Saturday 21 April 2012

A Whole New Tool of Macro-Economic Policy

Many moons ago (1970, from memory), Harold Wilson defended a blip in the balance of payments - when such things mattered in British politics -  on the grounds that four Boeing 747s were imported that month.  The obvious riposte was: if things are on such a knife-edge that they can fall over with the merest gust of wind, all is not well.

Petrol panic and warm weather may have kept UK out of recession ... a 4.9pc surge in fuel buying due to the panic caused by the threat of a delivery drivers strike

And thus was the 1st Quarter of 2012 saved. Oh, George !  Doesn't that give you ideas ?  A whole new tool of macro-economic policy:  I reckon you can keep the can bouncing merrily along the road indefinitely, starting with:
  • Chief Scientist mentions that drought will mean all types of food will be in short supply from 1st July, hints that stocking up on canned food etc might be a good idea (takes care of 2Q) 
  • government minister hints that VAT on consumer durables will double on 1st October (sorts 3Q)
 But it's not just the recession that can be staved off.  How about:
  • rumour that postage stamp prices will rise by another 50% next year (solves PO pension problem, ask Michael Crick)
  • story that all tickets to the 100m sprint final at the Olympics will be allocated to people putting an extra £50 on their Oyster cards (sorts Crossrail funding)
  • 'leaked report' that C.Difficile in NHS is at pandemic levels (fixes hospital waiting lists)
 Any readers' nominations for further problem-solving scares ?



Mark Wadsworth said...

I like your thinking. The problem with most of your examples is that they reverse in the next quarter, i.e. panic buying of petrol this quarter means that there is a corresponding shortfall next month. What you need is stuff that is cumulative. I'll see if I can think up some things which will not reverse, so if we introduce one or two per quarter, we'll have illusory GDP growth for a long time.

To be fair to Gordon Brown, his cunning wheeze was the house price bubble, but unfortunately that only lasted a decade and now it is unwinding in an ugly fashion.

andrew said...

You need something that has a sell-by, or something that just expires

Any fresh food will do.
payg credit

gsd said...

I reckon what you want is a fake crisis that hits multiple sectors at once and has a long completion time eg

Cameron announces that the euro crisis definitely won't spark ww3. Maude suggests that ppl make sure their bunkers are stocked just in case... leads to booms in:
bunker design
building equipment, supply, employment
generator & battery
tinned food
army surplus sales
4x4 vehicles

and the gov pockets 20% vat on all of it. The euro thingy is going to go on for years & years, so all that is needed is an ominous announcement every 6 months to keep things rolling. Job done!

Nick Drew said...

excellent reasoning all round, we are onto something here: I shall let Boy Osborne know of our deliberations

Mark, cumulative would be great and I should of course have added that ideally we are looking for a regular sequence of things that either unwind slower than they ramp, or increase in magnitude with each successive cycle (or both)

but even just 1-1 replacement each quarter is OK as far as it goes

at the end of the day it's all just a variant of ponzi (sorry, confidence)

Anonymous said...

Sources 'close to PM' say Britain will ignore European Court of Human Rights and 'seekers' won't get free houses, NHS, benefits etc. Flood of immigrants stops overnight.

Anonymous said...

In the 60's & 70's the balance of trade was considered the be all and end all of how the economy was doing, come the period of Margaret Thatcher it was dropped since then hardly ever mentioned now. I don't know if you heard the chairman of a manufacturing company todayon NAO, BBC (Sunday) saying that the treasury is trying to run the country, he said he would not allow the finance director to try to run his company.

Mark Wadsworth said...

I like GSD's idea. If people waste money on underground bunkers, then that kind of spending won't reverse in future, once they're built they're built.

At a very minor level, the government does this by issuing "Jubilee memorial coins" (or stamps), people buy them and never spend them, so it's basically pure profit for the government, or a good way of financing the deficit, problem is, these scams only raise a few million and not the required hundred billion.

Electro-Kevin said...

"Mark, cumulative would be great and I should of course have added that ideally we are looking for a regular sequence of things..."

How about yearly summer rioting ?

Grilles, alarms, security jobs, people buying replacement iphones etc

Bill Quango MP said...

Annual Royal Wedding/ diamond Jubilee?

Can't have a diamond jubilee annually but surely can make some other milestones up apart from gemstones?

61 years - cheese
62 years - Melamine
63 years - Zinc
64 -years -I-phone
65 years - Margarine


lilith said...

It seems to me that not enough is being made of Global Warming Alarm. More catastrophic forecasts..."lights going out"..sells generators..."last chance to ski in the Alps/holiday in the Maldives"...sells holidays... "clean water supplies under threat"..sells water filters and so forth

idle said...

The housing market's lack of transactions has had a terrible effect on everyone from Bishop's Move to B&Q to Laura Ashley, even to my man who builds bespoke gun cabinets in metal (interior) and british fruit tree wood (exterior).

So I prescribe an 'escalator', whereby owners of UK properties who are not resident for tax purposes here will pay a 5% charge on the gross value, due 31.12.12, 7.5% due 31.12.13, etc etc.

This will have the effect of forcing sales in the top 5 bands in London, and the eventual return of the London property market to those who aspire to work and pay their taxes in the capital. The ripples will be felt hundreds of miles away and the British obsession with high property prices will undergo its hugely overdue correction. All trades associated with people moving house will benefit and we will no longer all be prisoners in our current homes.

dearieme said...

Repeal the ban on the public's preferred light bulbs. That would lead to a buying surge.

Electro-Kevin said...

Idle - Your's is a great idea but it won't be entertained. Why ?

Because keeping house prices inflated seems to be the name of the game with near zero interest and Govt innitiatives to enable first-timers to over-borrow.

Therefore the correction - which you and I believe is due - will come from those who work for B&Q, cabinet makers, Laura Ashley ...

But even then we hear of lenders being encouraged to forbear and to enable mortgage holidays, reversion to interest only etc ...

Presently there is much denial in the housing market (having dipped my toe in it recently.) Particularly among those secure in their work/retirement and prepared to sit it out.

London is a different matter altogether. It looks like a bubble to me having seen the price that property spivs are asking for their new-build rabbit hutches within sight, soud and smell of the M25.