Kenneth Arrow proved economists needn’t be loud to make a difference
Does winning the Nobel Prize in economics cause longevity? We might be forgiven for thinking so. Thomas Schelling died last year aged 95. The author of the famous textbook, Paul Samuelson, passed away at 94, whilst his colleague, Bob Solow, is still going strong at 92. The British Laureate Ronald Coase reached the age of […]
Claims that a low tax, low regulation UK would be a disaster are rubbish
Dame Minouche Shafik, Deputy Governor of the Bank of England, is leaving to become Director of the London School of Economics. Last weekend, she gave her final interview wearing her Bank hat. Shafik issued what was described in the media as a “thinly veiled warning” to the Chancellor, Phillip Hammond. She stated that it was […]
A tale of two Eurozones: Greater Germany and Club Med are drifting ever further apart
At the end of last week Federica Mogherini met leading members of the Trump administration. Mogherini, yet another Italian politician turned Euro-bureaucrat, is in fact the foreign policy chief of the European Union. She stood on her dignity, or rather the dignity of the European Commission, issuing a warning to America not to interfere with politics […]
It’s fanciful to think China’s economy will overtake the US’s anytime soon
Possibly the single most important of the tensions stoked up by President Trump is the rivalry between the United States and China. Economic strength will be the ultimate determinant of this struggle for the position of Top Nation. Comparisons of the size of economies, particularly ones at very different levels of income per head, are fraught […]
Why the economics profession remains blind to the benefits of Brexit
The office for National Statistics last week estimated that the UK economy grew at an annual rate of 2.4 per cent in the final quarter of last year. This is slightly above the long-term average growth of the past three decades. But a Financial Times survey this month showed that the majority of economists remain […]
Economic Research Council talk: why are so many economists opposed to Brexit?
Economic Research Council talk on Monday 20th February 18.30 – 20.00: I will be discussing why so many economists are opposed to Brexit. Book your ticket here. A limited number of Early Bird tickets are available for £15 each. Following a Financial Times survey in January that showed that nine times as many economists are opposed to […]
The NHS will never have enough cash: the English religion needs reformation
We British like traditions. A well-established one which comes round every year is the “winter crisis” in the NHS. Health provision is a political hot potato not just for this government, or indeed for any particular UK government, but for governments across the developed world. One of the key assumptions made by economists about human […]
Why do bad companies stay in business for so long? Just ask an economist
A bookseller in the Yorkshire Dales has hit the headlines, branded a “shopkeeper from hell”. He called a customer a “pain in the arse”, and has been the subject of numerous complaints to the local parish council about his rudeness. To complete the outrage, he charges 50p as an entry fee to his shop. The […]
What Dirty Harry tells us about economic forecasters’ Michael Fish moment
Economic forecasters are in the dock. Last week, none other than the chief economist of the Bank of England, Andy Haldane, was confessing the crimes of the profession. The failure to predict the financial crisis was, Haldane said, economic forecasting’s “Michael Fish” moment. Thirty years ago, the BBC weatherman predicted that the UK would avoid […]
Farewell to the game theory master who helped prevent a nuclear apocalypse
Last year was a year of celebrity deaths. But perhaps the most significant of all received very little coverage. Just before Christmas, Thomas Schelling, Nobel Laureate in economics, died aged 95. In the early, tense years of the Cold War between America and the Soviet Union in the late 1940s and 1950s, Schelling’s ideas were […]
The death of cash, the rise of trade unions and other eclectic 2017 predictions
It’s certainly been an eventful year. But rather than dwell on the past, what sort of things can we expect in 2017? Here are a few eclectic predictions. Sweden may become the world’s first cashless economy. Notes and coins are already fast disappearing as a means of payment, and retailers are legally entitled to refuse to accept […]
Forget “post-truth”: A compelling vision drove Brexit and Trump triumphs
The buzz-phrase of the moment in political discussion is “post-truth”. Shell-shocked metropolitan liberals are astonished by both Brexit and Donald Trump’s success. How could their own rational analysis not find favour with the electorate? People in the internet age must be no longer capable of recognising the truth. Both the Brexiteers and Trump certainly created […]
Rampant corruption – not just the euro – has doomed Italy to stagnation
So farewell then, Matteo Renzi! The resignation of the Italian Prime Minister after his heavy defeat in Sunday’s referendum on constitutional reform has created turmoil. Fears have been resurrected about the stability of the Italian banking system, and even the possibility of Italy leaving the euro has been raised. But the problems of the Italian […]
The OBR shouldn’t be expected to forecast so far into the future
Economic forecasts have become a political hot potato. The Office for Budget Responsibility’s (OBR) predictions, presented as part of the chancellor’s Autumn Statement, have put the government under pressure. The OBR has revised down its forecast for GDP growth over the next four years by 1.4 percentage points. The real controversy is that their gloomy […]
Forward guidance is just another delusion foisted on us by mainstream macro
The governor of the Bank of England, Mark Carney, was on good form last week when he appeared at the Treasury Committee of the House of Commons. Asked what “forward guidance” meant, he answered smoothly: “The thing about forward guidance is that it is guidance that is forward. Which is not to say it is meant to […]
