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May 26, 2023


Jan Wiklund

On the other hand those who fail to improve in the face of greater competition are knocked out entirely and become very poor, and probably less able to improve afterwards than if they had protected themselves in time against competition.

That was not only what happened to the European colonies but also to Sout America after its independence. See for example Jeffrey Williamson: Trade and poverty, 2013.

There is, however, as for example Ha-Joon Chang, Erik Reinert and Alice Amsden have insisted, good protectionism and bad protectionism. Good protectionism can be exemplified by Japan in the 20th century, bad by Latin America.


Rachel Reeves is selling snake oil (as might be expected).

You do not start as a conductor of an orchestra by slipping on a straight jacket, waving your arms is a necessary to direct activity.

This is what Reeves has done, with her fiscal responsibility. Also how does gender impact on the job especially if you can self-identify as female?


"58 per cent of the 2,000 people surveyed in mid May think nothing in the country works any more or that 76 per cent believe things are worse than they were in the past, given the sharp squeeze on living standards people are experiencing preceded a decade of austerity. But some of the other data is startling and personal. Forty-five per cent of Britons don’t think they are living up to their potential and 48 per cent feel they no longer have much control over the direction of their lives. Almost two-thirds (63 per cent) think the social contract is broken and 57 per cent think Britain is preparing worse for the future than most other countries."


"His bigger challenge will be to convince some chronically disappointed voters that change is even possible."

Without changing anything substantial. Fiscal Responsibility!

Mummy (Nurse) Reeves will make you feel safe by going green!

"This must mean expanding affordable childcare, helping women get back into the workforce.

Fixing Britain’s struggling health service, to get millions off the sick list.

Making sure we have the right employment support and reforms to support getting more people back into work.

And improving vocational education and skills training to equip people for the jobs of the future."

More like Nurse Ratchet - eat your greens nurse knows best. Thatcher (a biological woman I believe, so much for the glass ceiling) would approve, no, be proud, just as she was of Tony Blair.

The economy is making people ill. and the health services can't fix them.

What Cory Docorow calls the crapification of life.

Of course Chris is wrong, as he is focusing on metrics not mechanisms.

What does productivity in retail even mean? Closing shops in the rust belt and opening them in London where there is more disposable income and more footfall (and more Government spending)?


""Whether it's the knowledge workers in internet businesses or the blue-collar workers at delivery platforms - both employ millions of workers, and many are most likely working 996 hours," Dr Song Zhaoli, of the National University of Singapore, said."

Back to Reeves:
"That means cyber amongst the former coal and steel communities of South Wales, robotics and AI in business hubs in Lancashire’s mill-towns and carbon capture and storage technologies pioneered and applied in the manufacturing landscape of Teesside."

So much for the Cyber jobs. She missed Cypto, Rushi said we were going to be the best place for crypto, or has the fraud spoiled that bandwagon. Now job destroying A.I is flavour of the month.

"Too open, in letting Britain’s industrial strength hollow out.

Too closed, in the barriers to trade it has erected through its chaotic Brexit deal."

As was pointed out on the radio, who directly employs people in Social Care, and the NHS, and who controls training, wages and seeks overseas employees in these industries - Government.

But mummy bear will get it just right.

"Securonomics means ensuring that a mum and dad in Worthing – or Wyoming - who are doing everything right, no longer feel like they are doing "something wrong""

Securonomics is snake oil.

If you just take the nasty medicine, nurse will cure everything. Not even a spoonful of re-distributive sugar.

Because, from security, comes hope. And hope springs eternal, even as Chris's metrics show continuing decline.

Superficial analysis, metric driven or wishful thinking, will not address the fundamentals.

I have to agree with the above comment: predatory pricing and a race to the bottom benefits no-one.

Why is creative destruction necessary? Answers in the comments?

Why will going green improve the economy when it is supposed to address other issues climate change - a universal elixir?

Real World Export Licence

" The deglobalization caused by Brexit, for example, has greatly added (pdf) to UK food bills."

How can that be the case - since tariffs on imports from other countries have been vastly reduced due to the elimination of the common external tariff.

UK consumers now get much cheaper oranges from Morocco.

There is an increase in globalisation due to Brexit, not a decrease. Almost by definition.

Any import barriers imposed by the UK can be removed by them. Everything else will eventually be dealt with by the floating exchange rate.

If French apples are now more expensive, then consumers will choose South African ones instead - and the share of trade of French apples will decrease.

The mathematical juggling game economists like to play needs to sit in the real world of competition, alternative choices and floating exchange rates.


What if despite lower productivity, self-sufficiency leads to happiness?


《The relationship between self-sufficiency, productivity, and happiness can be complex and subjective. While productivity and economic efficiency are often associated with higher living standards and material well-being, happiness is influenced by a variety of factors that extend beyond material wealth.

For some individuals, pursuing self-sufficiency and a simpler lifestyle may indeed lead to increased happiness and fulfillment. The satisfaction derived from being self-reliant, having a closer connection to nature, and living in alignment with personal values can contribute to a sense of well-being and contentment.

Happiness is subjective and varies from person to person. Some people may prioritize autonomy, independence, and a sense of purpose over financial prosperity. They may find joy and fulfillment in growing their own food, being less dependent on external systems, and living a more sustainable or intentional lifestyle.

However, it's important to recognize that self-sufficiency often involves trade-offs. It may require significant time, effort, and resources to meet all of one's needs independently. This can limit opportunities for other pursuits, social connections, and personal growth. It's also important to consider the broader societal and environmental implications of self-sufficiency and how it interacts with larger economic systems.

Ultimately, the decision to pursue self-sufficiency and prioritize happiness over conventional productivity measures is a personal choice. It's important for individuals to consider their own values, priorities, and the potential consequences of their choices. What brings happiness and fulfillment can vary greatly from person to person, and there is no one-size-fits-all answer.》

So why does our blogger write as if there is a representative consumer and a single goal: increase productivity? If I self-provision with water at least when out camping for a few days, is that robbing GDP and harming society? Or can I still pursue happiness as far away from markets as I can get?

ChatGPT, after further prompting:

《In the case of learning a song on the piano, the productivity lies in the personal growth and skill acquisition associated with the process. It may not have immediate economic or external societal value, but it contributes to your own development and enjoyment. Ultimately, whether an activity is considered productive or not depends on your personal goals, values, and the outcomes you aim to achieve.》

So why does public policy default to an arbitrary measure such as dollars per hours worked (and assumes away the measurement uncertainty)?

Jan Wiklund

One of the troubles is to define "globalization".

The world has been globalized since at least 1500. However, what the power people mean with globalization is that "the market" (read Capital) should be the only power and that states should keep hands off.

Whatever happens, the world will continue to be globalized. But, hopefully, with intervening political powers to mitigate the bad effects of untrammeled competition.


Nurse Ratched


"in 1975, it hit the big screen, with Jack Nicholson’s McMurphy memorably squaring off against Louise Fletcher as Nurse Ratched."

Pat McFadden


""If you say spending three times he apparates with a scythe," Wes Streeting, the shadow health secretary, quipped recently."

Wes Streeting, a man, himself said to be to the right of Anne Widdicomme a women who thinks Atilla the Hun was a soft lefty.

Anne Widdicomme


"I’ve written before in this newspaper that the Government’s duty is to look after the poorest, particularly when electricity prices were climbing towards Mars, but it is action not woolly waffle which helps.

"The truly out of touch are those who believe Government has a magic wand and lacks only the will to wave it."

If they don't do the first we will never, know about the second.

The Government can definitely influence the price and supply of energy, and yes even the product of cows milk, of course less inequality of wealth might be a better place to start.

With immense power comes the promise never to use it, except at the whim of the powerful.

I use the term Govenment as whom ever you vote for the Government always gets in (Mrs Thatcher, Neoliberalism, and the Treasury)

The Governments duty to the poor, like hope is the last out of Pandor's box, or perhaps it still languishes in the box with the lid now firmly closed.

James F Frazer

"Of course, the solution to this is to pay care workers more. "
Of course, there are two broad sets of people who can do that. Chris doesn't go on to mention which ones should bear the extra charge - he just assumes that the reader is in his carriage of the train tooting that everybody should.
A statist promoting private gain at public expense seen in the wilds of the www.
Statism : not even once, thanks, it blurs your mind.
We're doomed.


«against UK productivity growth»

That is a graph of money GDP, in effect GNI, vs hours worked. To me that is an unreliable version of "productivity".


«Everything else will eventually be dealt with by the floating exchange rate. If French apples are now more expensive»

There is a big difference between *relative* and *absolute* terms of trade, and they depend on the ratio of exports vs. imports.

The UK governments can cut import tariffs, making imported products cheaper, indeed, but it cannot cut other countries' import tariffs, and indeed Brexit has increased those with the EU substantially, except for goods, but then on goods the UK was a substantial net importer..

If the pound sterling needs to fall to compensate for higher import tariffs by EU countries, then that makes imports from *everywhere* far more expensive than any tariff reduction, as overall import tariffs were rather low to begin with.

So the argument above is silly if author was ignorant that terms of trade depend on both import and export prices, or seems pure intellectually dishonesty if he were.

«then consumers will choose South African ones instead»

Of course in a "flat" world transport costs and delays are insignificant :-)

So if the wholesale price of french apples was £100/ton vs £80/ton + £20/ton of tariffs and £10/ton of extra transport costs, after devaluation the french apples will be £130/ton and the south african will be £104/ton plus £13/ton of transport costs, or £117/ton, indeed significantly cheaper than the french ones at the new exchange rate, but a lot more expensive than the french apples than before.
Without even considering that an increase in the demand for south african apples will increase their price.


«Productivity improvements “seem to have been the effects of the division of labour” wrote Adam Smith in the first sentence of the first book of modern economics. If you were to emulate Tom Good and try to become self-sufficient, you’d be poorer.»

While some division of labour does improve productivity a bit compared to no division of labour, Adam Smith's claim is rather wrong, and the vast majority of physical productivity improvements have come from high calorie density and cheap fuels, first in their initial adoption and then in their wider adoption and the improvement in the machines that consume them, both processes that have a limit (which was reached in the 1970s in the "first world").

The usual references that shows numerically and graphically how much bigger were the effects of coal and oil:



«I have to agree with the above comment: predatory pricing and a race to the bottom benefits no-one.»

That's ridiculous: predatory pricing benefits predator pricers, and the race to the bottom benefits those who own resources in shorter supply e.g. housing. What matters to living standards is the ratio between income and prices, and if incomes fall slower than prices, than living standards improve.

Which is not even the case of the UK: the upper-middle and upper class who practice predatory pricing have seen considerably increased incomes over the past 40 years, at the same time as the costs of lower class labour has been stagnant or falling in real terms.

«Why is creative destruction necessary? Answers in the comments?»

Because while it was cheap high energy density fuels that have delivered the overwhelming majority of productivity increases, *bankruptcy* is the most important mechanism for general efficiency beyond that because:

* There is a wide spread of efficiency among most organizations, and most are far less efficient than the remaining minority (there are a lot of "zombie businesses").

* Experience shows that it is much easier to close down inefficient organizations and reallocate their resources to more efficient ones via bankruptcy sales than trying to improve them.

"Creative destruction" of organizations does not need to mean the "creative destruction" of the incomes of their incumbent employees.

But admittedly in England, where the supreme value is incumbency, many of the incumbents in more capable organizations have no wish to pay insurance premiums against the loss of everybody's incumbency.


Re terms of trade, may I repost the BIS analysis that indicates that financial flows far eclipse real trade widget flows and are thus much more important, though routinely ignored (as here)?


Understanding gross capital flows is increasingly viewed as crucial for both macroeconomic
and financial stability policies, but theory is lagging behind many key policy debates. We
fill this gap by developing a two-country DSGE model that tracks domestic and cross-border
gross positions between banks and households, with explicit settlement of all transactions
through banks. We formalise the conceptual distinction between cross-border saving and
financing, which often move in opposite directions in response to shocks. This matters
for at least four policy debates. First, current accounts are poor indicators of financial
vulnerability, because in a crisis, creditors stop financing debt rather than current accounts,
and because following a crisis, current accounts are not the primary channel through which
balance sheets adjust. Second, we reinterpret the global saving glut hypothesis by arguing
that US households do not finance current account deficits with foreigners’ physical saving,
but with digital purchasing power, created by banks that are more likely to be domestic
than foreign. Third, Triffin’s current account dilemma is not in fact a dilemma, because the
creation of additional US dollars requires dollar credit creation by US and non-US banks
rather than US current account deficits. Finally, we demonstrate that the observed high
correlation of gross capital inflows and outflows is overwhelmingly an automatic consequence
of double entry bookkeeping, rather than the result of two separate sets of economic


«An economy of high productivity growth is one in which there will be insecurity as low-productivity jobs will be in danger of being destroyed. Policy-makers can in principle ameliorate this trade-off by having a more generous welfare state to support those whose jobs are destroyed and more active labour market policies to help the unemployed into those better jobs.»

As to this, there were some famous papers by Economists that showed that in principle any employment "dislocation" caused by "globalization" could be compensated efficiently by governments to "dislocated" workers.

Thus the policy of many governments was to liberalize capital, commodity, labour markets as in Peter Mandelson's pithy summary:

“in the urgent need to remove rigidities and incorporate flexibility in capital, product and labour markets, we are all Thatcherites now”

While promising future generous compensation to "dislocated" workers.

Turns out that such future never happened, and the actual policy of those governments was globalization now, compensation never, because in hindsight their goal seems to have been to increase insecurity of workers as much as possible, both as to job security and housing security (unless mostly tory-voting owners).

Compare instead the many hundreds of billions spent by all governments since 2008 to save from global competitions the jobs in the finance and property sectors, and the fortuners of their proprietors, as argued by "The Economist" to save the jobs of the children of the elite:

«Britain will one day wake up to discover that it has lost one of the world's most successful business clusters, and the best hope the next generation has of earning a decent living»


«The deglobalization caused by Brexit, for example, has greatly added (pdf) to UK food bills.»
The paper quoted by our blogger summarizes:
«Between December 2019 and March 2023 food prices rose by almost 25 percentage
points. Our analysis suggests that in the absence of Brexit this figure would be 8
percentage points (30%) lower.»

So a rise of 17% has become one of 25% because of "Brexit", thus "Brexit" increased the prices of certain types of food by nearly 7% over 3-4 years, or 2% per year. Isn't that more or less the BoE inflation target? What's the big deal here?

Brexit was a stupid idea politically, even if the economic impact while negative was bound to be small (as estimated by the BoE's worst case scenarios). This to me looks like the usual "Remainiac" dissembling.

It is also seems to me the usual "distraction tactics": the big deal is to distract by blaming Brexit from the extra inflation of the past 3-4 years, which has been maximized in the UK, and much lower in some other countries (some of which have never been EU members).

My estimate is that the surge in inflation of the past few years in the UK has been deliberate to make UK wages more "competitive" in real terms and give a huge boost to finance and property, for example thanks to deeply negative (minus 6-8%) real interest rates.


«I have to agree with the above comment: predatory pricing and a race to the bottom benefits no-one.»

«That's ridiculous: predatory pricing benefits predator pricers»

That is even acknowledged by the ultra-neoliberal "Financial Times":

«Mr Topper’s is perhaps the most celebrated by generations of frugal Londoners. In a city founded on predatory pricing»


Where to start...

Debt and rent seeking is predatory but not normally thought of as pricing...

Housing, Food and Water, are essentials no-one can go without. They are a captive customer. Hair cuts, not so much so the poor are more price sensitive than the rich.

Predatory pricing usually involves selling below costs, to bankrupt the competition, only when a monopoly is established, does profit accrue to the predator.

"at the same time as the costs of lower class labour has been stagnant or falling in real terms."

Well with China's 996 hours (see BBC link above) The Lord Sith Mandleson (fallen angel) would advocate no doubt 8,10,7 as a removal of rigidities. (Sleep is for the elite).

"Creative destruction" was a retorical question, see the innovators dilema. The incumbants are to fat and complacent. So new entrants drive change.

As finance is just a parasite, what is the consequence of the world been dominated by financial flows, or the City dominating the UK Economy. There is a reason China invests in manufactured physical goods, Once the UK was the workshop of the world.

At the end of the day, the City, Hollywood, Silicon Valley, they don't matter... too high up Maslows Hierachy of needs, Housing, Food/Water, Energy, how do we source them from China, and what do we trade with? Valueless Pounds Sterling?

I want my Silicon chips (Source: Taiwan - pop 25 Million) as well as the Potato ones. But I can't live without the latter.

How is that for security?


I have contempt got Peter Mandleson and his works, we have a left elite that is economically on the far right (accepting Neoliberalism), seeking authority through Trans Rights, Critical Race Theory and Green Religion, the later self-harming through energy policy (North Sea) and refusing to spend money.

While finance bleeds the country dry, using essentials like shelter, food, water and energy before moving on from the desiccated corpse.


Create wealth, how does finance create wealth, except for money from thin air, Finance just extracts it. Pragmatic, incoherent is more accurate.

Confirmation that there is no intelligent life in Westminster, or such a thing as society.

The metrics say Neoliberalism is dead but Westminster keeps trying to re-animate the corpse.


If I wasn't clear:

Price gouging on essentials: Shelter, Food/Water and Energy is predatory, but not predatory pricing. (Neomercantilism), often Monopolies (like water or asset management) can engage in price gouging.



I strongly disagree with Sherelle Jacobs on the solutions, but the pathology is clear.

"For now, though, things look pretty bleak. In complex systems theory, a system becomes pathological when it gets to the point where measures being taken to maintain equilibrium are actually destroying the system. A system is also classed as fatally neurotic when it deems the psychological cost of detaching from the status quo to be too great, even if failure to adapt threatens its own destruction. There is little doubt that the British ruling class strongly exhibits both of these symptoms. And things will get a lot worse before they get better."


Can I quote Robert Shiller on the morality of finance?

From https://oyc.yale.edu/economics/econ-252-11/lecture-23

"[...] part of our morality is to do good for the world by doing things like set up railroads, or Microsoft. And the kind of activities that that entails, will create opportunities for conspicuous consumption, but not necessarily make that the defining characteristic of someone who does it. Nobody is perfect, and it’s hard to judge people ultimately, but it seems to me that there’s almost a moral imperative to entrepreneurship."


"So, the Nature Conservancy believes, also, that the way to protect habitat is to buy land, and put up fences around that to keep people out, and then have a forest manager run it, so that the species will have it, will have that land. [...] this is really finance. We have portfolio managers managing portfolios and properties of land with a good purpose. [...] The moral dilemma is to prevent big, bad things from happening, and that takes a sort of entrepreneurship and big thinking to manage."

Will a financial solution such as selling ecosystem services instruments provide more expedient forest conservation than non-financial solutions? Can we create enough money to pay loggers not to log?


Price gouging on essentials: Shelter, Food/Water and Energy is predatory, but not predatory pricing. (Neomercantilism), often Monopolies (like water or asset management) can engage in price gouging.

[ This is unfortunately ridiculously confused. ]

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