Coppola Comment

In the U.S., we are told, the post-World War II period was a golden age of full employment. High wartime government spending had brought to an end the double-digit unemployment and misery of the Depression, and as war gave way to peace, unemployment settled at a non-inflationary level of 3-5%. It's known as the post-war "economic miracle". But it's a myth. There was never full employment. The low unemployment of the post-war years is a massive statistical fudge. In fact, over five million people lost their jobs immediately after the end of the war, most of whom never worked again. But they were never listed as unemployed - because they were women.  The Great Unemployment Fudge started in the "Depression of 1946", described by the Cato Institute as "one of the most widely predicted events that never happened in American history". During the war, there was full employment, GDP was roaring and industrial production was at an all-time high. But much o

The desire to judge people's motives rather than addressing their needs is a “British disease”. We have been suffering from it for hundreds of years, cycling endlessly through repeated cycles of generosity and harshness. Each cycle ends in public outrage and an abrupt reversal: but the memory eventually fades, and the disease reappears in a new form. In this post, I outline the tragic history of Britain's repeated attempts to "categorise the poor". For centuries, successive British social systems have recognised that there are people who cannot work, whether because they are too young, too old, too ill or too infirm. These people need to be provided for by others – in the first instance families, but where family support networks break down, support must be provided by the wider community. And for centuries, successive British social systems have also recognised the existence of people who are perfectly capable of working but are not doing so. Most of these

Ah, productivity. Who knew that our whole prosperity was totally dependent on a concept as nebulous as this? To be sure, it doesn't sound nebulous. It is output per worker per hour. What is so difficult about that? The problem is how you define "output". Usually, we take this to mean GDP (gross domestic product), though we might use GNP (gross national product) or GVA (gross value added). In this post, I shall use GDP. As Diane Coyle has engagingly written , GDP is a deeply flawed measure. Yet we are obsessed with it. The Eurozone uses government debt-to-GDP and deficit-to-GDP ratios to justify harsh spending cuts and tax rises. In the UK, "WE MUST PAY DOWN THE DEBT!" roar the headlines, entirely missing the point that debt-to-GDP is a ratio, so even if we never borrowed another penny, it would rise if GDP fell. Even if GDP growth remained positive, but slowed down - say to 1.5% per annum instead of the predicted 2% -  debt-to-GDP would take longer to r

It had to happen. Amber Rudd, the Home Secretary, has refused to commit to a net migration target. Facing a barrage of complaints from the hospitality industry about potential staff shortages post-Brexit, Rudd appears to be softening the government's line.  She told BBC Radio 5Live's Pienaar's Politics: "My personal view is we need to continue to bring immigration down. I want to make sure that we do it in a way that supports businesses.” So what way might that be, then? After all, her boss is on record as saying she thinks net migration should fall to the tens of thousands. Currently, it is in the hundreds of thousands: according to the latest ONS statistics , net migration for 2016 was 273,000 (net inflow), of which 164,000 was from outside the EU. Even if immigration from the EU stopped completely after Brexit, it would not be enough to bring net migration down to levels Theresa May considers "sustainable". The UK would also have to impose much more d

This chart has been doing the rounds on Twitter (h/t @dbcurren) . It shows manufacturing employment in the USA.  See that huge drop? That's the drain of manufacturing jobs to South East Asia. And see that uptick since 2010, that appears to be tailing off? That's the return of manufacturing jobs to the USA. What they call "reshoring". Reshoring is hype, isn't it? Related reading U.S. reshoring: over before it began? - ATKearney (pdf)

As I said in a recent blogpost , failing to provide microfoundations for a macroeconomic argument doesn't make the macroeconomics wrong. Conversely, providing lots of lovely microeconomic detail - right down to the " I met a man " level - does not necessarily add up to a convincing macroeconomic argument.  So here is Chris Dillow taking Tim Montgomerie to task for claiming that the UK's remarkable employment performance is due to the Coalition government's welfare reforms. Montgomerie isn't the only one making this claim: Fraser Nelson does so too in more detail, in an op-ed in the Telegraph. Both Tim and Fraser say that the Coalition's welfare reforms, by forcing lots more people into work, have somehow created a massive jobs boom. Say's Law, applied to labour markets? Hmm. Maybe I'm a bit fonder of microfoundations than I thought. I want to know where these workers really come from - the increase looks too much to be entirely due to bene

"The UK’s Chancellor of the Exchequer, George Osborne, has announced that his priority is jobs. In his words (from his  Twitter account ): This week sees biggest personal & business tax cuts for 2 decades. Part of our plan to build an economy that supports full employment — George Osborne (@George_Osborne) March 31, 2014 Today have set an ambition for the UK to have the highest employment rate in G7- best place to create a job and to get a job — George Osborne (@George_Osborne) March 31, 2014 "This is more than slightly confused." Read on here . (Pieria)