PERPETUAL BUDGETARY BLUE

On the eve of the Budget, the UK government announced it would consider issuing very long term bonds known as ‘perpetuals’ (50 to 100 years duration), in order to take advantage of historically low rates of interest . This would seem to be a rational response from a government who is pursuing a conventional (and conservative) economic policy path based on public austerity to promote private affluence. This could be described as the blue solution, both for its political connotations but also psychological and symbolic ones.

Blue is the colour of melancholy but also happiness through the latter’s association with clear skies. It is also related to personality types who are rational, analytical and clear-minded but underpinned by a gender differentiation (blue for a boy and pink for a girl).  In Hinduism, blue represents the fifth chakra the purification point of the body located in the throat.

So personality, psychology and symbolism combine to form the objective basis of the current economic policy, whose blue hue can purify the economy of its irrational (and presumably red bits). So should economic policy in the leading economies of the world be perpetually blue? This  returns us to budgetary stance and the logic of fiscal rectitude to promote economic recovery.

The question of whether to issue perpetual government bonds reminds us of the relationship between interest rates and the price of these bonds. For example, a government issues consols (bonds with no redemption date) at a price of £100 each, offering an annual coupon (fixed amount of interest paid each year) of £5. Thus, if interest rates are set at 5%, then the value of the consols, traded  in  the secondary market (bought and sold by traders after their primary issue by government) would be £100. If interest rates are lowered to 21/2% then the value of the bonds traded increases to £200, as the £5 coupon payment now represents a 21/2% return on this investment, and vice versa.

The yield on investing  £100 consols is determined by the changes in the price and the fixed coupon payment. This is known as the current yield. If the current traded price is £95 then:

Current Yield   =   Face value   x Coupon rate100 x   5% =  5.26%                                                                                                Current price                95

There are other  types of yield that apply to what is called the term structure of interest rates, with a range of returns and years to maturity although the calculation is a little more complex.  This is the crucial point in the public discussions of debt of what you pay and what you get back in investment. The problem is that the masters and mistresses of the finance universe and in their Second Estate (politicians) and Fourth Estate (journalists) minions’ febrile reporting, they focus on the total size of nominal  public debt and not its temporal distribution and real value at different points in time.  In other words,  no distinction is made between different yields and maturities This is illustrated  below in the 30 year nominal yield curve  for euro-denominated debt issued in  the European Union:

This issue was put into sharp relief by the proposal to create perpetual bonds in the context of funding infrastructure investment, another of the eve of Budget interventions by the British Prime Minister who suggested that the UK’s roads could be built and improved by selling them to pension funds and sovereign wealth funds. The paradox of his Chancellor announcing that issuing ‘perps’ would appeal to the former, whilst the latter’s buying of public assets would push up yields on them seems to have escaped him. Moreover, if the issuing of perps reduces the cost of public investment why turn to more expensive private investment? Furthermore, the returns to  this investment are likely to be repatriated overseas rather than re-cycled within the UK.  Perhaps it was a ‘blue’ moment, but which part of the psychological and symbolic distribution of this hue we are uncertain of.

This brings us back to the UK budget, which can be said to have delivered some inter-generational re-distribution from all pensioners to wealthier younger people. However, questions of inter-generational equity in relation to the housing market were not touched upon. The increase in stamp duty (a tax levied on the purchase of domestic housing) for houses whose value is above £2m was used to defray opposition  to the reduction in the top rate of income tax from 50 pence in the pound to  45 pence.  With nearly half of black young men being unemployed, reduction in pension rights;  trebling of tuition fees for higher education; and access to further education being financially restricted, the young are being offered the alternative of the rock and the hard place. A modest proposal would be to start with the housing market.

This proposal rests on establishing a national investment bank that would be the organising agency for infrastructure projects. Funding would come from issuing bonds associated with income flows from projects, with the national investment bank able to borrow from the UK government at its perpetual rates.  In respect of the housing market, the re-introduction of a capital gains tax on the increase in site value at sale would be introduced with its revenue streams hypothecated for the building of social housing, particularly in regions where housing is in short supply.

This investment bank could also issue mortgages to first-time buyers or through intermediary lenders at rates commensurate with government borrowing ones. The effect would be to balance both owner-occupier and rental (both social and private) markets whose prices have been distorted by the fall out from the financial crisis. There has been a revival in the ideas of Henry George, the   19th century American politician and political economist who thought that the only form of taxation should be a ‘single tax’ on land.  There are precedents for the modest proposal: the Caisse des Depots et Consignations in France and the pre-crisis roles of the Federal National  Mortgage Corporation (Fannie Mae) in the US. In the former case, there are subsidiaries known as societés d’economie mixtes that have private shareholding: an example that a British national investment bank could follow if desired.

With the forecast  trend rate of annual growth for the world economy between 2013 and 2018  being 4.2%,; 2.5% for the US; 2.1% for EU; and, 2.2% for the UK, the blue period looks likely to remain a constant feature of our socio-economic spectrum .  But, if the modest proposal  above isn’t addressed in some form then the continuing inter-generational inequity will mean the younger generation will be seeking higher wages to compensate for their increased costs of providing education, housing and pensions for themselves. And who would blame them for looking for red-hued alternatives as the economy’s blue chakra does not rid them of the impurities that they have had to imbibe in the last decade?

Posted in Heterodox Economics | 1 Comment

IS 2012 THE YEAR OF LIVING DANGEROUSLY FOR THE GLOBAL ECONOMY?

The Year of Dangerously is a film directed by Peter Weir with Mel Gibson and Sigourney Weaver in the starring roles. It is set in Indonesia on the eve of the attempted coup against the government of President Sukarno in late 1965.  The film focuses on a group of international journalists as they try to make sense of the impending political crisis.  1965 was also the year that the US committed half a million troops in order to end the war in Vietnam.   What journalists make of the baffling economic and political events  that are unfolding in 2012 is anybody’s guess.

Are there lessons to be drawn from the events in East Asia nearly 50 years ago as one of its largest nations became subject to political suppression, violence and ensuing economic instability?  At the end of  shortest month of the year, the question arises of whether 2012 is likely to be the longest year for the global economy as a catenation of events creates a heady brew that could overwhelm us all?   Professor Michael Klare of Hampshire College in the US makes a comprehensive case in his recent blog Welcome to the Year of Living Dangerously that covers potential food and energy crises in the context of increased geo-political threats.

This year will see presidential and parliamentary elections in the US, Russia, France, Greece, Hungary and Finland, among others, with Germany and Italy following suit in 2013. Overhanging these contests is the question of whether there will be sufficient economic recovery, particularly in the eurozone.  The World Bank’s view of prospects for the global economy suggest:

  • The global economy is now expected to expand 2.5 and 3.1 percent in 2012 and 2013;
  • High-income country growth is now expected to come in at 1.4 percent in 2012 (-0.3 percent for Euro Area countries, and 2.1 percent for the remainder);
  • Developing country growth has been revised down to 5.4 and 6 percent;
  • Reflecting the growth slowdown, world trade, which expanded by an estimated 6.6 percent in 2011, will grow only 4.7 percent in 2012, before strengthening to 6.8 percent in 2013.

“However, even achieving these much weaker out-turns is very uncertain. The downturn in Europe and the slow growth in developing countries could reinforce one another more than is anticipated in the baseline scenario, resulting in even weaker out-turns and further complicating efforts to restore market confidence……Additional risks to the outlook include the possibility that political tensions in the Middle East and North Africa disrupt oil supply, and the possibility of a hard landing in one or more important middle-income countries”. (World Bank, Global Economic Prospects, January 2012  Uncertainties and Vulnerabilities).

The graphic below shows the quarterly percentage change in world industrial production (IP). It does not make comfortable reading for those who claim that the emerging markets will provide the stimulus to growth. As can be seen, it is China that has been supporting world IP but there are now mixed signals coming from analysts who have shifted their position of being “bulls” (continuing significant growth rates) to being “bears” (faltering growth and stronger inflationary pressures).

The bulls suggest an annualised growth rate of 9.6% between 2012 and 2016, whilst the bears suggest a figure of 3.9%, with a base case of  6.9%. The lowest case is predicated on domestic and international factors. In the former case, the danger of bankruptcy of property developers, as real estate sales fall, is putting pressure on the banking system, already beset by solvency and liquidity issues. The rise in nominal wages has made the export sector less competitive in the face of continuing weak global demand. Inflationary pressures are impacting on consumer demand as household real incomes are constrained.

The eurozone crisis is impacting on the export sector by affecting demand in the whole global economy.  Cumulative debt defaults in the eurozone could lead to a hard landing for China in 2012 and 2013.  Martin Wolf in a recent Financial Times article pointed to the potential risk of the next global financial crisis starting in China  unless its economy starts to re-balance, including the full international convertibility of the renminbi.

The jobs and housing sales data in the US suggest that its economy may be edging towards recovery, although the unemployment rate appears to be sticking at 8.5%. Although growth increased by 2.7% in the last quarter of 2011, fiscal tightening of the equivalent of 11/2% of GDP is expected to limit growth to below 2% in 2012, with an upside forecast of 2.7% for 2013.  But, again the downside risk to these forecast outcomes  depends on whether the global economy can get “Beyond Thunderome”, a place that  the eurozone seems to be heading towards.

Thunderdrome is a gladiatorial arena where conflicts are resolved by a duel to the death, portrayed in another Mel Gibson film, Mad Max :Beyond Thunderome. This arena is located in Bartertown whose electricity is generated by methane generators:  a resource fiercely defended against outsiders existing in a post-apocalyptic Australia.  Anyone could be forgiven for viewing the eurozone as increasingly like Thunderdrome, in which Greek and other EU leaders and officials from the Troika of the International Monetary Fund (IMF), the European Central Bank (ECB) and the European Commission (EC) slug it out to the death.

There is also another fictional parallel in the relationship between the EU’s core and its periphery that is from Emile Zola’s novel  La Débâcle, which portrays  events during  the Franco-Prussian War of 1870. The novel centres on circumstances in and around the Battle of Sedan during which the Prussian army surrounded the French one, ultimately leading to  France’s defeat. Zola describes in detail how the black uniformed enemy troops swarm over the French lines like an army of ants.

The population of Greece can be forgiven for thinking that the Battle of Sedan is being metaphorically played out as proposals for German officials to swarm over the budgetary arrangements of the Greek government, as part of the conditions for continuing to support the fiscal bail-out deal.  Moreover, the German fixation with fiscal rectitude can be directly traced back to its history in the C19th and C20th century. Yet its proposals for an EU-wide fiscal compact that will constitutionalise public debt ceilings in all Members States reinforces the deflationary bias of the existing fiscal rules introduced by the Maastricht Treaty.  The net result is that even if there is an upswing in the economic growth cycle, any downturn will be amplified resulting in greater volatility.

The year 1870 was  one of living dangerously for the France of Napolean III and the Second Republic as its sovereignty collapsed under military defeat. If the EU,  facing a negative growth rate, continues to pursue its austerity the outcomes are potentially dangerous for all the world’s  citizens. Ironically, the head of one of the Troika, Christine Lagarde, surprisingly abetted by some of the credit rating agencies, is stating that the austerity path in itself will not lead to renewed growth. In the unlikely event of Mario Draghi, the President of the ECB, turning into some kind of economic Mad Max, 2012  and beyond will be the years of living dangerously for the world economy as its own Bartertown starts to crumble.

Posted in Heterodox Economics | 1 Comment

VANITY FAYRE OR BONFIRE OF VANITIES? THE TALES OF INFRASTRUCTURE PROJECTS

As the population of the United Kingdom (and particularly London) gears up for the next Olympiad, the Jeremiah question is whether the infrastructure projects associated with it will generate lasting socio-economic benefits. The related question is why so many large projects are either in the London region or are centred on the capital when  regional disparities within the United Kingdom have been growing wider. These projects include CrossRail and High Speed 2 (HS2), the rail link to Birmingham and eventually cities further North.

Vanity Fair is the novel by Thackeray based upon Piligrim’s Progress in which man’s attachment to worldly goods is the  main narrative. It is centred on a stop along the pilgrim’s path: a town called Vanity in which a never-ending fair is held. This Groundhog Day scenario is akin to our attachment to signature infrastructure projects, whether architectural or transport links.

In an economic environment in which the Plan A of fiscal austerity appears not to be creating growth and combating rising unemployment, and Plan B is seen as a rapper/turned soul singer, the only fayre on offer appears to be a number of vanity projects whose benefits do not appear to be widespread. Moreover, these projects tend to reinforce regional imbalances by accepting the existing spatial structures and characteristics, rather than using investment in infrastructure to influence the scale and scope of connectivity between locations. In doing so, demand patterns and their future size and duration will be influenced and changed.

The UK government expects that over the next 30 years  HS2 will cost £32 billion to build; generate £27 billion in fares; and provide £43.7 billion of economic benefits (just less than a  third of UK national income). However, like any calculus of a large amount of economic benefits over time  its logic  is problematic. The Roskill Commission, that investigated the case for a new London airport in 1969, showed that the benefits of building it were widespread but the costs very localised.

In the case of HS2, the benefits are mainly travel time savings, from which job creation numbers are inferred.  That is, time savings associated with  faster business travel are estimated at the average hourly wage rate plus non-wage costs of about 21%.  A fifth of this figure accounts for  time savings  for leisure travel , of which  commuting accounts for a fourth of this proportion.

The essential problem is that these calculations are uncertain and given the likelihood of cost overruns that are a consistent feature of British construction projects, then total net benefits are likely to be considerably lower.  Indeed the ratio of benefits to costs for HS2 has now been reduced from 2.7:1 to 1.9:1, if wider economic benefits are included, and 1.4 if they are not included. One of the problems of applying a measure of benefits that include time savings is that it can be self-fulfilling. A way of exploring this is to use the Alonso Model named after the urban economist, William Alonso.  His model explores the relationship between location, transport and housing costs. This is displayed in the figure  below.

The line Tx1 shows the increase in transport costs as one moves further out from an urban centre, whilst H1 shows the decline in housing costs  at longer distances from the centre. Thus, the optimal household location (assuming away income considerations) is at D1. If a transport improvement occurs, then the transport cost  line tilts downwards, showing that households can locate in places with cheaper housing costs (TC2) or  trade higher cost housing further away (D2).   The outcome is that this increases longer distance commuting  that generates  a range of policy implications in respect of transport infrastructure, as well as housing and supporting services.

It can be argued that the longer commuting effect will lead to higher house prices as well as increase the value of land around termini along the route.  The increase in land prices is the capitalised rents of residential  and commercial real estate over a period of time.  This contributes to  an increase in Gross Domestic Product (GDP), depending on assumptions that are made, but given the distorted and  unbalanced nature of the UK housing market this is hardly a set of economic benefits that should be welcomed.

The UK’s government’s own calculations show that the modal shift to HS2 from air and car travel will only be 16%. The freight benefits are claimed on the basis of freeing up existing rail capacity, yet evidence for this modal shift is not set out in any detail.   This cuts to the heart of the matter: demand forecasting. You do not have to be John Maynard Keynes to believe that the past is s poor guide to the future, as increasingly observed in the circumstances leading up to the ongoing economic and financial crises. The central assumption is that current demand for rail travel will continue to grow until capacity is over-full.  Estimates suggest that rail passenger traffic grew by 10% on the West Coast Mainline (the one that HS2 will complement) in the three years from 2007 and 2010.  Estimates, from a 2007 base, of overall rail demand suggest a total increase of 6% for the whole of the UK and 10% for London and the South-East until 2031.  The underlying assumptions relate to socio-economic changes including population and demographic changes and the trend rate of GDP.  In the present circumstances most consensus forecasts foresee a lower trend rate of growth until 2018 of just under 2% per annum and declining average family incomes for a decade.

The clamour for a high speed rail link seems to be a repeat of past British transport policy, with the same claims made that without adding extra capacity  a near congested system,  then gridlock will ensue. The same argument  was made in the 1970s about motorways and trunk roads based on the application of a Sigmoid curve (commonly known as the ‘S’ curve):

The curve shows the trajectory of demand whilst the dotted line represents the limit of capacity (Cd) , from the base year (B0). Well, in the case of road traffic we have not yet reached deadlock, as the system continues to be managed without turning ‘This Sceptred Isle’ into a concrete kingdom. This is in spite of doomsday warnings about catastrophe if road traffic demand was not met. Moreover, unlike HS2 this refers to the system as a whole rather than a point-to-point link.  In regard to expanding road capacity, there is the well-established traffic generation effect. A similar logic applies to HS2 in that building it may well fulfill the projections it is based upon, rather than generating system-wide economic benefits from a general and targeted upgrade of the whole railway system.  Evidence from high speed rail networks in France, Germany, Italy, Japan and Spain show that they have little or no impact on new investment and economic activities in peripheral regions.  Indeed, they tend to encourage either longer distance commuting and/or economic flows draining away from the periphery towards the core.

In Tom Wolfe’s 1987 novel Bonfire of the Vanities, the central character Sherman McCoy is wealthy bond trader and a ‘Master of the Universe’ of Wall Street. His demise follows a wrong turning whilst driving on the freeway to Manhattan with his mistress that leads them into the poorer Bronx. Their denouement starts with a hit-and-run accident involving a local black youth who eventually dies.  The title refers to the vanities of 1980s New York from a number of social, economic and anthropological perspectives : a heady brew of ambition, class, greed, politics and racism. The vanities of the protagonists are ultimately burnt as they pursue their self-interest irrespective of their fates. The current transport fayre on offer is analogous to Wolf’s novel.   The prospect of infrastructure investment that  would stimulate general growth in the economy, notwithstanding, the vanity of a single high-speed rail link seems to blind its proponents to all our fates.

It is interesting that the core cities outside London should look to links to the capital to strengthen their economic resilience. Yet a proper mapping of the attributes of this form of resilience and the connectivity (real and virtual) needed to sustain it should be the precursors of policy formulation and implementation.  Until British urban and regional economic policy is no longer solely based on the town of Vanity (otherwise known as London) and the site of its continuous Fair (otherwise known as Heathrow Airport), then we may be condemned to continue to light the touch paper to the UK’s ongoing economic welfare.

Posted in Heterodox Economics | 4 Comments

CULLING THE CONTINENT’S ECONOMIC CHILDREN?

The historian Mark Mazower’s excellent book The Dark Continent: Europe’s Twentieth Century chronicles how the objective of building a better society from the ruins of the First World War was swept away by division and bloodshed on an unprecedented scale.  The twenty-first  century offered the hope that the dark continent may be better lit , as its socio-economic development offered the opportunity of progress for all  citizens.

On the eve of the G20 Summit following the EU Summit,  that supposedly will generate the means to end the present global economic crisis, perhaps the participants should be reminded of Mazower’s previous and brilliant book Salonika: City of Ghosts. This monograph charts the history of the city from 1450 to 1950 and in particular the decline and fall of the Ottoman Empire. This was a  tolerant empire in which Christians, Jews and Muslims co-existed in a relatively co-operative way.

The relative lack of wholesale bloodshed in the post Second World War period suggests some parallel between Europe and the Ottoman Empire. The degree of tolerance among Europe’s  citizens seems greater than the two decades before the War, during which the wholesale  culling of certain and significant parts of the populace occurred.  The recent absence of darkness in the world’s seventh largest continent should not disguise its dormant volcanic quality, the explosion of which would cast a pall over all of us.

One can strongly argue that the recent and significant rise in youth unemployment is an example of the inter-generational economic culling of  Europe’s young citizens. The table below (from EUROSTAT) displays a sample of EU economies’ unemployment rates for the 16 – 25  age group and the ratio to total unemployment.  Policy makers speak of a ‘lost generation’ but their prescriptions are hardly likely to dent this disgraceful and tragic situation.

The European Commission’s Europe2020 strategy contains two key priorities out of a  total of seven:

  1. “An agenda for new skills and jobs: to modernise labour markets and empower people by developing their  skills throughout their  life cycle with a view to increasing  labour participation and a better match between labour supply and demand, including through labour mobility”, and;
  2. “Youth on the Move: to enhance the performance of education systems and to facilitate the entry of young people into the labour market.”

However worthy, these priorities are supply-side responses to a crisis of deficient aggregate demand in one of the world’s richest regions. Moreover, they do little to fulfill the President of the European Commission’s statement that we can’t go back to “business as usual”, following the financial crisis of 2007.  Moreover, Youth on the Move sounds like some dodgy 1970s band whose fondness for a certain Latin American white powder is the only thing that moves them.

There are more fundamental and structural forces at play here. Fiscal conservatives point approvingly to the concept of Ricardian Equivalence that states that existing generations should not incur debt burdens for future ones that cannot be paid for by an equivalent amount of taxation. Yet, there is a serious structural inter-generational deficit in which access to wealth and income are unequally distributed.  This is an often and overlooked component of the rising inequality between rich and poor in the advanced economies.

In the UK, the owner-occupied housing sector is seen as the main root of inter-generational inequity, but there are contingent factors.  The UK has been a traditionally low wage economy, so the wealth effect of increased house prices have been an important part increased income and consumption flows in the future  for those able to exploit this economic rent. Access to higher education with no fees and full student grants are no longer available to the younger generation (see The Sceptical Economist Feeing Up Higher Education for the impact of the new arrangements). The ending of final pension schemes on spurious demographic grounds is another blow for younger generations, who like us all will wither with age.  Limited access to important social and positional goods as well as  to housing-generated economic rents close down a range of opportunities to a large part of the population due to the accident of the year of birth.

The  current British Minister of State for Universities and Science, David Willetts published his book The Pinch: How the Baby Boomers Took Their Children’s Future – And Why They Should Give It Back in 2010,  in which he accuses the generation of  baby boomers  of stealing their children’s inheritance through their dominance of the socio-economic and cultural landscape.

As Willetts was part of the Thatcher administration’s policy unit that oversaw the increased privatisation of self in accessing social goods and the decline in public housing, it is left to the reader to decide about the degree of irony in this book. Furthermore, this is the man who claimed that feminism restricted male access to the labour market.  Moreover, Willets carries the nickname “two brains” for his intellectual prowess in a political party not renowned its intellectual credentials.

There is a solution to inter-generational inequity and it is called the taxation system. Schedule A, the tax on housing capital gains in the UK, was scrapped in 1962. But, presumably Willetts’ other brain would object to reviving this form of taxation on grounds of interfering with the market,  which is presumably why the thresholds on inheritance tax still remain high for large parts of the country.

There are  more dramatic solutions like hunting down everyone over a certain age as in the novel and 1976 film Logan’s Run.  In this perfect world of hedonism of  the 23rd century everyone over thirty is hunted down and killed in order to maintain equilibrium in resources and prevent over-population. It seems the perfect rational expectations universe that  could be applied today to everyone in Europe over forty-five (the equivalent age below which proposed   reductions in pension entitlements are being set).

Metaphorically, as the European political classes slither from one slippery slope of crisis to more dangerous and steeper ones, this may have a certain appeal. But the socio-economic culling of younger generations does not seem to register with them.  In spite of the EU Summit and the upcoming G20 one, it may seem unfortunate  to those of a biblical persuasion that the global occupation protest outside St Pauls Cathedral is having no Road to Damascus conversion impact on  these policy makers.

At the end of Dark Continent, Mark Mazower writes:

If Europeans can give up their desperate desire to find a single workable definition of themselves and if they can accept  a more modest place in the world, they may come to terms more easily with the diversity and dissension which will be as much their future as their past.

Well  not culling the continent’s economic children is a starting point in embracing  diversity and dissension , otherwise we may start to inhabit a Region of Ghosts as history’s dance around tragedy and farce begins to haunt us again.

Posted in Heterodox Economics | 1 Comment

THE DECLINE AND FALL OF NOBLE ECONOMICS

Teaching is a noble profession but given the damaged reputation of economics, following the financial crisis and the world economy teetering in the brink of  another Great Depression, should there continue be a Nobel Prize for Economics?

Strictly speaking, there is no prize for economics by the Nobel Committee.  Alfred Nobel established the original prize in 1895, with the first winners  being awarded in 1901. In 1969, the the Sveriges Riksbank  (the Swedish central bank) set up the Sveriges Riksbank Prize in Economic Sciences in Memory of  Alfred Nobel.  Although officially not part of the Nobel competition, the award for economics takes place alongside it.

Like the dismal or dangerous science it represents, the economics prize has not been without controversy with the rather ignoble associations of a number of winners. The 1974 joint winner Gunnar Myrdal stated that the prize should be abolished, giving the record of awarding it to reactionaries, for example Friedrich von Hayek  in 1974 (his co-winner) and Milton Friedman in 1976. Nine of the winners have been drawn from the Chicago School, whose reputation was damaged by its association with the Pinochet dictatorship in Chile .

Apart from past winners like Myrdal, Amartya Sen and Paul Krugman, and perhaps one or  two others, most of the recipients have been steeped in orthodoxy, both by training and formation. The same applies to the awarding committee that is made up exclusively of Scandinavian economists. Moreover, there has only  been one woman  (40 years after it was established) and only one non-white recipient.

The criticism of the current winners, Thomas Sargent and Christopher Sims, is that the prize committee is returning to an orthodoxy, the  application of which  has been complicit in the causes of the 2007 financial crisis and found wanting.  The 2011 recipients  won for their work on “for their empirical research on cause and effect in the macroeconomy” drawing on the statistical technique of Vector Auto Regression (VAR).  Unfortunately, they  have  also been rather agnostic on whether their work can address the current global crisis.

The major influence on their work comes from another former winner, Robert Lucas Jr, and his hypothesis of rational expectations (RE).   This hypothesis assumes that individual economic agents engage in forward looking contracts, based upon the assumption that there is a unique equilibrium in the future around which they form their expectations.  The RE approach also  assumes that people do not make systematic errors when predicting the future, and that deviations from perfect foresight are only random. Thus in this view of the economic universe, economic and financial crises, particularly caused by “Black Swan” moments, are not possible.

The criticisms of the 2011 winners are somewhat misplaced in that in the abstract universe of RE  it is being modelled using statistical methods to evaluate relationships between macroeconomic variables. There is a contradiction here, however,  because the RE hypotheses assumes that individuals’ preferences can be summed to represent the economy as a whole. Yet, what is called the aggregation problem of how the macroeconomy becomes greater  than the sum (because of scale, scope and externalities, etc) of its parts is ruled out within this perspectives  .

But, as John Parr of Glasgow University notes “theory set you free”. The essential problem is not abstraction but  the empirical application and the acceptance of the underlying ideology of rational efficient markets.  A similar problem has come to light recently in the  physical sciences,  with evidence derived from the Hadron Collider at the CERN project in Switzerland,   challenging Einstein’s theorisation of the cosmos. The evidence from the CERN team suggests that particles can travel faster than the speed of light, something that challenges the theory of relativity.

The point about the orthodoxy around the prize for economics is its hegemony in academic, policy and practice. In these circles, an American imperialism prevails which reinforces the ideology underlying this orthodoxy. The journalist John Gapper recently pointed out in the Financial Times that the hegemony of the US in the Nobel science prizes may be coming to an end, as the budgetary commitment to sustaining a globally-leading research culture in the US begins to weaken.  He includes economics in his analysis , although it is arguable that the (proper) Nobel winners  in the natural sciences have contributed much more to the human condition, as well as society.

The financial crisis brought Adam Smith, Karl Marx and John  Maynard Keynes back into public view and debates about its causes and effects. Yet, their  insights and enormous intellectual contribution are often opaque to the contemporary economics graduate and economist. Moreover, much of the discussion of their intellectual contributions borders on the caricatured by many, whose absolute rejection of anything heterodox borders on the messianic.

According to Keynes an economist should be an anthropologist, historian, mathematician, philosopher, and  political scientist pursuing ‘disciplined eclecticism’, in the words of his biographer, Robert Skildelsky. Unhappily, most of these classical disciplines are missing from the economics curriculum in contemporary higher education in the majority of the advanced economies.

The late economist  Lionel Robbins, who dominated the British   economics landscape for a large part of the 20th century, asserted that ‘economics was an engine for discovering concrete truth’. The problem is that the orthodox engine rests on rear-view mirror models whose construction prevents it from gaining forward momentum.

As for truth, Paul Krugman’s comment that  the RE School “mistook beauty for truth”appears apposite at first sight. The beauty of theoretical abstraction should be encouraged in all academic disciplines. If  teaching of economics, however,  is to become noble again  a commitment to truth seeking is imperative. But the continuing fixation with physics envy,  by  which reducing economics to the methods of physics  somehow makes its equivalent to this physical  science, will only hasten the decline and fall of this miserable endeavour.

By re-asserting the triumph of thought over technique, beauty and truth may be combined but don’t expect the Sveriges Riksbank Prize in Economic Sciences in Memory of  Alfred Nobel to be in the forefront of this noble  proposal.

Posted in Heterodox Economics | 1 Comment

THE BEARABLE HEAVINESS OF THE WEIGHTY ECONOMY

The end of the London Metals Exchange (LME) Week during which the great and good of the mining and metals industries, as well as related financial institutions, met up to discuss the issues that affect this global sector marked an important turning point in the global economy.  The revival of what called be called ‘the commodity economy’ may be ironic for many of the participants who having devoted most of their professional lives to primary and secondary industries.  Moreover, given the recent rise and fall of metals prices, it could be argued that this sector is the leading global economic indicator in upturns and the lagging one  in downturns.

The participants in these crucial industries, along with the rest of the populace,  have been  told that, since the turn of the millennium, weightlessness lights the way to the future based on the new knowledge economy. Well you need a lot of knowledge, resources and  technology to mine, say, nickel, smelt it and turn it into an input into stainless steel, the leitmotif of the contemporary built environment.

Moreover, many apparently and previously unknown metals, for example Titanium, are becoming the mainstay of advanced global industries. These include aerospace, human joint replacements, the premium marque for a well-known motor manufacturer,  as well an insulating material for wetsuits!

The development of the so-called “super-cycle” in metals in the first decade of the millennium is evidence of the rise of the emerging economies, particularly China, who have sucked in raw materials to feed its rapidly growing and export-orientated manufacturing.

The other driver is that the conditions that led to the financial crisis created incentives for financial institutions to seek new assets.

These conditions included;

  1. Global imbalances between creditor and debtor nations reinforced that the role of the US as the consumer of  last resort in fuelling global demand.
  2. The imbalances in the world economy created commodity and other asset booms, as financial institutions sought to exploit the  rising demand for natural resources in the emerging markets.
  3. Finally, a global deflationary environment brought about the  expansion in the supply of goods produced in the emerging economies which lowered the cost of capital and encouraged financial institutions to seek higher  investment returns from riskier assets.

Using financial innovation, a number of commodity-backed funds and other financial instruments further boosted the ‘super-cycle’ in metals prices.  Some of this cycle can be seen in the graph of the index of base metals below.  At the peak, it was estimated that financial fund activity boosted metals prices by an average of 40%.Despite the credit crunch and post-financial crisis, the growth in demand from the emerging markets helped sustain this super-cycle. The heaviness of the commodity economy has also supported the global shipping industry which has seen global seaborne trade increase from 10 trillion tonne-miles in 1979 to 35 trillion in 2010, recovering from the cyclical trough of 13 trillion in 1982.

Although shipping traffic and freight rates have declined in the aftermath of the crisis,  these figures do not include traffic between different operations of international companies. For example, the mined output of  metal ore  in one country may be trans-shipped to another country to be smelted, and then again trans-shipped for final production across another national boundary.

Given these weighty facts, why do we persist in imagining that we live in an second life economy in which avatars transact virtually?  Literature and science may provide the answer.  In the book The Unbearable Lightness of Being by Milan Kundera, the Czech novelist, he ruminates on the nature of human existence. He combats and contrasts the view  of the heaviness of the eternal recurrence of being (we come back as different people in future existences) with his own view that we only have one life, hence its lightness. Ironically, 27 years after we were told in the UK that “King Coal” was dead as a future energy source, the Australian and other commodity  economies are booming as a result of their  commodity exports, and in particular this form of energy  whose market is dominated by a global triumvirate which spans three continents.

From this rumination we could generalise  that always looking  for the shock of the new is central to the human condition, whether it is human pleasures or the embrace of a digital technologies and processes.  Like L.P. Hartley, we often view the past as a foreign country. Yet in matters of the economy rather than the heart, the past returns to  haunt us and remind of us that so much of our existence relies on old and heavy technologies. The internal combustion engine and the railway block working system are centuries old inventions that are the still of the basis of contemporary mobility.

In the opening of  The Shock of the Old the historian of technology David Edgerton asks the question of whether the condom is more significant in the history than the aeroplane . He could have similarly made the comparison of the condom with the computer or the Internet  as the question is impossible to answer. The heaviness of the weighty economy demands advanced scientific discoveries in order to refine the bounty of the earth. The lightness of the digital economy is also part of the bounty that nature grants us. But, as the rock turned heavy metal band Led Zeppelin show us in their most famous song, Stairway to Heaven:

There’s a lady who’s sure all that glitters is gold
And she’s buying the stairway to heaven.
When she gets there she knows, if the stores are all closed
With a word she can get what she came for.
Ooh, ooh, and she’s buying the stairway to heaven


We all may want to buy the stairway to economic heaven but by only embracing the lightness of the weightless economy its golden glitter may blind us to the heavy escalator of the weighty economy’s ascent.

Posted in Heterodox Economics | Leave a comment

THE CORROSIVE CHARACTER OF CORRUPTION

The recent arrest of the trader at the Swiss bank UBS for alleged illegal trading has highlighted the role of corruption in contemporary business. It could be argued that as the economy has become more globalised, the reverse take-over of companies to obtain public listings on respected stock exchanges has increased the probability of corruption.

Furthermore, the safeguards of corporate governance have increasingly been infringed. In the UBS case, it has cost the CEO, Oswald Gruebel,  his job and led to losses of £.15bn for the bank.

Like the ‘bad apple’ in the barrel of good ones, the ‘rogue trader’ moniker hides a more complex and systemic reality. Should we worry about corruption?. If you subscribe to the Efficient Market Hypothesis (EMH) the costs of corruption are already included in the prices of financial assets. Furthermore, that if rational expectations hold in economic transactions then individuals will  engage in forward-looking contracts, leading to equilibrium outcomes.

There are basic approaches to the economics of corruption:

  1. Corruption as ‘sand’: its grit damages  the efficiency of economy’s machine. The Swedish economist, Gunnar Myrdal argued that argued public officials construct higher bureaucratic    hurdles in order to demand bribes and thus reduced efficiency in production.
  2. Corruption as ‘oil’:  The starting point is that corruption is merely a transfer and does not lead to a loss of social welfare. The American economist, Natahaniel Leff argued that, in  respect of economic development, corruption increases  social welfare because it allows economic agents to escape burdensome regulations.

At this level of economic abstraction, one may take a sanguine approach to the two perspectives. But at a  more comprehensive and visceral level, corruption may develop a corrosive character, particularly in respect of discrimination.

The sub-title of the American sociologist Richard Sennett’s book The Corrosion of Character is “personal consequences of work in the new capitalism” in which he looks at the breakdown of traditional employment and the communities associated with it.  In this environment, the imperatives of a flexible workforce means that discrimination in the employment bargain can flourish.

This appears to reinforce the economist Gary Becker’s ‘taste’ model to justify discrimination on the basis of gender, race, sexuality, disability and age. That is, some employers may indulge their employees’ and customers’ ‘taste’ for not being associated  with certain groups. In segmented labour market theory discrimination may flourish in labour markets in general because of the splintered nature of each segment.

In the case of women, it may seem ironic that the outgoing President of the World Bank, Robert Zolliek recently  pronounced that “women were an emerging market”. Followed by the news that the Australian armed forces has scrapped limits on women being in combat roles, it suggests its seems some kind of corner may be starting  to be turned.  This is nearly 220 years after the publication of Mary Wollstonecraft’s A Vindication of the Rights of Women in which she opposes the conventional view of the time that women should not have a public education.

Yet this age-old prejudice prevails as Cordelia Fine, the Australian social psychologist, dissects in her recent book Delusions of Gender. She likens the current vogue in neuroscience to use brain scans to reinforce the caricature that women are from Venus and men from Mars. Fine compares the current fashion for brain science (based on subjective interpretation of MRIs) to justify treatment of men and women in business with the C18th best seller An Enquiry into  the Duties of the Female Sex. The author, the Reverend Thomas Gisborne, stated that the  qualities of science, rationality, jurisprudence, political authority, abstraction and so on were the attributes of the male mind. Whereas, the female mind was unsuited to these pursuits as they cluttered women’s natural cognitive functions of soothing the labours of the male mind.

Many of the subscribers to the business pot boiling books on leadership and the sexes,  who draw on neuroscience to make the same point, would probably find Gisborne’s vision historically quaint. Yet both suffer from no theory, limited evidence and contaminated data. Fine’s research  extensively reviews scientific studies across a range of different disciplines to find little difference between sexes; mainly explained  the social construction of gender. A bit like the difference across the social Rubicon of the Thames that divides North and South London.

Casual observation could lead you to ask why is so much of British management dominated by mediocre provincial white boys? They tend to conform to some Stepford-like corporate culture that reproduces itself over time. Just the suits and haircuts seem to change but the essential construction remains. The objection could be made that there are a greater number of women in senior positions in firms. But the key issue is  their distribution across different  industries, for example under-represented in primary and secondary ones.

The nature of this form of corruption is made worse by the embrace of a quasi-scientific and medical aetiology that seeks out differences in the gender to reinforce the a priori ‘taste’ for employers to legitimate discrimination in the workplace.  Drawing on alchemy to discriminate against any group corrodes the character of society and is less a form of ‘sand’ type of corruption than one that renders the machine obsolete and damages the economy permanently.

Posted in Heterodox Economics | Leave a comment

EXORBITANT THE GREEK?

As the Greek tragedy of the eurozone crisis plays out with Angela Merkel as Electra and  Nicholas Sarkozy as Orestes in pursuit of revenge for the death of Agemenon (you can choose which object or subject is appropriate in the current re-run of the play by Sophocles), the recent death of the director of the film, Zorba the Greek, Michalis Kakogiannis, reminds of the complexity that is Greece.

The romantic response by the British  to this 1964 film led to the rise of visitors from the UK and elsewhere in Northern Europe and the growth of a full-blown tourist industry. Yet this early 1960s rose-tinted view of one of the world’s oldest civilisations should not blind us to the country’s troubled history and politics. And, in the current economic reporting of the position of Greece in the eurozone crisis, this  is overlooked.

The entry of Greece into the European Union in 1981, like that of Spain in 1986, was an act of political modernisation in order to maintain a democratic bulwark against  the return of military dictatorships. For both countries joining the eurozone at its onset appeared to be a one way economic bet by which complete democratic modernisation would be complete.

A better cinematic reference point to modern Greek political history is Z made in 1969 and directed by Costas-Gravas. It is an account based on the assassination of the politician Grigoris Lambrakis in Thessaloniki in 1963. This tragic event paved the way for the military coup by the “Regime of the Colonels” in 1967 which lasted until 1974.  The current combination of tragedy and farce that is the contemporary position has to be understood in the context of recent modern history.  The final title at the end of the film, the Greek word Zi (he lives) appears, referring to Lambrakis. 

The politics of the eurozone, in respect of Greece and the other troubled economies is the biggest challenge. As Adam Posen, the academic economist who is a member of the Bank of England’s Monetary Policy Committee, recently stated that the economic solution to the eurozone crisis is fairly straightforward – it’s the politics and accompanying will that is the problem.  This may be a little sanguine given the fundamental design flaw in the eurozone, That is, it is not an optimal currency area (like the UK and the US) because there is not a system of fiscal transfers to compensate for the immobility of labour and capital across national boundaries.

According to the US-based economist, Ronald Mackinnon, the lack of a fiscal system should not matter if a comprehensive and  integrated financial system exists.  In the case of the EU, the Single European Market (SEM) and the Financial Services Directive (FSD), full integration and comprehensive coverage are some way from being complete . The essential issue for the troubled economies in the eurozone is that the trade-off of the benefits of membership are unequal. In the case of the eurozone, the trade-off is between productivity convergence and price level convergence. In the graphic below, the peripheral economies have tended to converge on rising price levels but not on increasing productivity gains.

The relative position of the wealthy “North” compared to the poorer “South” shown above reflects the gains and losses in competitiveness. This representation is reinforced by evidence of the index of Germany’s relative unit labour costs against the periphery (the year 2000 = 100).  In other words, the South is actually bearing the costs of the benefits of the North. This view flies in the face of that often held by “The Markets”.

The paradox in the eurozone crisis is that “The Markets”  have become a hierarchy that seeks to appropriate sole authority and do not operate as conventional markets . But that authority is undermined by it acting like a sea world theme park Orca that flips and flops according to who is feeding its frenzy.  In respect of Greece, the Orca’s response is puzzling at one level, given the actual scale of the problem. Greece accounts for 1.7% of EU GDP and its total public debt is 2.88% of EU GDP. So, that if a tsunami swept away one of Europe’s oldest civilisations, the eurozone would not ultimately suffer much in the future. The problem is that the Greek pinhead is bending under the weight of the elephant that is the leveraged debt of the creditor European banks.  It is estimated by the IMF that the exposure of European banks to Greek debt is €300bn (around  2.4% of EU GDP). So the citizens of the EU’s periphery are effectively paying for a banking crisis through a fiscal crisis that was beget by a financial crisis in the first place with banks as prime culprits.

As Posen also noted, you can’t get blood out of a stone as the citizens of Greece are being impoverished by an ideology that sees public debt and deficits as the problem and cutting them the  solution to economic growth. Furthermore, the intervention into the sovereignty of Member States by an unelected body, through the public hectoring of the head of the eurozone’s central bank is reinforcing the democratic deficit that is part of the visceral fault line in the EU.

Returning to Greece, it is squeezed between the many headed monster (Scylla) of the  “Troika” of the International Monetary Fund, the European Central Bank and the European Commission and the  whirlpool  (Charybdis) of the Orca’s flipping and flopping. The common view is that the Greeks have been profligate and have living off the fat of the North’s benefactors : Zorba the Greek has become Exorbitant the Greek -  a Trojan horse threatening the economic well-being of their  neighbours. Yet the objection to the eurozone being  a transfer union that German politicians and public express is otiose: the EU and the eurozone are  de facto and de jure transfer unions.

On a recent visit to Crete, it was interesting to observe  that below the apparently calm surface there are palpable signs of decline. Many shops are empty and derelict, especially family-run mini-markets, there is road less traffic and a severely reduced ferry services: the lifeblood of any sparsely populated Archipelago that is analogous to the condition of the eurozone itself. If one part becomes isolated, the rest will follow with estimated costs for Germany of 25% to 30% of GDP if the eurozone collapsed and consequently ended the Single European Market and brought down the EU itself.   The cost to the Greek populace would be too great to estimate.

The romance of Zorba the Greek has given way to blaming the victim as Exorbitant the Greek.  The commentariat overlook the modern political history of Europe at its peril. The economic solutions, including a Greek debt default within the eurozone, exist but unless there is the political will and authority to implement them, then future generations may look back at the events like those that followed the assassination of Grigoris Lambrakis.  The governing elites of Europe’s polity need to embrace Zi and stop smashing the plates that serve the food of  the economic welfare of their citizens.


Posted in Heterodox Economics | 4 Comments

FROM 9/11 TO THE 911 ECONOMY

The 10th anniversary of the attack on the twin towers of the World Trade Center has stimulated commentary and debates in different forms of media. The causes and consequences of the attack are subject to controversy and conspiracy, based on different interpretations of history and politics. The other controversy surrounds the replacement of the Twin Towers at “Ground Zero” by a new set of six towers, at an estimated cost of $100bn. This appears to be emblematic of the current Mad Hatter’s Tea Party that is the present global economy and whose trajectory seems to stem from the tragic events of the 11th September 2001.

911 is the phone number for emergency services in the US and the current parlous state of the global economy suggests that we are living in an emergency economy. Calls to the economic emergency services (The G20 countries, US Fed, the ECB and other central banks, the IMF and national finance ministries) go unanswered because of system overload, as the edifice starts to crumble and fall. Can the shock and awe and accompanying psychological trauma of the tragic events a decade ago, explain this current imbroglio?

In the aftermath of the dot.com boom giving way to the dot.bomb bust, US interest rates were lowered progressively until 9/11 when with fear bordering on panic rates were slashed, as shown below. The “Black Swan” moment of the attack of the Twin Towers turned risk into uncertainty for the global economy. With a seemingly near-permanent reduction in the cost of capital, riskier assets were sought by financial institutions to generate greater returns. The ensuing financial bubble was pricked when pretty rapid rate rises generated the conditions for the sub-prime mortgage crisis and ensuing financial crisis and recession.

This story needs no re-telling, but the simultaneous pursuit of the security state by the military-industrial complex generated an estimated $3 trillion worth of public expenditure (around a fifth of national income), thereby limiting fiscal discretion in managing the economy. Paradoxically the war on terror had been turned into a war on the economy as the only defence left was to “push on a piece of string” of a liquidity trap by lowering interest rates to near zero. That is, at these levels there is no incentive to invest because of expectations of economic recovery and greater returns is very low. The Quantitative Easing (QE) programmes (Q1, Q2 and possibly Q3) seem like a production line of ocean liners whose fates are akin the Mary Celeste and the Titanic: a ghost ship and one fatally holed by an iceberg.

With the economics and politics of austerity being pursued with quasi-religious zeal as public debt is declaimed as the source of evil, the global economy appears to be heading for its own ground zero. Ironically, the world’s economic emergency services could take a lesson from the re-building of the area around New York’s “Ground Zero” to signify revival and recovery. In other words, increased public investment as part of a growth strategy to stimulate demand, output and employment. Such a strategy  would thus publicly demonstrate that the historical lessons of 911 tragedy are not lost in farce.

The problem is that in the 911 economy, the economic emergency services are fighting new challenges with old and outdated equipment .When The Police produced  Message in a Bottle in 1979 they sang “I’ll send an SOS to the world”.  By  refusing to break the glass and read the message, these services are doing us all great and long-lasting disservice.

Posted in Heterodox Economics | 1 Comment

A LITTLE HELP FROM IRELAND’S FRIENDS

The Irish and the Germans like and can hold a tune. As Brian Cowan plays Danny Boy to Angela Merkel’s Lilly Marlene, the Beatles’s song “With a Little Help from our Friends”, in which a verse refers to singing out of tune, comes to mind. Within the European Union (EU) and among members of the eurozone, different hymn sheets are being sang from.

The bail-out of the Irish government by a combination of European Union (EU), International Monetary Fund (IMF) and some other EU Member States, reportedly worth around €85bn can be traced to the aftermath of the financial crisis. But, almost as importantly is a fundamental flaw in the design of the single currency system and the consequences of a public wail from the German Chancellor about private investors needing to be prepared for a ‘haircut’. That is, accept a loss of their holdings of government bonds in the eventuality of a default by the issuing government.

Similarly, the French Finance Minister Christine Lagarde railed against the bond markets as ‘irrational’. But that is the point, markets are always irrational otherwise financial crises wouldn’t be endemic to capitalist economies. The bond yields (%) of a number of eurozone economies is shown below.

The impact of their interventions was to increase the yields that markets demand for buying the sovereign debt of a number of European Union Member States. The bond yield is the return (interest payment plus gain capital gain) from the buying and selling bonds). Perhaps these two august European politicians should have been listening to Miles Davis’s “In a Silent Way”.

Other public commentators sing that it is greedy bankers who are causing difficulties for the eurozone system and not the system itself. The former is the ex post outcome of the ex ante weakness of the latter. The eurozone purports to be an optimal currency area, that in the absence of full mobility of capital and labour needs a system of fiscal transfers to compensate for differences in economic flows and development. At the birth of the euro monetary policy was established at the EU level but fiscal policy remained under the control of the eurozone national governments.

The lack of a fiscal equalisation system means that the currency area is not optimal in managing an asymmetrical external shock. That is, how the global financial crisis impacted differently on different currency area members. The euro went through a long period of stability and thus its weaknesses were not exposed. It allowed peripheral economies like Greece, Ireland and Portugal to exploit low and stable interest rates to create a development path that was unbalanced and unstable. It would appear that the system benefits small open economies on the upturn but privileges the larger economies on the downturn.

Fiscal crises always follow financial crises as the states bails out the banking and financial system whose participants engaged in speculative behaviour. In the case of Ireland a low corporation tax rate to attract Foreign Direct Investment (FDI) and a speculative real estate boom had the bankers and politicians leading the chorus of Survivor’s “Eye of the Tiger”:

It’s the eye of the tiger, it’s the cream of the fight
Risin’ up to the challenge of our rival
And the last known survivor stalks his prey in the night
And he’s watchin’ us all in the eye of the tiger”

to celebrate the rise of the Celtic Tiger economy. Unfortunately in the face of the crisis, the Irish economy turned out to be toothless.

Ireland’s fiscal position deteriorated with a budget surplus to GDP ratio of 2.9% in 2006 to a budget deficit to GDP ratio of 32% at the time of writing. The efforts of the European Central Bank to pump liquidity into the EU banking systems and the European Stabilisation Fund, as well as the new financial regulatory architecture, notwithstanding, the imbalances between the EU’s largest economy and its smaller neighbours is at the heart of resolving the crisis. EU policy makers, however, appear to be fighting historical episodes rather proactively dealing with the almost fatal flaws in the design of the eurozone system.

By negatively reacting to the markets ‘animal spirits” rather than proactively engaging in a sustainable policy path, they are in danger of letting “Babylon Burn” as the eurzone appears to be heading for conflagration.

With friends like these, Ireland may wistfully think about whether Angela Merkel should organise a karaoke night with the 1980s British pop band Haircut 100 in a starring role singing Gloria Gaynor’s “I Will Survive”. Unhappily for many of Ireland’s citizens they may not as pubic expenditure cuts to satisfy fiscal fetishism bite.

Posted in Heterodox Economics | 1 Comment