EconomicsNotes

  The idea of a wage gap is somewhat simplistic. It is undeniable that there is a gap in nominal terms between those who are not formally skilled and those with salaried jobs who hold professional qualifications. The development of the ‘precariat’ is something which tends to run against this idea. Many of those who are formally skilled are highly leveraged, and it is estimated, have so little in savings, and so much in housing, educational, and personal debt, that they are between one and two pay-days away from bankruptcy. Often, those who are skilled live in high-cost areas and rent, rather than own property, whereas some of those who are unskilled live in public housing or their family property with a much lower set of outgoings per month. In addition, many of those classed as unskilled are young, and are living with parents or relatives who can accommodate them. It follows that a wage gap predicated upon technological change which pushes out those in service positions, or wh...

  The world since 1987 has become remarkably less unequal than it was. This is because of sustained growth in areas which had traditionally been rich in human history but which two hundred years of Imperial inequality had destabilised, such as South America, the Middle East, India, and East Asia. In those countries and areas, incomes have generally risen along with GDP/GNI, wages have increased, land value increases have provided one-off but huge benefits to many who were formerly peasants, and living standards have increased (at the temporary expense of the environment.) By contrast, Western countries have seen the opposite since 1973; their real wages and purchasing power have declined, their domination of world markets in a growing number of sectors and services has come under challenge, their national debts (since 2000) have generally grown, and their economies and supply chains have become globalised and financialised. This has not resulted in more unemployment, but has fo...

  Ultra-low interest policies have been a feature of global monetary management since 2008 in most countries (and were tried in Japan before that.) They exist in the context of the near-collapse of the global economy and of national and international banking, credit, and derivative markets in 2008, though they also reflect a perceived lack of inflation risk. The idea behind ultra-low interest rates, or negative real or nominal rates, was, firstly, to prevent a credit crunch. Credit crunches happen when banks have lent out a great deal of money and cannot fund a large volume of withdrawals. This causes banks to reduce refinancing and new lending, which puts individuals and businesses in a position where they cannot stay in the market and pay their bills and debts, thus creating a spiral of economic decline. In addition, banks might in such circumstances start asking for their loans and credit payments back early, worsening things still further. Many modern banks also are princip...

  There are several challenges here. One is that a general consensus has arisen that a reduction in the carbon waste which enters the atmosphere from traditional forms of power generation is necessary to slow or reduce dangerous climate change. This means a move from an economy based around the generation of power from coal, oil, and to an extent gas, and towards one based upon renewable, abundant, and satisfactory replacements.   The challenge is that hydrocarbon power is a really efficient and effective form of power for electricity grids, cars, aeroplanes, heating, and factories. It is also globally used by competitor economies. Switching from it might therefore limit the capacity of economies, create advantages for competitors, lower living standards, and reduce the amount of investment capital available for the development of renewable resources. A second challenge is that the renewables sector is one covering a great many things. Some of these things, whilst improvin...

  A wealth tax is a tax on high value assets, high incomes, or luxury goods. The premise of the tax is that this can reduce the gap between the rich and the poor either by making the rich less rich, or by doing that and then redistributing money to the poor, thus narrowing the gap between the rich and poor.   The rich are poor and the few are many, however. An attempt to greatly reduce the wealth or incomes of the rich may simply encourage the rich to leave a country or to avoid the taxes with the help of accountants or lawyers. This would complicate efforts to collect the tax, and may actually mean that the tax was inefficient, because it collected less than it cost to operate. If a government were to take tax from a small number of individuals and then give a small portion to a large number of poorer people, the effect might be temporary and might not really affect incomes overall, as it could be spent on debt, inferior goods, or imported cheap goods. In addition, taxes ...

  Vaccines are a merit good. They are excludable (they can be charged for) and are rivalrous, in that different companies can produce different versions. The market could in theory therefore produce a vaccine. Start up costs are however very high, so initial average and marginal costs would be high. This is because fixed costs are high, and also because safety measures, tests, and liabilities if things go wrong, are expensive and take a long time to work through under normal   safety protocols. Vaccines have high positive externalities and to really work require widespread coverage. This generally means that the social optimum for their provision will be different from the market equilibrium. This is because in a market, people will pay for the drug or vaccine up to their own marginal private cost, at the point where that meets marginal private benefit (equal to marginal social benefit.) For society, it would be better for the provision to be at the social optimum, where m...