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Five years ago, all the talk was of Tesco’s advances, both in the UK and US. There was plenty of opposition to Tesco, and when the former boss Terry Leahy stepped down there was more scope for reflection on the impact of the retailing giant.
The last few years have been much harder for the business, so I read with interest another type of Tesco article, in which communities reflect on the impact of Tesco closures. This looks to be another example of the potential external costs of business activity.read more...»
Centre for Cities is an independent organisation that conducts research on change in city life and economy. It has a great website that will be of real use to economics teachers.
The regional economy database produced by Centre for Cities is a helpful resource when delivering macro topics such as regional GDP, changing industrial sectors and rates of unemployment.read more...»
Mark Carney says that a period of low inflation – even deflation – propelled by falling oil prices would be “unambiguously good” for the economy. How do we reconcile this with the textbook position that the economy needs a little bit of inflation, and that deflation is to be avoided? He has also said there were no signs yet of “bad” deflation – what is the difference between ‘good’ and ‘bad’ deflation? Can we assess whether it is true to say that deflation is always bad for the economy?
I have picked up on some of the analysis of yesterday’s inflation rate as well as last Thursday’s Inflation Report to consider this. If you want to set this task for your students, here are a few links to get them started:
-(If students only read one of these, they should really see this last one.)read more...»
I’m sure you know at least a bit about the airport debate. It’s often reported that Britain needs more airport capacity in the South East of England. I’m not going to enter into that fascinating debate here. Instead, I seek to draw attention to the language I have seen used this week by two key players in the argument: Heathrow and Gatwick airport.read more...»
Vox have published a splendid e-book "Europe: No Country for Young People" looking at the diverse experiences of youth unemployment in Europe in the recent past. It highlights the diverse experiences of the past few years and separates Europe's economies into different categories depending upon their performance in tackling the issue of youth unemployment.
Does it make sense for a business to pay its staff as little as possible, in order to cut costs and be more competitive, or to raise wages in order to stimulate greater motivation, and gain employee loyalty, thus cutting costs on recruitment and training? In part one of The Price on Inequality on Tuesday, Robert Peston was looking at the widening gap between the highest income earners and the rest of us, arguing that while income and wealth inequality was seen as 'almost a good thing in the 1980's', it is now being seen as one of the greatest economic problems facing us. An article in The New Yorker, 'The Return of Fair Wages', examines a similar theme, looking at a decision by an American company to substantially raise the wages of their lowest-paid employees. Since 2000, 'real' wages in the US have hardly changed, while many US employers are making decent profits and the incomes of the top 1% have risen by nearly 60%. Mark Bertolini, CEO of Aetna (a medical insurance company) has announced that the company’s lowest-paid workers will get a substantial raise—from twelve to sixteen dollars an hour, in some cases—as well as improved medical coverage as part of their package. This article offers some interesting comment on why it may be worth paying employees a little more than the Marginal Revenue Product of their Labour.read more...»
There's a great graphic in the Economist to illustrate the currency pegs in operation around the world. According to the article, pegging a nation’s currency to that of a trading partner has some advantages. It allows businesses to plan; exporters and importers can agree on prices without worrying about sudden foreign-exchange fluctuations. Until the early 1970s, most global currencies were pegged to the dollar under the Bretton Woods system. Since then, pegs have been adopted for three main reasons by varying groups of countries.read more...»
I have often wondered how long it would take the other Michael Owen to earn my salary, and vice versa. But what determines wages? Innate skills, knowledge, limited supply, high added value of the employee are key factors.read more...»
The weekend newsletter from the Institute of Economic Affairs has this 2-minute video about the regressive impact if indirect taxation on those with the lowest incomes. The message comes very much from the free-market perspective of the IEA, which may or may not be to your taste, but serves as a very good stimulus to discussion and analysis. The data that supports their argument for a reduction in indirect tax can be found in a report titled Aggressively Regressive.
When the government still has to borrow an extra £90bn per year, in spite of all their efforts to cut spending, then the rate of interest they need to pay in order to get access to that borrowing has got to be very important. George Osborne certainly thinks so; a key reason for his deficit-reduction strategy is to retain the confidence of the bond markets, so that bond-buyers are prepared to lend to the UK at low rates. This week, that rate touched a historic low of 1.396 per cent on 10-year bonds, and as the FT report, longer term 30-year gilt yields, considered particularly reflective of the country’s inflation prospects, also dropped to a record low of 2.102 per cent.read more...»
Habitual Radio 4 listeners will already have heard the trailers for a programme coming up on Tuesday morning at 9am called The Price of Inequality. In two 30-minute programmes, Robert Preston will be investigating the cause of the growing gap between the rich and the rest of us in the UK, and assessing whether it matters - this sounds like essential listening for A2 students, and will be available on i-player after it has been broadcast.
We all know that the UK government has run up a colossal national debt - £1475bn as I type this sentence. And it’s rising fast, since the UK government also has a fiscal deficit to finance this year, which will add even more to the total stock of debt.
Yet the cost of borrowing all this money is falling to new record lows. Why? And should this influence the government’s economic policy in any way?read more...»
A lot has been made of the recent set of growth figures recently published of the UK economy. Despite the seemingly positive 0.5% quarterly growth and 2.6% annual growth, the overall impression is of disappointment and despondence. I am part of this crowd, a believer that the UK economy is only partially on the road to recovery. Several obstacles remain on this path ahead and some are already slowing us down including:
1) Poor real wage inflation
2) Poor productivity
3) A ever bulging current account deficit
4) National debts at record levels despite 'austerity'. Austerity set to continue
5) Huge economic and political uncertainty in the Eurozone
6) Consumer and Business confidence no more than pre-crisis levels and increasing survey data showing how households' perception of their financial situation is far below pre-crisis levels
7) Long term and youth unemployment above pre-crisis levels
8) Private indebtedness at record levels manageable through record low interest rates
9) Banks remain unwilling to lend despite huge rounds of QE - Deflation risks putting banks off even more
10) National election uncertainty
11) Credit fuelled consumption the key avenue promoting growth. Manufacturing, construction and the trade sector are not contributing substantially to growth and in some senses are shrinking
12) A rise in interest rates which could cause our debt time bomb to explode
These points make for excellent evaluation for an exam style question on the UK recovery, particularly for OCR's Global Economy paper. But can students actually effectively get these points down answering the question in the detail and clarity required to score fully? The difference between grasping a concept, applying it and reading about it in this case and writing formally can be stark. Here is my attempt to get students to see the light when it comes to transferring these real evaluation points on paper referring specifically to extract 1 of the OCR stimulus material to an evaluation question of whether UK recovery can be sustained.
What does this mean? Stated simply, it means that ratings agencies – who try to judge how reliable a debtor is – have issued a warning about the Russian government. If traders in the bond market doubt Russia’s ability to pay back debts, it will make it much harder, or at least more expensive, for Russia’s government to borrow.read more...»
FT Video has a short animation by Martin Wolf explaining why Global Trade Imbalances matter. This could be useful for A2 students, but needs to be used with caution - they will need to be quite clear first on the difference between a trade surplus or deficit and a government surplus or deficit - which is a classic confusion for a great many.
They need to understand not only that some countries have vast current account trade surpluses, as shown in this graph from The Economist in 2012, but also that some of those cash mountains are then used to fund buying government debt from countries. To investigate that issue, I suggest two articles; for the UK, try this in the FT about foreign investors selling UK gilts and the other from CNS News about foreign holdings of US Treasury Bills.
"Smoking during pregnancy remains a major health problem, resulting in the deaths of an estimated 5,000 foetuses and babies each year in the UK. It is responsible for tens of millions of pounds in extra healthcare spending."
This extract from a report published today in the British Medical Journal offers clear evidence of a negative externality - not only does the extra healthcare spending carry the opportunity cost of less spending available for other health treatments, but there is also evidence that the babies whose mothers smoke but which survive will have more health problems later in life. This is classic territory for an AS question on the lines of 'Evaluate policies which the government could use to reduce the incidence of smoking during pregnancy." The report also proposes a controversial policy - giving shopping vouchers worth £400 to pregnant smokers who manage to kick the habit.read more...»
Read on to find out about my article in UKED Magazine on 'Real World Economics'.read more...»
This website, and the many links to videos and articles included within it, looks like a treasure trove of resources for teaching inequality.read more...»
Free market economists are major critics of government intervention in markets. Only if it is fundamentally necessary should governments step in ( if there are substantial third party costs and if the free market is failing to allocate public goods are good examples) and even then, the use of effluent charges is best. Not many students are able to understand why the imposition of an indirect tax is market distorting and why specifically a deadweight welfare loss occurs as a result of the imposition of the indirect tax. This video explains exactly that, comparing free market equilibrium to the new tax equilibrium isolating all surplus, cost and benefits involved, finishing with overall welfare. The conclusion will be that an indirect tax will lead to net loss of social and economic welfare for society thus the key question for governments before making the decision to intervene is to question whether the benefits of intervention in the form of government revenue and potentially solving a prior misallocation of resources outweigh the costs of a loss of welfare. Higher level thinking for your top students. Enjoy
Here is a great idea! CluedUp is a new solution for students really keen to improve their contextual knowledge in AS economics
To subscribe to the daily email click here http://eepurl.com/bccNXr
Check out the blog: www.cluedup2015.wordpress.com
I'll be following Clued Up carefully in the coming weeks.
The World Economic Forum at Davos tends to stimulate and showcase lots of fascinating material, and has a focus on global issues which is of particular interest for teaching about developing economies - all very useful for Edexcel Unit 4. I strongly recommend having a look at a new BBC collection called A Richer World which is a rich source of data and strong material for application of the theory we are teaching in the Growth and Development section of the syllabus.
If you don't get around to using anything else from there, I strongly recommend a great 3.45 minute video of Hans Rosling and Evan Davis analysing changing global inequality with the aid of seven snowballs.
If you're like me and you love the logic and intuition of Economics diagrams, going the extra mile and 'dissecting' a diagram into its components is a joy rather than a complexity and unnecessary faff. Striving the get out the maximum detail from diagrams is also a great way to differentiate the class and to work out who your real stars are. The indirect tax diagram, besides the usual analysis has plenty to offer. Take a risk go through the whole lot for a lesson, your students will love you for it and will no doubt be intrigued. The beauty of Economics right here in this video!read more...»
Inequality is on the rise. Not so much between countries as within them. There is some worrying indications, reported this week, that the gap between Britain’s best performing and worse performing regions remains thoroughly entrenched.read more...»
This issue is emerging as one of the big, if not the biggest, economics story of our times. The world is vastly richer than in even the recent past, with many poor countries making good progress in catching up with the richer ones.
Yet within almost all economies, income and wealth gaps are widening. Last year Oxfam were talking about a double decker bus, representing the world’s richest people, who own half the wealth. This year wealth is concentrated in even fewer hands.read more...»
News that Bupa has taken a 49% stake in a joint venture with an Indian healthcare provider marks the impact of a new set of legislation going through parliament. The government in New Delhi wants to makes it easier for foreign firms to invest in the country reports the Times of India.read more...»
The title of this blog is taken from a Guardian article which is a stepping stone into a discussion about how best the UK can support development across the world.
You might think that the best indicator of our desire to help is the amount of money the UK government commits to overseas aid. That opens up two more discussion points. Firstly, does aid actually help poor countries? That’s a debate for another blog. Here, I’m going to focus on a second point: is there more to supporting development than being generous with aid?read more...»
I am working hard to put the finishing touches to this new resource and will get it out to schools as soon as possible!
The economic news this week has been dominated by the announcement of a very low rate of inflation. Information from the ONS shows a few more interesting nuggets of data that economics students might like to know.
A reminder, also, that when we start talking quantiles, deciles and indexes, we are now only a few short months away from the arrival of new specifications for the A level and teachers need to start thinking about how they will integrate further quantitative methods into their lessons. If you wish to know more, stock up on a few resources and think about how the A level will change please join us on our latest teacher CPD event in London on the 12th of February looking at how to Master Quantitative Methods (book online from here).read more...»
CPI inflation has slipped well below the lower limit of the Monetary Policy Committee's target, to 0.5% - that is far lower than it fell during the recession, and the lowest level since May 2000. So, as Mark Carney prepares his letter to the Chancellor to explain how this has happened, and what the Bank of England intend to do about it, the BBC have published an article which examines why we need some inflation. It is one of those articles which is truly useful - probably more so than a text book as it is based on real, current context. Highly recommended to AS students learning about inflation for the first time, and A2 students who need to revise the basics.read more...»
Due to illness, an opportunity has arisen to work with our good friends in the fantastic Economics team at City of London School.
Trust me, this is a wonderful place to work, right next to St Paul's Cathedral and a stone's throw from Millennium Bridge.
City of London School are looking for someone to teach Economics AS and A2 from 19th January - 17th April. The holidays will be fully paid and the pay is £55k pro-rata. The timetable is rather light too from 9-1am Mon-Wed and 9-3.30 Thurs-Friday.
If you are interested, please contact David Rey via email for more details.
Some thoughts on what may be to come next weekread more...»
Youth unemployment remains a serious problem in Europe. There is the tiniest glimmer of hope in that the number of young people under 25 unemployed in the Euro zone is 58,000 lower than it was a year ago. But that still leaves 3.4 million without a job. In Italy, the youth unemployment rate is 44 per cent, in Greece nearly 50 per cent and in Spain 53 per cent.read more...»
ESSENTIAL CPD COURSE: Teaching the New A Level Economics: Mastering Quantitative Methods
Extra course date now available - 12 February 2015 - London
A key feature of the new A Level and standalone AS specifications (for first teaching from September 2015) is a greater focus on quantitative methods.
The Ofqual subject criteria with which awarding bodies must comply states that specifications must require learners to:
"...develop analytical and quantitative skills in selecting, interpreting and using appropriate data from a range of sources"read more...»
The price mechanism should help the economy to allocate resources more efficiently. Scarcity drives up prices, sending a signal to the economy – usually giving firms an incentive to produce more, and households the motivation to ration their consumption.
Offering free parking sounds like a terrific idea, until you think of some of the possible consequences.read more...»
What a superb Business & Economics opportunity here - a chance to work with our good friends at The King's School, Grantham. Applications need to be in by 20 January 2015. Please mention you saw this opportunity on tutor2u!read more...»
This week we have read news of two corporate giants taking strides to rein in their operating costs amidst challenging business conditions.read more...»
Perhaps you are starting to look at labour markets, which economists usually understand in terms of the supply of, and demand for, labour services. This is a good example of these two forces coming together to determine wage rates.read more...»
Will 2015 be the year in which fantasy economics in Europe is finally put to the test? Somewhat to the surprise of many commentators, in December the Greek political class failed to elect a new president even after three attempts. Parliament has now been dissolved and an election will take place on 25 January. The left-wing Syriza party currently leads in the polls.read more...»
I recommend colleagues have a look at Max Roser's World in Data website that presents the Long-term Data on how our World is Changing – Visualised in Maps and Graphs. Click here for the Facebook page: https://www.facebook.com/OurWorldinData
Our good friend Tim Harford recently gave the annual lecture at the Royal Statistical Society and the talk is available via You Tube.read more...»
An ever-growing community of teachers are using common hashtags to support, extend and enrich the work of their students across the various economics units at AS, A2 and IB level.read more...»
Unit 4 Edexcel Economics Key Tips:read more...»
As 2015 comes in, France’s 75% rate of income tax disappears. It was paid on earnings of over €1 million, by around 1000 staff in 470 companies. This Guardian article suggests it raised comparatively little- €260m in 2013 and €160m in 2014- as France’s national debt rose to over 80% of GDP-read more...»
The second annual Marshall Society Economics Conference in Cambridge on Saturday 31st of January 2015 promises to be another superb event.read more...»
Here are some details of an event being held at Eton College on Wednesday 28th January likely to be of interest to Economics and Politics students. A panel of young political activists debate the top topics of the day in a question-time style event
Please email Geoff Riley for details of ticketing for visiting schools and colleges
The event starts at 8.15pm and tickets are free but must be booked in advance.
Following on the from success of our 2014 Quick Revision Guide for Macroeconomics, the new 52-page, full-colour printed revision guide written by Geoff Riley is designed to support students preparing for their AS Economics exams on microeconomics.
To order your copy click here: http://tutor2u.net/acatalog/Economics-AS-Microecon...read more...»
New changes in the egg market in California are a great resource for teaching a number of economic concepts, particularly supply and demand in action. A number of scenarios are possible as different rules in different states impact on egg producers decisions on how to produce their eggs and where to sell them.read more...»
Just a quick heads-up about this Twitter chat.read more...»