The British economy is lying flat on its back in an alleyway with wee dribbling down its leg.
– Rod Liddle (£)
|
|||||
|
February 1st, 2025 | One comment
 In the Telegraph’s business section, Matthew Lynn writes about why Santander is thinking of leaving the UK:
January 27th, 2025 | 7 comments
For the past decade or more, “neoliberalism” has been under attack. For example, a few years ago I read a book by the journalist Tom Bergin (Reuters), who argued, with a lot of data and references, that cutting marginal tax rates will not boost an economy. He poured cold water on the ideas of US economist Arthur Laffer, the “father of supply-side economics”, and denied that changes to tax rates make much difference to incentives to work, or so on. (Bergin’s analysis is politely and beautifully skewered, here, by Kristian Niemietz of the IEA. See also this new book by Tim Worstall.) Of course, it is true that a 1% cut or rise to, say, capital gains tax or other tax will not produce an instant or commensurate change in economic behaviour. The elasticity of supply/demand relationships for labour, capital and land are variable. Labour is not homogenous, as Tyler Cowen notes (this also is a killer for the Marxian labour theory of value); there are frictional costs and sources of inertia that mean an economy cannot be turned on or off like a switch, contrary to the delusions of central planners or, indeed, naive advocates of free markets. But there IS an effect over time. Changes to incentives compound: if you make it harder to hire and fire, and make it more expensive, irritating and difficult to achieve A or B, then less of what you want will get done. Hiking taxes on employment will reduce labour employed and encourage a substitution of capital for labour, just as taxes on petrol or food will causes changes to consumption, or force those who buy essentials to buy fewer so-called luxuries, or adjust in various other ways, not all of them predictable. The UK government spending total, as a share of GDP, at the highest level since the late 1940s. And following the 31 Oct. 2024 budget, unemployment is rising. We also have about 1 in 5 working-age adults out of the workforce. Like a rusty naval frigate, large elements of the UK public have been decommissioned, fit only for a salvage yard, so it appears.
Tax incentives aren’t the only thing that count, but they are important. The UK has moved decisively down the wrong side of the Laffer Curve, and the results are clear.
January 24th, 2025 | 36 comments
(For the convoluted way see here.) All that is needed to end Britain’s debt crisis is for Nigel Farage to say this:
This will have the following effects:
January 17th, 2025 | 23 comments
Holman Jenkins Jnr, an opinion columnist in the Wall Street Journal, reflects on the mix of bad faith, moral cant and low protectionist nonsense that underpins so much Western policy on electric vehicles:
Jenkins also refers to the concept of “permission structures” and the malign legacy of the Obama administration. (He links to this article at The Tablet.) I like that term – it coheres with concerns about how an “administrative state” has evolved over the decades to impose policy outcomes at a remove from democratic oversight or the sharp and corrective blast of free market competition. Worth a read. The UK’s Institute of Economic Affairs, the think thank, has recently opined about “mission-directed governance”, which is a sort of automated paternalism (I discussed this offline with Paul Marks of this parish). The IEA piece links to an interesting paper about East Asia and forms of authortarianism. Update: From Guido Fawkes today: The UK’s electricity grid came worryingly close to blackouts yesterday – just 580 MW shy of the lights going out – in what independent energy consultant Kathryn Porter described as the “tightest day since 2011 or before”. National Grid ESO had to issue its first Electricity Market Notice of the winter, along with a third Capacity Market Notice, though the latter was quickly binned. No surprise that cold weather means more heating and energy… A sharp drop in wind output combined with limited electricity imports from Europe left the grid scrambling to keep the lights on. Yet Red Ed is still pushing to fast-track planning permission for a wave of new wind farms — despite the inconvenient truth that these turbines have to be switched off when there’s too much wind and the grid can’t handle it. Meanwhile Labour is ploughing ahead with their plan to make wind and solar the backbone of our energy system to hit 95% renewable energy by 2030. January 8th, 2025 | 17 comments
TIME Magazine has made Donald J Trump, re-elected to the White House, as its Person of the Year. These POTY titles don’t necessarily mean the publication thinks that X or Y are good or praiseworthy; what counts is that they are significant in some overwhelming way. Trump fits the bill perfectly. Without a doubt, his election in November will shake things up, not always for the better. But shake them up they surely will. If I were to choose an alternative POTY from the ranks of politics, my choice would be Javier Milei, president of Argentina. He’s been in the job for just over a year. On his watch, inflation in a high-inflation country has sunk to low single-digits. He’s deregulated the rental market and prompted a flood of new rental housing, cutting rents as a result. He brandished a chainsaw as his symbol of what he wanted to do to government. Thousands of public workers have been laid off; a number of regulations have been scrapped. The price of Argentinian debt, both public and private, has risen, and the yields have fallen. This represents a massive vote of confidence in the creditworthiness of a nation renowned for its fecklessness for decades. This will attract capital and investment, helping the country pull out of recession and hopefully, boost living standards in a sustainable way. It needs to happen: there is a lot of poverty in that country. As a result of some of this free market medicine, the Argentinian peso has risen in value: The peso-dollar has surged 22 per cent a year before. So much so, in fact, that Keynesian columnist Ambrose Evans Pritchard, who often predicts the case for reflating this or that country with lots of cheap money, has denounced this situation. For those who have seen Latin American currencies reduced to dogfood (apart from maybe in Chile) in recent decades, no higher praise for Milei can be higher than catching the glare of a columnist who is so often wrong in his predictions. So there you are: My choice for Man of the Year would be a chainsaw-wielding fan of Austrian economics in Buenos Aires, an actual classical liberal in a world gone increasingly collectivist. Update: I fixed the way of expressing the foreign exchange rate; apologies. The point stands: the peso is worth a lot more today than a year ago. Another update: Does a stronger Argentina make it more likely the government might try and re-take the Falklands? Maybe; one risk factor now in play is that under a socialist and self-hating PM, Sir Keir Starmer (who has an inferiority complex about Mrs Thatcher), the Argentinian public might, with some reason, think there is a chance the UK could be persuaded to transfer control. There is a lot of oil down in the South Atlantic; Milei does not, as far as I know, give a damn about Net Zero and might eye the area as a key resource. But he is also not a fool and might, with justice, think that a row with the UK is not worth the trouble, particularly if Argentina looks to rebuild trade relationships, particularly in a world of rising tariff barriers.
December 20th, 2024 | 64 comments
“Argentina’s Javier Milei has made a horrible mistake”, says Ambrose Evans-Pritchard in the Telegraph. The article can also be read here.
A commenter called Krassi Stoyanova says, “Well, Ambrose, having listened to Milei and his plans for the Argentine economy, I have far more confidence in him than I do you.” I want to agree. But, truth to tell, I do not have a good understanding of this branch of economics. Some of you guys do. What do you think? December 13th, 2024 | 28 comments
Whether Jaguar’s new electric car flops as a result of all this remains to be seen. It would hardly be surprising if Jaguar’s traditional audience – the people who actually buy its cars – give up on the company in response to all this insufferable virtue-signalling. After bending the knee so readily to the trans cause, that would be the least Jaguar deserves. December 5th, 2024 | 29 comments
Macroeconomic management doesn’t work because the data available to do detailed macroeconomic management is shit. Therefore let’s not try doing detailed macroeconomic management. Get the basics right, the incentives, markets, then leave be. Of course, this then leaves a paucity of jobs for economists but then as I’m not one of them why would I give that proverbial? December 1st, 2024 | 20 comments - (Comments are closed)
As most of us are aware the almost all Western governments are living beyond their means. Every year they spend more than they raise and their debts spiral ever upwards. But there is a solution: ask the voters. Here is how it would work:
At a stroke:
I can see some objections/issues:
November 27th, 2024 | 31 comments - (Comments are closed)
“Britain’s biggest problem is a lack of economic growth – so much else is downstream from that. In per person terms, annual real growth averaged more than 2 percent in the run up to the financial crisis. From the crash to COVID-19, growth was just 0.6 percent on average. And of course these growth rates compound. Before the financial crisis, living standards were on course to double every 35 years; afterwards, it was every 120 years. This is a change with profound societal – and even civilizational – consequences. “From tax and regulation to institutional malaise, demographic decline, and a culture that denigrates success – there are all sorts of explanations for our economic slowdown. But the way I see it is that we are suffering a progressive loss of economic dynamism, as we gradually replace market processes with bureaucratic ones – often to reduce risk or increase ‘fairness’. To many observers, every individual step along the road is reasonable and easy enough to justify. But over time, the effect is suffocating.” – Tom Clougherty, Institute of Economic Affairs November 17th, 2024 | 19 comments - (Comments are closed)
First time is happenstance, second is coincidence and third is enemy action. As it happens Bolivia has a third natural resource which, currently, is in high demand. Lithium. Those salt flats up at 12,000 feet and so on. One of the great deposits of easily extractable lithium they are. So, why aren’t they being extracted? Because the government has insisted that they’re a great natural resource. Therefore, rather than greedy capitalists extracting and shipping out those batteries should be made up at 12,000 feet. Even, in fact, the cars that use the batteries. The result is obvious – the lithium isn’t being extracted, the batteries aren’t being made and nor are the cars. Because idiot fuckwits are in charge of what happens to Bolivia’s natural resources of course. November 15th, 2024 | 58 comments - (Comments are closed)
|
   |
||||
All content on this website (including text, photographs, audio files, and any other original works), unless otherwise noted, is licensed under a Creative Commons License. |
|||||