More Macro

More Macro

In this article, “Britain’s tax delusion”, the ‘Statesman identifies that the UK is not overtaxed, that taxing non-doms and imposing VAT on school fees will raise trivial amounts of money and that the clawback of child benefit has a disincentive on the supply of effort. It is silent on the clawback of the personal allowance which does the same, and fails to substantiate its arguments on income and wealth equality by not quoting the gini coefficient or any altenrative statistics, or facts as I like to call them.

… creates a system that is not just dysfunctional but profoundly inequitable, in which the average effective tax rate paid by those earning more than £10m a year is lower than that of most nurses. In 1845, Benjamin Disraeli wrote of England’s division into “two nations”: the rich and the poor. Today, the gulf between Asset Britain and Austerity Britain is as wide.

Since both major parties identify growth as the answer, we need to ask how they think it’ll happen, the three sources of growth are investment (private or public), government expenditures (i.e. the deficit), or exports (and we know why they’re fucked).

The challenge for Western democracies is to provide for that spending while encouraging investment and job creation. It is a challenge that Britain is failing. Instead, the UK’s tax system is quietly managing our ­economy towards disaster.

Business taxation does not encourage investment; the UK’s investment rate is low by international comparison.

Growth strategies must only be pursued in the context of combatting climate change. So a new coal mine is not a good idea.

Modern economists argue that investment in human capital is a priority as an incubator of growth. Even those politicians who agree are silent in the face of monetarist orthodoxy which requires continued austerity. After 13 years you’d think they’d have learnt, but it seems not.

Image Credit: from , cropped. Fair use as it has no economic impact on the original publisher. …

Perez: cycles, bubbles & golden ages

Carlota Perez in TECHNOLOGICAL REVOLUTIONS AND FINANCIAL CAPITAL: The Dynamics of Bubbles and Golden Ages in a, to my mind, successful, attempt to explain Kondratiev Long Waves, creates a theory of cycles of technology and output. I find her arguments, illustrated by powerful historical example to be compelling,  I cannot understand why her theories are not more popular.

She argues that there have since the turn of the 19th Century been five technology revolutions, of motion and textiles, the original British industrial revolution, followed by railways, steel, oil & cars and latterly silicon, computers and the internet.

I came across the ideas a number of years ago and was revising an unpublished blog article which includes a piece about her book and ideas; I made the above collage and thought I’d share it now. … …

Quality of Capital

I just found my copy of David Warsh’s “Knowledge and the Wealth of Nations”. I have promised myself that I would review it but on studying the dust cover, I find it says that the long term paradox of falling costs, is explained by internalising i.e. to the growth process, technological change. Such a simple insight, which from today’s view point seems so obvious. It may have impacted the capitalist economists more than the Marxians. …


I re-read Greiner’s Evolution and Revolutions as Organisations grow. He argues that the growth of companies meet crises, the resolution of which change and shape the next stage of development and that companies go through creativity, direction, delegation, co-ordination and collaboration stages. As ever, I fail to see the compulsion and inexorability of each succeeding stage but the causes of potential stagnation and the need to respond by changing the management style and tools are insightful.

I wonder where today’s exemplar corporates are on this curve, or is software different? …

Influences on my economics

There are three books which have changed my thinking about economics over the last few years. I originally questioned whether these books are revolutionary but they have added to my thinking in very basic ways. These books all look to address the economics of information, or the wealth unleashed by I.T. and the internet. My thinking about this started in the early 1990’s, Dan Remenyi at Henley Management School introduced me to the ideas that Information was the 4th Factor of Production, that Industrial Age economics was insufficient as it was unable to explain why companies that invested in negative or zero profit IT projects, as measured by ROI, outperformed those that didn’t, and that an industrial age balance sheet was incapable of evaluating an information system asset.

The three books all relate to the evolution of society and its economics, the empowering of knowledge workers and their relationships with Capital, and hence capitalists. …