Have we passed peak travel?

Most economists understand is that growth in mobility and travel has for centuries signalled growing prosperity. Indeed, measures of transport miles are often used as indicators of economic activity.  The graph below is from Millard-Ball and Schipper’s 2010 article on trends in per capita vehicle miles, showing the strength of this relationship since 1970 in


Steven Keen on BBC’s HARDTalk

Find below a video of Steve Keen’s recent appearance on BBC HARDTalk. He stands up well under a withering barrage of questioning very much from within the neo-classical frame of reference, including some pretty weird ad-hominem attacks.


Peak life expectancy?

Life expectancy has peaked in some US States according to recent research. This follows research published in 2005 that suggests current living children may not outlive their parents, and that peak life expectancy in the US may be reached between 2030 and 2040. Mostly, this is attributed to the massive spike in childhood obesity which typically results in


Reviewing Steve Keen

Australian economist Steve Keen has released a second edition of his book Debunking Economics.  It should be compulsory reading in any economics course, and certainly contains many lessons for policy makers. I will state up front that I have been a follower of Keen’s work for some time, having read some of his academic publications


Is a Greek, in Germany, more productive?

Why don’t Australians fill up elevators even when there is long queue?  The elevator will be labelled for a maximum capacity of 22 people, but once eight people go in, no one else will (except me of course). I had an interesting experience my first time skiing in Austria.  I was being very Aussie and


The fat tax chimera

A couple of weeks back I noted that Hungary’s new fat tax is unlikely to slim the populous or reduce health costs.  While MacroBusiness has a wide readership, UK Prime Minister David Cameron is clearly not amongst them, as his recent suggestion of a ‘food levy’ to battle obesity suggests. Also, it was too late


Who wants a ‘Vodka ALDI’?

How much of consumer spending is driven by our identity and the need to signal it to others?  And where exactly does our identity come from? The more I think about it, the more I feel that identity – the projection of the person we desire to be – is a primary driver behind all


Tax the poor so the rich can drive faster

One idea raised at this week’s tax talkfest was road congestion charging.  Economists on both sides of the political spectrum seem to love it, citing London, Manchester and Stockholm as example of successfully implemented schemes. What is most surprising is the silence surrounding economic arguments against congestion charging (although Gary Banks, Productivity Commission Chairman, warned


Statistics lessons from The Drunkard’s Walk

Leonard Mlodinow’s terrific book The Drunkard’s Walk is an historical narrative on the philosophy of randomness and probability intertwined with modern statistical anecdotes. If the inner nerd in you enjoys a little mathematical philosophy like mine does it is definitely be worth the read. The anecdotes in the book provide lessons on the cautious interpretation


Where are all the deposits coming from?

It has been a while since the last mailbag but I got asked a cracking question over the weekend so it is definitely time to share another e-mail with the wise readership of MacroBusiness. Today’s e-mail comes from a reader Harrison who is wondering where all the banking deposits are coming from. Just wondering if


The economics of housework

Earlier in the week I argued that coordination problems, in the same vein as the Prisoner’s Dilemma, potentially lead to suboptimal outcomes in terms of the trading off productivity gains for leisure instead of increased incomes. A diligent reader queried one of the claims made in that post – that leisure time has been relatively constant


The false dichotomy of greed

The Euro crisis appears to be developing into something similar to the 1980s Latin American debt crisis when the idea that, to quote Walter Wriston, who ran First National City/ Citibank from the 1960s into the 1980s it was assumed that: “countries don’t go out of business.” The Latin American leadership demonstrated that they, in effect, could,


Quarry Australia has no people

Fungibility is a feature of a good where two items of that good are so close in their features that they equal substitutes.  Currency is the ultimate example.  If I lend someone $50 it doesn’t matter to me whether that same $50 note is returned, or another equally good $50 note.  Other fungible goods include


Hedonic price index limitations

In an ideal world, a selection of price indexes would be easily constructed and highly reflective of economic reality.  But we don’t live in that world, and we muddle our way through doing our best to measure price changes in the broadest sense. Despite many unresolved issues surrounding the methods and interpretation of hedonic price


Fat tax won’t slim a thing

Last week Hungary became the first country to introduce a comprehensive ‘fat tax’ on foods with high fat, sugar or salt content.  But it won’t make them slimmer or reduce health costs. Beginning Sept. 1, Hungarians will have to pay a 10 forint (€ 0.37) tax on foods with high fat, sugar and salt content, as well


The Rolex economy

I was recently in touch with a Swiss friend of mine who casually mentioned that the Swiss government was taken action to help their economy adjust to the undesirable strength of the Franc (CHF), shown in the charts below.  Given that the Australian government and the RBA have been silent about the disruptive impact of


World Bank endorses MB

Many readers have noted the largish impact that MB has had on the reporting of the national media on certain topics. Indeed, one reader coined the term “”Macrobation” to describe the phenomenon. Now the World Bank is out with fascinating new research into the effect economics blogs (h/t Adrian). And it’s a ringing endorsement: Economic


Return of the Jedi

So, that was the US week that was. The August data flow was probably a little better than I reckoned on but was certainly bad (I tend to move more quickly than an economy does). Indeed, data was bad enough, especially Friday’s employment report, that the tenure of US debate has clearly shifted from worry


Safety in numbers

The MB nemesis, Gittins!, offered a piece over the weekend in which he gave the economics fraternity a caning for failing to foresee the current global slowdown. Using the now famous Carmen Reinhart and Kenneth Rogoff text, This time it’s different, Gittins! concludes: In their landmark study of hundreds of financial crises in 66 countries


The buck stops here

Sam Burmingham, founder and editor of the WeMoney Newsletter, has written an entertaining article on his blog on attribution theory. Sam’s article is provided below for your reading pleasure. As always, comments are welcome. The events of the past few weeks have been the perfect reminder of a concept that struck a chord with me


Macro 101 – Reserves and interest rates

It has been quite some time since I did a post in the Macro 101 thread. There has simply been too much economic news to process lately. However, now that the stock markets seemed to have stabilised themselves at a lower base, and the western world has set itself up for a recession I think


Rethinking economics

Back in April I wrote a post titled “We’ve lost our way”. The point of the post is captured in the following paragraphs So after years of a China driven mining boom that continues to adjust our terms of trade ever upwards how did we get here? How is it possible that after so much


Weekend Musing: The People’s Budget

It’s the Saturday, which means its time for some CC and a weekend musing. Last weekend’s musing on the public expenditures of first-world governments produced a lot of interesting debate.  My premise was that current levels of spending on non-capital items – primarily welfare and healthcare – were increasing quicker than GDP.  Politics aside, the math


Weekend Musing: The problem with democracy

It’s the weekend and I’m on my third Canadian Club. So to hell with it, I’m going to step outside my usual dry realm of equities analysis and get a little philosophical. Tonight I want to have a chat about what I see as a major flaw in modern liberal democracies – namely, their tendency


Would you Twizy ?

A little off topic tonight, but hopefully not too far. One of the things I used to talk about on my old blog was a concept I called GPEC. I am not going to discuss it again here, but basically it is a measure that I suggest government economic policy should be judged by. GPEC


Google and correlation madness

Some of you may have heard of Google Trends, a useful tool from Google that lets you plot the activity of popular Google search terms over time. As noted by Justin Wolfers at the Freakonomics blog, there are already some pretty useful applications of this tool; most notably, Google Flu Trends, which uses Google’s search


Scarcity vs abundance II

Last weekend I looked at issues of scarcity and abundance, and how that really needs two economic theories for late stage capitalism, or post-capitalist societies, as Peter Drucker described it. One for what is scarce, using “laws” of supply and demand. The other for what is not scarce (the “knowledge economy”, for instance) which is


The abundance of scarcity (and vice versa)

In response to my post last weekend on the emergence of meta-money, a hall of mirrors, in global finance, a US reader, Toby, said something that really had me thinking. This is a very important article which, sadly in my view, does not address Perpetual Growth, a key component of the challenges facing humanity. There



Ok, we all know that anyone who says “this time it is different” is to be treated at best as misinformed, at worst as a fool. “They are the five most dangerous words in the English language” etc. etc. But, to repeat my question: “Are things always the same?” Mostly, yes. Modern housing bubbles are


Abolish the RBA

There is absolutely no evidence or even studies to produce evidence that the RBA provides any value to the Australian people. Anything the RBA does could be undertaken by the private banking sector. In fact the RBA can only perform three types of tasks. Tasks that the private sector would or are undertaking given the