Think Pieces

The results are in: Spending cuts, not tax hikes, are the road to recovery

Written by | Thursday 13 September 2012

A new research paper by Alesina, Favero and Giavazzi focuses on measuring the output effect of fiscal consolidations. The idea is that fiscal consolidations tend to have much more favourable effects on the economy if they are done via spending cuts alone, not via increased taxation (see the graph below), which is actually what austerity is supposed to be.

Here's the abstract:

Conspiracy theories: Back and to the Left?

Written by | Tuesday 4 September 2012

A study claiming that climate sceptics are more likely to (a) support the free market, and (b) believe in conspiracy theories has attracted a good deal of media attention recently, leading to such headlines as “Climate change deniers ‘are either extreme free marketeers or conspiracy theorists’”.

Prohibition returns

Written by | Wednesday 29 August 2012

Contrary to some excitable headlines, Tasmania has not banned the sale of cigarettes to anyone born in the 21st century. Such a move has been proposed, but it is most unlikely that the Australian state’s Lower House will allow it to become law.

‘We built it together, Mr President, through the division of labour.’

Written by | Wednesday 1 August 2012

Friday the thirteenth wasn’t kind to Barack Obama.  In a speech in Roanoke, Virginia earlier this month, it was the American president’s bad luck to proclaim a howler heard round the world:  ‘If you’ve got a business — you didn’t build that. Somebody else made that happen.’ — An affront to sound economics and Adam Smith, for whom Malthus’s ‘dismal science’ was instead a path to personal freedom and prosperity for all.

These Olympic Games are nothing to be proud of

Written by | Friday 27 July 2012

The first and only time I've met Boris Johnson was when we were on our bicycles at the traffic light at the bottom of King William Street in the City. I stammered: "Uh, good morning, Mr. Mayor." Play it cool. After a brief (and awkward) exchange, he pushed off, away from my sight and into eternity.

Review: Why Nations Fail: The Origins of Power, Prosperity, and Poverty

Written by | Tuesday 10 July 2012

What makes countries end up in persistent and permanent poverty? Why is Mexico much poorer than the United States? Why is Latin America so fundamentally different to North America? How is it possible that an average American is 40 times richer than an average Sierra Leonean? Is it climate, geography, culture, or could it be the ignorance of domestic leaders? Acemoglu and Robinson suggest it’s none of these – rather, the real reason behind the poverty trap and significant between-nation differences lies in the role of political and economic institutions.

Taxing Times: Tax Avoidance, Boon or Bane?

Written by | Thursday 28 June 2012

The recent Times series on tax avoidance has triggered a huge spike in coverage of the tax affairs of the rich and famous. 

David Cameron’s condemnation of Jimmy Carr’s tax arrangement as ‘morally wrong’, presumably based on newspaper headlines, was arguably unwise, and may well come back to haunt him as open season is declared by the press on Tory donors tax planning arrangements.

Rather ironically, in the same week he welcomed the news of the introduction of a 75% tax for high earners in France;

In praise of consumerism

Written by | Friday 22 June 2012

We generally hear the term ‘Consumerism’ used as a term of abuse, usually by religious movements, pro-state economists, environmentalists and so on. I would argue that, properly constituted, a ‘consumerist’ society is exactly the type of society that we should be striving for.

However, part of the pejorative use of the term comes from a particular meaning attached to it. As the brief but surprisingly illuminating Wikipedia article observes, there are at least four possible meanings of the term:

Mind Your Own Business!

Written by | Wednesday 20 June 2012

We need a real market for corporate control, argues Elaine Sternberg. Private firms may have good reason to pay their executives highly, and shareholder sovereignty should be protected. The most important thing the government can do is to remove state restictions on shareholder power — and stop meddling in how private companies are run. 

Shiny happy people? The madness of the Happy Planet Index

Written by | Wednesday 20 June 2012

The New Economics Foundation’s Happy Planet Index has been inspiring bemusement and mirth since it first appeared in 2006. The third installment, released last week, continues to defy parody with its glorification of lawless, poverty-stricken countries in the name of environmental sustainability.

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