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March 05, 2021


Jonathan Hallam

“ It would be good economics as well as good politics for Labour to drive a wedge between productive business and entrepreneurs,”

Is this as intended? Unproductive, surely? Or rentiers instead of entrepreneurs?


Thanks for spotting. Yes it should. Correction made.


«The left should be pointing out that the Tories’ class interests are part of our economic problem and cannot be the solution to it»

Many people on the left and even the centre and even the non-rentier right point that out already, but New New Labour's Keir Starmer the LibDem's Ed Davey are not pointing that out because they are targeting the voters with the same class interests as the Conservatives.


If I spend an hour to make $100 in a quick options market scalp, I'm productive but it doesn't show up in your measures. Economists are clueless about how the world really works ...


rsm: your version of productive is my definition of parasite


@JohnM. Lol! Adair Turner referred to it as 'socially useless', but I prefer your definition tbh. ;)


John M: At least it's nonviolent, which is more than I can say for "productive" activities such as logging, mining, cattle ranching, slaughterhouses, vivisection, manufacturing weapons, testing chemicals on animals, etc.

And Adair Turner is my definition of an effete pompous dandy who does more harm than good with myth-based models.

How is Chris Dillow's job any more socially useful than day trading?

Jan Wiklund

A land value tax would be good for another thing too: It will disincentive keeping expensive land without building on it.

There is in the whole western world huge urban areas with a very low building volume per land area. One can say that wealthy people monopolize valuable land in cities, crowding out poorer people to the peripheries. And while it sometimes is attractive for wealthy people to live in peripheries it is always bad for poor people.

Heavy taxing sparsely exploited urban land would be an incentive to build - perhaps causing housing prices to go down according to the law of supply and demand.


March 2, 2021

The budget should create a balanced recovery, but instead it will be about the deficit

Some obvious points first. We are still in a pandemic, and so support measures for employees, the self-employed and businesses should continue. The chancellor should also, belatedly, increase sick pay substantially. The success of the government’s COVID strategy will depend on persuading those who otherwise cannot afford to isolate to do so.

The following remarks are based on the assumption that the government’s strategy works, and there is no return to NHS crises and lockdowns. Contrary to the perception you get from the media, encouraged by the government, it is far from certain that their strategy will work as planned. In addition, what I’m proposing here is what a Conservative Chancellor could conceivably do, rather than the budget I would enact if I was Chancellor. For reasons I will give later, it is not the budget I expect to see.

The overall macroeconomic context is for once fairly straightforward. Most academic economists, as well as the IMF and OECD, agree that you use fiscal stimulus (i.e. tax cuts or spending increases) to get you out of recessions, leaving monetary policy to control inflation outwith recessions. That means this budget should be all about ensuring a balanced recovery and not at all about fiscal consolidation. The last ‘recovery’ we had from a major recession was in 2010, when George Osborne thought the priority was to reduce the deficit. The result was a disaster, as this chart shows.

https://1.bp.blogspot.com/-TJGED2OejCM/YD0eyvPqpvI/AAAAAAAAEIY/PytqZdcl7S8hAoPxYYhI-8KNmS8YKhYZwCLcBGAsYHQ/w640-h370/GDP%2Bper%2Bhead.jpg ...

-- Simon Wren-Lewis


"Heavy taxing sparsely exploited urban land would be an incentive to build - perhaps causing housing prices to go down according to the law of supply and demand."

What if you could live for free on public land in cities, and government bought back more private land (such as failing malls) to allow usufruct on it?


The point about Labour and the so-called left, is that the leaders of Labour and the left allowed the false ruining of Jeremy Corbyn and what remains is Keir Starmer and Tory-lite.

At least try to understand what the betrayal of Corbyn and the ideas of a Corbyn have meant. Keir is Boris-lite.

Jan Wiklund

rsm: First you have to build on it. It is not that simple, if you aren't satisfied with shacks. You must have an organization with a lot of skilled professionals in it, at least in big cities.

Of course, that could be fixed. But would be a lot more technically difficult than raising a tax.


Can't think of a budget that has been so roundly criticised in my time from all sides. The deficit is too big/not big enough. He has raised taxes too much/not enough. He has stoked inflation/killed the boom.

The next six months are more uncertain economically than any time I can remember. We don't know how much of a boom there will be on lifting lockdown. We don't know where EU trade will be once the full agreement kicks in. We don't know if we will be facing high unemployment or a labour shortage. This budget was simply about buying time.


The next six months are more uncertain economically than any time I can remember....

[ The question, I think, is now and if the economy is in recession now, then act now. If there is marked growth in the coming months, there is ample time to be conservative in policy. ]


The next six months are more uncertain economically than any time I can remember....

[ Then at least why not look to work closely with China, since we know that China is growing strongly. I do not understand why we are playing the US game on China at our expense. ]



January 30, 2018

Interest Rate on 10-Year United Kingdom Government Bonds, 2007-2020

[ The UK needs to be spending now, since the cost of spending is insignificant. ]

James Charles

"If I spend an hour to make $100 in a quick options market scalp, I'm productive but it doesn't show up in your measures."
Hasn't 'someone' lost $100?
So 'this' 'nets out' to zero?


The interview of the Suxxexes was devastating for me. There is a British "elite" that is beyond socially disappointing, and I need to remember that. No wonder Jeremy Corbyn was ruined by an elite so readily. Look what was done to Meghan....

Jan Wiklund

James Charles: Perhaps the amount of dollars would go up, as they did before the crash. But there would be no more things to buy for them.

It appears that some people make fetishes of money.


Jan Wiklund said: "if you aren't satisfied with shacks." But a lot of us are. I want to build temporary natural shelters on public land and roam between them. There is plenty of public land in cities, but policies prevent me from camping legally. Those policies are harmful and should change.

@James Charles: No, options can combine to make all counterparties money. The market maker I sold my call to would have hedged by buying stock when I bought the call, so as the stock went up they booked a profit even as I did ...

@ Jan again, who said: "there would be no more things to buy for them." Financial goods are infinite. The 2008 and 2020 crashes were not due to physical scarcity but to an artificial scarcity of liquidity in the former case, and policies shutting down economies in the latter case. In both cases, central banks supplied liquidity without limit ("whatever it takes").


In a previous thread you asked what is wrong with a rising stock market?

This article attempts to answer your question.


"Government power can fix the future, leading to a world where standard economic thought looks like nonsense. Artificial moral hazards can severely distort price behaviour. Already an irrational process, price determination can become absurd where the government commits to saving bankers, no matter what.

We know this; it is no secret. However, moral hazards in financial markets are abundant today. Indeed, in the US, the moral hazard created by the government is so well known that it has an ironic nickname: the ‘Greenspan Put’.¹³ In essence, the Greenspan Put is the Fed’s unbroken promise to save financial markets whenever a crisis hits, through measures like bailouts, QE and interest rate cuts."


"The government intervention that has produced this dangerous mode of moral hazard has completely changed the logic underlying asset pricing."

Casino Capitalism for the rich, austerity for the poor.

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