Thursday, April 27, 2006
Tuesday, April 25, 2006
The Daily Ablution
Friday 21st April to Tuesday 25th April
Thursday, April 20, 2006
Monday 17th, Tuesday 18th, Wednesday 19th, Thursday 20th April
Sunday, April 16, 2006
Friday 14th to Sunday 16th April
WW will restrict ourselves to a few comments:
1. The 60% figure seems too low - the Economist run a similar article in February also quoting Patrick Artus's figures and he said 75%.
2. We don't recall Krugman, De Long or Baker saying that US companies did not have overseas operations, or that US consumers did not buy foreign shares, just that it was not likely.
3. Current figures bear that out. There is some slight issue with apples and oranges in the following sets of figures, but it gives some idea of the magnitude. Profits of US companies in 2005 were $1,146 bn, of which overseas operations and US holdings of foreign shares added $334bn bn. However there were also outflows of $128bn, making a net equity addition of $206bn, ie under 20% of total profits. It's important to note here that around 50% of these profits come from Europe, which is not demographically unchallenged itself.
4. Furthermore those aren't the only inflows and outflows. In 2005 US GDP was 12,487 bn, and then there was 508bn of income from abroad and 474 bn of income flowing overseas. So the net earnings from income abroad was just 34 bn. In the context of US GDP then this is about 1/4 of 1%. If you think about it in terms of equivalent people then that would be about 600,000. I think there is something like 40m retired US citizens, a number that is rising quickly. So even if they got all the returns then it would mean their incomes were about 2% higher than they would otherwise be).
5. But can the situation change? Jim Glass envisages people sending their savings directly to Chinese mutual funds, presumably when they exist. However there are many signs that the situation will worsen. The current account is obviously the major thing to note here. Indeed the fact the US has a surplus on overseas income at all is somewhat of a mystery, and in this excellent summary Barry Eichengreen looks at the arguments. The two most commonly heard are in conflict - and as Eichengreen says there is apparently no reason to believe that the US can continue earning higher returns on its investments than it pays to overseas holders. Why? Because Markets Work.
Broadly speaking the issue here, as it has been in many of these discussions over the years, is a fallacy of composition. Because we can diversify our portfolios (or at least diversify our portfolios of quoted company shares, which is not the same thing) and even get some income from abroad, it is believed that everyone can do it, and perhaps worse, that everyone is doing it.
Thursday, April 13, 2006
Wednesday 12th April and Thursday 13th
Tuesday, April 11, 2006
Monday 27th March and Tuesday 28th March
And Scott is right, it does. Indeed the title is "There IS a problem with global warming... it stopped in 1998". Now it's not entirely clear if Bob Carter did choose this title. I doubt he did as its indefensible. He does say, however:
Consider the simple fact, drawn from the official temperature records of the
Climate Research Unit at the University of East Anglia, that for the years
1998-2005 global average temperature did not increase (there was actually a
slight decrease, though not at a rate that differs significantly from zero).
Now if this had been in the Guardian, or said by someone left-wing, Scott would have jumped on it like a flash. As it's not, he's not. It's totally unsupported by the Climate Research Unit's work. It's true only for certain data, and only because 1998 was a very warm year. Even on this data it would be like earning £40k a year in 1998, and then £20k in 2002, £25k in 2003, £30k in 2004 and £35k in 2005, and saying that your income was on a downwards trend.
Sunday, April 09, 2006
Friday 7th to Sunday 9th
Who owns it makes no difference to whether the industry is in Britain, of course.The "of course" is classic Worstall, usually said after he's criticised Polly Tonybee for something she has said that later turns out to be right. The "no difference" is far too strong, to quote Lance Knobel, "there is a significant amount of research showing it does matter. Over time, high value-added activity tends to concentrate in country of ownership".
I'd also rather question the piece on oil. Tim appears to believe the main market-distorting thing in oil now are Chinese subsidies, while the other Tim in the comments (who works in oil, I think, or some energy field) appears to believe that there was a totally free market in oil before OPEC.
Update: The piece on David Cameron's way to make the world a better place makes one of the points we were discussing below - the absurdity that is 'fisking'. Tim knows, and everyone else knows, that when David Cameron says 'take the bus when you can', he means, 'instead of driving'. Tim has to pretend not to realise that to make his point. Why oh why?
Thursday, April 06, 2006
Thursday April 6th
Wednesday, April 05, 2006
April 4th and April 5th
* I don't mean there have been no posts , just nothing particularly Watchable.
Monday, April 03, 2006
Monday 3rd April
As one might expect from where it is, Tim's column at Tech Central Station isn't very good. Essentially he wants to explain why economists are 'right-wing' or 'classically liberal'. His conclusion, "Economists are right-wing because, on economics, the Right is right".
In other words, if you study a science then it can't really be all that much of a surprise that you learn something of that science. And if economics is indeed a science then there are such things as correct answers, ones that will be recognized by all practitioners of that very same science.
So what is the best example of a 'correct answer' that this 'science' gives us? The minimum wage, which apparently economists don't believe in, and liberals do. Tim notes:
the essential point being that rises in the minimum wage almost certainly have a detrimental effect on the incomes of those who receive them, for if you raise the price of something then people will buy less of it.
Minimum wages. Bit of a let-down, eh? For a start there are loads of economists, particularly outside the US, who do support minimum wages. Second, this idea of if you raise the price of something then people will buy less of it is sounds much like those famed "Laws of Supply And Demand", which get more press coverage than the Laws of Gravity, though no-one seems to know what they actually are. It would be equally as obviousin this example to assert that if you raise the salary of someone you'll get a better quality worker. It's not trite to note that workers aren't pieces of coal, and their pay is not irrelevant to thir work. Indeed if raising the price of something means people buy less of it, and in the case of labour this means that 'it almost certainly has a detrimental effect on the incomes of those who receive it', then it's been a pretty desperate last 20 years for CEOs in the United States. Which obviously it hasn't.
Sunday, April 02, 2006
Friday 31st March, April Fool's Day, Sunday 2nd March
Otherwise let's hope next week brings us something to get this site back on track - there should be a Polly Tonybee post at the very least.