Willem Buiter is quite right to criticise the Bank of England’s bailout of Northern Rock. The message to bank directors and shareholders is quite clear: “take big risks, and if they go wrong the taxpayer will pay for your mistakes, if they work, you can keep the profit”. Continue reading
Economics
Abolish planning laws; solve housing “crisis”
Imagine that the UK had enough housing that every single household occupied a detached or semi-detached house (two thirds of them in detached houses) and all the country’s 12 million currently occupied terraced houses, maisonettes and flats were empty. You might think that to provide so much housing we would need to “concrete over the countryside”, in fact we would need to switch just 2.5% of the UK’s land area to urban residential use. Switching much less would provide a more than adequate supply. Continue reading
The end of academic publishing
It has been clear to many analysts (including myself) for years that publishers of academic journals were facing the slow death of their business. Despite the view of publishers and the more optimistic analysts that peer reviews journals were irreplaceable, the evidence continues to emerge for a slow, but certain, decline. Continue reading
Fixed rates will not make housing affordable
I find it hard to believe that encouraging long term fixed interest mortgages, as the government plans to, will really make housing more affordable. Here is why: Continue reading
The end of the housing affordability argument?
The Council of mortgage lenders says that yesterday’s interest rate raise “will leave more households financially stretched“, with an especially marked impact on the two million people close to coming off fixed rates. Are we hearing the end of the argument that housing remains “affordable” thanks to low interest rates, despite the high ratio of prices to incomes?
Spreading greed
According to economist Robert H Frank, economics students become more selfish as a result of spending years immersed in the study of economic theory that is based on the idea that people act selfishly (or “rationally”, as economists describe it.
What effect does living in a neo-liberal capitalist society that is based on exactly the same assumptions have on people?
Counter-signalling web-sites
Since I read this post on countersignalling, I have been bothered by a feeling that there was a good example I could not bring to the front of my mind. I just realised what it was: ugly websites. Continue reading
Good Regulation, bad regulation
If the continual tightening of regulation in the financial sector good or bad? It depends.
It appears that subjecting Wall Street investment research to legal pressure to be more independent has made things better. The effect has been that sell side analysts are now reasonably willing to make sell recommendations. Continue reading
Off-shoring professionals work
I have blogged before on the increasing off-shoring of professional jobs. The issue continues to attract comment from bloggers, with Richard Murphy arguing against expecting large scale off-shoring of professional work. I think he is wrong. Continue reading
How to pay CEOs
Eric Rasmusen has an interesting proposal on how to pay CEOs. I think the underlying ideas is right, but I see one danger in his proposal, and one aspect of motivation that he is missing. Continue reading