I’m writing an economics column in Critical Quarterly, a humanities journal, which is a bit of fun. They are supposedly free to view for 12 months after publication. I already posted a link to the first, on the European democratic deficit, but neglected to link to the second, on migration. The third, on secular stagnation, is available here.
13 replies on “Critical Quarterly columns”
Genius footnoting there Kevin. Great article.
Kevin — You state in the article that Africa is undergoing a demographic transition, just as Europe did during the 19th century. Is this true — I read that they have re-estimated recent population growth rates in Africa and there is no sign of a demographic transition there?
Greg: latest here
Fertility declining, but very slowly; more rapidly for educated women in urban areas.
Secular stagnation seems to be driven by the monopolistic behavior of the tech sector, the impact of that tech on workers, the decline of unions, QE, the focus on buybacks rather than investment in productivity and the focus of central banks on targeting inflation,( which is a pathetic failure ) rather than on employment. With the collapse of commodity prices it does look as though we are in for a spell of global deflation.
Prof O’Rourke: Nifty article: but Sub-Saharan Africa??? Economic basket cases, one and all. Even the wealthier states are going ‘backwards’.
The idea that a “demographic shift” will improve things economically is complete wishful thinking. Its their energy dependence. Though I might opine that fresh (potable) water is probably a more immediate problem. You can survive without fossil fuels, but not without the steady availability of drinking water. Then there is the matter of increasing their overall food supply. Now, the very best of luck with that one.
Secular Stagnation: my explanation is of a bloke (with shovel) in a deep, square excavation and no means to get out. So, he starts to excavate further in three of the corners and re-distributes the spoil in a careful heap in the fourth corner. He now constructs a meaningful ramp for himself and is then able to walk up and out of the excavation. Saved! Well, not quite.
The nett volume of the excavation is unchanged. Just some localized re-distributions. Looks good though.
Thanks for reminding me about Samuelson. I will have to re-read chapt 18: “Fiscal Policy and Full Employment Without Inflation”; ‘Economics’, (1948) to understand what the background might be. The caveate will be that Samuelson wrote this long before the advent of the FIRE economy in the mid 1970s. So, my guess would be that our current bout of economic funk is a tad more serious – its affects are far more widespread.
I have one nit-picky issue with many economic commentators: they keep referring to ‘government’ – when in fact they should use the term “the political party/ies currently in power”. It appears that irrespective of whichever color is the ‘government’ all they want to do is spend the taxpayers’ monies – for political leverage. One color wants to distribute small amounts to lots of folks, the alternative color wansts to distribute large amounts to a few folk. Interesting optical illusion difference. Sums up to the same.
The only thing that gets to get actually shrunk – are the taxpayers’ incomes! So the ‘government’ has two(?) options: use the Credit Card or QE!
“A growing (exponentially expanding)* economy needs more capital, and so capital accumulation and investment will(?) be higher in an economy that is expanding rapidly. In the long run, economic growth depends on the (rate) of population growth, and the (episodic) rate of technological change. If population growth and technological change accelerate, the investment rate will therefore increase as well.”
There is a physical limit to the creation and deployment of productive capital. You have to have willing and able demanders (consumers) to absorb the increase(ing) supply of your stuff. We (western, developed economies) seem to have shunted ourselves into a siding on this one. The demanders are not increasing at the rate required. And they sure are unwilling to spend – their income streams being a tad strained, and all.
* the items in brackets are my additions.
Technological change is neither steady nor continuous – quite unlike population changes. If the rate of investment increases overall, with a lower and lower proportion going to the establishment of productive capital and more and more into non-productive financial speculation then you effectively establish the conditions for Secular Stagnation – 2000s style.
Now, if we had a ‘Debt Austerity’ programme instead of QEs. Thanks again for the article.
I know it’s probably not the appropriate thread, but the long awaited Energy White Paper has appeared:
In so far as it’ll be implemented it’ll probably add to the secular stagnation being eperienced by the majority of citizens, but it’ll be business-as-usual for the embedded rent-seekers and subsidy farmers.
I particularly liked this piece in the section on International Developments:
“US unconventional oil and gas production is having a profound impact
on international energy markets and prices and is likely to have significant implications for EU competitiveness, and geopolitics generally. Notwithstanding these new oil and gas resources, oil prices have remained at a high level for the past two years, affecting the global economic recovery.”
These guys’n’girls really are up to speed with current developments and their implications!
Any chance of a post on the Fed raising interest rates by a whopping 25bps and the implications for the future of civilisation ?
“These guys’n’girls really are up to speed with current developments and their implications!”
The Glossary describes ‘peat’ as a hydrocarbon!!! No worries.
Please remember this in respect of fossil fuels (coal + oil, but not so much gas): There is a 101% correlation between fossil fuel consumption and GDP output, and the exponential increases in food production and populations. If you reduce your fossil fuel consumpton below a critical level – you sever those relationships. Bye, bye Neo-classical economics!
Also, approx 60% of the fossil energy input becomes an economic externality (ie. lost in the process). However, advance engineering technologies allow us (up to specific limits) to ‘lever up’ (literally) the residual energy. It gives the illusion of more out for less in. Not so.
Fossils are a primary energy source and were (past tense) in economic terms relatively inexpensive, abundant and reliable. So called re-newables are in economic terms relatively expensive (to manufacture, to deploy, to maintain, to repair and to replace), are intermittant and occupy large spatial footprints. Gives the illusion of more out for less in. Not so.
Humans are genetically engineered to trash the carrying capacity of their environment. We have done so successfully in the past, and are now doing so again, even more successfully. “Just carry on regardless.”
Global Warming is where the political spotlight is. Unfortunately, our real economic problems lie elsewhere. They are not being illuminated – yet.
Charlie Hebdo has an awesome editorial this week.
Translation “Many French people live precariously and vote FN in the hope of a return to full employment a return of postwar prosperity. This is not going to happen. France will never have full employment. Both left and right hope
it will happen. The right privatises things arseways and the left subsidises with public money. Le Pen believes in full employment as much as the respectable parties butbwith notions ofbprotectipnism from another age.. She dreams of a return to the sixties. It is not going to happen”
text from Blind Biddy in Ballyhea:
Text from the ether by Neil Postman as we head into global deflation
Why state that the column is a bit of fun? It’s a piece of policy analysis by an academic economist, the fun bit is implicit.
Here is an early Christmas present for all academic economists and wannabes who aspire to move beyond the Punch and Judy show that their discipline has become.
secular stagnation from the experts
“The United States, Europe, and Japan are involved in a descending spiral. Up to now, capital of generalized monopolies has retained the initiative and tirelessly pursued its sole objective: the growing accumulation of monopoly rent, which, in turn, produces the runaway growth of inequality in the distribution of income. Moreover, the growth of the latter itself is weakening. This inequality increases the impossibility of monopoly rent finding an outlet in expansion of the productive system and leads headlong into the growth of the public debt, which offers a possible outlet for the investment of excessive surplus profits. The austerity policies implemented do not permit reduction of the debt (which is their avowed objective) but, on the contrary, produce its continuous growth (which is the real, but unacknowledged, objective). ”
I wish someone in the Irish economic world would join the dots on this and push it in the meeja. RTE is a joke when it comes to what is actually going on in the macro sense.
Here-s basically the same endpoint espoused by McKinsey . Just fancy that !