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While you await your lunchtime pint (or Pret at your desk, depending on your commitment to raising the UK’s productivity levels) here’s some reading to tide you over the weekend. We cover the synchronised swimming of house prices and the fact that even the OECD thinks we might want to get a grip on the political economy of wealth. And something on zombies. Sorry.
Naughty novices. A little knowledge is a dangerous thing – or so the saying goes. Now a study reported in the Harvard Business Review finds that it’s also those with a little experience that are a danger – because after a few goes at a new activity we learn the basics and think we’ve cracked it (even if we’re still fairly rubbish). To add some spice, the experiment the authors carried out to demonstrate this ‘beginner’s bubble’ of overconfidence involves a zombie apocalypse – now that actually would be dangerous…
Wealth: it’s all the rage. This week the OECD published major new reports on the taxation of household savings and wealth. Some high(low)lights: wealth inequality is greater than income inequality everywhere and wealth gaps have been increasing in recent decades (although the UK picture is more complicated). To add insult to injury, there’s also a systematic tendency to under-tax wealth across the OECD: the number of rich countries that tax wealth directly has declined over the last quarter-century from 12 to just 4 (France, Norway, Spain and Switzerland).
On house prices, big cities are all in this together. If house prices are rising in Tokyo, does that mean they’re also going up in London? More and more the answer is yes, says a blog this week from the IMF. Some of this isn’t surprising – interest rates move up and down in sync to quite a degree. But the authors also point to institutional investors and wealthy individuals operating across countries – my billionaire is your billionaire it turns out. The result: houses are behaving increasingly like other financial assets. The good news is that policy responses like property taxes will still help – if any government actually bothered to implement them. Here’s our starter for ten…
The American dream nightmare. The US labour market is a bit of a basket case – nowhere near enough Americans are in work. However, a perkier take is provided by Peterson Institute economists, including former White House adviser Jason Furman, in a recent blog. They argue that employment is now at last effectively back at pre-crisis levels, despite only 60.3 per cent of the 16+ population being in work compared to nearly 63 per cent back in 2007. The fall is explained by the ageing of the population, rather than any ongoing effect of the crisis. Fair point – but while many countries are seeing record employment levels, the US still has lower employment rates that it did in the past. This is what an economic and social disaster looks like.
Impact of QE. This week the Bank of England’s chief economist was Down Under. In case you weren’t convinced by last week’s argument that a loose monetary policy hasn’t boosted inequality he’s had another go at ramming the point home in a speech in Melbourne.
The dismal science’s dismal record on gender: Economics is a gender disaster area. An audit of who does the talking when it’s discussed in public doesn’t make for pretty reading. It turns out XY chromosomes are very helpful for getting on in the profession – a point rammed home by a data rich article (£) by Gemma Tetlow in the Financial Times this week. The root cause? We’re doing a rubbish job attracting women into studying economics in the first place. Only a little over a third of undergraduate economics students in the UK are women – compared to nearly 60 per cent of undergraduates overall. Time for economics departments to get recruiting.
Chart of the week: child rearing for generation rent
Generation Rent has moved on from nightclub fees to nursery fees but they’re still paying a landlord, rather than a mortgage provider, as this sneak peek chart from a Resolution Foundation report out next Tuesday shows.
We’ve trebled the number of kids growing up in the private rented sector since 2003 – and done precisely nothing significant to respond to that fact by giving young families the security they need. We’ll be proposing ways to fix that…