Henry Curr

I don't believe in central planning, so I do not think it is credible to assert that two jobs in very different contexts are "similar skills level and responsibilities". In most of these cases the wage captures more information than any authority can access

The lesson of Birmingham’s striking binmen The moment is ripe to reform Britain’s equal-pay rules

www.economist.com/leaders/2025...

Birmingham’s bin strikes reveal local problems—and a national one Rubbish policy and rubbish on the streets

Absurd laws saying Britain's employers must pay equal amounts to workers doing jobs judges deem to be of "equal value" have made central planners of the judiciary and left rubbish piled high on Birmingham's streets. Scrap them

www.economist.com/britain/2025...

Matthew "Taleb" Holehouse

Fair point, I am curious about that nominal anchor too. But the political consequences of the high wage growth / high inflation equilibrium of the past few years has made me less keen to gamble. I suspect many see all nominal wage growth as earned and all nominal price growth as greedflation

I am definitely taking the bait here, but this has the Lucas critique written all over it. You don't just have 5% nominal wage growth; you need a general equilibrium that produces it!

The more stable the inflation regime, the better the correlation in your chart; if the BoE hit its 2% target all the time the correlation would be perfect. This undermines it as evidence; it begs the question to assume inflation would not rise. So be curious, but not because of this chart

Trade deficits just don’t measure what President Trump thinks they do. Why the tariffs are among the most profound and harmful economic policy mistakes of the modern era ⬇️

How Donald Trump’s tariffs will probably fare in court The president has drawn fire from some conservative legal scholars

Could the “major questions doctrine”--a conservative legal theory used to stop Biden's student loan forgiveness--bring down the tariffs?

"The pool of potential plaintiffs to take this fight to the courts is vast."

www.economist.com/united-state...

The Euler equation lives!

You're right at market exchange-rates. But (most people think) the market exchange rates, ie dollar strength, reflect US hegemony, so the logic is circular. At PPP the decline is clear

That the US has not recognised its own success under the old order is a tragedy for for the US, and a tragedy for those elsewhere who admired what really made the US great and wanted their own countries to emulate it.

While MAGA populists told voters the US was a victim of the global order, the world outside the US looked enviously at the country's standout economic growth and its enduring power.

The striking thing about American hegemony pre-Trump was how robust it had been while America's share of world GDP declined.
Now, because it is burning its alliances, America's power is more likely to fall in line with its share of the global economy.

Aid cannot make poor countries rich For decades, officials have promised to raise economic growth. For decades, they have failed

About three quarters of aid spending goes on something that doesn't work: trying to make poor countries rich by spending money. Only a quarter is humanitarian relief and health funding

www.economist.com/finance-and-...

If you must raise taxes, raise VAT Taxing consumption is economically efficient and politically possible

At the same time the numerous inefficiencies in the system should go: stamp duty, 60% marginal rates, etc. High-tax states need efficient taxes, which is why the Nordics levy 24-25% VAT and Estonia is raising VAT to fund defence
economist.com/leaders/2024...

If VAT brings about US tariffs, though, as President Trump has threatened, it's land or bust. High-value property is the only obviously lightly-taxed thing in Britain, with council tax based on relative values from the early-90s and capping out at a relatively low house price

The rupture in the transatlantic alliance would surely justify Labour raising taxes despite its pledges. But the higher defence spending goes the more important it is that taxes are carefully designed to minimise the damage. That means land (ie, council-tax reform) and VAT

Let’s be honest. Does anyone think that this president would honour Article Five? Presence of US military & nuclear sharing still has value to Europe, but its deterrent value is significantly reduced & falling. This is reckless, dangerous behaviour by the Trump administration.

I was just an Education Department guy under Reagan and the most junior WH senior staffer under G.H.W. Bush, so what do I know? But if I were an ex-president, and the current president were executing the most disastrous turn in American foreign policy in 80 years, I think I might say something?

That's a fair point, but at a long horizon we'd have to be talking hysteresis. And fiscal multipliers don't seem as relevant today, with rates far from the ZLB. Only a model can replace a model, so really critics need to present one at this point, unless they want no rules.

But the record of OBR forecasts is that they have been too *optimistic*

(AFAIK the only criticism he has made of the current-budget rule is that Reeves is wrong to use a 3 year horizon. But it's frozen at 29-30 currently, so is de facto a 4 year target. He wants a 5 year window in case there is a recession, but there isn't a recession currently. So not relevant here.)

Those criticisms have focused on the debt stock rule, which Labour already changed. This is about current balance, which is broadly consistent with the Wren-Lewis/Portes work, and of which Simon is not very critical.
Regardless, it is possible to read an argument and disagree with it in good faith.

They are criticisms that are made when fiscal tightening is on the cards.

Who thinks the current budget target is irrational? The horizon is already distant.

The implicit argument is: rules should exist until they bind, at which point it is undue specificity/nitpicking to insist on adherence.

It amazes me that people still argue that Britain's fiscal rules are too exacting. Reeves must balance the current budget. With balance defined as a deficit less than 0.5% of GDP. Only in 29-30. And only with >50% probability (54% at the last forecast).

The rules aren't tight. The stance is loose

Just to be clear--genuine Q, as they say--you think Reeves should tolerate an OBR forecast of a current budget in deficit in 29-30?

Even "deficit" is defined as "deficit greater than 0.5% of GDP". Met with 54% probability. With years of delay built in...

(Already we are talking about 29-30, not the short term.)

Then what's the problem to which you object?

At the last EFO the OBR judged that the rule met with only 54% probability. I'd be interested to know how low @dsmitheconomics.bsky.social thinks that should be allowed to get for the OBR to still deem things "broadly on track".