Posts

Do you remember yesterday?

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It’s ten years since the fall of Lehman Brothers. Ten years…. but it seems much longer. I look back on the mid-2000s as if they were a past century. Those days are gone forever, and the future is increasingly dark and uncertain. How a single event can change the course of history...

“Do you remember yesterday, that was a hundred years ago?” cries Lucretia in Benjamin Britten's The Rape of Lucretia, shortly before committing suicide. Lucretia's death was the event that brought about the fall of the Tarquin dynasty and the establishment of the Republic of Rome. A fundamental re-ordering of Roman society was triggered by a single act of betrayal. Tarquinius raped the wife of one of his senior generals. She committed suicide. Appalled, the Roman army overthrew him. No doubt Tarquinius had raped many other women. But Lucretia was a noblewoman and the wife of a loyal supporter. It was too much.

History is scattered with similar triggers for earth-shattering political changes. The…

Patrick Minford's holidays

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Skewering Patrick Minford has become something of an economists' bloodsport. I admit, I have done my fair share of Minford-bashing, though I do try to stay away from trade economics. Others are much better at lampooning Minford's antediluvian approach to trade economics than me.

But when Minford starts pontificating on the effect of currency movements on the balance of trade, I can't resist getting out the shotgun. Minford is appallingly bad on anything that involves foreign exchange. He just doesn't seem to understand how floating exchange rates interact with trade dynamics and capital flows. So it is unsurprising that his latest venture into this complex subject is as disastrous as the last.

Here is Minford, in the Express, talking about Brits and their holidays:
The mood of British consumers is good, reflecting the fact that the economy continues to grow and create record employment.

A staycation is best because of the Brexit devaluation, which makes British holida…

Job guarantees for the disabled

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It took me a while, but it has finally dawned on me why job guarantees might be very popular in the U.S., even among the sick and disabled. The clue is in this response to a tweet from Nathan Tankus:
It's not just a problem for the technically disabled. Health issues are the #1 reason why people miss work and lose jobs. Many are too weak or previously injured or old before their time. Until Medicare for all, JG with benefits would be a fantastic lift for many. — Bob Spencer (@binhkhe) August 24, 2018 Here in the U.K., access to healthcare is not dependent on being gainfully employed. But in America, it is. If you aren't working, your access to healthcare can be very limited. Thus, sick and disabled people who are unable to work can lose access to healthcare. The very people who need it most are denied it.

But there is a fatal flaw in the notion that a job guarantee could compensate for lack of universal healthcare, even temporarily. No job guarantee scheme can possibly ensur…

Life after death

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Last Friday, I watched my father die.

It was the first time I had witnessed death in a human being, though I have seen it in animals. I will never forget what it looked like. The pallor of death is quite different from paleness due to shock or illness. Even before death arrives, the blood drains away from the face as if bleached, leaving behind something more like wax than human flesh.

Right up to the end, I knew he could hear. He tried to open his eyes when I spoke to him. He knew that my brother and I were there. I don't know if he was in pain, but his breathing was distressed, so I asked the palliative care nurse to give him morphine. Perhaps the morphine stopped him fighting the process of death. He died shortly afterwards.

I have sung about death many times: in the classical song repertoire, death is almost as ubiquitous as love. And I have read many, many words about death. But nothing prepared me for this. So many of our ways of describing death are euphemistic. Perhaps…

Intermezzo

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No doubt you are all wondering why Coppola Comment has been quiet for the last two months. There are two reasons: the first is personal - my father is seriously ill and needs a lot of my time. But the second will I hope be music to your ears. I am writing a book.

My forthcoming book will be called "The Case For People's QE" and will be published by Polity, probably in Spring 2019. Yes, I know, the title makes it sound as if I have gone over to the dark side. But I assure you I have not become a Corbynista. My version of "People's QE" has a long and hallowed pedigree, running all the way from Keynes through Friedman to Willem Buiter, John Muelbauer, Paul McCulley, Zoltan Poszar and numerous other sensible people. It's really the outcome of much of my thinking and writing over the last eight years.

Coppola Comment will be back in due course. In the meantime, here is some music. Ice creams may be obtained from the kiosk in the foyer, and drinks are avai…

A very British disease

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The desire to judge people's motives rather than addressing their needs is a “British disease”. We have been suffering from it for hundreds of years, cycling endlessly through repeated cycles of generosity and harshness. Each cycle ends in public outrage and an abrupt reversal: but the memory eventually fades, and the disease reappears in a new form. In this post, I outline the tragic history of Britain's repeated attempts to "categorise the poor".

For centuries, successive British social systems have recognised that there are people who cannot work, whether because they are too young, too old, too ill or too infirm. These people need to be provided for by others – in the first instance families, but where family support networks break down, support must be provided by the wider community.

And for centuries, successive British social systems have also recognised the existence of people who are perfectly capable of working but are not doing so. Most of these people…

Velocity Matters

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An accounting identity does not indicate the direction of causation. Not ever.

I’ve been caught out on this a few times myself, usually when I am trying to deduce something useful from national accounting equations. But I’m merely a writer. People actually involved in the formulation of policy should know better.

Here’s an attempt by people who should know better to try to infer the direction of causation from an identity. On the St. Louis Federal Reserve’s blog site is this post by Yi Wen and Maria Arias. It purports to show that the reason why three rounds of QE in the US have failed to raise inflation is because the velocity of money has collapsed. And they then come up with some reasons why velocity has collapsed, though sadly no ideas about what to do about it.

Their argument is based on the familiar Quantity Theory of Money:

MV = PY

where M is the monetary base M0, P is the price level, Y is real GDP, and V is the velocity of money. Sometimes real economic output Q is use…