Explanation of the Greece Bailout in 90 Seconds
13 Aug 2015 Leave a comment
in budget deficits, business cycles, currency unions, economic growth, fiscal policy, international economic law, international economics, International law, macroeconomics Tags: credible commitments, Eurosclerosis, game theory, Greece, sovereign bailouts, sovereign defaults
How @equitablegrowth showed inequality helps growth when arguing inequality harms growth
10 Aug 2015 1 Comment
in applied price theory, applied welfare economics, comparative institutional analysis, currency unions, economic growth, economic history, economics of regulation, entrepreneurship, Euro crisis, fiscal policy, global financial crisis (GFC), income redistribution, labour economics, labour supply, macroeconomics, Marxist economics, poverty and inequality, Public Choice, public economics, rentseeking Tags: British disease, entrepreneurial alertness, Eurosclerosis, France, German unification, Germany, growth of government, sick man of Europe, social insurance, Sweden, taxation and entrepreneurship, taxation and investment, taxation and labour supply, welfare state
The Washington Centre for Equitable Growth recently tweeted that inequality harms growth in the USA as compared to Sweden, France, Germany and the UK. It was relying on some dodgy OECD research.
.@OECD sees continued rise in growth-harming inequality, reports @PaulHannon29 on.wsj.com/1EZpq1S http://t.co/xt4heZysXT—
Equitable Growth (@equitablegrowth) May 21, 2015
The Washington Centre for Equitable Growth did not check their inequality ratios they tweeted against trends in economic growth and economic policy since 1970, which I have reproduced in figure 1. Germany is not included in figure 1 because German data on growth is thrown askew by German unification.
Figure 1: Real GDP per British, French and Swede aged 15-64, 2014 US$ (converted to 2014 price level with updated 2011 PPPs), 1.9 per cent detrended, 1970-2013
Source: Computed from OECD Stat Extract and The Conference Board. 2015. The Conference Board Total Economy Database™, May 2015, http://www.conference-board.org/data/economydatabase/
Figure 1 shows that France has been in a long-term decline since the late 1970s despite the blessings of a more equal society than the USA as championed by the Washington Centre for Equitable Growth. In figure 1, a flat line is growth in real GDP per working age person, PPP, at the same rate as the USA for the 20th century, which was 1.9% per year. A falling line in figure 1 indicates growth of less than 1.9% while a rising line indicates growth in real GDP per working age person, PPP, in excess of 1.9%. In figure 1, France hardly ever grew at the trend rate of growth for the USA of 1.9% per year and was frequently well below that rate.
Sweden tells a slightly different story in figure 1 because of regime change in the early 1990s when Sweden adopted more liberal economic policies where taxes and government spending were reduced:
The rapid growth of the state in the late 1960s and 1970s led to a large decline in Sweden’s relative economic performance. In 1975, Sweden was the 4th richest industrialised country in terms of GDP per head. By 1993, it had fallen to 14th.
@alexvoronov använda smygfinansiering av Generell Välfärd är alltid av ondo. @NimaSanandaji: bit.ly/1Nar2eV http://t.co/wD0YEgncIE—
Old Whig (@aClassicLiberal) August 05, 2015
That regime change reversed a long economic decline since 1970 under the egalitarian policies of the Swedish Social Democratic Party. Under the Swedish Social Democratic Party, Sweden was almost always growing at less than the trend rate of growth of the USA, which was 1.9%. That position reversed only when there was a turn away from big government and high taxes.
Figure 1 tells a similar story for the British economy: a long economic decline in the 1970s when Britain was the sick man of Europe. Under Thatchernomics, Europe had a long economic boom for 20 years or more – see figure 1.
In the 1970s, under the high taxes of the Heath, Callaghan and Wilson administrations, as figure 1 shows, Britain was the sick man of Europe. With the election of the Thatcher Government, Britain soon grew at better than the US trend growth rate for nearly 20 years through few exceptions.
Graph of the Day: The UK has among the lowest total tax rates on businesses in the G7 http://t.co/l6mMhN9yLD—
CPS Think Tank (@CPSThinkTank) August 04, 2015
Greece’s GDP collapse is among the worst advanced economy falls since 1870
07 Aug 2015 Leave a comment
in currency unions, economic growth, economic history, Euro crisis, macroeconomics Tags: Eurosclerosis, Greece, prosperity and depression
Greece's GDP collapse is among the worst advanced economy falls since 1870. And most of those were war-related. http://t.co/QLp6fYN83u—
RBS Economics (@RBS_Economics) July 04, 2015
Swedosclerosis, Eurosclerosis and the British disease compared
05 Aug 2015 2 Comments
in currency unions, economic growth, economic history, economics of regulation, Euro crisis, fiscal policy Tags: British disease, British economy, Eurosclerosis, France, Germany, Italy, sick man of Europe, Sweden, Swedosclerosis
Figure 1 shows stark differences between Sweden, France, Italy and the UK since 1970 in departures from trend growth rates of 1.9% in real GDP per working age person, PPP. Italy did quite OK until 2000 growing at about the trend growth rate of 1.9% after which it fell into a hole so deep that it barely notice the onset of the global financial crisis. Sweden really had been the sick man of Europe until it turned its back on high taxing, welfare state socialism in the early 1990s. France has been in a long decline so much so that the global financial crisis is hard to pick up in the acceleration in its long decline in the mid-1990s. Figure 1 also shows Britain did very well, both under the neoliberal horrors of Thatcherism and the betrayals by Tony Blair of a true Labour Party platform. The UK grew at above the trend annual growth to 1.9% for most of the period from the early 1980s to 2007. The UK has done not so well since the onset of the global financial crisis.
Figure 1: Real GDP per Swede, French, British and Italian aged 15-64, 2014 US$ (converted to 2014 price level with updated 2011 PPPs), 1.9 per cent detrended, 1970-2013
Source: Computed from OECD StatExtract and The Conference Board. 2015. The Conference Board Total Economy Database™, May 2015, http://www.conference-board.org/data/economydatabase/
Note: When the line is flat, the economy is growing at its trend annual growth rate. A falling line means below trend annual growth; a rising line means of above trend annual growth. Detrended with values used by Edward Prescott.
German data was not in figure 1 because German unification threw all of its data into disarray for long-term comparison purposes.
Did fiscal austerity in 2010 have credible academic support?
05 Aug 2015 1 Comment
#Greece austerity gauge. Greek government spending has fallen 20% since 2008. In UK and Italy it's up. #GreekCrisis http://t.co/WMQBxxVFqq—
RBS Economics (@RBS_Economics) July 07, 2015
One measure of the scale of austerity in Greece…and other advanced economies. http://t.co/PxCLagdd3L—
RBS Economics (@RBS_Economics) July 06, 2015
The employment level in #Greece is back to where it was in 1985. It's the equivalent of the UK losing 6 million jobs. http://t.co/AAWHMEFwfK—
RBS Economics (@RBS_Economics) July 06, 2015
Did the GFC catch modern macroeconomists by surprise?
03 Aug 2015 Leave a comment
in budget deficits, business cycles, currency unions, economic growth, Euro crisis, fiscal policy, global financial crisis (GFC), great depression, great recession, history of economic thought, law and economics, macroeconomics, monetary economics Tags: bank panics, bank runs, banking crises, currency crises, Thomas Sargent
Italy compared to Greece – bust without the boom
31 Jul 2015 1 Comment
in business cycles, currency unions, economic growth, economic history, Euro crisis, global financial crisis (GFC), macroeconomics Tags: Eurosclerosis, Greece, Italy, sovereign defaults
Are there net saving from a British pull-out of the EU?
31 Jul 2015 Leave a comment
in currency unions, economic growth, Euro crisis, international economics, macroeconomics Tags: British economy, customs unions, EU, EU membership, free trade areas, international economic integration, preferential trading agreements, regional integration
Ukip claims that there is a net saving from pulling out of EU are highly debatable: http://t.co/TemtNC9gnN—
C4 News FactCheck (@FactCheck) April 02, 2015
Unemployment rates across the OECD member countries
30 Jul 2015 Leave a comment
in business cycles, currency unions, economic growth, Euro crisis, job search and matching, labour economics, labour supply, macroeconomics, unemployment Tags: employment law, employment regulation, EU, Euro sclerosis, Euroland, Eurosclerosis, Japan, labour market regulation
Average effective retirement age by gender in the PIGS, 1970 – 2012
27 Jul 2015 Leave a comment
in currency unions, economic history, Euro crisis, fiscal policy, labour economics, labour supply Tags: ageing society, demographics crisis, economics of retirement, female labour force participation, Greece, Italy, male labour force participation, old age pensions, older workers, Portugal, social insurance, Social Security, Spain, taxation and labour supply
Figure 1 shows a relatively distinct pattern for men in the PIGs. Portugal aside, there has been a long decline retirement ages. This is different to the Anglo-Saxon countries where effective retirement ages have been increasing in recent years for men.
Figure 1: average effective retirement age (5-year averages), men, Portugal, Italy, Greece and Spain, 1970 – 2012
Source: OECD Pensions at a Glance.
Figure 2 shows that apart from Greece, that after a long decline in female effective retirement ages, there was something the rebound, especially in Italy and Portugal. In Greece, the rebound was in the 80s, followed by a resumption of decline from the mid 90s.
Figure 2: average effective retirement age (5-year averages), women, Portugal, Italy, Greece and Spain, 1970 – 2012
Source: OECD Pensions at a Glance.
European integration explained in one easy chart
25 Jul 2015 Leave a comment
in currency unions, Euro crisis, international economics, macroeconomics Tags: Common market, customs unions, economics of immigration, EU, Euro, Euroland, European free trade area, European Union, free trade agreements, free trade areas, open borders, preferential trading agreements
AMAZING chart on European integration. One to pin to your office wall. Nice job by @Nic_Koenig delorsinstitut.de/2015/wp-conten… http://t.co/zZbOA29mYP—
Maxime Sbaihi (@MxSba) July 24, 2015
Is the socialist solution to the Greek economic crisis working?
25 Jul 2015 Leave a comment
in budget deficits, business cycles, currency unions, economic growth, Euro crisis, fiscal policy, global financial crisis (GFC), international economics, law and economics, macroeconomics, monetary economics, property rights Tags: capital controls, capital flight, Greece, labour exodus, sovereign defaults
For down and out Greeks, the U.K. is the promised land with jobs aplenty bloom.bg/1Lwcc55 http://t.co/XHHXxdTUiN—
Bloomberg Business (@business) July 24, 2015
Finland is the poster child for why the euro doesn’t work
24 Jul 2015 Leave a comment
in business cycles, currency unions, economic growth, Euro crisis, global financial crisis (GFC), macroeconomics Tags: Euro land, Finland, recessions and recoveries, Sweden
Iceland went bankrupt in 2008
23 Jul 2015 Leave a comment
in currency unions, economic growth, Euro crisis, fiscal policy, macroeconomics Tags: Euroland, Eurosclerosis, Finland, Iceland, sovereign default, The Netherlands
Finland and Holland have grown less than Iceland since 2007. Iceland went bankrupt in 2008. washingtonpost.com/blogs/wonkblog… http://t.co/gBEbDUhgYS—
Matt O'Brien (@ObsoleteDogma) July 17, 2015
Maggie Thatcher on the Greek crisis
17 Jul 2015 Leave a comment
in applied welfare economics, budget deficits, comparative institutional analysis, constitutional political economy, currency unions, economic growth, economic history, economics of regulation, Euro crisis, fiscal policy, income redistribution, macroeconomics, Marxist economics, Public Choice, rentseeking Tags: Greece, growth of government, Margaret Thatcher, size of government
Utopia, you are standing in it! 
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