We economists, especially those of us who have had some responsibility for educating students, have a lot to answer for. Presumably all the politicians strutting across our television screens did attend some sort of educational institution at one time. Indeed, many attended institutions of so-called higher learning. Yet somehow their economics teachers failed them.
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Conventional analysis of Korea seems to be incorrect in its view of the probability of North-South reunification. The conventional view is that reunification grows more unlikely as the disparity in wealth between the North and South (now far greater than that between West and East Germany in the 1980s) continues to increase, and as young South Koreans, who tend to be more opposed to reunifying with the North, come of age.
While we have no way of knowing what the odds of reunification are, we should recognize that the logic behind these conventional views is not sound. Most South Koreans are Baby Boomers or senior citizens, so the issue of young Koreans tending to oppose the idea of reunification may not be nearly as relevant as one might think. An estimated 58 percent of South Koreans in general favour reunification.
As for the enormous economic disparity between the North and…
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In 1278 the King of England came up with a new plan to raise money and land, as leaders are fond of doing. Certain that historic privileges had been usurped by uppity subjects, King Edward sent royal officers around to prominent individuals demanding by what legal right – quo warranto – they held their honours. However when Edward’s men arrived at the home of one John de Warenne, Earl of Surrey, the ageing aristocrat pulled out his rusty sword and proclaimed: “My ancestors came with William the Bastard, and conquered their lands with the sword, and I will defend them with the sword against anyone wishing to seize them.”
Pay restraint put Germany back on track but at a cost. It has left the economy more unbalanced than ever. Exports are super-competitive. In last year’s annual health-check, the IMF said Germany’s real effective exchange rate was undervalued by 10-20%. Consumer spending, meanwhile, remains depressed. Despite abundant jobs growth, the share of GDP going to households has fallen from 65% in the early 1990s to 60% or below, to the benefit of corporate profits (see chart 4). The rate of household saving, however, has not changed much: it is currently 9.8%, exactly in line with its 20-year average.