Beware Those Economic Numbers

We have varied sets of economic numbers to try to measure the world around us. All of them are pretty hazy because the economy’s a pretty big and pretty complicated thing. We only even get close to any accuracy about GDP – just to use an example – about 6 months after the relevant period has passed. We’re not, thus, really able to use GDP as a reliable guide to policy. To policy action that is, rather than a measure of what we did.…

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Memo To Phillip Inman – 1.25% Of The Economy Isn’t A Solution

Phillip Inman in The Observer tells us that it’s rent that’s the problem. We can’t have all those nice things – infrastructure, modern broadband, a vibrant steel industry – because all the money to pay for such is being eaten up by rent.

Well Phil laddie, why not try doing some sums? 1.25% of the economy really isn’t going to make that much difference to all this. That is, rent isn’t the problem you’re making it out to be.…

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The Falling Labour Share Of Income

I am much less convinced this is actually a problem. In fact, I tend to think that the claimed problem doesn’t actually exist. We’ve an accounting issue here, it’s the incorrect way we count both GDP and total labour compensation combining to show us something that isn’t there. But that’s just a view. Here’s some actual research:

The declining labour share of income: Accounting for the main factors from a meso perspective
Jan Mischke, Hans‐Helmut Kotz, Jacques Bughin 26 July 2019

Since the 1980s, labour compensation relative to aggregate output has been on an inexorable downward trend across major developed economies.…

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Bad News For Economic Fat Controllers – Economic Autocracy Kills Growth

Ha Joon Chang is not the only one out there. The Senior Lecturer is known to succumb to the delusion, Will Hutton’s entire oeuvre is based upon the idea. If only everyone just did what they were damn well told by an economic autocrat then everything would be vastly better. The peeps would be richer as a result of the omniscience – and the power to implement – of said economic autocrat.

As it happens it doesn’t work out like that.…

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Dear Larry Elliott – What Race To The Bottom On Tax?

A line from Larry Elliott’s latest piece showing that of course the Tories are wrong on the economy:

Even so, the race to the bottom on tax is in some sense welcome.

If only we’d had such a race:

Tax to GDP

We have historically high taxes for the UK economy. More of everything goes through government than normal. So, what tax race to the bottom?

For a start, it validates the use of tax and spending as an economic tool.

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If Only The Guardian Employed An Economist – Instead Of Richard Partington

Richard Partington is the economics correspondent for The Guardian. True, he’s a step up from that bird who ended up at Mashable, but still.

Richard Partington is the Guardian’s economics correspondent.

No one who groks economics is going to write something as silly as this:

But some people have benefited more from growth than others, despite global gross domestic product (GDP) growing by more than 5,000% since the 1960s.

Which tells us something about well Our Dickie groks economics.…

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Less Than 3% Global GDP Growth Is A Recession

Yes, yes, we normally think of a recession as being negative growth. More formally, two quarters or more of negative economic growth. The pile of everything being produced by everyone goes down.

However, while this is true it’s not entirely useful when we consider the global economy. There a reasonable rule of thumb is that less than 3% growth is that recession:

It sounds a bit odd to be describing near 3% global GDP growth as being recession levels – most rich countries would kill for that sort of growth rate maintained over the years.

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Brexit’s To Blame For The British Economy – Odd, Innit?

The reports – cries of pain really- from the Treasury, G. Osborne and all about the immediate and deep recession we’d have if we even thought about leaving the European Union were published everywhere. Cheered from the rooftops even. Certainly, there was much smacking of the lips about how we really would get it in the neck if we had the temerity to differ with our betters.

As we know, it didn’t really turn out like that.…

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It’s Almost Like It’s Possible To Have Too Much Government And Tax

That we do need some government is true – we are not anarcho capitalists here. Given that necessity of having a system of who takes out the bins there is also going to be taxation in order to gain those public goods. This is not then to say that more government, more tax, is thus a good thing. It is rather to posit that there’s an optimal amount of both government and the tax to pay for it.

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Don’t Ever Believe GDP Statistics Out Of China – They’re Reporting 6.4% This Quarter

China has just reported first quarter GDP growth – on an annualised basis – of 6.4%. Well, OK, but we should never trouble ourselves into believing any such Chinese economic statistic. It’ll be broadly correct in terms of being in the right direction but believing in accuracy beyond the first digit would be foolish. This is not just because all such economic numbers come with varying caveats. We can’t, in detail, know what is going on out there, we can only do statistical surveys and hope we’ve not messed up too badly.…

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