Friday, January 05, 2007

Gold And David Blanchflower

Whilst one obviously wishes The Devil's Kitchen all the best on his return to southern climes, I do hope the big fella realises just how much of an impact his move will have on the capital's rat problem.
Although 'The Daily Mail' puts it all down to recycling (a phenomenon which might give David Cameron some pause for...nah, too much like hard work), the idea that an increase in the volume of rubbish having anything to do with an increase in the number of people seems to have escaped them.
But immigration's good for us!
Or so you would believe if you read nothing other than the effusions of Professor David Blanchflower, a member of the Bank of England's Monetary Policy Committee, who went on the record earlier this week as saying that there was 'little or no evidence' that mass immigration has any effect on either native wages or native unemployment.
Blanchflower, whose contribution to the jurisprudence of same-sex relationships has been as great as his contribution to economics, is a British born naturalised American who only took the MPC job on the condition that he could continue teaching at Dartmouth; however the idea that a foreign national helps mould British economic policy might be as startling to some as Nick Griffin being appointed a columnist for 'The Guardian', or Jared Taylor getting a weekly gig at 'The New York Times'.
One of the planks of Blanchflower's case is that the UK has enjoyed lower than average population growth over the last 40 years, as if the size of the population in 1971 is of any consequence after the massive inward migrations of the last 10 years.
I look forward to reading DK's description of riding the Tube of diversity with interest, and imagine that he'll be lucky to get 0.03 sq m of floor space. Thank God I'm a hick.
The BBC wrote of Blanchflower's report that,
"There is "little evidence" that migrants have made it harder for UK workers to get employment or pull down wages, says a Bank of England report.

The paper dismissed the idea that recent arrivals come to claim benefits.

The 0.8% unemployment rise over the past 18 months has little connection with the arrival of some 500,000 Polish and ex-Soviet bloc workers, it said....
The paper also highlighted that population growth had been "extremely low" in comparison with other nations in the past three decades.

The population increase in the UK has been 7% in that time, in sharp contrast with 42% in the US, 25% in Spain and 18% in France....
"The entry of recent A8 [accession] migrants appears to have improved the workings of the labour market, reduced wage and inflationary pressures."
They have also lowered the "natural rate of unemployment," by making the workforce more adaptable and mobile. "

Such workers have contributed to keeping inflation in check by consuming less than they produce."
One defers to the inestimable David Jefferson Bean's description of this analysis -
"Begging your pardon, Mr. Fuckwit, sir, but isn't "reduced wage pressures" a euphemistic way of saying: "has pulled down wages"? Just curious."
Couldn't have put it better myself, Dave; although I suppose 'Professor Fuckwit' might have been more appropriate.
Although there are some indications of a recovery in wage rates (which may or may not be seasonal), and the prevalence of the the bonus scam notwithstanding, British wage rates are trending so far downwards that the trend is clearly visible; and evidence that British workers are being displaced by migrants has been in the public domain since October 2005.
And there is one other little problem with Blanchflower's 'migration is the cure for all our economic ills' scenario; one indicating that, no matter how much migrants depress wages or how conservative they might be in their spending habits, inflation might soon be back in the system.
Whether or not the price of gold is a useful indicator of future inflation is certainly a contentious topic amongst economists; however, the bottom line is that we don't trust the official inflation figures (with some justification; The Gobblin' King's preferred CPI index excludes housing costs) and the price of gold is going through the roof; according to yesterday's 'Daily Express', it rose by a whopping 23% during 2006.
No matter how frugal the migrants might be, Gordon Brown's economic mismanagement, a direct consequence of his mania for the fascistic, anti-British policy of 'globalisation', has pumped inflation back into the works; and the Monetary Policy Committee's energies would be better directed towards advising on the need for radical anti-inflationary measures, such as capping public sector pay increases for five years, as opposed to finding solutions that will only exacerbate the problem.

7 comments:

Trixy said...

It may be the Gobblin' King's preferred method, but he doesn't actually have a choice about it as the CPI, or to call it by its proper name, the Harmonised Index of Consumer Prices, is a way of measuring inflation dictated to us by the EU.

Anonymous said...

I'm guessing that Mr Blanchflower hasn't been checking on the wages and the 'ethnic diversity' of building site workforces in the South East, then. But of course, those of a particular political slant would like to see the same area of the country sliding into the sea and disappearing.

Little Black Sambo said...

Is Brown ever going to be brought to book for the way he got rid of our gold reserves?

Pascal said...

Dictated ? If you want other countries to invest here, or finance your debt, it is usually better to have numbers that are comparable to other countries. So dictated, I think not.

As for having a foreign national helping shape economic policy, I am not sure what the harm is in that.

Those pesky foreigners taking all our jobs. Get a grip.

AntiCitizenOne said...

M4 is a good guide to future inflation. BTW M4 is very high at 16%.

Trixy said...

Blanchflower's main result is that the 'natural' rate of unemployment has fallen - which has been confused in some press with the actual rate of unemployment. I haven't read his paper but I can be sure it contains econometric bullshit. The usual definition of the 'natural' rate is the rate at which actual inflation tends neither to rise nor fall.

Anonymous said...

I think one of the main issues that affects interest rate setting is that of personal interest on the half of the BOE members - Blanchflower will no doubt have a house, be paying a mortgage etc. Likewise, so will his friends and family so let's just keep interest rates low and everybody can make a pile of cash! Another issue is that we won't see the inflationary effects of someone's 100k house- sale profit being injected into the stock market(also hugely inflationary) in the near term. It only increases money supply of which the effects can only be seen much later. Interest rates will probably need to go higher than 6% LIBOR to decrease this rampant supply of cash in the system.