Google Wave: Trade deficits and surpluses
We were back on Wave last night considering some of the wider arguments surrounding persistent trade imbalances. Are trade imbalances a problem?
We are hoping that - as more Economics teachers migrate to Google Wave - we will be able to schedule collaborative sessions (typically lasting between 45 to 60 minutes) where we can generate ideas, arguments and perspectives in real time and support eachother’s teaching on chosen topics or issues.
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Reasons to expect a Nike Swoosh recovery
A failure of trust in global financial markets lies at the heart not just of the current recession but prospects for a sustained recovery in spending and jobs. Whilst journalists play the game of alphabet soup to describe the likely shape of the economic cycle, we might be better off thinking in terms of a Nike Swoosh. World growth is responding to an unprecedented policy stimulus but there is a real danger that the rebound inactivity will be constrained by a set of negative forces pushing down on growth. This was the message from Paul Donovan, Managing Director of Global Economics for UBS in his presentation to the Eton College Keynes Society last night.
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A broader measure of unemployment
The eminently readable Edmund Conway over at the Telegraph has written a blog post looking at a wider measure of unemployment than the published claimant count or labour force survey measure. This measure of unemployment includes: official unemployment, those classed as economically inactive who actually want a job and part time workers who would rather be working full time. The evidence is that this measure has grown by over 1.2million since the start of 2008 and is now pushing 5.7 million. Details here.
This is part of a wider debate about the scale of under-employment in modern economies and also the economic and social costs of deep-rooted, persistent unemployment and economic inactivity.
David Blanchflower on Unemployment Policies
David Blanchflower writes in the new Autumn edition of the RSA’s Journal about the help needed to avert an unemployment time bomb especially for younger workers. This piece builds on his recent talk at the RSA. It is a superb article and has some powerful sections on the economic and social consequences of high rates of unemployment.
US jobless figure climbs above 10 per cent
It perhaps has a political significance greater than its marginal economic impact - but when one worker in ten is out of work, an economy truly is on the verge of mass unemployment. The US economy is showing signs of a rebound in demand and production but the labour market data continues to show the depth of the preceding slump. Over eight million Americans have now lost their job since the start of the recession in December 2007, with more than 15m Americans now out of work. Here are some links to coverage of this news.
Guardian: US jobless rate hits 10%
Independent: Sharp rise in US unemployment figures
Unemployment & the UK Labour Market - Teacher Presentation
This updated revision presentation examines the key issues involved with rising unemployment in the UK labour market. It looks at new data on the causes and consequences of UK unemployment and also touches on the regional, gender and other differences in the experience of unemployment - there is a set of right up to date charts on these aspects.
Launch interactive presentation on UK unemployment
Download printable pdf version of the slides
230 million unemployed worldwide - the economic and social fallout
I was listening to BBC Business World today and came across this revealing and thoughtful interview on the global impact of the huge rise in joblessness. According to the UN’s International Labour Organisation, there are upwards of 230 million unemployed people on this planet, around seven per cent of the workforce. This is a figure set to rise sharply despite an upturn in the global economic cycle - for as we know, unemployment is a lagging indicator. It tends to turn around with a delay after demand and production has started to rise again.
Public debt and intergenerational equity
With government borrowing set to rise above £175bn this year and total public sector debt already approaching 60% of GDP and set to surge much higher in the coming years, attention is now focusing on who will pay for this almost total collapse of fiscal discipline. There truly is no such thing as a free lunch - next year the costs of servicing the national debt will be over £60m a day.
The latest National Institute report makes for somber reading. They project that an economic recovery built around exports may do little to reduce the size of government borrowing and escalating debt and that a structural budget deficit in excess of 6% of GDP is likely to persist. Ray Barrell’s quote in this article in the Times is a classic example of the problem of inter-generational equity:
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Escaping from the Poverty Trap
There is a timely article on the existence of the poverty trap here in the Financial Times. The article draws on some of the recent research by the Centre for Social Justice which has looked at the disincentives facing people who want to earn extra income either by leaving the unemployment register or by taking a second job or working some extra hours. There are hundreds of thousands of people whose ’effective marginal tax rate‘ is well in excess of sixty per cent.
As this article in the Times makes clear “Marginal tax rates actually refer to the extra tax you pay in proportion to every extra pound you earn as your income rises.:
And for others, the net gains from earning higher gross incomes are even smaller.
The poverty trap comes about because for every £10 of higher incomes many lower-income families
1: A loss of income from tax and national insurance
2: The withdrawal of means-tested social security (welfare) benefits
Add in the financial costs of child care, traveling to and from work and the deterrent to finding a job or accepting some extra hours can be tough to overcome.
Disincentives matter hugely in the labour market and benefit reforms are likely to figure prominently in the manifesto of the Conservative Party at the next general election. It seems at the moment that they are taking a lead in developing a more radical approach to labour market reform. The Centre for Social Justice appears to be influential in reshaping their strategies to get people off benefits and into work.
The UK Economy - a Long Run Perspective
We tend to focus on short run changes in output, jobs, prices and profits and risk missing the long term picture of where an economy is. A year ago I produced this chartroom presentation as the UK economy entered recession - this has now been updated and might be useful for colleagues helping students develop an appreciation of the long-run trends in key UK economic data. It is available for download in pdf and scorn-compliant VLE format.
Launch streamed revision presentation on the Long Run Perspective
Download SCORM-compliant VLE ZIP version
Download printable pdf handout version
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