IPE Views: Beware the stimulus hype

first_imgIn that respect Philip Hammond, the Chancellor of the Exchequer (finance minister), was right to identify the UK’s weak productivity as a key problem to address. In his official speech he noted that: “We lag the US and Germany by some 30 percentage points. But we also lag France by over 20 and Italy by eight.”He went on to spell out what this means in practice: “It takes a German worker four days to produce what we make in five; which means, in turn, that too many British workers work longer hours for lower pay than their counterparts.”The subsequent news that real wages look likely to be lower in 2021 than they were in 2008 underlined the scale of the problem. If productivity does not increase then wages will continue to stagnate.Hammond’s proposed solution is the creation of a National Productivity Investment Fund that will provide £23bn of additional spending over five years. Its focus will be on transport, digital communications, research and development (R&D), and housing.The most striking thing about this proposal is how small the planned spending is relative to the scale of the problem. The UK’s GDP is about £1.9trn so an extra £4.6bn a year is a tiny amount in contrast.In addition, £7.2bn of the proposed new fund will go to housing. There is nothing wrong with that in principle – on the contrary, the UK’s decaying housing stock could do with much more investment – but it will not raise productivity. Investment in housing is essential to improving living standards, which is welcome, but it does not contribute to making future production more efficient.Increasing productivity cannot be achieved simply by spending more money. Another key requirement is a willingness to stop state support for unproductive or “zombie” companies. In the authorities’ desperation to keep the economy ticking over, for instance by allowing the provision of cheap credit, otherwise defunct firms are often allowed to survive. Such action hinders the economic process of creative destruction that is essential to dynamic growth in any market economy. This problem is apparent in Japan where economic growth has remained weak despite several attempt at fiscal stimulus.From this perspective the two common reactions to the Autumn Statement can be put into context. For a start, the scale of the fiscal boost, at least on the spending side, is tiny relative to the huge task of bolstering productivity.In addition, the discussion of Brexit in this context is a diversion. It is hard to make any meaningful estimate of its likely cost when the form it will take remains so uncertain. Meanwhile, the preoccupation with the subject obscures the fact that Britain’s weak productivity record long predates the Brexit referendum. The problem would exist whether or not the UK was in the European Union.Although the UK’s circumstances are unique, there are broader international lessons to be learnt. The widely anticipated fiscal stimulus from the incoming Trump administration in the US could also be on a smaller scale than much of the discussion suggests. Talking about improving infrastructure is much easier than doing it. Ensuring it bolsters innovation and economic growth is particularly tough.With the global pendulum swinging towards fiscal stimulus it is more important than ever to separate the reality from the hype. The UK seems to have fallen in line with a growing international consensus on the need for fiscal stimulus. Central banks seem to be “running out of ammo”, to use the favoured expression, so higher public spending and tax cuts are gaining political support.Infrastructure spending in particular is coming into favour. Not only does infrastructure across the developed economies need more investment, but such spending could bolster economic activity more widely. Its advocates contend that improving infrastructure makes economies more efficient and so helps generate future growth. Better roads, railways and telecommunications are all welcomed in this respect.The UK’s plans were announced on Wednesday in what is known as the Autumn Statement (one of two annual sets of parliamentary proclamations on the government’s fiscal plans). In broad terms there were two reactions to it. First, it was hailed as a dramatic break from the harsh austerity of the previous government. Second, there was a lot of excitement about its implicit estimate of the likely cost of Brexit to the British economy (£58.7bn (€69bn) judging by additional borrowing costs).But a closer examination shows that, at best, these points are secondary. The plans should be judged in relation to their stated goals.last_img read more

Dutch star ‘agrees terms’ with Barcelona

first_img Read Also: Barcelona board at war over Lionel Messi sale, asking price The Spanish publication claims Wijnaldum has agreed a three-year deal, with the Catalan club now negotiating a transfer fee with the Premier League champions expected to be in the region of £13million to £18m. Barcelona have signed Miralem Pjanic, but Koeman needs more additions, with Arthur and Ivan Rakitić having departed to Juventus and Sevilla respectively, while Arturo Vidal also looks set to leave. FacebookTwitterWhatsAppEmail分享 Promoted ContentWhich Country Is The Most Romantic In The World?The 10 Best Secondary Education Systems In The WorldWho Is The Most Powerful Woman On Earth?10 Characters That Should Be Official Disney Princesses7 Reasons Why You Might Want To Become A VegetarianA Hurricane Can Be As Powerful As 10 Atomic Bombs6 Most Handsome Indian ActorsCouples Who Celebrated Their Union In A Unique, Unforgettable Way7 Of The Wealthiest Universities In The World12 Flicks That Almost Ended Their Stars’ Careers8 Weird Facts About Coffee That Will Surprise YouIt Looks Like An Ordinary Doughnut, But It Glows In The Dark! Talks between Wijnaldum and Liverpool over a contract extension appear to have hit an impasse, although Reds manager Jurgen Klopp insisted last week he was relaxed about the situation. But Wijnaldum has now agreed terms with Barca over a move that will leave Liverpool needing reinforcements, according to Diario Sport .Advertisement Georginio Wijnaldum has agreed terms with Barcelona over a switch from Liverpool, according to one report coming out of Spain. Wijnaldum has been at the centre of speculation over a possible move to the Nou Camp after the midfielder entered the final year of his Reds deal. New Barca head coach Ronald Koeman is believed to be a fan of the 29-year-old, having worked with him during his time as the Dutch national boss. Barcelona boss Koeman and assistants Loading… last_img read more

PSA shifts direction under new leadership

first_imgFor the past several weeks, the Political Student Assembly has sponsored multiple events per week, but that might change as the assembly takes a “quality over quantity” approach to becoming an effective resource for politically focused student organizations under the leadership of a new executive director.Edwin Saucedo was voted in as PSA’s executive director Monday following former Executive Director Luke Phillips’ resignation. “PSA as it currently stands is too targeted to people who are already involved,” Saucedo said. “I feel like the purpose of Program Board is to serve the student body as a whole. My goal and vision for the remainder of the semester and the upcoming semester would be to attract a larger audience through political events that bring in big names and appeal to a larger audience … bring that diversity in and make sure everyone in the student body has a chance to become politically involved.”The main purpose of the assembly, one of nine assemblies in Program Board within the Undergraduate Student Government, is to promote political discourse and action among students, a mission they carries out through various speaker and discussion-based events and by supporting the political activism of students and groups on campus. PSA is considered the umbrella organization that supports and advises about 16 member organizations, including the USC College Democrats, USC College Republicans, Student Coalition Against Labor Exploitation and Young Americans for Liberty.PSA holds weekly meetings on Mondays for its own executive board members, member organization representatives and students interested in becoming involved in politics at USC. A speaker event typically takes up the first hour of the meeting, while the second hour consists of official business, such as voting on funding requests and which events PSA will co-sponsor with member organizations.USC Red Cross Member President Adrienne Visani serves as her organization’s representative in PSA. She said the assembly allows her to connect with leaders of other organizations and find ways to emphasize USC Red Cross’s political aspects, including international services and human rights.“As a pre-med student, it’s easy to lose sight of the fact that people are politically engaged,” Visani said. “It’s one of the reasons I wanted to bring up the political element of USC Red Cross. Because we have a lot of pre-med members, it’s nice to get them exposed to other things that are going on that really do have an impact on people’s health, just not in the way you might think.”Visani said PSA has helped spread the word about her organization’s events, provide a network of support and provide vital funding, such as awarding funds to fly in a guest speaker.Though PSA manages several member organizations, many of opposing viewpoints, the assembly itself is a neutral party. PSA does not endorse any political view, candidate or position, but it does support the right of its constituents to express and lobby for their respective views.PSA Assistant Director Kevin Tsukii said that the assembly vigilantly works to remain nonpartisan at all times.“It’s kind of a struggle to be as impartial as possible, to be unbiased and to welcome as many different viewpoints as possible,” Tsukii said. “We have to find a way to balance all of our programming. It’s being political without favoring one or the other too much and getting people to join the discussion without turning people off.”Though PSA takes a nonpartisan approach, the group does work with member organizations to encourage political engagement within the student body through actions such as registering voters on Trousdale Parkway.Nonetheless, Tsukii said that the differing political views of PSA’s member organizations do surface often.“There’s kind of this underlying tension because you know what other people are thinking when they say things, but it’s really great how we’re able to kind of laugh it off and just get along together and move forward,” Tsukii said. “In an assembly like this, that’s what makes a lot of our events great, the discourse that happens.”In addition to more intimate events about politics, PSA hopes to bring more well-known political figures to campus in the future, according to Saucedo. Last fall, PSA co-sponsored an event that brought comedian and political commentator Bill Maher to speak before a packed audience in Bovard Auditorium.Saucedo also said that PSA will continue to host forums for students to talk about current events. Past events of this nature include a talk about the protests in Ferguson, Missouri, and those in Hong Kong. “People are really interested in seeing current issues,” Saucedo said. “When we did the Ferguson talks, for example, we had over 70 people because it was a current event. We had a professor come and speak about what it meant and what it means going forward. I want to continue doing these smaller events on topics that are affecting everyone.”Despite the successes of their own events, several members of PSA feel that the organization struggles to combat general apathy toward politics on campus.“It’s a very painfully slow process getting people involved in politics,” said Shikhar Gupta, PSA’s webmaster and a member of two PSA member organizations. “We’ve had really good showing at events at the beginning of the year, but it tapers off. People get busy with midterms, people don’t have the time or might not be engaged in certain issues. It gets frustrating at times, but it’s something that changes over a long period.”Nonetheless, those involved with PSA feel that their goal of increasing political engagement among students, though at times a challenge, is a worthy cause.“People always talk about how the millennial generation is going to have a huge influence on politics, but not yet. Not yet, because we’re still kids,” Phillips said. “But we need to be cultivating the minds of the millennials generation to be thinking about the issues that are going to be facing us as we get deeper into the 21st century. That is where I think PSA is going to have the biggest influence by bringing in inspiring speakers and interesting speakers and by giving students the chance to talk about these issues that they’ll have to deal with 10 or 20 years down the road.”last_img read more