Low interest rates contribute to weak labour markets A new measure of Unemployment and Labour Market Conditions gains support at the Annual Jackson Hole Conference. Doubts continue about European QE as near-zero interest rates may actually be preventing employment from picking up. Concerns about Repo Market Disruptions The Repo market is becoming less attractive due to new Leverage Ratio rules. Doubts remain as to whether this can prevent reoccurrence of credit seizing up should (...)
With the Scottish referendum around the corner and other ones looming on the horizon, IREF investigates the accounts of states thinking about a divorce. What are assets and liabilities to be split? Is the currency such asset, for example?
Scotland’s coming referendum is offering the country “independence”. Politicians cannot agree about what exactly it would mean, especially what currency the new state would have. Now an economics Nobelist has added his voice to the debate. At face value the question of adopting another country’s currency is very simple, but closer scrutiny reveals deep fiscal connotations which complicate things. IREF disentangles the (...)
Most companies were hit hard by the freezing up of financial markets after 2008. Governments responded selectively – by selective tax cuts and subsidies, but they could have more meaningfully “help” everyone, not just big companies, by lowering corporate tax rates. Did they? IREF investigates, and shows EU countries’ responses fall into 5 categories.
Why is anyone against it?
A famous economist, author of even more famous economics textbooks, is calling for an end to corporate taxation. Not because he has been bought by the corporate world and multinational companies, but because it makes economic sense. Perhaps most surprisingly – it should make sense even to left-leaning thinkers.
A century later....
EU governments are increasingly subsidising electric plug-in cars. Many countries have “five year action plans” to electrify their roads, using tax money. Environmental benefits will actually decrease with e-car proliferation, and the governments are forcing us to pay for something we may soon not want.
New IREF Policy Paper
A new IREF Policy Paper by Senior Fellow Alexander Fink analyses the colourful patchwork of various private pension schemes the government has created, and compares their inflexibility and other disadvantages to the US system. A “single pot” which would enjoy some of the currently individualized incentives would be a much better idea for everyone in Germany. And it may even contribute towards social (...)
So who would build roads without taxes?
A century after privately built and operated roads were either nationalized or closed down, a new private toll road has sprung up in England. It is popular with drivers, if not with the local government. Is it always wrong to charge for use of infrastructure built from tax money? Is it OK that many EU countries start charging for highway mileage?
Government is blatantly nudist
Summer temperatures bring new wave of strikes to France (not that they’re seasonal…). Two concurrent current strikes involve nudity. Fiscally, though, they have very different implications. It does not depend on what you do with your clothes, it depends on who is your employer.
After many Occidental countries imposed sanctions on some Russian businesses, Russia has retaliated by restrictions on some Occidental ones. Trade wars rarely work. However, a new fiscal phenomenon has appeared: affected EU companies seek compensation from the state for loss of markets. Should they get it?
The media world calls Summer “the silly season”. When politics takes summer break, it is time to roll out the “silly stories” to fill the media. Not this year. Politics strikes back and rolls out silly taxes on media. Hungary’s ruling party introduced a new tax on advertising revenues of up to 40%. This is terrible economics, but economics cannot compete with terrible hatred…
Key to post-Wimbledon life? Lose the key!
Carrying keys on your person is dangerous if you are a Wimbledon champion, tax authorities will charge you heavily for such audacity. At least one EU government’s budget apparently relies on its citizens winning the Wimbledon. And it encourages envy. If successful sports-people representing their countries want to help their fellow citizens, they should stop being patriotic.
Portuguese Constitution is too PC
Portugal’s Constitutional court joined the ranks of those European courts that have halted crucial welfare reforms by governments. IREF reviews the evidence and concludes that fiscal policy must, for better or worse, remain the sovereign responsibility of the government held accountable at the next election. Being able to blame the courts would pave the way for governments to court misery, the opposite of what constitutions want to (...)
BIS has doubts about monetary policy in the Euro area Latest BIS Report says that present monetary policies risk permanently destabilizing the global economy. It calls for A New Policy Compass, focussing on the ‘Financial Cycle’, not the Business Cycle. Banks remain fragile and imbalances persist The BIS notes that banks have been recapitalising, but in some countries problems with asset quality and earnings persist. The recent issue of a convertible bond for TESLA is a prime example of (...)
Desperate times call for desperate measures. European governments cannot raise enough tax to cover their spending. Ireland has even been forced to adopt what economists generally consider the least distortive tax feasible. That is good (considering the alternatives), but its execution leaves much to be desired. Strange incentives remain, and punishment for success is built (...)
Two years ago, prof. Vani K. Borooah published a working paper for the IREF with the warning title "When the Lights Go Out". We are pleased to announce that the working paper has been since extended into a fully fledged book, now published by Palgrage Macmillan.
Spanish government has just announced it will cut some taxes. The actual cut will not come until early next year, and just like a Spanish rodeo arenas, it has a sunny and a shady side to it. The sol is the riddance of tax breaks. The sombra, however, is ushered by the EU pressing for higher taxes.
Stalin said: No man – no problem. EU governments’ tax policies are following suit. Shifting taxes onto a man who does not (yet) exist is one way of solving problems. Are governments also subtly changing existing taxes into less visible ones? Is this a more humane form of “No man protesting – no problem”? IREF investigates.
Central Banking Confidence in the ECB wobbles as commentators on all sides question the effectiveness of supposedly growth stimulating new policies. Markets and Investment At least two big takeover deals are being negotiated in Europe now, both with heavy government involvement. The strategies adopted by the French and UK governments may appear to differ but at heart they are very (...)
Tax harmonisation in the EU is pursued in order to prevent competitive lowering of tax rates, an alleged race to the bottom. What race?, IREF asks. Taxes are an ever increasing (at best stable) portion of GDP, and have been for years.
Gross domestic product is getting more gross
Prostitution is going to enter official Italian GDP figures, allegedly to help the government meet its fiscal targets... The story went viral. IREF brings you the real story beyond the headlines. Prostitutes in GDP are perfectly normal, everywhere. It’s the way that we measure our governments’ indebtedness that is not normal...
How economics - and the fiscal cycle - affect voter turnout is a richly studied question. But what about the other way? Can turnout - how many or few voters turn up to vote - affect the fiscal situation in the following period? IREF investigates and finds that people simply going and voting can be good for fiscal freedom. At least a little.
Cypriot government has unilaterally “redefined” one of the conditions of its 10bn bailout package and lifted a ban on government officials traveling business class. Is this an exercise in customary opulent luxury or is it actually a hidden subsidy? And aren’t all governments guilty?
Voter turnout at the latest European Parliament election is much debated. Many countries saw further drops compared to last EP elections in 2009, fuelling concerns about widening democratic deficit. Beyond the general facade, IREF discovers an interesting geographic pattern in the turnout numbers.
The concept of Living wage is gaining popularity throughout the EU. The social pressure of its advocates probably stands behind the recent proposals to increase substantial minimum wages. Closer scrutiny of the proposed levels of living wages by the IREF reveals, however, that the relationship between Living wages and Minimum wages is quite unexpected.
LLL: Location, Largess and Lessons
If the Yes campaign wins today, Switzerland will have by far the biggest minimum wage on this planet. We analyse this trend in a wider context of contemporary European popular movements. We suggest that the Swiss Minimum wage proposition has actually very little to do with the traditional concept of "minimum wage". Lessons for the EU go much deeper than the standard effect of minimum wage on (...)
The misadventures of a new scientific materialism
In his new Capital in the 21st century, as forbidding as his previous work on High Wages in France in the 20th century, Thomas Piketty presents a mass of data on asset growth in several European countries and the United States. This information improves the knowledge of our society’s relationship to capital and the divide between the richest and the poorest. Except that the author abuses these data, following 19th century scientific materialism. Like Marxist authors, he endeavours to (...)
Three fundamental questions have emerged, but clear answers still have not: Free floating for the hryvnia? New bureaucrats in Brussels? New rules for high-frequency trading?
Nobody likes poverty. But how do we end it? Suppose we give everyone some money. This will automatically include the poor, we don’t have to identify them, problem solved. Is it doable? Will anyone still work, create new ideas, write poetry, love? The answer depends largely on how basic the basic income is, as we show.
The latest Scorsese blockbuster is still making the headlines for its novel artistic work with timelines. Does the Wolf, however, have anything whatsoever to say about Wall Street? Very little, and it may actually work to strengthen and entrench any bad practices that remain in the financial world!
European elections are upon us. In a series of articles, IREF is helping to inform voters’ decision. Last week we analysed attendance rates by voters at elections and reasoned that European elections may be bad for democracy. It’s now time to turn the tables and consider attendance rates of parliamentarians at the EP. What does the record reveal about their attitude to work?
Recovery has started, according to some data. Is it sustainable? Or is it based on asset prices inflated by easy monetary policies? Inside this newsletter: * Bond markets and the real economy * Central Banking – The Illusion of Tapering * The Return of Bubbles?
Following lacklustre performance at local elections, the French President has appointed a new Prime Minister. Is it a good tactic, and will it change anything?
In his new book Capital in the 21st century (Belknap Press, April 2014), French economist Thomas Piketty presents a mass of data on asset growth in several European countries and the United States. This information improves the knowledge of our society’s relationship to capital and the divide between the richest and the poorest. Except that the author abuses these data, following 19th century scientific (...)
Where have all the voters gone....
“Nothing to see here, move on.” So goes the “apology” for low turnout rates in European elections as penned by many European analysts and commentators. “The US have them just as low at mid-term elections, so why worry?” Closer analysis of individual country data by the IREF, however, reveals that the “European turnout deficit” is actually worryingly high in many places, adding to existing concerns over EU’s democratic (...)
European nations’ fiscal authorities must be doing an excellent job if people are willing to pay hundreds of thousands of euros for the privilege to pay taxes to them… Or is there something else behind the new market for EU citizenship?
They want to be taxed.. or so they say.
Government’s mortgage interest subsidy, besides creating a lot of social costs, benefits almost solely the rich, yet it’s precisely the rich who boldly claim to want to scrap the programme. What’s going on?
… And Then There Were Three…
Ladies and Gentlemen, please welcome to the stage Dutch Disease, 2nd edition. This time it’s not natural wealth that makes you poor, it’s a natural consequence of a poor policy.
Only those Parisians whose licence plates end with an odd number could drive their cars down the Boulevards last Monday. It was the 17th, an odd number. This is no solution to a real underlying problem which exists because of a lacking market.
Anti-Pollution Measures: A Third Of Abuse Of Power, A Third Of Mismanagement And A Third Of Demagoguery
And maybe even a fourth third of “electoralism” in order to win the hearts of green voters! In fact, the executive power has nothing but contempt for users, taxpayers and citizens.
The culture of the single transgenic maize (MON810 , produced by Monsanto) approved by the European Union has been banned from France. It is the third time since 2008 that genetically modified corn is banned from the French territory. The decree (...)
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