Jo Michell

Rachel Reeves given extra £3bn for budget after VAT error fixed ONS says public borrowing estimates have been out by £200m-£500m a month since January

Yet another example of why the tail-wagging-dog relationship between volatile and uncertain OBR forecasts and decisions about long-run fiscal policy is too rigid. www.theguardian.com/business/202...

More details are needed on this proposal. A permanent end to QT means a large chunk of the outstanding gilt stock permanently on the Bank’s balance sheet. We currently pay Bank rate on this. How will it be managed in future? This is at best an incomplete proposal.

Impressed that your opinions on ale are as misguided as your opinions on music!

Well, OK, no, not actually worse but they would raise taxes you know.

Would leftwing populism really be worse than rightwing authoritarianism? Not this kind. In fact, I'd argue that most Americans really have no idea what socialism is, given that much of what passes for it in the US would be considered middle of the road in much of Europe. But it is true that taxes on wealth and regulatory burdens - already high in some areas - could increase if the hard left gains power.

“Are Mamdami and AOC really worse than Trump?” Asking the real questions in the FT. www.ft.com/content/a0ad...

This video of Chicagoans intervening to save a man from being abducted off the streets by ICE is making the rounds on Instagram.

Community action works.

Source: www.instagram.com/reel/DPZL2AL...

CHUCK TINGLE?!

*gasp*

The gravity model should really be called the distance model. Or the magnetism model. Or the sound pressure model.

The protagonist Gully is an unrepentent rapist and woman-beater. He spends the story rampaging the solar system killing most men he meets, while beating and assaulting the women. He is never punished for this, no justice is ever done, and at the end he decides he should stop doing that and he's suddenly a hero.

It seems to be a pseudonym taken from a character from a sci fi book?

The book is edited by Gullible Fool? Is this some kind of hoax?

I’m not making any claim about whether the changes it leads to will be good or bad, just the potential scale. There’s a tendency towards blanket dismissal among the critics which I increasingly think is a mistake.

See also, though perhaps somewhat less high-profile, those Labour types gushing over DOGE and Musk and disruptive change even as he dismantled US aid programmes and left Africans to die of HIV-AIDS.

YouTube video by Humberto David Bowie predicted in 1999 the impact of the Internet in BBC

I’m sceptical about the claims made of AI, and I hate many of the current applications. But I also think we need to be careful about offhand dismissals. It does have the potential to be transformative in ways we can’t yet imagine. We don’t want to end up as Paxman. youtu.be/8tCC9yxUIdw?...

Lawrence Hill: come for the angle grinder, stay for the rainbow.

Entertaining section on “how do we cope with the fact that standard models say that this isn’t happening?” Option 1: pretend it isn’t happening.

Graphs showing that, on some measures, the labour share of income in the US is at its lowest level since the Great Depression.

Incidentally, this is a useful recent paper on the falling labour share. www.aeaweb.org/articles?id=...

Technology Perhaps the most intuitive explanation for the decline of the labor share is that capital-augmenting technology has increased over time. Using our labor share solution, we see that this requires an increase in A, and o > 1. The economics of why parameter o affects the relationship between the labor share and capital-augmenting technology are fairly straightforward. Factors are substitutes when • > 1, and thus, following an increase in capital-augmenting technology, production requires more capital relative to labor to accomplish the same level of output. In this case, the labor share decreases.? Despite the appealing economics of how capital-augmenting technology might have affected the labor share, this is also the most irrefutable explanation of the labor share decline. In order to rationalize the decline of the labor share, one could claim that A, decreases over time and factors are complements, o < 1. While this case is nonintuitive because we suspect that technology is improving over time, there is little hope of differentiating between these two explanations. The fundamental problem is that factor-augmenting technologies are not easy to conceptualize and measure. For example, are robots physical capital, or do they augment high-skilled labor's technology? Do improvements in an organization's management increase or decrease the productivity of capital relative to labor?

The development of task-based models of the labor market has allowed economists to think more concretely about the role of technology for factor shares. These models emphasize the conceptual difference between tasks, which produce services of output, and skills, which are workers' capabilities for performing tasks. The key assumption is that some types of services can be produced with either capital or labor, whereas other services are produced only with labor. Automation decreases the number of tasks which are produced only with labor, enabling capital to substitute for labor in a larger share of tasks. The economics of automation are similar to an increase in the distribution parameter a in the production function of the firm. As our labor share solution shows, the increase in a unambiguously reduces the labor share, for any value of o. In fact, some researchers use the labor share as a proxy for the displacement of tasks due to automation (Acemoglu and Restrepo 2022). While the economics are similar, task-based frameworks are empirically more appealing than frameworks with factor-augmenting technologies because they are easier to refute using proxies for automation, such as the adoption of robots and the share of routine jobs. One difference between factor-augmenting technology and task-based frameworks is that in the former capital-augmenting technology increases wages, whereas in the latter automation could displace labor demand and lower wages (Acemolgu and Autor 2011).

Karabarbounis on the related problem of explain the declining labour share is basically highlighting the limitations of the standard aggregate production function approach. Basically you can’t distinguish quite different phenomena when using it.

Yep that’s roughly where I’d got to. Good stuff.

What’s your take? I’m just getting started but so far I think it’s useful.

We propose a conceptual model of occupational task bundling that predicts that changing occupational expertise requirements have countervailing wage and employment effects: automation that decreases expertise requirements reduces wages but permits the entry of less expert workers; automation that raises requirements raises wages but reduces the set of qualified workers.

For example, Autor on “Expertise”. www.nber.org/papers/w33941

Arguably TFP is an insufficiently sophisticated or even meaningful concept to cope with the current trajectory. The switch from standard production function approaches to “task-based” analysis could be seen as symptomatic of this.

There’s a gap in the market for a 5000 word piece on the implications of the Cambridge Capital Controversies for the debate on AI, “general purpose technology”, growth models, productivity and so on.

Really quite weird.

This Israeli government decision to host Tommy Robinson will widen the growing gulf between the Netanyahu government and the British public, including the broad majority of Jews in Britain (3/4 of whom dsapproved of Netanyahu, before this new link to this anti-Muslim racist UK far right convict).

Really good @gabyhinsliff.bsky.social piece.

Worth reading in conjunction with the RF 2030 report on why the hospitality sector may have to shrink to free up resources for other things.

Because that may be economically correct but it is not easy politically.

www.theguardian.com/commentisfre...

there are probably some good internal Google documents.

And I agree with Dan that it won't change much. Everyone will just use the central forecast and ignore the error bars.

To do it with anything much beyond crayon, I think that would require an entirely different macro model to the one they use.

I take a simple view. There has to be a forecast. I’d, on balance, rather the OBR did it than HMT.
But equally there is nothing to stop the CHX publicly disagreeing with the forecast and or, occasionally, presiding over policy which is forecast to miss the rules.