It’s a sad fact that war can pay. The US arms industry is one major beneficiary. The UK is a long way behind, but it also a big supplier of armaments to the world. If governments of the world upped their defence pending to 3 percent of GDP that would see a massive increase in demand for weaponry. In Britian’s case it could re-engage the manufacturing sector and maybe even lead Britain back to a trade surplus. Phil asks Steve why we seem happy to see government spending on defence, supporting gro...
Oct 09, 2024•37 min•Season 1Ep. 424
Phil tells Steve that he’s always struggled with Karl Marx’s idea of surplus value. The idea that workers work for themselves, then a bit more to create the profit for a business. Phil says, that seems like a cost-plus approach, whereas in his marketing days, it was all about creating a brand that people would pay more for. The extra value was created by the goodwill associated with the brand. How do you apply Marx’s theory of surplus value to a $1,000 Gucci handbag, for example. Steve says it s...
Oct 02, 2024•36 min•Season 1Ep. 423
Europe and the US are both recovering from the same problem – COVID and the inflation that followed. But last week the Fed in the US dropped interest rates by half a percent, with markets expecting a soft-landing for the US economy. Europe, meanwhile, is struggling, with Germany’s economy heading backwards for more than a year. So, when the big difference when both economies are coming from the same place? Steve Keen tells Phil Dobbie that the US would be struggling just as much if it restricted...
Sep 25, 2024•36 min•Season 1Ep. 422
The UK’s unemployment rate is 4.1%, the inflation rate is growing at 3.1% and the economy is growing at 0.6% quarter on quarter. That’s how the economy is doing, what more do we need to know? Well, it would be useful to know whether the unemployed are predominantly in certain income groups, or that income growth was greater in particular parts of the economy Like, more for capitalists and less for workers? As Steve and Phil discuss this week, economists are building business models built on aggr...
Sep 18, 2024•34 min•Season 1Ep. 421
The pandemic was the biggest economic disturbance since the second world war. In both cases supply chains were severely disrupted, either by German U-boats or, more recently, factories and borders closed to stop the spread of disease. On the face of it, though, we have got off relatively Scot-free. We haven’t seen the massive fall in GDP experienced after the war. In fact we saw a sharper fall in GDP in the 2008 financial crisis. What is different is how we have handled the readjustment. After t...
Sep 11, 2024•37 min•Season 1Ep. 420
A couple of years ago, when warning of the need to fight inflation, Jerome Powell, Governor of the US Federal Reserve says interest rate would rise and jobs might disappear. Yet, interest rates have risen, and unemployment hasn’t fallen anywhere near as much as expected. So, what’s going on? Does it mean, thankfully, that monetary policy isn’t working as well as expected? Now the talk is of a soft landing, where jobs have been protected and inflation has come down. The work of fine tuning by the...
Sep 04, 2024•37 min•Season 1Ep. 419
Some call it the silver tsunami. The wave of old people putting pressure on government budgets. And, as baby boomers retire and young people produce less and less children, western populations will continue to age. That means less productive capacity and more people dependent on welfare. On today’s podcasts Phil & Steve talk through the three options open to governments: flood the country with younger migrants to pay more tax, pay less and create a cohort of elderly poor, or rethink the idea...
Aug 28, 2024•39 min•Season 1Ep. 418
The last time interest rates were this high they came down rather fast. This time central bankers are determined to manage a slow unwind and deliver a return to growth without wreaking havoc on the economy. Will they be successful? This week Steve Keen argues the high interest rates are inflicting damage without treating the problem. Inflation is being caused by businesses increasing their mark-ups. But, Phil asks, surely they are only able to do that because demand is outstripping supply. And w...
Aug 21, 2024•35 min•Season 1Ep. 417
Complex systems don’t have to be complicated to provided deep insights into the real world. That’s the view of Doyne Farmer, special guest on this week’s podcast. It’s an approach he shares to economics with Steve Keen. Steve develops systems from the top-down, whereas Doyne’s work focuses on agent-driven bottom-up modelling. But they arrive at similar conclusions. Phil Dobbie talks to them both about how we could arrive at a more accurate understanding of the economy and financial systems, whic...
Aug 14, 2024•54 min•Season 1Ep. 416
It’s curious isn’t it how we talk about household savings, rather than net debt. Many people do have money squirreled away in savings accounts, for a rainy day. That rainy day comes when hey lose a job and need that cash to pay their mortgage. So we are saving to help pay off an existing debt at a later date. How cockeyed it that? A lot of that money tied up in savings, including funds we’ve put away for our pension, ultimately become the source for investment. That’s supposedly a good thing. Mo...
Aug 07, 2024•37 min•Season 1Ep. 415
So, if economics is all about the allocation of scarce resources, isn’t energy the most scarce resource? And yet its not really included in any economic models. We look at labour and capital as the drivers of growth, but energy is just a contributor to those factors, not a key factor in itself. Yet without energy humans wouldn’t survive and machines would lie dormant. This week Phil talks to Steve about the need to give energy the dominant position it deserves in economic models. As you’ll disco...
Jul 31, 2024•38 min•Season 1Ep. 414
We are obsessed with the need to own things, not least, our homes. But for younger people that is increasingly becoming a pipedream, unless they are lucky enough to gain a healthy inheritance. Even then it’s going to come later in life. In the meantime, we save like crazy, and even when we do get a house, we spend decades paying it off though a hefty loan form the bank. The finance sector are the big winners. But should we do away with this unhealthy obsession and rent our homes. A d should the ...
Jul 24, 2024•39 min•Season 1Ep. 413
The global share market has always been dominated by the US, now we’re seeing a number share of very large tech companies claiming a larger slice of that pie. Even though they are trading with price to earnings ratios well beyond the historic average, these companies won’t fail. They dominate the market, with billions of customers, low production costs, a low number of workers and the spare cash to vest in growth without the expense of extra capital. Phil asks Steve, what damage are these compan...
Jul 17, 2024•37 min•Season 1Ep. 412
Labour has romped to victory in the UK and they need to get cracking on all their election promises. One of those is the creation of Great British Energy. Keir Starmer points to the number of foreign interests owning energy generation in the UK. But, as Phil highlights this week, foreign companies are also heavily invested in energy distribution and retailing. The National Grid is suffering from a lack of investment. Doesn’t that also need to be brought into public hands. And what about all the ...
Jul 10, 2024•38 min•Season 1Ep. 411
In the UK the proportion of the population aged over 65 has grown from 16 percent in 2000 to over 19% today. It’s a similar story throughout the western world as the population ages. That’s seen as an enormous liability for governments who will have to pay out pensions to their old folk. Hence the drive to get people to put money into private schemes. In the UK there’s over £2.2 trillion tied up in pension funds, more than AUD$3.4 trillion in Australia. So, what good is that money doing? It will...
Jul 03, 2024•40 min•Season 1Ep. 410
Carla Denyer and Adrian Ramsay recently launched the Greens Manifesto in the run up to the UK election. Phil and Steve discuss it on this week’s podcast and conclude the one thing that seems to have slipped down the priority list, is all the green stuff. They talk about fixing broken Britain, like every party, and correcting wealth inequality. They also promise that their ideas are fully costed, and can be paid for – for example, by a carbon tax. But they know they will never run government, so ...
Jun 26, 2024•40 min•Season 1Ep. 409
The UK election debate changed tune when Nigel Farage agreed to stand for Reform, promising to cut migration and rid the UK of all the problems these nasty foreigners are responsible for. Elsewhere the recent European Union elections saw a sharp shift to the right, again driven by concerns over migration. If Donald Trump wins again in the US at the end of the year that too will be gained on a ticket spreading fear and loathing over migrants. It is clearly an issue that can’t be ignored. Yet you ...
Jun 19, 2024•42 min•Season 1Ep. 408
Imagine if Keir Starmer, the UK Labour leader, had said, let’s not get too obsessed with government debt. If we go down that road we won‘t be able to provide the public services we need, our infrastructure will crumble further and we’ll simply see the country’s productivity erode further by the day. Unfortunately, he didn’t say that. Instead, he has pledged himself to the temple of fiscal responsibility, just like the Conservatives. That means, whichever party is in power the UK can expect somet...
Jun 12, 2024•36 min•Season 1Ep. 407
There’s been a debate brewing post-pandemic about how much inflation has been elevated by companies increasing their margins. The evidence of that is the increased profits, not just in the tech sector, which has helped increase the share prices of these companies, evidenced by record levels across the US share market indices. This week Steve Keen says its clear that is happening. Even before the pandemic, when inflation was lower, companies were still increasing their margins more than the level...
Jun 05, 2024•43 min•Season 1Ep. 406
The UK is heading to the polls on July 4th and the Conservative Party is heading for annihilation. Yet, when it comes to espousing sensible ideas from textbooks, Rishi Sunak had the making of a good Prime Minister. For example, tackling productivity by building the necessary infrastructure, investing in education and building cities and regions where businesses could cross pollinate their expertise, facilitated by strong communication and transport links. He presented all of these ideas three ye...
May 29, 2024•43 min•Season 1Ep. 405
Steve is on hols this week, so Phil takes a look back at a couple of Debunking Economics podcasts from just before Donald Trump took office. In many ways he stuck to his promises. He tried to cut immigration, he introduced protectionism with hefty tariffs on China and he cut taxes. Now he’s promising more of the same, although Biden might have beaten him to it when it comes to heftier taxes on China’s EV exports. The first time around Steve suggested some of Trump’s thinking was right, although ...
May 22, 2024•30 min•Season 1Ep. 404
Should we tax wealth more? The UK’s Shadow Chancellor Rachel Reevs wouldn’t be drawn o the question at an FT forum recently. She said the UK is already a high taxing country. But around the world the wealthy are getting wealthier. Is that a bad thing? Some would say that if they are making money creating growth for the economy, then why would you want to stop them. Jeff Bezos, for example, makes a small fraction of the wealth of the economic benefit he has created for broader society. But does i...
May 15, 2024•41 min•Season 1Ep. 403
UK Labour leader Keir Starmer has said if he wins the next general election, within 5 years he will have re-nationalised Britain’s railways. Phil asks Steve whether it naturally follows that this will lead to an improvement in services and lower fares? Steve reckons you any need to look at government run services elsewhere in Europe to answer that question – but Britain’s trains weren’t so great even in the days of British Rail, when they were in government hands. This time there’s a chance one ...
May 08, 2024•44 min•Season 1Ep. 402
The new industry is struggling to survive, with far reaching consequences on public accountability and democracy. Steve says part of the problem could have been fixed with a suitable micropayments system, so readers could consume articles without subscribing to papers in full. Phil’s not so sure, pointing to the fact that an increasingly large proportion of the population is not consuming news at all and what they do read or watch is on their feeds in social media. News media is having to resort...
May 01, 2024•48 min•Season 1Ep. 401
There are two types of people who buy gold. Speculators who see it as a risk-adverse asset class to buy when other investments look a little shaky. There are also those who hold onto gold because they believe paper money has no intrinsic value and is therefore susceptible to collapse. Zimbabwe, who’s paper currency has been undergoing decades of increasing worthlessness, is now being replaced by a new form of blockchain currency – the ZiG, completely backed by gold and foreign currencies. Phil a...
Apr 24, 2024•39 min•Season 1Ep. 400
Sadly for Donald Trump, America seems to have been doing quite well in his absence. It has weathered the pandemic and inflation better than most. GDP pr capita is rising faster than most places and consumer spending is on the up. In fact, the main reason the Federal Reserve isn’t cutting rates is because the economy is doing so well they don’t see the need for a sudden change. But there are lots of warts in the US too. Industrial production plateaued decades ago, crime is rampant, despite the hi...
Apr 17, 2024•46 min•Season 1Ep. 399
For a while now Dr Edgar Feige has been a proponent of an automated transactional tax. The idea is that we get rid of all taxes – income tax, sales tax, corporate tax, excise, capital gains, import and export duties, inheritance – and replace it all with a tax on all transactions Every transaction, which can be easily identified through bank accounts, has a very small tax on it. Phil and Steve discuss the pros and cons this week. It’s certain broad in its reach, but is there a danger that it cou...
Apr 10, 2024•42 min•Season 1Ep. 398
There’s been a lot of speculation lately about the role of immigration and its impact on inflation. Does a flood of foreign workers push down wages, which contains cost and keeps prices down? Conversely, did the low immigration levels post-COVID add to the wage pressures because, combined with sickness from COVID, there were a lot less people for every job vacancy. It sounds sensible, but Steve believes it’s only a small part of the issue. And if did have the potential to increase labour supply ...
Apr 03, 2024•40 min•Season 1Ep. 397
The Bank of Japan has just lifted interest rates for the first time in 17 tears. The central bank has kept rates in negative territory in the mistaken belief that it would encourage banks to lend an people to borrow, helping to boost their flagging economy. Steve Keen says it’s based on the mistaken belief that banks lend money from their reserve accounts. They believed that by charging to hold onto the money banks will prefer to lend it out. If that was the case, the policy has been a dismal fa...
Mar 27, 2024•40 min•Season 1Ep. 396
One analogy that economists like to use is that of the Capitol Hill Babysitting cooperative in Washington DC in the 1970s. Government workers set-up a babysitting group, where they to it in turns to babysit each other’s children, so they could enjoy nights out without paying for childcare. There were quite a few on the group, so payment was formalised through the issuance of scrip. Economists like it because it mirrors a monetary system and suffers some of the pitfalls and problems faced in the ...
Mar 20, 2024•32 min•Season 1Ep. 395
