The General Economics Thread

There's also the fact though, that we're going to see a population decline too, so this might end up balancing out a bit. More for less people. We've basically hit peak population.

Meanwhile:

Most Europeans think their country's inequality is worse than it actually is, while Americans believe their country is far more egalitarian than it actually is.

Joel Kotkin, a major op-ed columnist for the WSJ and its ilk, who is also an urban studies professor, thinks that the low prices in Houston, Dallas, Phoenix and Atlanta means there's more demand to live there than coastal cities.

He also fails to grasp the cities are designed to make climate change worse (by encouraging driving) and have unbearable bad summers.

Low prices would mean the opposite, either that or that there's a huge underclass dragging the bottom down

Wasn't there something last month about how urban policy that actually allows new buildings to be built is the reason for the lower cost of living?

The Bank of England split 7-2 over Interest Rates, with the 2 being for more hawkish actions, and while the The Institute of Directors is delighted to see the split, British companies will be scratching their heads about how the bank plans to handle the Sterling and any possible volatility in the British Economy.

Google's Growth since its IPO is simply amazing.

edited 20th Aug '14 10:53:38 AM by PotatoesRock

Boy oh boy, the BoE is determined to keep Britain flirting with recession, isn't it?

They probably feel they have some wiggle room since our present rate of economic growth isn't actually all that bad. Not sure how wise it is, though - the housing market, especially in London, shows every sign of another huge bubble.

edited 20th Aug '14 12:31:33 PM by Achaemenid

The rich discover that inequality is bad for business. Really? Who would have thought that destroying people's opportunity also removes their ability to spend money and purchase things? Huh, how odd.

Hey, if both parties attempt to address income inequality, that would be a hell of a start. The libertarians/Austrian economics dumbasses will be the only ones left opposing it, and no-one cares what they think.

edited 20th Aug '14 12:47:41 PM by BonsaiForest

The housing bubble in Britain is, to all appearances, a supply issue. Trying to address it by sapping demand is a really poor choice.

That article starts out well enough, but its proposal — a share in capital wealth for everyone — is a bit weird. I can't see it as anything that's likely to pay out. Lower income consumers don't need shares of McDonald's and Wal-Mart stock; they need cash in hand to buy food and clothing and such. Teaching them to "save for a rainy day" is damn near insulting, never mind the wrong solution for our present economic malaise.

The single most powerful tool we have for addressing income inequality is the minimum wage. If we can't fix that, then stock ownership programs for domestic servants and fast-food workers aren't going to make a lick of difference.

Edit: There's something else interesting — our tax laws give preferential treatment to capital gains, so shifting lower-class workers' income towards stocks would potentially have a negative impact on general revenue.

edited 20th Aug '14 1:38:02 PM by Fighteer

Yet try building houses — our Planning System is pretty slow (especially for large developments, which may sometimes require a Public Enquiry) at the best of times, and house-building rates are pretty slow at the moment^note  Big Business is indeed involved, and house-building is very unpopular in affected areas.

Clearly, the U.S. needs to start exporting houses to the U.K., and solve both countries' problems.

I wonder if we could ship those pre built houses over there.

I doubt it'll work. Houses are built differently (and of different materials) over here.

They probably don't meet building codes anyway.

Building houses is easy. Zoning land for it is apparently the hard part in Britain.

Well, this did use to be a Green and Pleasant Land. It would be nice to keep the Home Counties from becoming a single London conurbation, or the Central Belt from becoming a battleground between advancing Glasgow and expanding Edinburgh.

I think our best bet is actually to build up.

The trouble is that it didn't work out last time we attempted that.

What if we could build down?

Living in vaults is an acquired taste, methinks.

The economics of home building are really pretty simple. If there aren't enough homes to satisfy the needs of a population, then prices will rise until enough people can't afford homes to quell the demand. Even an Austrian could understand that concept.

I get it, politics, culture, blah blah. But if the Bank of England thinks there's a bubble in housing, it should examine the actual cause and address that, not propose band-aid solutions that might make things worse.

edited 21st Aug '14 5:19:20 AM by Fighteer

But that is not the Bank of England's role^note  Which is pretty clearly set out and defined — it isn't allowed to build houses itself. That is the responsibility of Central and Local Government.

edited 21st Aug '14 5:25:20 AM by Greenmantle

Then it needs to look at the overall economy and note that it's showing no signs of core inflation, meaning that holding interest rates low to continue to spur economic recovery is the correct action.

If housing policy isn't the BoE's job, then it should, in fact, do its job and not try to interfere in housing policy.

edited 21st Aug '14 5:28:11 AM by Fighteer

Well, in another area where the rent is too damn high (San Francisco), the reason that housing is kept scarce is because there's a lot of rich homeowners in San Francisco who like their property value appreciating through the roof, and rich homeowners vote. These guys don't want San Francisco to expand because that'd threaten their own little nest.

Wonder whether London has any of that problem.

edited 21st Aug '14 5:32:10 AM by Ramidel

Well, the housing markets and in particular, money held in mortgages affects Interest Rates.

Britain Is Not Only London.

Mind you, housebuilders have been accused of doing something similar, having "Land Banks" and not building on them when prices are lower.

PS: I'm getting a phishing warning appearing on every page I use^note  it automatically transfers to another page in the Forum at the moment...

Europe is doing worse than it did in the Great Depression, thanks to Austerian control of the continent's economies.

The U.S. Skills Gap it looks doesn't exist, the problem is potentially overeducated people are pushing the less educated out of the system, and that's all College Degrees might be doing these days. As well, employers aren't offering as many "thinky" jobs as they were before 2000, which might be causing a fairly significant drop in who is and isn't work.

Helicopter Money always works, as you can in theory just print a sufficient amount of money. Things like Deflation, Low Inflation and Secular Stagnation are purely political and policy choices.

edited 21st Aug '14 10:24:23 AM by PotatoesRock

The skills gap is one of those "Very Serious People" things. I hear about it all the time at my public/international affairs grad school.