Matt Nolan

Has monetary policy failed the world?

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There are two views of the long festering economic malaise that has hit the world – the view that monetary policy has done too little (read Sumner – I would put proponents of fiscal policy in the same camp) and the view that the world is re-adjusting to a structural shock and so has to undergo some drop in activity (read Kling).

Now, there is currently no way to really separate which view is right and which view is wrong.  But there is one thing we can keep in mind – during the Great Depression (which has been put down as a time when monetary policy failed) we saw inflation fall well below the Fed’s implied target … but this time they’ve kept things pretty close to where they were aiming.

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Will Taylor

Blog Update

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Those who trawl our site regularly may have noticed the blog has had a visual refresh over the last couple of days.

For those who care, the main changes are:

  • Less ugly: Fairly self explanatory…
  • Social media integration:  this should make it much easier for you tell all your friends how much you disagree with Matt;)
  • Nested comments: This should make it easier to tell which one of Matt’s comments you are disagreeing with;)
  • Rich text editor for comments: So when you want to emphasise how strongly you disagree with Matt you can bold stuff:) (will keep playing with different plugins for this, right now it is very simple)
  • Moar ads, nom nom nom: Sticking to the stereotype placed upon as greedy capitalists, we have switched to google ads. So hopefully there will be more relevant content for you and more beer money for us!

I will probably keep tweaking it over the next couple of weeks and try and add some other modern features. Any suggestions for ways we can improve the blog are welcome!

Matt Nolan

Is it wrong that …

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… the first time any concern popped into my head while reading this cartoon was when, half way through, I suddenly thought “where is the demand curve”?

He shows that supply rises as price rises – and that is great.  And given that the marginal cost is zero, this would give pretty awesome profits.  However, it misses the point that we need a demand curve in order to determine price – and generally as price goes up demand goes down.

My solution.  The firm should start buying and wasting power (generally on things that upset their employees) in order to increase demand!

Although, this might not be socially optimal if, ya know, we care about the welfare of the workers …

 

Matt Nolan

A point on debt

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Around the world there are a lot of complaints that there is too much debt, that debt will prevent a recovery, and that debt is the root of all problems – be it fiscal deficits, debt fueled consumption, or a debt powered housing market.

While there are undeniable issues to keep in mind, there are a few things to remember with these large debt levels – and one of the most important is that there are some people on the otherside of this debt.

Unknown to some is the fact that, as a planet, we are not actually in a net debt position with the rest of the galaxy (although the statistics say otherwise, I think there is an error – rather than us owing money to Martians).  As a result, for every person who has a liability owing there is another person or group who views that as an asset.  When we look at what the “issues” are with debt, we have to keep this point in mind.

Now this sounds like me stating the bleedingly obvious AGAIN … but lets think about some of the conclusions that come out of this:

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Matt Nolan

UK riots

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The riots in the UK are not pleasant, that much is clear.  Seeing such anger and hatred is never nice, but when this is happening to innocent people by a bunch of rioters who just feel bored and want to get kicks it is even more frustrating.

In this context, I find the comments of Nina Power in the Guardian not just distasteful, but sickening.  She lays the blame for these riots not on the shoulders of selfish individuals, but on capitalism and on society – she makes it sound as if the rioters are the victims, and that they are rising up to free themselves of some overbearing “system” that has trapped them.

This type of comment upsets me for two reasons:

  1. It demeans the struggle of those who are genuinely poor, of those who are genuinely oppressed – countries where a dictator presses down the rights of man for his own selfish gain.
  2. It dishonours the actual victims from these riots, and acts as if the rioters have cause – truly, why would someone who wants to fight against injustice do so by causing injustice?

By asking us to “step back” to look at the issue, she wants to provide a top-down view of what is going on in London, and now in other parts of England.  She wants to blame the structure of society, and act as if this rioting is an act of desperation by people who are victims to this system.

In truth, if we are going to step back to understand the issue we need to start from the bottom-up – these individuals view themselves as victims, in a large part because people like Nina Power tells them they are.  Given that, they don’t feel any obligation to take on responsibility – or to even ask themselves how their own selfish actions have an impact on those around them.

Truly, it is not the free market system we have that requires wholesale change, it is the victim mentality of people in society that needs to change – we can only have a “better society” when the individuals within it are willing to take responsibility for their actions.

Do I believe there is injustice and inequity within society, within institutions, and within government – yes.  But the solution needs to be built from individual responsibility and mutual respect, not the arbitrarily defined institutional structure suggested by intellectuals and columnists.

Matt Nolan

More on the recent labour market data

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Via Twitter, James Shaw informs me of the following critique of my post where I stated the media were misrepresenting the latest wage-price data.

Lies, damn lies & statistics. A friend reckons TVHE is also only painting a partial picture. QES includes merit promotions, so wages have kept up with inflation *if* you got promoted. Promotions are meant to be about getting ahead, not keep…ing up, otherwise how’s the next guy going to feed his family? Moreover, while TVHE strips out tax changes from inflation (a little rough if employers factor this into wage rounds), it ignores that Stats themselves picked out food and electricity as rising by more than the headline 5.3%. The Salvation Army reckons that CPI actually understates how difficult it is for lower income families to afford the basics.

There are a lot of points here – and while they are important things to keep in mind, I’m sticking to my conclusion that the initial headline was misleading.  Let me try to explain myself here.

[Note:  The new headline and first paras of the article I linked to in the initial piece are completely reasonable – as I’ve just gone back to read it again to see if there had been changes.  As a result, I am not criticising the article in its current form – I actually quite like the current one.  However, I am still criticising the initial suggestions that came from the article and other ones like it which will be discussed below … what can I say, there is only so much you can listen to John Campbell talking cr*p before you have to write something about it 😉 ].

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