Helicopter Money Is in the Air
| Thursday, September 22, 2016
LONDON – Fiscal policy is edging back into fashion, after years, if not decades, in purdah. The reason is simple: the incomplete recovery from the global crash of 2008.
Europe is the worst off in this regard: its GDP has hardly grown in the last four years, and GDP per capita is still less than it was in 2007. Moreover, growth forecasts are gloomy. In July, the European Central Bank published a report suggesting that the negative output gap in the eurozone was 6%, four percentage points higher than previously thought. “A possible implication of this finding,” the ECB concluded, “is that policies aimed at stimulating aggregate demand (including fiscal and monetary policies) should play an even more important role in the economic policy
The Scarecrow of National Debt
| Monday, August 22, 2016
Most people are more worried by government debt than about taxation. “But it’s trillions” a friend of mine recently expostulated about the United Kingdom’s national debt. He exaggerated a bit: it is £1.7 trillion. But one website features a clock showing the debt growing at a rate of £5,170 per second. Although the tax take is far less, the UK government still collected a hefty £533.7 billion in taxes in the last fiscal year. The tax base grows by the second, too, but no clock shows it.
Many people think that, however depressing heavy taxes are, it is more honest for governments to raise them to pay for their spending than it is to incur debt. Borrowing strikes them as a way of taxing by stealth. “How are they going to pay it back?”Continue reading...
Theresa May, the UK prime minister, has all but repudiated the economic policies of the previous chancellor of the exchequer, George Osborne. She has promised an “industrial strategy to get the whole economy moving”. What form should a renovated economic strategy take?
The immediate problem to overcome is the uncertainty engendered by the Brexit vote. What weapons exist to fight it? Mr Osborne’s target of eliminating the budget deficit by 2019-20 has already been abandoned, but adding to the national debt by issuing government bonds for an infrastructure programme is likely to unsettle the financial markets. The Bank of England’s base rate is already close to zero, and judging by Thursday’s announcement we should not expect a
The Failure of Free Migration
| Monday, July 18, 2016
LONDON – The horrendous attack by a French-Tunisian man on a crowd in Nice celebrating Bastille Day, which killed 84 and injured hundreds more, will give National Front leader Marine Le Pen a massive boost in next spring’s presidential election. It doesn’t matter whether the murderer, Mohamed Lahouaiej-Bouhlel, had any links to radical Islamism. Throughout the Western world, a toxic mix of physical, economic, and cultural insecurity has been fueling anti-immigration sentiment and politics precise at the moment when the disintegration of post-colonial states across the Islamic crescent is producing a refugee problem on a scale not seen since World War II.Continue reading...
In the last 30 years or so, a key benchmark for liberal-democratic societies has
Basic Income Revisited
| Thursday, June 23, 2016
LONDON – Britain isn’t the only country holding a referendum this month. On June 5, Swiss voters overwhelmingly rejected, by 77% to 23%, the proposition that every citizen should be guaranteed an unconditional basic income (UBI). But that lopsided outcome doesn’t mean the issue is going away anytime soon.Continue reading...
Indeed, the idea of a UBI has made recurrent appearances in history – starting with Tom Paine in the eighteenth century. This time, though, it is likely to have greater staying power, as the prospect of sufficient income from jobs grows bleaker for the poor and less educated. Experiments with unconditional cash transfers have been taking place in poor as well as rich countries.
UBI is a somewhat uneasy mix of two objectives: poverty