Keynesians are wrong: Cutting public spending can boost economic growth
The key aim of George Osborne’s economic policy has been to eliminate the financial deficit of the public sector. The main way of trying to achieve has been to squeeze public spending. The orthodox economic textbooks maintain that this withdraws demand from the economy, and so leads to the growth rate being slower than it […]
Technology is replacing school ties in companies’ battle to keep their employees honest
The activities of the House of Lords are very much in the news at the moment. But the members do carry out serious work, not least on the economic affairs committee. Last week, Lord Green, former chairman and chief executive of HSBC, appeared before them. Yes, the noble Lord admitted, the bank had not got […]
Guaranteed bank deposits and the market for lemons
One aspect of the Greek crisis which will affect many readers is the reduction in the amount of cash in a bank deposit which is protected. The Bank of England announced that the current guaranteed amount of £85,000 will be cut to £75,000 on 1 January. This has led to predictable outrage, with Andrew Tyrie […]
Opinion Polls, Financial Crashes and Groupthink
The election is done and dusted, but many interesting questions remain. Was there a swing to the Conservatives at the very last minute, or was it indeed possible to foresee the victory in advance? Snippets are emerging which suggest that the electorate had made up their minds well before polling day. Rod Liddle, the entertaining […]
Bribing the electorate: new rules of the game thanks to zero inflation
The temptation to believe in the concept of a free lunch is one which has proved irresistible to numerous governments through the ages. Henry VIII, for example, has seized popular imagination once again through the brilliant portrayal of him by Damian Lewis in Wolf Hall. Bluff King Hal is the nickname often associated with the […]
Capitalism is stable and resilient
The financial crisis did succeed in creating one dynamic new industry. Since the late 2000s, there has been a massive upsurge in op-ed pieces, books and even artistic performances offering a critique of capitalism. A founder member of the Monty Python team, Terry Jones, is the latest to get in on the act with his […]
The Happy Band of the Self Employed
How many workers does the typical American firm employ? Actually, it is a trick question. The answer is ‘zero’. More than 50 per cent of all companies in the United States are one person operations – the owner, and no-one else. This fragmentation of size is increasingly reflected in the UK. Here, the main growth […]
Recessions are good for the nation’s health
Many readers at this time of the year will be looking forward to their summer break, perhaps contemplating with a certain amount of envy their colleagues who have already departed. But is leisure good for you? A bit of a no brainer one might think. Indeed, until recently the consensus amongst applied economists was that […]
More ideas like HS3 are needed to solve our regional problems
In London and much of the South East, the recovery has been well under way for a considerable time. House prices boom and restaurants are packed. The economic data for the UK as a whole looks just as encouraging, with employment being at its highest ever level. Yet there are persistent complaints that the recovery […]
Psychology, not hard line maths, tells us why Osborne’s strategy is working
So, International Monetary Fund, wrong again! At the end of last week, the IMF abandoned its criticism of the UK government’s economic strategy. Christine Lagarde, the IMF chief, said her organisation had ‘underestimated’ the strength of the recovery in Britain. The IMF now believes that the UK will be the fastest growing of any major […]
Two cheers for the global recovery, but doubts remain in the Euro zone
Worries are growing about some of the countries in the Euro zone slipping back into double dip recession. By convention, a recession is when national output (GDP) has fallen for two successive quarters. But this is far from being news. In a substantial number of economies, output is lower than it was not just two […]
New ideas are needed in economics, but not the tired old statist one
The annual Institute for New Economic Thinking (INET) conference was held in Toronto earlier this month. INET was created by George Soros in the autumn of 2009 in response to the economic crisis. Mainstream economics bears a heavy responsibility for creating the intellectual climate prior to the crash that the problems of boom and bust […]
Supply-side growth, not inflation, is the cure to the debt overhang problem
In the year to March 2014, consumer prices in Sweden fell by 0.4 per cent. This has prompted the central bank, the Riksbank, to abandon the normally cautious language used by such institutions. Over the same period, inflation was negative in a further seven European countries, such as Greece, Portugal and Spain. In eight other […]
The ‘Gentleman in Whitehall’ does not know best
The government is relaxed about people cashing in their pension schemes to buy a Lamborghini. But the left-leaning liberal commentariat is certainly not. Abuse has been heaped onto George Osborne’s Budget measure of removing the requirement for people to buy an annuity. The main thrust of the attacks is that individuals may act irresponsibly. They […]
Forward guidance needed for companies, not consumers
Most of the commentary on the UK’s economic recovery focuses on consumers. Are they taking on too much debt again to finance their spending? Is there a bubble in house prices, as people get excited about bricks and mortar again? Certainly, in terms of its sheer size, spending by consumers is by far the biggest […]
