Dr Alf’s Two Cents: Consumer Price Inflation May 2013 – ONS

The Bank of England in Threadneedle Street, Lo...

The Bank of England in Threadneedle Street, London. Deutsch: Sitz der Bank von England in der Londoner Threadneedle Street. (Photo credit: Wikipedia)

Fiscal policy

Fiscal policy (Photo credit: Wikipedia)

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The latest ONS report on consumer price inflation in the UK is INTERESTING READING. Check it out!

via Consumer Price Inflation, May 2013.

The most significant comment for me was:

The largest upward contributions to the change in the rate came from transport (notably air transport and motor fuels) and clothing.

It will be interesting to see whether the latest announcement will have any impact on the two important levers of economic policy, namely fiscal policy and monetary policy. I suspect that there will be little change to both. UK Chancellor, George Osborne is still locked in to his austerity policy, so no change in fiscal policy. Meanwhile, it is probably too early to expect any change in direction from the new leadership at the Bank of England as far as monetary policy is concerned.

Regular readers of this blog will know that I agree with the IMF‘s view that austerity in the UK has been too severe and the economy should be carefully reflated. In particular, I endorse the IMF’s recommendation to increase public borrowing by £10 billion this year and invest it in top-class infrastructure projects.

Any thoughts?

 

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Dr Alf’s Two Cents: Only the Poor Die Young by Johan P. Mackenbach – Project Syndicate

Chicken Tiki Masala - Work Social

Chicken Tiki Masala – Work Social (Photo credit: mangee)

This article by Prof. Mackenbach, published by Project Syndicate is WORTH A READ. Check it out!

via Only the Poor Die Young by Johan P. Mackenbach – Project Syndicate.

When I saw the title I was expecting the article to be about deaths from war; in wars, the largest share of the soldiers come from poor backgrounds. I was a little surprised that the article focused on effectiveness of postwar social policies in Europe. In particular, the article highlights that the poor, typically from less educated, lower income, social  lower classes, die younger; Mackenbach noted that this trend was also present in Scandinavia, often highlighted as the beacon for social policy. The author concluded that the solution was higher taxes that favored redistribution in favor of the poor.

I was particularly interested in the following comment:

Long-term time-series data indicate that the socioeconomic mortality gap narrowed before the 1950’s, but has grown substantially since then.

Personally, I am uncomfortable with the argument in favor of higher taxes designed to take from the rich and give to the poor, like in the current French model. Based on my political views, I favor lower taxes, a small state and a meritocracy that favors individualism.

In my mind, social policies have been increasingly abused by do-good politicians, inefficient bureaucrats, and ungrateful recipients. Austerity policies across Europe have helped to highlight the causes of the socioeconomic mortality gap, namely smoking, physical exercise, diet, and alcohol consumption.

For me, Germany provides a good model or benchmark for social policies, and France and the UK highlight ineffective policies.

This leads me to an emerging open question:

In austerity savaged Europe, what should policy-makers do about the socioeconomic mortality gap, i.e. poorer people die younger?

Any thoughts?

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