[HN Gopher] BOE Chief Economist Says Britons 'Need to Accept' Th...
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BOE Chief Economist Says Britons 'Need to Accept' They're Worse Off
Author : mennaali
Score : 80 points
Date : 2023-04-26 20:08 UTC (2 hours ago)
(HTM) web link (www.bloomberg.com)
(TXT) w3m dump (www.bloomberg.com)
| erehweb wrote:
| John Authers, a Bloomberg columnist, discusses this a bit in
| https://www.bloomberg.com/opinion/articles/2023-04-26/uk-inf...
| and thinks his friend got a bit of a raw deal here in the public
| reaction. If you like Matt Levine's columns, you might find
| Authers's newsletter worth a look.
| legitster wrote:
| I now really surprised how people are biting into the bait
| without looking at the context. This does not at all indicate
| the "blame the poor" meaning that people are putting on it.
| jarym wrote:
| Thank you, that does set some nice context.
| nine_zeros wrote:
| How about they start the "acceptance" at the BOE. Cut their
| salaries.
|
| Then, cut all MP salaries.
|
| Then, cut government employee salaries.
|
| Then, tax the wealth of the rich (and not just income).
|
| When these noble people "accept" poverty themselves, that ought
| to bring inflation down.
| Symbiote wrote:
| Government employee salaries are often below equivalent private
| salaries, and would be better being raised in many cases.
| robocat wrote:
| I think similar solutions have often been tried in the last
| decades in other countries and often fail. I'm thinking
| Zimbabwe (although I admit I am incredibly ignorant about the
| history there).
|
| Why do you think everyone would be better off after following
| your suggestions?
| nine_zeros wrote:
| > Why do you think everyone would be better off after
| following your suggestions?
|
| When inequality is lower, economy booms.
| quadrifoliate wrote:
| > Pill was more direct. He said there's a "reluctance to accept
| that yes, we're all worse off and we all have to take our share."
|
| They should look into taxing the various British Overseas
| Territories which usually top lists of tax havens across the
| world [1].
|
| I am not sure if the regular British public is just ignorant of
| the existence of these, or prefers to run with the limited set of
| facts that their Conservative government (now in its 13th year)
| is presenting to them. The Brexit shitshow seems to suggest the
| former.
|
| ----------------------------------------
|
| [1] https://www.theguardian.com/business/2021/mar/09/uk-
| overseas...
| andrewmutz wrote:
| There's no tax shortfall. Taxing tax havens is fine but you
| shouldn't expect it to limit inflation very much.
| quadrifoliate wrote:
| > Taxing tax havens is fine but you shouldn't expect it to
| limit inflation very much.
|
| Why not? To cite just one obvious effect, it can help fund
| social services that will inevitably be utilized more when
| the Government tightens monetary policy to combat inflation.
| pdntspa wrote:
| The British government levying spurious taxes on its
| remaining colonies. I am absolutely sure that's going to go
| well.
| vondur wrote:
| Reminds me of that Monty Python episode where they suggest
| taxing all foreigners living overseas.
| quadrifoliate wrote:
| It would be laughable to equate holders of British
| passports issued by His Majesty's Passport Office [1] as
| "foreigners living overseas".
|
| ----------------------------------------
|
| [1] https://en.wikipedia.org/wiki/British_passport_(Cayma
| n_Islan...
| ChuckNorris89 wrote:
| _> "we're all worse off and we all have to take our share"_
|
| Who is this 'we'?
|
| Only the poor and the middle class are worse off and being
| squeezed by the CoL. The big industry players, ruling, upper
| and asset owning class are all making bank. Do they think
| people like Tony Blair or Lord McMansion are affected that
| food, electricity and gas are all up?
|
| There is no 'we' here.
| [deleted]
| [deleted]
| tleilaxu wrote:
| Given that the current prime minister is a non-dom himself...
| seems rather unlikely to be in his or any of his friends
| interests.
| jutrewag wrote:
| [dead]
| krona wrote:
| LOL citation needed. (Yes, everyone knows about the wife.)
| bagels wrote:
| For those that don't have any idea what a non-dom is (like
| myself), BBC says:
|
| "Non-dom" is short for "non-domiciled individual". It's a
| term used for a UK resident whose permanent home, or
| domicile, is outside the UK. "Non-dom" is a description of
| tax status.
| [deleted]
| rurp wrote:
| Am I understanding this right, that the leader of the UK
| has his official residence outside of the country in order
| to evade taxes? If so, it's pretty wild that that's
| accepted
| rcarr wrote:
| I don't think he is anymore but his wife is. I might be
| wrong though.
| Kailhus wrote:
| Correct, still dodgy as the lot of them.
| jarym wrote:
| Funny, central bankers advocating for wage price restraints are
| in effect calling for price controls (on labour). Except when
| anyone calls for price controls in any other context (goods,
| commodities, services) they are generally shot down by mainstream
| economists because they create market distortions which
| eventually leads to unwanted side effects.
|
| Odd little disparity there.
| legitster wrote:
| No where is he quoted advocating for wage controls. If anything
| his actual conversation is explaining why changes in wages do
| not impact inflation.
| jarym wrote:
| Well he isn't directly but:
|
| > someone needs to accept that they're worse off and stop
| trying to maintain their real spending power by bidding up
| prices, whether higher wages or passing the energy costs
| through on to customers.
|
| Coupled with prior remarks from the BoE governor:
|
| > In the sense of saying, we do need to see a moderation of
| wage rises, now that's painful. I don't want to in any sense
| sugar that, it is painful
|
| And add to that politicians using that (amongst other things)
| to deny pay rises for healthcare workers who've had a real-
| terms cut to wages of 25%+ over the past decade (when
| inflation was supposedly under control yet easy money was
| pumping risk assets like stocks).
|
| Together, it all paints a picture of: hey we can't control
| prices for food and energy, and because of inflation we have
| to increase taxes, and also we can't pay you more, oh and
| because we're going to support energy prices we will also
| have to tax you more.
|
| In totality, one should understand the frustration felt here
| is a culmination of the inequity that's been slowly building
| over a long time.
|
| I'm lucky, I'm relatively well off but I don't want to live
| in a system that screws (or at least appears to screw) the
| least-well off at every turn.
| justsee wrote:
| Pill (BOE economist) is advocating for wage price restraints,
| which is what the parent observed.
|
| The parent then said it is in effect calling for price
| controls on labor, which is true.
|
| Pill is then recorded as saying wages do contribute to
| inflation:
|
| > "He said that firms and workers are in a "pass the parcel
| game" that's causing more persistent price pressures,
| contributing to the UK's main inflation rate remaining stuck
| in double digits."
|
| The final parent comment captures a very common line in
| corporate media messaging: which is that wages always need to
| be suppressed lest inflation rear its head, but corporate
| profits never should because that is market distortion and
| not related to inflation.
| legitster wrote:
| The full context of his interview:
| bloomberg.com/opinion/articles/2023-04-26/uk-inflation-boe-
| s-chief-economist-fails-find-the-right-
| words?leadSource=uverify%20wall
|
| > So somehow in the UK, someone needs to accept that
| they're worse off and stop trying to maintain their real
| spending power by bidding up prices, whether higher wages
| or passing the energy costs through on to customers. And
| what we're facing now is that reluctance to accept that,
| yes, we're all worse off, and we all have to take our
| share, to try and pass that cost on to one of our
| compatriots.
|
| > That pass-the-parcel game is generating inflation and
| that part of inflation can persist. How much bargaining
| power and pricing power exists for different actors in the
| value chain in the corporate side and in the labor market?
|
| He is literally saying that corporations passing on energy
| costs _is also_ causing inflation. Absolutely nowhere does
| he even advocate for policy intervention. Not only is
| everyone putting words in his mouth, it goes against his
| larger point that interventions on individual actors are
| meaningless.
| rnk wrote:
| Inflation is a worldwide thing, along with increased prices for
| oil and gas. But it doesn't seem like anybody is blaming Brexit
| much there?
| lockhouse wrote:
| "The Great Reset"... back to medieval serfdom.
| jacooper wrote:
| > So somehow in the UK, someone needs to accept that they're
| worse off and stop trying to maintain their real spending power
| by bidding up prices, whether higher wages or passing the energy
| costs through on to customers. And what we're facing now is that
| reluctance to accept that, yes, we're all worse off, and we all
| have to take our share, to try and pass that cost on to one of
| our compatriots.
|
| That pass-the-parcel game is generating inflation and that part
| of inflation can persist. How much bargaining power and pricing
| power exists for different actors in the value chain in the
| corporate side and in the labor market?
|
| That's the actual quote
|
| https://www.bloomberg.com/opinion/articles/2023-04-26/uk-inf...
| sunshinerag wrote:
| He would know, considering the banks complicit in debasing the
| pound aggressively
| badcppdev wrote:
| https://archive.is/0swGu
| WalterBright wrote:
| All that free stuff from the government is expensive.
|
| "the British people need to accept they are poorer instead of
| seeking to claw back a historic drop in living standards after a
| jump in inflation."
| gghhzzgghhzz wrote:
| It's not expensive. It's expensive if you don't spend on good
| quality public services. Without the NHS then there would be no
| economy. Without social care then people are taken out of the
| economy to care for relatives. Without child care then parents
| can't afford to go back to work.
|
| The main issue is that an every increasing proportion of money
| spent on services ends up in profits for private companies, and
| in the administration of that profit and contracts. If money
| went directly to public sector workers, then the economy would
| boom.
| dukeyukey wrote:
| Although the UK has an unusually low tax-to-gdp ratio compared
| to its neighbours, so it's probably not that.
| moremetadata wrote:
| [dead]
| legitster wrote:
| A lot of commenters are obsessed with just finding money. You
| can't eat money. You can't build a house out of it (advisably).
|
| Money is only as valuable as the amount of _stuff_ in an economy.
| More money with the same amount of stuff is just inflation. The
| Pound does not need more inflation. Money and trade are only
| valuable in so much as they aid exchange and efficiency.
|
| On a real, practical-level Brexit made England _materially
| poorer_. There are a lot of export commodities they no longer
| have a market for. And there are a lot of markets they can no
| longer import from cheaply.
|
| You can do what you want to make the distribution more equal, but
| it can also be true that the pie is smaller for everyone.
| gghhzzgghhzz wrote:
| The issue isn't about Brexit making the country materially
| poorer, the conditions existed long before Brexit, it's the
| main reason for the Brexit vote in the first place.
|
| Sure we can trade a bit more, but when the whole economy is
| financialised to a massive degree, then any benefits of that
| trade (if that trade outweighs the negative effects) are
| funnelled through a long standing system of extracting profit
| and concentrating wealth.
|
| there's pretty much nothing you can do in your private or
| public life that doesn't result in a net transfer or wealth
| from the household, the local economy or from public funds,
| through a highly complex system of extraction.
|
| So not only has people's purchasing power gone down, because
| purchasing power is relative to the money you have vs the money
| others have, but also basic services have just gone away from
| being free at the point of use. And what is free at the point
| of use is both low quality (so you are incentivised to pay to
| get a better service), and is again a black hole of public
| money being funnelled away thus reducing your purchasing power.
| mkoubaa wrote:
| The conditions existed long before Brexit, _and_ Brexit made
| it materially worse
| 1vuio0pswjnm7 wrote:
| "Money is only as valuable as the amount of stuff in an
| economy. More money with same amount of stuff is just
| inflation."
|
| What if the number of people in the economy significantly
| changes.
| falcolas wrote:
| Economists keep chiding us about how that will ruin the
| economy too. They tell us our population must keep growing to
| keep the economy healthy.
| pyuser583 wrote:
| Economically, it's best to not have children at all and
| depend on immigration.
|
| You don't have to waste resources educating people. Someone
| else does that, and you just pay them a slightly higher
| wages.
|
| Much cheaper than a well-funded education system.
| dkqmduems wrote:
| [flagged]
| dylan604 wrote:
| Isn't this just an example of how the economy is a
| legitimized Ponzi scheme?
| acjohnson55 wrote:
| Yeah, sort of. We're also counting on increases in
| productivity. Although these have also not been
| forthcoming.
| lofatdairy wrote:
| Not really, insofar as that early buyers aren't paid out
| w the entry of new participants with the absence of any
| real productive usage of capital. It's more that firms
| invest in production with the expectation for demand to
| increase, and outside of increased per capita spending,
| the main contributor to that effect would be simply more
| participants in the market. The expectation is obviously
| somewhat self-serving, but there isn't the sort of
| hollowness as you would get in a Ponzi Scheme. The system
| itself would still work so long as population growth
| slowly came to a halt rather than collapsed and firms
| observed such trends.
| pyuser583 wrote:
| Parents support their children, then when the parents are
| retired the children support them.
|
| Is publicly funded childcare and eldercare a Ponzi
| scheme?
| makomk wrote:
| It's not even Brexit really - the whole of Europe is poorer on
| a real, practical level because its economies cannot produce
| the same amount of stuff. Brexit put some additional barriers
| to exporting and importing stuff from Europe, but generally
| speaking the main reason imports aren't available cheaply is
| because the supply isn't there for anyone and export markets
| are mostly going away because there's no longer the same market
| for those goods or services for stop.
| krona wrote:
| > There are a lot of export commodities they no longer have a
| market for
|
| Exports to the EU hit a record high in the summer of 2022,
| which ironically, was mainly because of commodities. Who'd have
| thought?
|
| https://www.ft.com/content/47fe0d2a-6e87-4f30-8212-3b37f7f09...
| eightysixfour wrote:
| I can't access the FT article - is that in inflation
| adjusted/real terms? I know that in 2022 as a whole their
| trade deficit with the EU broadly increased in size and
| percent.
| guardiangod wrote:
| https://www.export.org.uk/news/631720/UK-trade-deficit-
| with-....
|
| In total, imports from the EU, excluding precious metals, hit
| PS82bn whilst exports to the EU were valued at PS49.2bn. This
| represents an increase of 7.5% in imported goods and a
| decrease of 6.1% in exports.
|
| The UK's total imports of goods decreased by PS3.5bn (-2.1%)
| in Q4 2022 compared with Q3. Goods imports from non-EU
| countries fell in this time period (10.4%).
|
| Exports of goods over the same period decreased by PS4.5bn
| (4.5%), with exports to both the EU and non-EU countries
| falling.
| monero-xmr wrote:
| You can only financially engineer and money print your way for so
| long. Once living standards and real wages fall far enough, UK
| costs will get low enough to attract foreign investment again. A
| very educated workforce that speaks English with a good time zone
| will eventually be attractive at a low enough price.
|
| The problems fall squarely on the British themselves, as it
| always does in democracies. They elected representatives who then
| made choices reflecting the collective will. Scape goat all you
| want but the answer is actually producing things of value that
| people around the world want to buy. Other than that it's shell
| games.
| shadowpho wrote:
| >A tight jobs market and strong corporate pricing power means
| that firms can pass on costs in higher prices and workers can
| demand wage increases, fueling inflation further
|
| Maybe it's better to curb the strong corporate pricing power
| instead?
| bioemerl wrote:
| When demand is higher than supply there will always be strong
| pricing power from the supply side, you can't fix that with
| price controls, you'll end up with shortages.
| zmgsabst wrote:
| And yet they routinely try when it's the supply of labor in
| the strong position.
| [deleted]
| acd wrote:
| We should welcome back Brittain to the European Union. To lessen
| inflation.
| bottlepalm wrote:
| We should get the band back together welcome it as a new state.
| gghhzzgghhzz wrote:
| People are happy to ignore the reasons why the vote happened in
| the first place, or why similar anti-establishment votes keep
| happening throughout the western world.
|
| There are systemic issues that no main stream political project
| seems capable of addressing, it's pointless simply removing
| some trade barriers again to paper things over and put
| ourselves on the back that we can pretend they are being
| solved.
|
| Brexit has exposed some of those issues, and made it clear
| where the responsibility lies. by exposing them and focusing
| attention on them it has created a real opportunity to address
| them, although I imagine that opportunity will be missed.
| samirillian wrote:
| "Have you tried kill all the poor?"
|
| https://youtu.be/owI7DOeO_yg
| vibrio wrote:
| I was expecting to hear Jello Biafra singing on the other end
| of that link.
| boeingUH60 wrote:
| Good karma for a former colonialist empire...anyways, their
| ceremonial king is a billionaire while the average citizens bear
| the grunt of the decline.
| bbg2401 wrote:
| What a detestably callous comment. Do your job, dang.
| rajin444 wrote:
| Ironically enough, one of the strengths of a monarchy is a good
| king could absolutely prevent this and set the empire on a path
| to enriching the British populace. And if not they run a high
| risk of losing their head.
|
| Nowadays we've all embraced democracy (oligarchy run by
| demagogues) and it's a lot harder to hold anyone accountable.
| Everyone knows the British monarch is "powerless", so they
| quibble amongst one another over whos political party is to
| blame.
| fullshark wrote:
| A monarchy is more responsive to the needs of its citizens
| than a representative democracy? I realize we've all become
| jaded cynics over the western flavor of republic recently,
| but history and even present day monarchies show this to be
| nonsense.
| version_five wrote:
| I tried thinking through the upstream assertion, and I
| can't say I believe it.
|
| But I am curious about how the accountability structure of
| a feudal system rolling up to a monarch compares to modern
| democracy. To some extent isn't each level still
| accountable to the levels below it - a peasant uprising
| will be the downfall of a noble, and an aristocrat uprising
| will be the downfall of a king. It's not immediately clear
| either that this would be worse than whatever system we
| live under, which in most places has no accountability and
| where democracy (voting) is mostly a theatrical exercise
| that changes nothing.
| rajin444 wrote:
| Do any modern western governments truly represent the
| interests of their people? They're all suffering from
| fragmentation and discord. Without high trust culture, they
| end up balkanizing their people and being ruled by
| oligarchs.
|
| I think the non representative democracy the US initially
| was worked well (as history can attest to). Fully
| representative leaves you with demagogues (as the current
| day can attest to).
|
| > history
|
| There have been plenty of good kings who saw it their duty
| to see to their people. This is more or less the default
| for how humans operate (families, tribes, businesses,
| etc.).
|
| > present day monarchies
|
| There are not any left in western society that I'm aware
| of, so there's a bit of a sampling bias.
| boomboomsubban wrote:
| >And if not they run a high risk of losing their head.
|
| This happened to roughly one British monarch, Lady Jane Grey
| and Mary Queen of Scots make it "roughly." Do you think there
| was only one monarch who failed to enrich the British
| populace?
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