Re: Employement status is more complex than that
One of the problems with straddling the pong (err, not physically you understand). Because Uber in California has just fallen foul of exactly that test....
1269 posts • joined 12 Feb 2008
One of the problems with straddling the pong (err, not physically you understand). Because Uber in California has just fallen foul of exactly that test....
IANAL but that's the way I read it, yes.
The one thing that cabbies can do (well, among the) is pick up someone waving their arms by the street. That's their customer.
NR wasn't that at all.
NR was a bank run pure and simple.
Their business model was: issue those mortgages, funding them with a bit from deposits and lots from the wholesale money markets in short term (overnight even) money. Then every now and a bit issue bonds with about the same maturity as the mortgage book and pay down the wholesale money borrowed from the market.
Continue to rinse and repeat. Those bonds didn't go bust at all (called, umm, Granite I think?).
However, NR got caught when it had less than a "now and a bit" number of mortgages agreed, paid out to, and funded by overnight money, but before they had enough to issue another tranche of those granite bonds. They couldn't then fund that loan book as no one would lend them money in the interbank market: a wholesale bank run.
As far as I've seen the mortgages are just fine.
Sure, let's talk about building societies. Two of which went bust at about the same time as Northern Rock. Dunfermline and, umm, Chelsea was it?
Haldane's a bit odd, even by central banker standards.
Negative interest rates, yes, these can happen. Not hugely negative, but we might put up with -0.75% or so: what would be the worry and insurance cost of having your money in cash under the bed? -2% maybe? But not fiercely negative.
Moving entirely over to electronic money though won't quite mean what Haldane thinks it will. He thinks that it's the government that creates money. And it ain't: it's as in this piece, a way of keeping score. And if people won't accept what the government is providing as a way of keeping score then they'll go off and use something else. Anything else. Tide detergent is used as "money" in some US drug deals for example.
The real aim of having all electronic money would be taxation, for everything would be trackable. And for that very reason not everyone would use it.
Dunno really. Marx's idea of true communism was pretty much "unlimited free energy". He's assuming the end of scarcity at least, which is consistent with the free energy bit.
And if you really, really, pressed an economist he'd probably tell you that unlimited free energy would mean the end of economics. Because there would be no scarcity and economics is about the allocation of scarce resources.
The reason we're subtracting the imports is the "domestic" bit.
"It's a bit like every country being in debt"
Sure. Every country is in debt. Or rather, the government of every country is in debt. Who to? Peeps, that's who. Sometimes it's to the peeps of that country (largely so for Italy and Japan), sometimes it's to other governments (Greece) and sometimes it's to foreign private people (some portion of everyone).
We're not "all in debt" because that's impossible. In the end, all of that debt is held by some humans, owed to some humans. Might be as individuals, might be as their pension fund, to their government, to a company that they own stock in, but all the debt is owed to peeps.
The government sector is in a net debt position because that's just what politicians do, spend the shit out of the tax revenues and borrow more. But the world ain't in a net debt position.
Nice analogy, might well steal it.
Hmm, I think a proper "what the hell is GDP?" might be a future subject.
You're generally right. It doesn't measure distribution, doesn't measure unpaid work, Just assumes that government output is worth what we spend upon government and has all sorts of other problems with it.
But we do know how to measure it.
A little bit for the comments to pieces which an editor has paid me to write. Part of the job description these days really.
Germn banking collapse was 1923/4. US Depression was 1930 onwards. And got really bad in 1931.....about the time of the collapse of the *Austrian* bank, Creditanstalt
We're absolutely delighted when things get cheaper: it really is just fabulous that enough wheat calories to keep us alive now costs 10 or 20 minutes of labour a day rather than 12 hours of it as was.
However, we're not entirely happy with the general price level declining. Not in a debt based economy we're not. Because the nominal value of the debt remains constant (in the absence of negative interest rates that is) while the value of what is being produced from having contracted that debt is falling. Everyone eventually goes bust in that world.
We could, perhaps, get away with 1-2% deflation, around and about the level of total factor productivity each year. But more than that would be a problem.
Another way of putting this is that we're just delighted that things get ever cheaper in real terms: we are 100 x or whatever it is richer than our forefathers because everything has got cheaper in terms of the labour we must perform to get it. But having things get cheaper in nominal terms, fewer tokens that represent that control of labour, has some problems.
GDP is a measure of value added, not of turnover.
In both cases the addition to GDP is £10k.
Imports are a negative number in GDP. Final sales to consumers we do count in one of the methods of working it out. So, in scenario 1) GDP is final sales minus imports, £10k, in scenario 2) GDP is final sales minus imports: £10k.
This becomes very important indeed when we start talking about the difference between a VAT (or sales tax) and a transactions tax.
NR was allowed to go bust as banks go bust. And it's the government (FSCS) which pays the savings compo. Which they charge the banks an insurance fee for.
And 5) doesn't follow from NR at all.
"Both gold and bitcoin can increase in value arbitrarily so that even though there is a fixed amount of each, the value of that amount can increase."
We have a name for that. Deflation. Which is what we're doing all this QE to try and avoid because we don't think deflation is a good idea.
Umm, what was this gifting of tens of billions to bankers then?
There's been three things done:
1) Liqudity provision. During the crisis, banks were running short of readies (those lines at Northern Rock etc). So, the central bank issues as much money as anyone wants in return for a security. This is what a central bank is supposed to do. It's all been paid back plus interest. Yes, saved the banks and that's the purpose of it: but didn't make the banks money.
2) Funding for Lending or some such scheme. Not been very successful as not that many people want to borrow money (rather our basic problem at present). BoE creates money, banks bid on it to be able to provide cheap lending to companies.
3) What I think you're talking about, quantitative easing. This didn't go to the banks.
Before QE the BoE had a few gilts. The banks had less than none (they were short). The pension and insurance companies had lots.
Now, after QE, the banks have lots of gilts, the BoE has lots of gilts and the pension and insurance companies have many fewer. Thus the BoE didn't purchase the gilts from the banks. They bought them from the pension and insurance companies.
Which was the aim all along. Buy enough gilts to drive up the price/down the yield, so those investors (note, not banks!) will move out along the risk curve in order to get yield. This lowers long term interest rates. And it has worked as designed.
But QE was never about the banks and except for the actual dealing in them (done at margins of a basis point or two, 0.01% being one basis point) never did have anything to do with the banks.
Is that I can't see how they would fail to make money out of this.
Yep. Lovely place.
As i pointed out over at the ASI this morning. Dallas and Houston between them issue more housing permits each year than the whole state of California.
12 million people in Dallas/Houston (the whole areas, not just the cities), 39 million in CA. And population density in D/H is very much higher than CA.
Median house price in Dallas is $150k. In CA, $400 k.
Issuing more chitties works.
My original was Meriden. Subs changed it to Triumph as more would know the name....
The pro-market argument being, wow, look at how well the markets did to exploit what the government didn't once they got the chance.....
Interesting question. The actual reason RR went bust was this:
" A side-effect of this affair was a change in accounting regulations to forbid the capitalisation of expenditure on research. This practice had resulted in Rolls-Royce massively overstating its assets, thus disguising its financial difficulties until it was too late to seek effective help."
That's the sort of thing that nationalisation and or recapitalisation can solve. Making shite cars, a la BL, isn't.
"What do you think of the other members of the "dream team" of economists?"
Danny Blanchflower has been consistently wrong about everything which is pretty good, even for a macroeconomist. Ann Pettifor believes in the magic money tree which is MMT (on which more in the weekend piece). The Russian sounding bird I know nothing about, Piketty is, well, Piketty and Stiglitz has done remarkable academic work (his Nobel entirely deserved) but that doesn't always carry over into his political pronouncements.
Those last two are actually sane but I couldn't insist on that for the others.
"do you have any suggestions as to how we might deflate the property market"
Yes, issue more planning permissions. Houses are not expensive, land is not expensive, land with permissions to build upon is grossly expensive. It the planning that costs the cash therefore.
Issue 2 million planning chitties and leave the rest to the market. Even better, repeal the Town and Country Planning Act 1947 and succesors and don't replace it with anything at all.
Yeah, the story's in the two Orlowski pieces linked in my piece......
I very rarely saw them as an act. Toby lived in my spare bedroom and also worked for me as a bartender at the time (OK, some of about this time).....
....see people you know from your youth being successful and famous.
" In 1984 he and Longworth formed the Rubber Bishops comedy duo,"
Yes, one of their bits was a lion taming act with the Yellow Pages as the lions. Not sure why it was funny but it was.....the name itself came from the fortuitous finding of a couple of cassocks in a cupboard at a gig venue (in the crypt of a church maybe?) as I recall...
Unconvinced that recommending free school dinners is part of any free market fanboi club really.
That's an intervention that has been tried. I want to say in Peru but that's only from memory.
Works very well too. Here's your family benefit, continues only if the school attendance record does. Addressing the same trade off for the parents and solving it, even if in a different manner.
Do note though, Peru is hugely (6x or so) richer than most of Africa. Don't know whether that is important to this or not but wouldn't surprise if it were.
Option 2) please. But can we make Cowell all 100 of those soon to be deaded celebrities each and every week?
Bolivia actually did this a year back. Made some forms of child labour (10 and 12 year olds sorta thing, not 6 year olds from memory) legal again having seen that a ban didn't work well.
I tend to argue that this is also something that happens as a result of development, not as a cause of it. Poor societies have two features: high child death rates and the economy runs on human muscle power. Thus women need to have many children and they are severely disadvantaged in the economy by both that and the lack of muscle heft.
A more developed economy has much lower child death rates and also jobs that aren't reliant upon muscle power (even basic textiles and sewing machines provides this). Agreed, it's not all one way but I do generally argue that it is economic development which allows female emancipation and education.
"Perhaps you can explain one day why we have a system where robbing a old lady will get you more porridge than bringing down an economy."
Because robbing an old lady is against the law ans screwing up an economy is not. Perhaps it shouldn't be that way but it is the politicians who make the laws....
"I'm all in favour of higher risks = higher rewards but so should be the costs of screwing up."
I'm in favour of people who break the law going to jail. N#But not in favour of people who screw up doing so. To err, is, after all, said to be human. Being wrong, foolish, stupid, greedy: these are not and should not be criminal offences.
"It will be fun to see what happens when small-scale solar power becomes a realistic solution in that part of the world."
This will indeed be something absolutely fascinating to see. It's going to happen too. Solar is already cheaper than trying to wire up a country for the first time (not for vast factories maybe, but for domestic and light commercial). Akin to leaping straight to mobiles without the landline stage.
How umm, devolved? granular? dispersed? not really sure of the right word.....can an economy be?
I don't think there's "an answer" here. Sure, if someone's starving, then feed them. Malarial area? Try to kill the malaria of design a treatment for it.
But in the longer term it's really all about economic development (the weekend piece talks about this as well). Paul Krugman as said that productivity isn't everything but in the long run it's pretty much everything.
Being able to communicate increases productivity.
In this specific instance, comms v. malaria, there's actually no conflict. There's plenty of people (both charitable and for profit) willing to fun the best we can do for both.
Quite so. And the politician is called Rand Paul, not Paul Rand.....
Peter Diamond (Nobel Laureate) and Emmanuel Saez (will get Nobel if he lives long enough) on the calculation of where the peak of the Laffer Curve is for the US.
As I say in the piece, about 54% for a system with allowances. That any Brit can leave the country and thus the tax system is such an allowance. And 54% is all taxes on income, so including NI. Giving a top income tax rate of some 45% or so......
"Methinks I have spotted a trend :-) Maybe we could write an article about how economics is all about minimizing stoopidity!?"
Ben Bernanke said that in a speech once. 90% of economics is telling politicians not to do stupid things.
I work quite a bit in hte Czech Republic and you do describe Milos Zeman rather well.....
"I'm interested that you seem more in favour of the basic income idea than when you said in January: 'I'm in favour myself, but real world experiments have shown problems', which slightly dampened my enthusiasm."
Ever the problem of both politics and economics. If you start from the real world experiments you might end up with a different colouring to the solution than if you start from first principles. And there's no real solution to it either. I'm firmly in favour in principle and slightly less so in reality.
I do think that much of the problem with reality goes away if a UBI really is *basic*. If it gets hijacked into being a *living* wage (ie, that £9 an hour sort of thing) then I think the practical problems overwhelm it.
Erm, well, I think that's where we disagree you see.
Thieving, lying, aggrandising, bastards appear to be less damaging than pure idiots.
We, with Willy the Conq etc, had the thieving, lying, aggrandising, but we ended up richer than those places with the idiots, no?
Corruption is bad, M'Kay? Idiocy is worse.
"Though I'd feel happier if el reg also had an equally accomplished economics writer with leftish leanings as a balance."
"Accomplished" is very nice of you, thank you.
However, one slight problem from my point of view. Yes, I know, I make little jokettes about being a capitalist plutocratic running dog and all that, but I actually consider myself (as do most of my colleagues at the Adam Smith Institute consider both me and themselves) as being a lefty, a leftist.
My arguments always start with "What's going to make the poor richer?" and in my book that makes me a lefty. That the answer seems to be markets, trade, non-excessive taxation and so on is only a means to that end.
That's an interesting point.
So, what's worse for an economy?
1) Corruption on truly Herculean scale?
2) Idiot* socialism?
Answers on a postcard to Nicholas Maduro, Presidential Palace, Caracas, please.
*Yes, there is non-idiot socialism. John Lewis for example. Building Societies.
This applies to Mage as well.
"What worries me, you see, is the possibility of a situation whereby so much is automated that there are simply too few jobs left for actual humans to fill at the current 37-40 hours a week and three weeks holiday or so."
I come from the other end of this argument. We start by assuming that human desires and wants are infinite. It's a basic assumption of the economic way of thinking.
So, if people get displaced from what they're currently doing by automation that leaves their labour free to go off and satisfy some other human need. If we were all still sowing and reaping the fields by hand then we wouldn't have nail bars: even though the need for them was probably higher back then. So, by automating farming we made nail bars possible.
It is of course possible that human needs and desires are not infinite. Which would mean that at some point there will be no new desires that that newly freed labour can go satiate.
But that means that all human needs and desires are satiated: why should anyone work at that point?
And there's no point in stating but, if people don't have jobs then they can't get any of the stuff: because at that point we're back to human needs not all being satiated so there's still jobs to do.
The end state can only be that either people don't need to work in order to be able to consume or that there will still be jobs to do.
As to maximum hours of work and so on I don't see any state need for it at all. Because all of history has shown us that as people get richer they take more of that increased income as leisure. Sure, seems to have slowed down in recent decades but not really. We've been taking it as reduced household production hours and increasing our leisure that way.
"because VAT is applied to extensions, but is not applied to "new build","
I can't recall which Chancellor brought that in but I would still call it one of the great idiocies of he UK tax system. Truly cretinous in fact.
Depends how much you worry about marginal tax and benefit rates as you go past the minimum income level. I worry a lot about it so prefer the UBI. The advantage of the NIT is that it's much cheaper. And we already pretty much have it really: working tax credits. That's what Friedman's original NIT did morph into when people tried to actually apply it.
We usually think of VAT working the other way around. The rich save more money (not subject to VAT) and the poor spend all their money (much subject to VAT). As it turns our,m empirically, it's a bit of a wash. As you note may of the things that the poor will spend upon do not carry VAT. And the rich still save a higher portion of their incomes.
So, in actual effect, VAT is roughly neither regressive nor progressive. That's for the UK though. Change what is subject to VAT (Sweden's VAT covers food I think?) and you can easily make it regressive, meaning that the effect you describe comes into play.
" but ignores the vast benefit of indirect distribution afforded in this once enlightened country by the very existence of state-funded schools and the fantastic National Health Service "
One interesting calculation which I've regularly mentioned, even if not around here. The TUC o0nce worked it all out.
Income, between the averages of the top 10% and the average of the bottom 10%, is about 30:1. When you get to consumption, so including all tax and benefits, and also the effects of things like the NHS and free schooling, is about 6:1. That's a pretty highly redistributive system over all.....
Indeed. It's not some killer argument against taxing. Rather, it's just a reminder that a tax, any tax, has its economic cost. From which the lesson I take is that whatever we decide to spend the tax money on had better be worth more than the activity we've just destroyed by taxing in the first place.
A rough rule of thumb is that, at current taxation levels, raising £1 in tax destroys £1.30, £1.40, in economic activity. There's very definitely things we can spend tax upon (keeping those ravenous French hordes from our shores for example) which are worth more than £1.40 for each £1 we spend on them.
Other things that current tax money is spent upon, or some proposals for spending, not so much.