Quotulatiousness

October 2, 2024

Duelling reports on how Javier Milei’s Argentinian “shock therapy” is working

Filed under: Americas, Bureaucracy, Economics, Government, Media, Politics — Tags: , , , , , , , — Nicholas @ 03:00

At Astral Codex Ten, Scott Alexander tries to find something approaching the truth between the pantingly enthusiastic libertarian reports and the angrily negative progressive reports:

How is Javier Milei, the new-ish libertarian president of Argentina doing?

According to right-wing sources, he’s doing amazing, inflation is vanquished, and Argentina is on the road to First World status.

According to left-wing sources, he’s devastating the country, inflation has ballooned, and Argentina is mired in unprecedented dire poverty.

I was confused enough to investigate further. Going through various topics in more depth:

1: Government Surplus

When Milei was elected, Argentina went from constant deficits to almost unprecedented government surplus, and has continued to run a surplus for the past six months.

This wasn’t fancy macroeconomic magic. Milei just cut government spending:

This source says he cut the size of government by about 30% overall. Unsurprisingly, this eliminated the Argentine deficit.

[…]

6: Overall

When Javier Milei took office, he promised to do shock therapy that would short-term plunge Argentina into a recession, but long-term end its economic woes.

He has fulfilled his campaign promise to plunge Argentina into a recession. Whether this will long-term end its economic woes remains to be seen.

I think he gets credit for some purely political victories (completing the budget cuts he said he would complete), for decreasing inflation, and for improving the housing market. But in the end, history will judge him for whether his shock therapy eventually bears fruit. I don’t think that judgment can be made yet, and I don’t see many economists eager to go out on a limb and say that there are strong signs that his particular brand of shock therapy will definitely work/fail.

There are disappointingly few Milei prediction markets, probably because it’s hard to operationalize “he makes the economy good”. This multi-pronged mega-market has few traders, and weakly predicts a mix of good and bad things, maybe leaning a little good. But here is a more specific one:

… which compared to Argentina’s historical GDP growth rate seems — no, sorry, Argentina’s historical GDP growth rate is too weird to draw any conclusions.

And maybe the most important test:

August 28, 2024

1974 – Britain’s nadir

Filed under: Books, Britain, Economics, History, Media, Politics — Tags: , , , , , — Nicholas @ 05:00

In the second part of Ed West‘s appreciation of Dominic Sandbrook’s Seasons in the Sun, Britain was described as “sliding, sinking, shabby, dirty, lazy, inefficient, dangerous, in its death throes, worn out, clapped out, occasionally lashing out” by Margaret Drabble in her 1977 novel The Ice Age, and it certainly seems to fit the bill quite well:

The Times reported in October of that year that London’s West End was in a “sorry state”, with parts of Shaftesbury Avenue and Charing Cross Road “in the sort of condition that, in Birmingham or Manchester, would qualify them for wholesale slum clearance”.

Journalist Clive Irving wrote that London had become “a semi-derelict slum”, a city blighted by “tacky porno shops, skin movies, pinball arcades, and toxic hamburger joints” while “behind neon facades the buildings are flaking and unkempt”.

The capital had lost a million and a half people since its peak in 1939, and would continue its decline for another decade. Whitehall Mandarin Ronald McIntosh declared that “London is evidently losing population quite heavily [and] services are steadily deteriorating, and nobody seems to have the least idea of how to deal with it”.

The country as a whole was haemorrhaging people, and in 1975 its population fell for the first time since records began. In the spring of 1974 applications for emigration to Canada went up 65 per cent, while New Zealand even felt compelled to put restrictions on people fleeing the old country.

Doctors in particular were leaving in droves, and recruitment agency Robert Lee International estimated that the number of professionals wanting to move abroad rose by 35% in just six months, from January and July 1975. Interest was keenest among engineers, accountants, scientists and teachers.

Many high earners were fleeing excessive tax rates, so punitive that even the Bond producer Albert R Broccoli left to make the iconic British movies elsewhere, and Moonraker would be filmed in France.

Gone were the days of the Swinging Sixties; instead, the London of George Smiley was “the city of the Sex Pistols and The Sweeney, not the Beatles and The Avengers; a city of tramps and hooligans, hustlers and muggers, the downtrodden and the disappointed, haunted by the deadly figure of the IRA bomber”.

Britain’s second city was in an even worse state. During Wilson’s first term Birmingham had been hailed as “the most go-ahead city in Europe”. Now the Times admitted it looked like a “large and chaotic building site”.

Travel writer Jonathan Raban described Southampton’s Millbrook estate as “a vast, cheap storage unit for nearly 20,000 people”. The country’s increasing problem with crime, hooliganism, graffiti and drug addiction meant that residents wouldn’t even hang their clothes in communal areas, for fear of theft.

The great architectural feats of the post-war era were beginning to look like a miserable failure, and none more so than the utopian social housing schemes, which had often entailed destroying closely-knit and organic communities in overcrowded and run-down – but rescuable – terraced housing.

Christopher Brooker visited Keeling House in Bethnal Green and found “its concrete cracked and discolouring, the metal reinforcement rusting through the surface, every available inch covered with graffiti”. Here was the story of modern Britain, “the bright, anticipated dream followed by a seedy, nightmarish reality”.

The National Theatre’s Peter Hall visited the New York Juilliard School and upon return home “found it depressing to compare it with our own already run-down, ill-maintained South Bank building”.

“The English apparently no longer care enough about material surroundings,” he wrote: “They even seem to take a positive pleasure in defiling them.”

August 27, 2024

Was 1974 the worst year in British politics or just the worst year so far?

Filed under: Books, Britain, Economics, History, Middle East, Politics — Tags: , , , , , , , , — Nicholas @ 10:10

I wasn’t in the UK in 1974 (although I did spend a couple of dystopian weeks there in January 1979), so I don’t know from personal experience just how bad things were, but as Ed West considers Dominic Sandbrook’s very informative social history Seasons in the Sun, he certainly helps make a strong case for it:

One of my favourite moments from reading Fever Pitch as a teenager was the passage where Nick Hornby and a friend bunk off school to watch Arsenal play West Ham, a game which was being held on a weekday afternoon because there wasn’t enough electricity for the floodlights. Britain was enduring a three-day week due to the energy crisis, and assuming the ground would be empty, Hornby is stunned to find it packed with 60,000 people, all skiving off work, and he recalls his hypocritical juvenile disgust at the idleness of the British public.

The scene encapsulates the comic crapness of that period, one that many of us have enjoyed laughing at with the recent Rest is History series on 1974. I began reading Sandbrook’s book Seasons in the Sun afterwards, from where the material for the series was drawn; the early chapters comprise a highly entertaining account of what he described on the podcast as “the worst year in British politics”. Reassuring, perhaps, for those of us inclined towards pessimism, although to paraphrase Homer Simpson, perhaps it was only the worst year so far.

Nineteen-seventy-four saw two elections, the first of which ended in a hung parliament, with Labour as the largest party, and the second with Harold Wilson winning with a majority of 3. These were fought between parties led by exhausted leaders who had run out of ideas, with a third, the Liberals headed by Jeremy Thorpe, soon to be notorious as a dog killer. Britain had declined from the richest country on the continent to one of the poorest in western Europe, and its economy seemed to be falling apart.

During his troubled four years in office Edward Heath had called a state of emergency several times, culminating in ration cards for petrol and power restrictions. In 1973 Heath had “told his Chancellor, Anthony Barber, to go for broke”, Sandbrook writes: “It was one of the greatest economic gambles in modern history: while credit soared and the money supply boomed, Heath hoped to keep inflation down through an elaborate system of wage and price controls”. By October that year, “his hopes were unravelling at terrifying speed”.

The “Barber boom” led to “house prices surging by 25 per cent in just six months, the cost of imports rocketing and Britain’s trade balance plunging deep into the red”. Yet just a week after Heath had published details of his “Stage Three” incomes policy, “the Arab oil exporters in the OPEC cartel announced a stunning 70 per cent increase in the posted price of oil, punishing the West for its support for Israel. It was a devastating blow to the world economy, but nowhere was its impact greater than in Britain.”

The stock market lost a quarter of its value in just a month, while by January 1974 share prices had fallen by almost half in under two years. Just before Christmas, the government cut spending by 4 per cent, and Labour’s Shadow Chancellor, Denis Healey, “warned his colleagues that Britain stood on the brink of an ‘economic holocaust'”. Nine out of ten people told a Harris poll that “things are going very badly for Britain” and nearly as many foresaw no improvement in the coming year. They turned out to be correct.

Amid trouble with the National Union of Mineworkers, in November 1973 “Heath announced his fifth state of emergency in barely four years. Floodlighting and electric advertising were banned; behind the scenes, the government began printing petrol ration cards. As the railwaymen voted to join the miners in pursuit of higher pay, it seemed that Britain was sliding into darkness. Offices were ordered to turn down their thermostats, while the BBC and ITV were banned from broadcasting after 10.30 at night. On New Year’s Day, with fuel supplies running dangerously low, the entire nation went on a three-day working week.” Happy days.

February 28, 2023

QotD: Politicians respond to different economic incentives than the rest of us

Filed under: Britain, Economics, Politics, Quotations — Tags: , , , , , — Nicholas @ 01:00

Politicians in particular have a problem – in good times, people vote for them, and in tough times … not so much.

The temptation is to delay the tough times until your successor can carry the can.

Poor old Keynes inadvertently gave politicians the answer they were looking for – the idea that during the downturn, the government should spend money into the economy to keep it going along nicely. Making sure that those lifeguards sacked from the Skegness lido can swiftly get jobs working at a government Skegness lido prevents them claiming the dole, and keeps them in the economy earning and spending until the economy washes out all the malinvestment and starts growing again. At which point the government Skegness lido closes and the lifeguards go to work at a lido somewhere where the biting Easterly wind doesn’t sandblast your skin off. The government has bridged the gap.

There’s one problem.

The government has no money of its own, so where will it get the money for their lido?

Well, Keynes said it should run a surplus during the good times and stash that surplus money away so it can be used during the downturn – a national rainy-day fund, if you will.

But guess what? Politicians don’t run surpluses.

Why would they? Every penny spent making lives better for voters today makes it more likely they will vote for you. And every penny saved against a rainy day makes it possible for your rivals to win votes tomorrow, by doing the same once they are in power.

So politicians don’t ever HAVE a rainy day fund. But that doesn’t stop them wanting to bridge the gap.

So they borrow the money.

And now what they are doing is not Keynesian, or even neo-Keynesian, but pseudo-Keynesian

By bridging the current gap with borrowed money, they simply make sure that the next gap will be costlier to bridge. Because the interest on the borrowing means that the gap will be wider.

But that’s not even the biggest problem – the biggest problem is that the gap is intrinsically important. We NEED it, to give us pause.

Whereas bridging it enables us to carry on being silly and prevents the misallocations from being flushed out – a lido remains operating in Skegness despite having no customers, and the lifeguards continue to work. Their lifesaving skills (which should be fruitfully employed elsewhere) stagnate at a lido with no punters. Their customer service skills deteriorate as the customers disappear, and what they learn instead is how to sit in a chair and stare into space. Their skills are degrading. Hysteresis, technically.

And so by delaying the collapse of the Skegness lido in pursuit of benign conditions for the voters, the government destroys the skills of our workforce.

Sowell was right – the problems we battle today were caused by the government’s interventions yesterday.

Surely using government to solve our problems is like a man quenching his thirst with seawater?

Alex Noble, “Drinking Brine”, Continental Telegraph, 2019-06-14.

September 17, 2022

In the wake of the Russo-Ukrainian war, Europe’s cold winter looms ahead

Filed under: Economics, Europe, Military, Russia — Tags: , , , , , , — Nicholas @ 03:00

Andrew Sullivan allows his views on the fighting in Ukraine to be a bit more optimistic after Ukrainian gains in the most recent counter-attacks on Russian-held territory around Kharkiv:

Approximate front-line positions just before the Ukrainian counter-attack east of Kharkiv in early September 2022. The MOD appears to have stopped posting these daily map updates sometime in the last month or so (this is the most recent as of Friday afternoon).

As we were going to press last week — I still don’t know a better web-era phrase for that process — Ukraine mounted its long-awaited initiative to break the military stalemate that had set in after Russia’s initial defeat in attempting a full-scale invasion. The Kharkiv advance was far more successful than anyone seems to have expected, including the Ukrainians. You’ve seen the maps of regained territory, but the psychological impact is surely more profound. Russian morale is in the toilet — and if it seems a bit premature to say that Ukraine will soon “win” the war, it’s harder and harder to see how Russia doesn’t lose it. By any measure, this is a wonderful development — made possible by Ukrainian courage and Western arms.

Does this change my gloomy assessment of Putin’s economic war on Europe, which will gain momentum as the winter drags on? Yes and no. Yes, it will help shore up nervous European governments who can now point to Ukraine’s success to justify the coming energy-driven recession. No, it will not make that recession any less intense or destabilizing. It may make it worse, as Putin lashes out.

More to the point, the Kharkiv euphoria will not last forever. September is not next February. Russia still has plenty of ammunition to throw Ukraine’s way (even if it has to scrounge some from North Korea); it is still occupying close to a fifth of the country; still enjoying record oil revenues; has yet to fully mobilize for a war; and still has China and much of the developing world in (very tepid) acquiescence. Putin is very much at bay. But he is not finished.

Europe’s scramble to prevent mass suffering this winter is made up of beefing up reserves (now 84 percent full, ahead of schedule), energy rationing, government pledges to cut gas and electricity use, nationalization of gas companies, and billions in aid to consumers and industry, with some of the money recouped by windfall taxes on energy suppliers. The record recently is cause for optimism:

    The Swedish energy company Vattenfall AB said industrial demand for gas in France, the U.K., the Netherlands, Belgium and Italy is down about 15% annually.

But the use of gas by households is trivial in the summer in Europe compared with the winter — and subsidizing the cost doesn’t help conservation. Russia will now cut off all gas — which could send an economy like Italy’s to contract more than 5 percent in one year. There really is no way out of imminent, deep economic distress across the continent. Even countries with minimal dependence on Russia, like Britain, are locked into an energy market with soaring costs.

That will, in turn, strengthen some of the populist-right parties — see Italy and Sweden. The good news is that the new right in Sweden backs NATO, and Italy’s post-liberal darling, Georgia Meloni, who once stanned Putin, “now calls [him] an anti-Western aggressor and said she would ‘totally’ continue to send offensive arms to Ukraine”. The growing evidence of the Russian army’s war crimes — another mass grave was just discovered in Izyum — makes appeasement ever more morally repellent.

So what will Putin do now? That is the question. His military is incapable of recapturing lost territory anytime soon; he is desperate for allies; and mobilizing the entire country carries huge political risks. It’s striking to me that in a new piece, Aleksandr Dugin, the Russian right’s guru, is both apoplectic about the war’s direction and yet still rules out mass conscription:

    Mobilization is inevitable. War affects everyone and everything, but mobilization does not mean forcibly sending conscripts to the front, this can be avoided, for example, by forming a fully-fledged volunteer movement, with the necessary benefits and state support. We must focus on veterans and special support for the Novorossian warriors.

This is weak sauce — especially given Dugin’s view that the West is bent on “a war of annihilation against us — the third world war”. It’s that scenario that could lead to a real and potentially catastrophic escalation — which may be why the German Chancellor remains leery of sending more tanks to Ukraine. The danger is a desperate Putin doing something, well, desperate.

I have no particular insight into intra-Russian arguments over mobilization, but there seems to be zero point (other than for propaganda … and that cuts both ways) to instituting a “Great Patriotic War”-style mass conscription drive at this point. The Russian army could absolutely be boosted to vast numbers through conscription. Vast numbers of untrained, unwilling young people with little military training and no particular passion to save the Rodina this time, despite constant regime callbacks to desperate struggle against Hitler in 1941-45. Pushing under- or untrained troops into battle against a Ukrainian army equipped with relatively modern western weaponry would be little more than deliberate slaughter and I can’t believe even Putin would be that reckless.

September 8, 2022

Liz Truss replaces Boris Johnson

Filed under: Britain, Economics, Media, Politics — Tags: , , , , , — Nicholas @ 03:00

In Spiked, Brendan O’Neill looks at some of the many, many tasks already piled on new British PM Liz Truss’s desk in the wake of Boris and the pandemic:

So it’s prime minister Truss. No big surprise there. What we need next, though, is something that would be very surprising, almost unfathomably so. We need a PM who can buck the crisis of political will and take clear, firm action to save the country from economic collapse and existential malaise. Is that Truss? I’m sceptical, but we shall see.

At first glance, Truss would seem to be singularly unsuited to the task at hand. That task is nothing less than a revolution of will, a rediscovery of the political mettle that has been glaringly absent in Britain these past few decades. We live under a political class that is cautious, bereft of daring; which is hyper short-termist, more concerned with dodging controversy in the present than laying out a plan for the future. The energy crisis is the bastard offspring of this evacuation of vision from politics.

And in Truss we seem to have a leader who is more technocratic than visionary, more given to following the political consensus than to shaking things up. As the Telegraph put it, Truss has been a “dutiful servant”. Despite being something of a Tory party outsider – considered by many insiders to be “a bit odd” – Truss has always “diligently backed the consensus within the party”. She seems overly media-oriented, too. She’s clearly had her gauche edges smoothed by media training and she devotes a lot of energy to “savvy social-media use”. A politician who prefers consensual calm to bold action, and who is more concerned with virtual likes than real-world impact, is not what crisis-ridden Britain needs.

And yet, Truss is far from alone in lacking political audacity, in seeming to prefer the small bureaucratic task of managing public life rather than overhauling it. In this, she’s fairly typical of today’s managerial elites. Also, Truss’s political clarity seemed to improve during the leadership contest. She even became a little more daring in what she said – for instance, by bristling against Net Zero policies. No, this doesn’t prove she’s the leader we need, but it is a reminder that politicians often find themselves, and their cojones, in the heat of battle. Will the pressures of the crisis similarly bring out Truss’s slightly edgier side? We should hope so.

On that crisis, let us be clear: it is incredibly serious. It is the most serious crisis Britain has faced in decades. The political and media elites seem unwilling to acknowledge just how deep and menacing the crisis is. Even their focus on households’ rising energy bills suggests they do not appreciate the enormity of what is unfolding. Yes, millions are worried about how to keep the lights on this winter, but the impact of the energy crisis on business and industry will be graver still. Numerous businesses look set to go under, precipitating economic collapse and mass unemployment. Choosing between heating and eating will be a luxurious memory in the event of the joblessness and poverty that would follow such a calamity in British capitalism.

On a somewhat lighter note, it turns out that Liz Truss isn’t the same person as @LizTruss on Twitter:

July 27, 2022

Baghdad Biden speaks

Filed under: Bureaucracy, Economics, Government, USA — Tags: , , , — Nicholas @ 05:00

Chris Bray recounts the story of a local government attempting and — for a while — succeeding with the Baghdad Bob blanket denial strategy:

In the Deep Blue suburban town where I live, our city government has been stumbling through a series of crises. For a couple of years, employees fled from City Hall like the building was on fire, and nowhere was the crisis more acute than in the finance department — where we had five directors in a little over two years, and lost most of the other staff, including one who sued the city over her departure. There was a year when we couldn’t pass a budget, because the budget proposal was such a shambles, and a discussion at a meeting of an advisory commission in which a commissioner asked one of the many finance directors if the numbers in the city’s bank accounts matched the numbers in the city ledger. (Try to guess the answer.)

Recently, an ad hoc committee of local citizens — all finance professionals — wrote a report on the period of crisis, and presented our city council with a recommendation that they hire someone to do a forensic audit of the city’s accounting during those years. The council scheduled the report as a “receive and file” item, placing it on a 28-item agenda as, you’ll never guess, item #28. Then, in a brief discussion that began after midnight, they said that the report was nonsense and hearsay. The end.

So, yes, there was no financial crisis in our city during the years when we had five finance directors, when “permanent” finance directors left after a few months, when we lost most of the finance department staff, when we couldn’t pass a budget, and when we had no idea how much money we were actually supposed to have in the bank. Our city council says so. “These are not the ‘droids you are looking for.”

Meanwhile, we’re not in a recession, or even facing the risk of a recession, because that’s not Joe Biden’s view, and because the technical definition of a recession is very complicated.

Also, the inflation of 2021 was transitory. Zipped right by! Also, Joe Biden has a plan to shut down the virus.

The war in Ukraine is SHUT UP SHUT UP SHUT UP, the economy is SHUT UP SHUT UP SHUT UP, the continuing Covid-19 “emergency” is SHUT UP SHUT UP SHUT UP, and the mRNA injections are REALLY REALLY SHUT UP. Actually, the way experts measure this is really complicated, and technically …

March 31, 2022

QotD: Nixon’s 1971 gamble to win re-election also tanked the economy for a full decade

Filed under: Economics, Government, History, Quotations, USA — Tags: , , , , , — Nicholas @ 01:00

[In 1971, economist Herb] Stein was saying aloud what they all knew. Prettifying a political grab by dressing it as an economic rescue was precisely the kind of action against which eminences like Burns warned foreign governments when they made grand speeches abroad. Nixon was indeed now preparing to do what Harold Wilson had done in 1967: disingenuously pretend that devaluing a currency would not affect the consumer. Stimulating the economy in this way might win Nixon the election, but inflation would eventually explode, as Friedman sometimes said, like a closed pot over high heat. Wage and price controls and taxes on imports could make the kind of growth America was accustomed to, the old bonanza, disappear for years, even a decade. True scarcity of key goods might suddenly become the rule. And that was true no matter how many times that cowboy Connally went around bragging about tariffs and telling others that America was “the strongest economy on earth”.

[…]

The 1971 run on American gold also, however, reflected foreigners’ insight. Outsiders knew a tipping point when they saw one. America had moved closer to Michael Harrington’s socialism than even Harrington understood. The United States had locked itself into social spending promises that might never be outgrown. Today, interest in Bitcoin and other cryptocurrencies serves as a measure of markets’ and individuals’ distrust of the U.S. dollar. In those days there was no Bitcoin, but gold played a similar role. The dollar was the common stock of America, and foreigners used gold to short it.

The disastrous performance of the U.S. economy in the following years proved the foreigners’ 1971 wager correct. To pay for its Great Society commitments, the U.S. government in the next decade found itself forced to set taxes so high that it further suppressed the commercialization of innovation. Products that could have been developed from patents awarded in the 1960s remained on the researchers’ shelves. Today we assume all markets will rebound given a decade. But there was to be no 1970s rebound for the Dow Jones Average. The Dow flirted with the 1,000 level throughout the decade, but did not cross the line definitively until 1982, an astonishingly long period to stagnate, nearly a generation. While markets languished, unemployment for all Americans rose. High prices, high interest rates, and federal budget deficits plagued the nation. “Guns and butter” had proved too expensive, but so indeed had butter alone. The 1960s commitments required spending that, then and down the decades, would be far greater than for Vietnam or most other wars. Those on the far left who had originally pushed for aggressive public-sector expansion had achieved what they sought, to subordinate the private sector. In 1977, Harrington actually titled a new book The Twilight of Capitalism.

Those who had counted on the private sector to sustain prosperity saw they had expected too much. The nation’s confidence evaporated. Indeed, by the late 1970s, President Jimmy Carter felt the need to undertake a national campaign to restore confidence, the kind of campaign Franklin Roosevelt had launched in response to the Great Depression. From being a nation that could afford everything, America morphed into a country that could afford nothing, a place where the president warned citizens to set their living room thermostats to sixty-five in January, or face catastrophe.

In a supreme irony, many of the people who caused the economic damage found themselves mired in the dirty work of reversing what they had wrought. The task of reducing inflation through punishing interest rates fell to Paul Volcker, who as a junior official aided leaders in the 1971 decisions that triggered the 1970s inflation in the first place. Mortgage rates rose to today incredible-sounding levels, over 15 percent. In the 1980s, the same John Connally who as treasury secretary in 1971 pounded on Nixon’s desk for populist measures that ensured an economic quagmire, went bankrupt, a casualty of the mess he had helped to create.

Amity Schlaes, Great Society: A New History, 2019.

August 18, 2020

Don’t worry your pretty little heads, normies, the enlightened ones are planning “The Great Reset” for 2021

Filed under: Bureaucracy, Economics, Government, Health — Tags: , , , , , , — Nicholas @ 03:00

Mark Steyn on how the great and the good of the world are figuring out the road ahead of us:

… most of the chaps who matter in this world are people you’ve never heard of — by which I mean they are other than the omnipresent pygmies of the political scene: In a settled democratic society such as Canada, for example, if you wind up with an electoral contest between a woke mammy singer with a banana in his pants and a hollow husk less lifelike than his CBC election-night hologram whose only core belief is that he has no core beliefs other than that party donations should pay for his kids’ schooling, you can take it as read that the real action must be elsewhere.

A lot of those chaps you’ve never heard of turn up in this video from the “World Economic Forum” — ie, the Davos set. After five months of Covid lockdown, you’ll be happy to hear that all the experts have decided that 2021 will be the year of “The Great Reset”:

I see my chums at the Heartland Institute headline this the “World Leaders’ ‘Great Reset’ Plan“. But, if by “leader” you mean an elected head of government accountable to the people, there is a total dearth. Indeed, it’s a melancholy reflection on the state of “world leadership” that the nearest to anyone accountable to the people in this video is HRH The Prince of Wales, in whom one day in the hopefully extremely far distant future the executive authority of the United Kingdom, Canada, Australia, etc will be nominally vested but which cannot be exercised without the consent of the people’s representatives. Yet even that token accountability is, as noted, in the future. So right now he’s just another guy who’s a “world leader” because he gets invited to Davos and you don’t — and, even if you were minded to show up anyway, you’d need a private jet because all the scheduled flights have been Covid-canceled and the world’s airports are ghost towns.

As is the custom among our big thinkers, the blather is very generalized. “Now is the time to think about what history would say about this crisis,” says the head of the IMF. If you say so. Personally, I was thinking that now is the time to eat a meal in a restaurant, if they weren’t closed.

But, why is it history’s job to say something about this crisis? Why, don’t you “world leaders” of the here and now say anything about it? “It is imperative that we reimagine, rebuild, redesign, re-invigorate and re-balance our world,” declares the UN Secretary-General.

That’s almost a full set, but he forgot “redefined”. “Possibilities are being redefined each and every day,” says the chief exec of British Petroleum, who as is his wont sounds like he’s in any business other than petroleum.

There is, of course, an inscrutable Oriental, who is chairman of something called the “China Green Finance Committee”. He’s there as a not so subtle reminder not even to bring up the subject of China, whose lies amplified by their sock puppet at the WHO are the sole cause of the present crisis – and whose death-grip on our future is the thing that most urgently needs to be reimagined, rebuilt, re-balanced and redefined. As I’ve mentioned many times over the spring and summer, twenty years ago we were told to forget about manufacturing — from widgets to “These Colors Don’t Run” T-shirts, that’s never coming back; from now on, we’re going to be “the knowledge economy”. Yet mysteriously, with the 5G and the Huawei and all the rest, China seems to have snaffled all that, too.

April 27, 2020

The Economy of Ancient Rome

Filed under: Economics, Europe, History — Tags: , , , , , — Nicholas @ 04:00

Economics Explained
Published 26 Apr 2020

Ancient Rome was perhaps the most significant ancient civilisation to have existed throughout history, the empire lived for over 1000 years and in that time, it gave us the foundations for our modern society. Democracy, a court based legal system, Latin languages and alphabet, three course meals, and perhaps it was one of the first modern economies to move beyond a simple agrarian empire and develop things like modern banking, lending, taxation and yes even financial crisis as we know them today.

In the same way that scholars study a dead language like Latin to discerned the foundation of meaning in our modern dialects economists can study the histories of ancient civilisations like Rome to determine basic economic functions in a time before modern financial systems could skew results and Rome was perhaps the most developed case study we could look at.

#rome #economics #recession

Patreon – https://www.patreon.com/EconomicsExpl…

Discord – https://discord.gg/7kM7Tw9

Enquiries – loungejita@gmail.com

References –

Morley, N., 2002. Metropolis and hinterland: the city of Rome and the Italian economy, 200 BC-AD 200. Cambridge University Press.

Temin, P., 2006. “The economy of the early Roman Empire”. Journal of Economic Perspectives

Temin, P., 2017. The Roman market economy. Princeton University Press.

Garnsey, P., Hopkins, K. and Whittaker, C.R. eds., 1983. Trade in the ancient economy

Brown, P., 2012. Through the Eye of a Needle: Wealth, the Fall of Rome, and the Making of Christianity in the West, 350-550 AD. Princeton University Press.

Braund, D.C., 1983. Gabinius, Caesar, and the publicani of Judaea. Klio

Articles

http://penelope.uchicago.edu/Thayer/E…

https://www.rug.nl/ggdc/historicaldev…

https://www.pwc.com.au/publications/a…

April 15, 2020

When the Fed Does Too Much

Filed under: Economics, Government, History, USA — Tags: , , , , , — Nicholas @ 02:00

Marginal Revolution University
Published 22 Aug 2017

In the 2000s, the Fed kept interest rates low to stimulate aggregate demand. But the cheap credit also helped fuel the housing market bubbles. We’ll look at the case of the Great Recession as an example of where the Fed did too much in one area, and perhaps not enough in others.

April 4, 2020

Monetary Policy: The Negative Real Shock Dilemma

Filed under: Economics, Government — Tags: , , , , — Nicholas @ 02:00

Marginal Revolution University
Published 15 Aug 2017

Imagine a negative real shock, like an oil crisis, just hit the economy. How should the Fed respond?

Decreasing the money supply will help with inflation, but make growth worse. Increasing the money supply will improve growth, but inflation will climb higher. What’s the Fed to do?!

September 28, 2019

How the Federal Reserve Works: After the Great Recession

Filed under: Economics, Government, USA — Tags: , , , — Nicholas @ 02:00

Marginal Revolution University
Published on 3 Apr 2018

In response to the Great Recession, the Federal Reserve has implemented some new instruments and policies – including quantitative easing, paying interest on reserves, and conducting repurchase (and reverse repurchase) agreements. In this video we cover how these tools work, and why they matter.

August 18, 2019

The Austrian School on the causes and cures of economic recessions

Filed under: Economics — Tags: , — Nicholas @ 05:00

Tim Worstall responds to a Guardian article on recessions (we’re apparently due for another one, according to the writer) and suggests that the Austrian theories may be helpful to understand what’s going on:

A Mises Institute graphic of some of the key economists in the Austrian tradition (Carl Menger, Ludwig von Mises, Friedrich Hayek, Murray Rothbard, and Hans-Hermann Hoppe.
Mises Institute via Wikimedia Commons.

As a pencil sketch – all you can do in a single article – that’s rather good. So, fine, let’s run with that. We’ve not had a normal recession for ages, one will come along soon enough and we’ve forgotten how to deal with it.

However, we can take this idea a little further too. Off into the wild spaces of Austrian theory. There a recession happens because of the built up malinvestment across the economy. Essentially, when it’s too easy to finance stuff then too much bad stuff gets financed. We need the regular recession to flick off the froth and get back to a more sensible allocation of capital.

My own view is that there is no one correct macroeconomic theory but that all of them contain elements of the truth. The trick is to work out which theory to apply to which happenstance. Reorganising the Soviet economy wasn’t going to be done by a bit of Keynesian demand management, there was a century of misallocation to chew through. Getting out of 2008 was different because it was the financial system that had fallen over, we didn’t just have that cyclical decline in business investment. Etc. Austrians can – perish the thought, eh? – be a little too fervent in the insistence that all recessions are about misallocation that must be purged.

But note the underlying thing we can pick up from Davies here. We’ve been staving off that normal recession for decades through that management. Perhaps it’s not all that good an idea to continually do that? He really does say that the Crash stemmed from those attempts to stave off after all. Thus, in a sense, we could argue that we’re going to get the recessionary horrors come what may. Even Keynesian demand management might not be the correct solution if it just gives us once in a generation collapses rather than more regular downturns?

That is, perhaps the Austrians are at least in part right? We need the regular purges for fear of something worse?

May 27, 2019

Game of Theories: The Great Recession

Filed under: Economics — Tags: , — Nicholas @ 02:00

Marginal Revolution University
Published on 5 Dec 2017

Tyler Cowen puts Keynesian, monetarist, real business cycle, and Austrian theories to work to explain a downturn from recent economic history: the Great Recession of 2008.

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