Economist is always right

The best editorials in The Economist are timeless. Traditionally they germinate in a Monday morning editorial conference run on the lines of an Oxbridge tutorial; Tuesday for a sometimes leisurely write up; Wednesday for editing; last minute tweaks on Thursday; giving a quality product with a life span longer than yesterday’s fish.

The latest on the global energy shock fits the bill.  Structured on the classical editorial tripos of “ … three problems loom[ing] large”.  Magisterial, incisive, combining sound economics with a global sweep of history.

But perhaps ten years too late.

MIQueue – bringing Kiwis together

Scattered across time zones, united in desperation, Jacinda’s team of 25,000 hunched over PCs and phones on Tuesday to secure one of the coveted 3,700 rooms (more or less) for returning New Zealanders.  The two hours or so it took to work down the electronic queue were an opportunity to catch up on international coverage of the government’s acknowledgement that Covid elimination was not going to work. 

Who gives a tweet about MIQ misery

The government’s choice of a randomised electronic queue for the distribution of 3,000 MIQ rooms yesterday had one surprising benefit.  It showed just how many New Zealanders were desperate enough to stand in e-line – more than 26,000 according to Stuff.

It also reminds us that while ministers and their officials can sometimes do one thing well – occasionally even two or three – the system is not designed to meet your personal needs. The fatal conceit, as Friedrich Hayek pointed out, is that the bureaucracy thinks it knows what they are.

The role of nudges, carrots and sticks in reaching target rates for Covid vaccinations

After everyone who wants to be vaccinated against Covid-19 has had their shots, what percentage of the population is likely to remain unvaccinated – and what should governments do about it?

Two articles bring carrots, sticks, behavioral economics and nudge theory into policy-shaping considerations.

Mind you, in this country it could be a while before the government has to think about persuading reluctant or complacent citizens to take their Covid shots.

Judith Sloan, an economist and company director, in an article for The Australian references Richard Thaler, who was awarded the Nobel memorial prize in economic sciences in 2017.

Thaler, who made his name by combining the disciplines of economics and psychology, is famous for nudge theory, which he discussed in an interview published in The New York Times this month:

 “Nudges gently guide people without requirements or economic incentives. Informing people about the benefits of vaccinations and making it as easy as possible to get a shot are in this category.”

NZ does better than Australia at Covid messaging but signals a different approach

Jacinda Ardern’s government got better press than Scott Morrison’s when it announced details of its ‘reopening’ strategy earlier this week.

This may seem a surprise given that both governments have no immediate plans to actually reopen – rather the contrary in fact.

So how does the housing boom end?

It’s an old adage that a speculative market collapses not when prices get crazy but when the last person who insists prices are crazy gives up in despair.  

Worth bearing in mind when London’s Financial Times tells us that the pandemic has fuelled “the broadest global house price boom in two decades”, even bigger than the one which preceded and helped trigger the 2008 global financial crisis, and which is understandably reviving concerns about financial stability.

Will China’s communist party complete a second century?

The Economist has marked the 100th birthday of the Chinese Communist Party (CCP) with one of its context-rich historical essays.  It puts its money on the side of the party’s continuing adaptability and resilience.  This is probably the orthodox position.  But, as the Economist’s editorial staff themselves say when hedging their bets, only time will tell.

The more optimistic among us might look beyond the party’s seemingly-monolithic strength and see it – in pleasingly Marxist terms – as a prisoner of its own fundamental contradictions.

No need to worry; the consensus says inflation isn’t going to be a problem

Ever since the 2008 financial crisis, pessimists have been saying we are due a global inflation surge. So far they’ve been wrong. The world’s economies, particularly the rich ones, have sucked up fiscal and monetary stimulus and the biggest official concern has usually been that the inflation rate is too low.

But even a stopped clock eventually shows the right time.  Given Covid-induced monetary and fiscal overdrive, might the worriers finally be proved right?

Can the world economy continue to float on a cushion of debt?

Monetary policy is difficult.

Economist Scott Sumner describes in his blog how the thinking of an intellectual giant like John Maynard Keynes evolved through three distinct phases in the 1920s and 30s.  As the man himself is reputed to have said “When the facts change, I change my mind.  What do you do?”.  Sumner then argues that the thinking of the economics profession repeated pretty much the same pattern of evolution over the last decades of the twentieth century.  

It makes a persuasive case for intellectual humility in general, and in monetary policy in particular.  Even more so in unusual times.  The forcefulness and fluency of experts can conceal the fact that they are testing new ideas when they make policy.

Covid: an endgame taking shape?

Things are moving fast on Covid, perhaps faster than we realise.  But as Europe painfully grinds its way through a second lockdown, it’s easy to miss this.

First of all, it’s more of a lockdown-lite this time.  Policy is more nuanced and – although most people are too polite to say – has more or less converged on a Swedish approach.

Secondly, the second wave so far looks less deadly. Excess mortality is considerably below the levels of earlier in the year. And while the institutional response hardly rates as an exemplar, there are plenty of signs of successful adaptation, of government policy certainly and, perhaps more importantly, of individual and business behaviour.