Economics

I'm not saying the answer is particularly satisfactory, but this 'puzzle' that confused so many econmoists wasn't very difficult.

Frank Field would fail GSCE maths

In a piece here he summons all his reserves of pompousness and says:

Had I been asked, I would have argued for a target that was achievable. The 2020 goal isn’t. Any candidate sitting GCSE maths should be able to explain that raising everybody above a set percentage of median income is rather like asking a cat to catch its own tail. As families are raised above the target level of income, the median point itself rises.

I wonder why he wasn't asked?

The spending database

No-one at the moment really understands it enough to come up with information other than possibly-interesting tidbits. At least the Guardian has broken it down so one can look at it in a spreadsheet - by month is small enough. In April 2009, for instance, total spending net of negative spending by about £57bn, in November (far less money in receipts) it was £81bn. The largest items are - as you might expect - state pensions, the NHS, social security and so on.

The big question surely is - does it pass Benford's Law? This is where the first digit of numbers, regardless of scale (so 10, 150, and 1120 are all "1"), follow a distribution in these proportions:

d p
1 30.1%
2 17.6%
3 12.5%
4 9.7%
5 7.9%
6 6.7%
7 5.8%
8 5.1%
9 4.6%

Anyway,the answer is yes, it does pass, so nothing to see here.

Why do Ministers Resign?

An academic paper here.

Laws & the pound

I'm been very critical of making too much of the impact of political events on financial markets, but I suspect if David Laws does resign it won't help the pound, both because he's gone and was seen a City-friendly competent Minister and the wider fact of increased chance of tumoil for the government.

Can football make us happy?

Simon Kuper investigates.

David Laws

I'm not immediately convinced he should resign as an MP, or even as a Minister, after what seems like sexually motivated smear, but quite clearly he should resign as the Chief Secretary, as that is a position that requires the upmost trust in someone's handling of government finances, and one cannot now have that in David Laws. Can you imagine what would happen to a non-government minister if they bent the rules in this way (such as for housing benefit?). It's not, after all, a small amount of money.

ps RT @TiggerTherese: Have yet to hear a single voice on BBC breakfast on David Law's side. ALL against. So much for BBC balance, as usual

Is it generally considered the BBC suffers a lack of balance against the Liberal Democrats? Or do they mean the Government in general? I guess the former is possible given the preponderance of coverage of the two (perhaps hitherto) main parties.

pps After reading about fifty arguments for and against I now feel quite sorry for him, clearly this must have been a terrible day. I've still not seen a good argument why he didn't stop the claims once the rules changed, I think the idea that this would have 'outed' him is extremely weak. But I think within the context of the expenses 'scandal' that was happening at Westminister this wouldn't have been seen as that big a deal compared with some of the others if it had been revealed when that was at its height. On balance though I still think it would be best if he stepped down from this position while the investigation happens.

ppps Oooh Rod Liddle, he's so controversial.

IDS

IDS's welfare plans if enacted would be expensive (he admits they will initially cost more money than the current system) and for that reason I'm sceptical they will happen. But anyway, this article says:

Iain Duncan Smith, the first former Conservative leader to serve in the cabinet since Sir Alec Douglas-Home 40 years ago.

What about Hague, William Hague?

And this seems rather an oversight. I guess they need to invest, sorry spend, on a fleet of motorbike couriers.

pa In the Telegraph IDS says "it is not “sustainable” for Britain to carry on spending almost 14 per cent of its national income on welfare". This isn't really true, is it? If that is the figure then Britain currently has as much to spend on non-welfare as it had to spend on everything in the year 2001 or thereabouts. Advocates of a Citizen's Basic Income believe the country could, should, spend about 30% of its national income on 'welfare'.

Academies

So far I think it's fair to say the Coalition has not been very nice to families with young children or expecting them. So their schools policy will be of great interest. I've not really understood it yet, but this caught my eye:

Schools which are rated as outstanding by inspectors can be fast-tracked into academy status for the autumn.

First one to spot an 'Academies outperform existing state schools' headline wins a prize.

The Coalition is really really good and the markets say so, even those buying US debt

So we read here, with a chart of the price of Gilts. The story is that the price of Gilts was rising as investors hoped for a Tory majority government, then fell when investors feared a LibLab pact, then have risen again with the wonderful economic stewardship of George Laws.

This fits the chart, but it seems rather a stretch, to put it mildly, that such thoughts could be behind the exact same rally, dip, rally in the US Treasury market shown in the chart below, with the green shading when the Hung Parliament negotiations were ongoing (I've used inversed yield, which is much the same thing as price). After all the US Treasury market is probably seven times the size of the UK gilt market (something like that) and tends to lead other bond markets, not follow.




Coming up tomorrow: Why It Is Not The Coalition's Scrapping of Individual Government Car Drivers for Ministers that Caused Crude Oil to Fall by $1/Barrel