Economics turned on its head at UCL
When most people hear that I study economics, they say, “Oh, a good, solid, libertarian subject”. However, having been rejected by Cambridge after trying to teach Partha Dasgupta* about the Laffer curve, I don’t exactly hold my own subject in the highest of regards.
Today’s ‘Macroeconomic Theory and Policy’ tutorial kinda proved my point.
[The government] printing money has no negative effect on the economy: only good. In the Western system, with the separation of politicians from central banks, this is not possible. However, [PR] China, which is my country, we have this without negative effects.
Squeamish Westerners. If only our government was more like the Chinese and risked over-inflating our economy just as theirs has done. And if only our government was more hard-nosed and cared as little about deliberately keeping down the value of private assets as they did over there. Darn bourgeois property rights getting in the way of sound economics…
A balanced budget policy cannot help an economy in a depression. In a depression, the revenue goes down, but expenditure goes up, because unemployment benefits go up. Thus, to try to balance the budget makes a bad situation even worse. That’s stupid for the government to do so, because it relies on the government cutting spending or raising tax.
Yes, balanced budgets are incredibly stupid. After all, we’ve already established that running a structural budget deficit is no problem, so long as the government is capable of printing its way out of trouble. Just to correct my tutor here, if the economy is as described, the best way a government can correct its deficit is exactly to balance the budget: by scrapping the afore-mentioned unemployment benefit and getting people back to work and back paying taxes to fund the government’s assumed largesse.
After my scrape at Cambridge, I sometimes wonder if not knowing the first thing about economic public policy is considered a requisite ‘talent’ for teaching the subject in our universities.
*A lefty development economist who is (and this is not unrelated to the first factor) nailed-on for the Nobel Prize.
V Samuel said,
October 24, 2007 @ 11:45 am
How much are you paying in tuition fees for this? I suggest you print your own money - like Boggs Dollars - and ask UCL to accept it. Is not bad effects, only good.
How much is this drawing worth?
http://findarticles.com/p/articles/mi_qa4128/is_200605/ai_n17176488
(Ironically, given that the market value of Boggs dollars exceed the face value of the artwork, is only good.)
Stuart Davenport said,
October 29, 2007 @ 3:55 pm
I’m sure Partha Dasgupta appreciated your attempt to teach her the Laffer curve. If ignorance of the interviewer was the reason you failed to get into Cambridge, what was the reason why you failed to get into Oxford?
Oli Cooper said,
October 29, 2007 @ 5:29 pm
I’d read several papers by Dasgupta before I even applied, so ignorance of the interviewer was clearly not the case. It was a matter of the interviewer being completely unable, or maybe simply unwilling, to discuss economic theories to which he himself does not subscribe.
That is an indicator of personal bias - and, given his fame and academic standing, institutional bias - against theories that have been proposed, and proven empirically, since these people were supposedly educated a generation or two ago.
Ignore of the world-famous individual may, of course, apply in your case. Dasgupta is a man, not a woman, which you may have deduced from the fact that he has a man’s name. You’d think that lefties such as yourself would be more aware of other cultures. Apparently not.
Stuart Davenport said,
October 29, 2007 @ 11:53 pm
Whether Partha is a male or a female name is really beside the point.
The point is that you childishly seem to blame your failure on everything but yourself. During my final year at school in the 6th form I can objectively say that the most able students got into Oxbridge (if they applied) while those who reckoned themselves able, but were actually not, didn’t.
“…by scrapping the afore-mentioned unemployment benefit and getting people back to work and back paying taxes” - That is an incredibly naive view of working politics. I can subscribe to the Tebbit Conference speech when he encouraged people to take responsibility for themselves by using the example of his father *getting on his bike” and looking for work. However by glibly saying that government should scrap unemployment benefit, you obviously don’t understand the complex issues at work (and they vary from area to area) in these deprived areas.
Government has a role to play. If you look back at the Victorian era when most of the infrastructure underneath our big cities was developed you will see government was doing this. A libertarian theory appears to work well in the developed regions of the world but they have got to this point by way of some collective action.
Oli Cooper said,
October 30, 2007 @ 6:35 pm
Sorry, but your ignorance, once again, knows no bounds. The major infrastructure projects were completed by PRIVATE companies, not by the government at all.
Take London. Huge housing projects, including the whole of Bloomsbury, Fitzrovia, and the West End, were built by private firms under contract from the aristrocratic landlords. Except the Victoria Line, all the London Underground lines were built by private companies, whilst the same is true of almost all the railways across the country. Similarly, the tramways were built by private companies (but were expropriated under the Tramways Act).
Until they were acquired in the latter half of the 19th Century, all the bridges across the Thames were built and owned by private companies. The city’s water mains were built by private industry, as was the city’s gas and electricity supplies. The docklands that formed the mainstay of the city’s early mercantile economy: built by companies, without any help from the government.
Elsewhere, the privatisation of roads from 1706 onwards heralded the end of the government failure that was the old parish system, which had been the bane of coaches. The most attractive and timeless of the architecture elsewhere - Edinburgh New Town, Regency Bath, Ashton-under-Lyme, and so on - were built and owned by private companies. Glasgow Subway - the only other subway system in the UK - was built and owned by a private business. The list is endless.
These, and more, stand as the testament to private industry. What the government achieved was to stymie economic and social progress, take money from the population so that they could expropriate the thriving businesses that the privately-owned infrastructure represented, and regulated and crowded out industries (such as the fire brigades and law enforcement) in which the private sector did a fine job. Its contribution can be summed up by the housing projects upon which the government embarked after the Second World War.
In future, stick to probing sheep, rather than poking your nose into areas of economics and history that you don’t know and can’t understand.
Stuart Davenport said,
November 1, 2007 @ 7:56 pm
Sheer rudeness allied with general factual inaccuracies and unsupported assertions does nothing to enhance your cause Oliver. London’s sewage system, still in operation today, was built by the Board of Works in the Victorian 19th Century. It was necessary for Disraeli to implement this system, by way of a levy upon Londoners, because private enterprise couldn’t and wouldn’t have had the resources. This act of Government was designed to help everyone, not just those who could afford such a valuable resource. Cholera affects everyone not just those who can’t afford sanitation and so society needed to be united.
The end of the Second World War left Britain with a desperate shortage of housing. Government, in the form of local authories, acted to provide council housing that was desperately needed to enable society to advance after such a terrible time. At times of change and rebuilding Government has a role, an important role.
In Africa today, there is misconception coming from the West that liberal economics thrust on these fragile countries will provide them with the platform to catch up with the developed nations. This is an error. The West was built with a basis of Government intervention followed by the evolution of laissez-faire economics as the infrastructure could support it.
Stick to moaning about your own academic and educational failures rather than attempt to push forward a selfish philosophy with a biased view of history.
Oli Cooper said,
November 2, 2007 @ 12:49 pm
Ha. You launch a personal attack against me - coupled with an inaccuracy in the only fact you tried to present - and you accuse me of “sheer rudeness”? This is a comment page, so the fact that these comments are unsupported here is not particularly relevant. If you want to discuss things, first, read a book about economics. Actually read it. You claim to consider the Road to Serfdom and Capitalism and Freedom your favourite books, yet you seem to beg for serfdom and discard of your freedom.
I am well aware of the provenance of the sewer system, but one example doesn’t really win over the numerous that I gave. For every sewer system built by the government, there are two gas systems built by private enterprise. For every Victoria Embankment, there are two Docklands. Even though the government has the ability and propensity, through taxation and regulation, to hold back the private sector, private enterprise always wins the race against the public sector.
However, notwithstanding that, I have never stated that the government has no role to play. In cases in which there are clear Samuelson public goods, there can be a case for the government to provide services. However, the idea that the government has a right to take my hard-earned money, and can spend it at its own discretion and without regard to that basic problem, cannot be proven by your one example of Victorian government largesse.
At no point in the reign of Queen Victoria did the government spend more than 13% of GNP (in 1902, when the UK had 200,000 soldiers fighting a war in South Africa). Compare that to 43% today. Clearly, there is a discrepancy. I would infer from that statistic that you would similarly wish to see the state’s share of GNP recede to the sort of level observed in 1902, and that yearning for the halcyon days of the Victorian era of laissez-faire is an activity that we can both share.
Unsupported assertions alert on the “government has an important role” front. The housing that it did build is now being torn down, only 50 years later, when the housing that was built by the private sector 200 years ago still stands. The housing was built in ridiculously large estates that, far from providing an environment that would allow people to continue their pre-war lives, removed them from society by placing them miles outside cities. Even Iain Duncan-Smith, one of the Conservative Party’s arch-interventionists, blames the government’s house-building programme, in places like Easterhouse, for much of the woes of the post-war era.
Africa is a good case in point, and I thank you for raising it. The historical misbelief that industrialised economies were based upon economic interventionism is the principal reason, or at least one of the principal reasons for African countries’ failure to develop since independence. ‘African socialism’ reigned supreme on the dark continent in the 35 years after independence, but what happened? GDP by capita fell in real terms between 1960 and 1995. That’s economic regression, not progression. Intervention in the market has failed in Africa.