Economics

Monday

Alex Massie

Irish Austerity Update

Paul Krugman is back banging a familiar drum: austerity is not a good idea. Anywhere. As always, Ireland is one of his favourite examples: [V]irtuous Ireland never did better than malingering Spain. And now, Ireland’s risk premium has exploded, here; Spain’s not so much, here. Of course, it’s not at all a clean experiment; Ireland’s banks were arguably second only to Iceland’s in their irresponsibility, and the Irish government’s blanket guarantee has exposed it to huge losses. But bear in mind that when Ireland seemed, briefly, to have regained the trust of the markets, this was touted as proof that austerity will be rewarded. Funny about that. As always, I’m

Saturday

Lewis Jones

Spiv on a grand scale

He insisted that he was not a pornographer but an entertainer, and told the Daily Herald that the Folies Parisienne (sic) — one of his early shows, featuring the ‘Harlem Nudes’ and their ‘taunting, scantily clad Native Mating Dance’ — was intended for family audiences, and that children were taken along by their ‘doting elders’. When he booked a celebrated American stripper to appear at the Raymond Revuebar (‘The Athenaeum of Strip Clubs’ — Spectator), she was appalled to learn that he and his wife proposed to let their five-year-old daughter watch the show. This family image was rather dented by such assurances as ‘this theatre is disinfected throughout with

Monday

Ed Holmes

Why a public sector pensions levy makes sense

Today’s papers are awash with stories that a public sector pensions levy will be announced in tomorrow Emergency Budget. Trade unions have already issued dire warnings, ranging from the PCS’s promise to “organise the widest possible popular opposition,” to Bob Crow of the RMT’s rather prosaic: “when someone’s winding up to give you a kicking you have a clear choice — you can either take them on right from the off or you can roll over and hope that they go away.”  Public sector workers, however, should not be so dismissive.   In our report, released on Friday, we argue for an “Irish style” graduated public pensions levy of 7.5

Monday

Alex Massie

Robin Hood and the Laffer Curve

I’ve been assuming that Ridley Scott’s interpretation of the Robin Hood saga must be terrible. After all, it’s nearly a decade since Black Hawk Down, Scott’s last properly good movie. But now AO Scott pops up in the New York Times to suggest, though he may not mean to, that the movie has something going for it after all: You may have heard that Robin Hood stole from the rich and gave to the poor, but that was just liberal media propaganda. This Robin is no socialist bandit practicing freelance wealth redistribution, but rather a manly libertarian rebel striking out against high taxes and a big government scheme to trample

Friday

Fraser Nelson

Why Cameron must never say “deficit”.

Listening to BBC news, it’s striking how they are still using Labour’s politically-charged vocabulary. When the universities are kicking off about their budgets being cut, the BBC newsreaders are told to talk about “investment” in higher education, rather than spending. Why, though? An “investment” would be to put £1 billion of taxpayers’ money into an Emerging Markets fund, and hope it grows. Giving it to universities – many of which serve neither students nor society – is not an investment. But using the word “investment” is Labour code for “good spending”. There is one particularly frequent example if this: the BBC regularly confuse the words “deficit” and “debt” – a

Friday

David Blackburn

How much attention should politicians pay the competing groups of economists?

The recession has been intellectually thrilling, and I write that without a note of sarcasm. First, politicians argued as to whose understanding of Keynes was greatest; and now they’re in Keynes versus Hayek territory, over the timing and depth of cuts. The Chancellor and his Shadow have marshalled the various authorities who support their respective cases. The science of economics, if it is science, is in its adolescence. Should necessarily equivalent government policy be detirmined by pure intellectual opinions and reputations, especially as those are being forged for posterity by current events? Economics is as much history as science – like Coleridge’s lantern on the stern of the ship; it

Tuesday

Alex Massie

The Naked Economist

As a mild econo-sceptic, I enjoyed James Buchanan’s short essay,  Economists Have No Clothes: Economists do not really understand what they are doing as they seem forced to make efforts to control aggregate variables that are not controllable in any direct sense. For example, the rate of employment (or unemployment) cannot readily be shifted by governmental mandate. At best, small and peripheral changes may be made while the emergent aggregate generated by the working of the large and complex economy remains stubbornly immune, or worse, to wrongly conceived reform efforts. And: How do markets work? Standing alone, this is an inappropriate and unanswerable question. It must be replaced by the

Saturday

Tim Congdon

Bank-bashing with a vengeance

Over the decades of (relative) macroeconomic stab- ility in the second half of the 20th century, profit-seeking com- mercial banks and state-owned central banks worked together to lower the cash-to-asset ratios in the banking industry. An understanding grew that profitable and well-capitalised commercial banks should be able to borrow cash from the central bank if they had trouble maintaining a positive cash reserve balance. The associated arrangements were technical and complex, and were of no interest whatever to politicians and journalists. Fashionable economic commentators regarded them, or rather ignored them, as the municipal drainage of the financial system. Meanwhile the long period of peace between the world’s leading nations encouraged

Monday

Alex Massie

Hayek vs Keynes

This is superb. Friedrich August vs John Maynard. Rapping. Needless to say, if we were to have a real discussion and a real debate between FAH and JMK this election season then we’d have an election to look forward to. As it is no-one of any sense can be anything but terrified by the nonsense that is about to be unleashed upon us all. Guilty confession, mind you: I tend to live as a Keynesian while believing or at least suspecting hoping that Hayek is right. If we each contain multitudes we’re also made of weakness and contradiction. Right? And yes, too many videos on this blog lately. Been a

Friday

David Blackburn

Griffin to complain about “lynch mob” Question Time

Nick Griffin has just made the following statement: “It was not a genuine Question Time, it was a lynch mob… People wanted to see me and hear me taking about things like the postal strike. Let’s do it again and do it properly this time.” He added that he would lodge a “formal complaint to the BBC over the way it twisted Question Time”. As James wrote last night, the debate was an extended navel gaze into whether it was right that Griffin appeared on the programme. Whilst Griffin unquestionably came off worse by babbling about a rather enigmatic, non-colour specific group called British aborigines, the panel missed the opportunity

Wednesday

Jonathan Mirsky

Unamazing insights

Four years ago, we learn from this book’s jack- et, Malcolm Glad- well ‘was named one of Time’s 100 Most Influential People’. Four years ago, we learn from this book’s jacket, Malcolm Gladwell ‘was named one of Time’s 100 Most Influential People’. As Gladwell himself might ask, ‘Is what Time says really significant? And what is significant?’ Gladwell is significant, all right. Not only is he a staff writer on the New Yorker but he wrote the bestsellers Blink and The Tipping Point that made him millions and — here is more significance — put him number one on the New York Times’ bestseller lists. What is Gladwell’s secret? Like

D J-Taylor

Rural flotsam

Notwithstanding’s suite of inter- linked stories draws on Louis de Bernière’s memories of the Surrey village (somewhere near Godalming, you infer) where he lived as a boy. Notwithstanding’s suite of inter- linked stories draws on Louis de Bernière’s memories of the Surrey village (somewhere near Godalming, you infer) where he lived as a boy. Having read the first piece, ‘Archie and the Birds’, about a cheery forty-something bachelor living with his mother who communicates with her by way of a walkie-talkie, and grimly despatched the third, ‘Archie and the Woman’, in which our man marries a fellow dog-walker, I was about to write the whole thing off as an exercise

Wednesday

James Forsyth

The demise of the speed camera

One of the more interesting influences on the Conservatives is behavioural economics. The book ‘Nudge’ informs quite a lot of their thinking and one of its author Richard Thaler is now an official advisor to the party; his co-author is heading up regulatory policy for Obama. One of the major British evangelists for behavioural economics and its insight is The Spectator’s own Wiki Man, Rory Sutherland. He drew this magazine’s attention to Thaler and Nudge long before people in the Westminster Village had cottoned onto it. I’m told that it was a piece that he wrote on Coffee House which inspired Theresa Villiers to announce the effective end of speed

Sunday

Peter Hoskin

Osborne’s crazy admission

Tim Montgomerie flags up this passage from Andrew Rawsley’s column today: “Mr Osborne raised some eyebrows at a recent private meeting in the City when he was heard to remark that ‘40% of my time is spent on economics’ – meaning that most of his hours are spent on campaigns and tactics. Mr Osborne seemed to think that 40% was an impressively large amount of his time to find to spend on economics; some of his audience thought it was a worryingly low proportion for the man who expects to be chancellor in less than a year’s time.” Of course, it’s no secret that Osborne has other responsibilities within his

Friday

Fraser Nelson

One crisis after another

Many CoffeeHousers will give a horse laugh to the idea of “green shoots” – especially the idea of Gordon Brown winning a fourth term because a grateful nation will thank him for a recovered economy. It’s a delusion, nothing surer, and the same one Callaghan and Major suffered from. In both cases, there were firm signs of an economic recovery – but the electorate never forgave the government which landed them in the mire. But is Britain recovering? We’ve seen a few developments lately which, given the fun and games elsewhere, have gone unnoticed. So here’s a catchup. Pick up the financial pages, and you’ll find numerous stories of success:

Peter Hoskin

Darling’s position of strength

Interviewed in today’s Indy, Alistair Darling’s “get real” warning to the bankers seems to be grabbing the headlines – but his comments on public spending rather jumped out at me.  After Peter Mandelson said that there wouldn’t be a spending review before the next general election, there were rumblings that Darling was actually still thinking about a pre-election review.  Here, he confirms that: “Mr Darling insists the uncertain economic position means he cannot decide now whether to go ahead with the scheduled comprehensive spending review (CSR). He will announce his decision in his pre-Budget report, due in November. ‘To do detailed allocations running up to 2013-14 at the moment, with

Friday

Alex Massie

Paul Krugman’s Rather Odd Love Affair With Gordon Brown

I wouldn’t ever dream of debating economics with Paul Krugman*. Politics, however? Well that’s a horse of a different colour. The Nobel laureate is, it seems, in Britain and he has this to say: Weird politics here in London, with Gordon Brown desperately unpopular even (or maybe especially) among those who surely share his general ideological outlook. And yet … …It’s not far-fetched to imagine that Britain will soon be experiencing at least a modest recovery, even as its neighbors languish. Yet that possibility doesn’t seem to factor into any of the political discussion. Even if one grants that is true – and, who knows, perhaps it is! Let’s hope

Wednesday

Martin Jacomb

Nor all that glisters

Fool’s Gold, by Gillian Tett Millions of words and scores of official reports on the credit crisis have poured out. There has been no shortage of criticism, especially from political leaders eager to deflect responsibility from themselves. The catastrophe is a man-made disaster, and in years to come historians will ask how it could possibly have been allowed to happen. Gillian Tett’s Fool’s Gold is the book they will turn to. The story she tells reveals in painful detail how credit derivatives came to be invented and then misused on an unimaginable scale. It is a thriller. The idea emerged from a wild weekend party of J. P. Morgan ‘rocket

Wednesday

Philip Hensher

Back to the future?

With the economy in recession, the close attentions of the IMF, taxation rising to punitive levels and a general sense of our having lived beyond our means, reminders of the 1970s are all around us at present. Last week, both the death of the union leader Jack Jones and Alistair Darling’s extraordinary budget in their different ways took us back to the atmosphere of 30 years ago. Andy Beckett’s history of the political engagement of those years comes at a highly opportune time. He rightly focuses not on the familiar popular culture — there is no mention of flared trousers, the Osmonds, platform shoes or space-hoppers — but on the

Interconnect

A load of hot air | 29 April 2009

As a general rule, I do not believe in reviewing bad books. Review space is limited, and the many good books that are published deserve first claim on it. But climate change is such an important subject, and — thanks to heavy promotion by that great publicist, Tony Blair — the Stern Review of the economics of climate change has become so well known (not least to the vast majority who have never read it, among whom in all probability is Mr Blair), that anything from Lord Stern deserves some attention. However, anyone looking for anything new in this rather arrogant book — all those who dissent from Stern’s analysis,