graduates who enter the labour market during a recession is that the short term doesn't have to be that long to put people at a permanent disadvantage in earning power.

So, despite his hand-waving there are real effects at work that he refuses to study.

john b

There's also a point to be made here about the ease of bearing adjustment costs. If a graduate in England can't get a job for a couple of years, that's frustrating for him. If a poverty-line vendor in India loses his job, then he's liable to die in a ditch.


So it's acceptable for the government to use hapless tenants as pawns in pursuit of getting landlords to lower their rents? Not according to Kant, it isn't. Why not re-establish the old system of rent controls where tenants could apply to the local authority to have their rant "fair rented"? Once a fair rent had been determined the landlord would not be permitted to charge more.

Account Deleted

What you've highlighted is essentially confimation bias - i.e. we proceed from a belief that a certain course of action should be pursued (or avoided) and then search for evidence to support our belief.

This is typical of most cost/benefit analyses, which are more correctly labelled justifications. The impact of business consultancy culture on government and think-tanks over the last 50 years has been pernicious in this regard.

Every day businesses make decisions about large amounts of money (and people's jobs) based on cost/benefit studies lacking any empirical rigour. It's not just "hand-waving", it's voodoo. In extreme examples (e.g. financial trading), we elevate gut (and risk-taking) over brain and celebrate the fact.

The John Lewis case is interesting because one's reaction to the proposal is largely determined by the emotive language: "... that shareholders be expropriated and their stakes transferred to workers."

I'm sure Nick Clegg could come up with a less threatening form of words.

Neil Harding

The benefit cap will allow landlords to increase rent as families split up to avoid the cap thereby increasing demand for rented accommodation.

Neil Harding

And forgot to add, increasing costs on the taxpayer.

David Hurley

The government should have to do some serious work otherwise people will through them out of the seats.

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