Manufacturing jobs will disappear - no matter where you are

just as the agricultural share of employment has fallen from 40% in the 1920s to less than 2% of the workforce in Europe today, manufacturing's share of employment will fall to less than 5% of employment. That is not jyst for Europe, according to Adair Turner's excellent dinner speech, but that is across the world. He has pointed out that it is not an issue of international transfer of jobs (although it dominates headlines) but it is because of innovation which makes the productivity of (manufacturing) labour increasinglty higher. As that happens, less and less labour input will be needed to prodcue the tangile products we need - hey, even China's manufacturing workforce has been falling for a decade - and the logical conclusion of such a tendency is that we won't need as much labour. Read more

@INET Berlin: The Great Divide

Behind all the technical language and the common theme of bashing bankers, there remains the Great Divide between Germans and the rest. To Angel Gurria of the OECD, Michael Hudson of the University of Missouri and many others, the key lesson for the EU is that cutting the deficit too quickly does not work, that temporary QE is according to the book, and so on. To Germans such as Kai Konrad from the Max Planck Institute for Tax Law and Public Finance, the key lesson is that we thought all countries in Europe had responsible governments with well-functioning institutions, but then found out we don't. Economics versus politics if you like. Or technical finance versus trusting The Other. Can they be reconciled?

@INET Berlin: Doing the actual work

While yesterday presented a number of frontrunning scientists discussing current economics and state of the economy in general, academic terms, today starts with ECB executive board member Asmussen. Interstingly, the ECB is quite a bit more positive about the development of the crisis and about the measures taken by politicians. But maybe that's just politics. It also gets more technical. Key message: 1) LTRO bought time, it is not the solution, 2) Now politicians should adjust budgets to "sustainable paths" - but no timeline given. Who could disagree?
But then, briefly and only at the end, a plea for fiscal and political integration, addressed at Germany principally. Nice.

Kids Behind the Wall

On my way back home from the Brandenburger Tor, I recalled that I already have been there, it must have been in 1988. Like many other Western German school kids we visited Berlin for a week. We climbed up a little elevated visitors’ platform on the West front of the gate to peer over the wall and watch Eastern German soldiers walking up and down. No way to pass.

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@INET Berlin: Decisions

A suprisingly large number of talks refer to the issue of human decision making. This afternoon Gigerenzer set out his story about the mind working on the basis of heuristics, right now Damasio talks about emotions as an effective decison making tool that has developed over evolutionary time. But the topic recurs in many of the other presentations as well. Gigerenzer has always been very clear with whom he disagrees (Kahneman and Tversky, and neoclassical economics principally) and so has Damasio (neoclassical economics, people who accept Descartes' mind-body distinction, people who appreciate Spinoza's understanding of human decision making). But what do they think of each others' work?.. Work to do next week...

Asking questions about paradigms and INET

Dinner has already rolled around on what has been a quick day. We have managed to corner Steve Keen and Dirk Bezemer for a round of questions and have confirmed Axel Leijonhufvud and Nicola Giocoli for tomorrow (in fact I am borrowing Nicola's iPad for this post as my laptop seems to have given up). That all said we are asking people four key questions and then building around that depending on answers and who people are.  Read more

Blogging Live from Berlin - Any Requests?

Just wanted to let you all know that amongst the distinguished, distinguishable and disturbing people at the INET conference we have inserted ourselves in the middle to do some interviews, attend talks and blog about what is going on. So far, I've managed to have a Curry-wurst, get a room and see George Soros invest twenty five million dollars in a new research collaboration, and just about getting ready to go and be part of the Young Scholar Initiative's 'Commons' event, which is running as part of the conference. Read more

Economics as a doctrinal discipline

In science, empirical disciplines such as physics, chemistry, history, and parts of sociology and political science, reason from facts. By contrast, doctrinal disciplines such as law, philosophy, and parts of sociology and political science reason from doctrines, or dogma’s. While doctrines must of course have a grounding in the empirical world, this relation is much harder to grasp. Moreover, to understand the doctrine and its derivation it is as much necessary to appreciate the context in which it was formulated, to understand the person first formulating it, and to assess the development of amendments subsequently made over time. Read more

From 1000AD to 1970 the History of World Trade is Based on Fact, After 1970, Fiction?

Having just started Findlay and O'Rourke's mammoth history of world trade in the second millenia, I have been struck by a strange incongruity. From before year 1000 and onwards the introduction is all about data, politics and the co-mingling of influences. Then you get to the 1970s and the data seems to be replaced with two very generic statements, and fiction on the effect of recent trade reforms (p. xxv). Read more

UK Budget Appeals to Adam Smith's Approach to Taxes... Sort of

Yesterday the Chancellor of the Exchequer (or UK 'finance minister') gave his annual budget speech where UK fiscal policy is set for the coming years. In announcing his tax changes he name-dropped Adam Smith as the inspiration for his objectives on tax:

Two hundred years ago, Adam Smith set out the four principles of good taxation - and they remain good principles today. Taxes should be simple, predictable, support work, and they should be fair. The rich should pay the most, and the poor least.  George Osbourne, 21 March 2011