Inflation targeting has failed. In a new report for the ASI, Scott Sumner argues that the Bank of England should adopt a policy of nominal GDP (NGDP) targeting, which would address the dual concerns of macroeconomic policy – inflation and growth – in one target. Here, the ASI's Executive Director Tom Clougherty summarizes the report and its findings. (Download PDF)
Inflation targeting has failed. In this report, Scott Sumner argues that the Bank of England should adopt a policy of nominal GDP (NGDP) targeting, which would address the dual concerns of macroeconomic policy – inflation and growth – in one target. Although such a policy would not fully solve the problems of inflation-related malinvestment, the policy would impose restraint on government monetary expansion in times of economic expansion. Sumner argues that,
by avoiding sharp falls in NGDP, NGDP targeting would have made the Great Recession far less severe.
In this article, PJ Byrne reflects on the anti-cuts march and the rhetoric used by Labour leader Ed Miliband. The movement's materialism and disregard for ideas, says Byrne, will be its undoing.
Implementation of the Bribery Act 2010 was meant to occur in April 2011, but has been delayed for a second time: is it now just a matter of time before it comes into effect? This think piece argues that the act itself will make Britain uncompetitive, and should be radically overhauled to prevent shifting undue responsibility onto businesses.
This paper, which analyzes World Health Organization data, suggests that the NHS fails to distinguish itself on either health outcomes or value for money – when ranked against similar countries, the UK is in the lower half of both league tables. Even more depressing are the findings of the annual Euro-Canada Health Consumer Index, which ranks the UK 15th out of 18 Western European countries in terms of healthcare performance from the perspective of the consumer. Such findings surely make it hard to keep insisting that the NHS is ‘the envy of the world’.
The 50p tax rate is costing the government money by discouraging work and driving high-income earners overseas. In a ranking of the marginal tax rates of the 86 largest economies in the world, Britain comes 83rd, and increasing numbers of businesses and high earners are leaving the country. This paper looks at the international evidence in favour of and against this high rate, and argues that Britain's growth prospects for the next decade are seriously harmed by it.
The following memo, which has fallen into our hands, is a draft of advice to the new Irish Minister for Finance from a British colleague who has a wealth of expertise on how to handle economic crises. He prefers to remain anonymous for professional reasons.
The welfare state is out of date. The principle of 'Free at the point of delivery' must be replaced by 'Paid for at the point of delivery', so that those who can afford to pay for their healthcare and children's education do so in proportion to their earnings. The result, argues Ross Harvey, would be huge savings as market efficiencies are introduced to moribund sectors, without leaving the country's poorest behind.
Some people might actually benefit from the nanny state, but the questions of who decides what is in people’s interests and whether individuals can be coerced will forever separate libertarians from paternalists, says Tom Papworth.
The Forestry Commission has failed in its duties, and the government is right to sell off some of its holdings. This report argues that the government could sell off 92% of the Commission's holdings without affecting the broadleaf forests that the public values for their amenity and scenery. Doing this could raise up to £4.3bn, and end the woeful mismanagement of the country's woodland that the Forestry Commission has delivered.