On the comments of Pope Francis

I’ll admit a bias here – my middle name is Francis, so no doubt I am being overtly generous to his comments when I discussed them on Rates Blog last week 😉 .  Or potentially I’m am being harsh, because I am particularly unhappy that I ended stuck with a middle name I didn’t particularly want.

All kidding aside, the way different economists reacted to the Pope’s comments was fascinating for me – and also helped to reinforce the idea that often when we discuss things as economists, it can be hard to hide our normative assumptions.  As I pointed out here, I was raised with a fairly significant Catholic upbringing – and in the context of what I remember being told about when I was young his comments were not terribly strong.  I felt he was making some statements that were factually wrong, but it was on the basis that those within the Church actually believe in a more equitable distribution of wealth (even if it is significantly less wealth).

These normative value judgments about the distribution of income run past economics – economics is a descriptive discipline that allows us to fairly represent the trade-offs, not to determine what trade-off is right.  However, as an individual I would also note that the normative value judgments of the Catholic Church are hardly going to be representative of society as a whole – as a result, we do not need to say that the Pope is wrong with what he is saying in order to disagree with him.

However, as the end of my Rates Blog piece does point out, factually his two main “testable changes in society” are completely false.  Make of that what you will.

Is it a bubble?

I was at the Press Gallery Christmas function last night in Wellington. Great do. I have renewed respect for journalists’/government relations types’/politicians’ drinking ability.

At some stage I got cornered on what would happen to Auckland house prices. Having no good answer I resorted to the Keynes line that markets can remain irrational for longer than you can remain solvent.

This morning I thought I would have answered it more as The Economist writes:

“Manias can last much longer than investors think, as many contrarians discovered to their cost during the dotcom boom of the late 1990s. Nor do investors know whether a bubble will be resolved through a sharp fall in prices or a long period of stasis, in which inflation erodes prices in real terms.”

And the folly of forecasting asset prices is neatly encapsulated by Irving Fisher (Professor of Economics at Yale University), in 17 October 1929, soon before the crash:

“Stocks have reached what looks like a permanently high plateau.”

Regional unemployment

The 2013 Census data is a treasure trove. A striking regional picture is the unemployment rate by territorial authority.

Urate by TA Read more

Macro data and are we doing better?

Statistics New Zealand launched their social indicators on 26 November 2013. It is a collection of data from the General Social Survey, which supplements various ‘hard’ economic data with ‘softer’ measures of perceptions.

I was part of a panel that spoke briefly at the launch. Donal at Economics New Zealand has written about it already.

The question posed to me was: Are we doing better? It’s a loaded question. It depends on who you ask and what dimension you measure.

Putting it in the context of the economic cycle, we can describe a recession where economic activity, employment and various other indicators fell. They have subsequently recovered. But the recession and the recovery were shared unevenly, across regions, industries, age, ethnicity etc: Read more

A bunch of interesting links

All links via Marginal Revolution – all things I want to comment on, but do not have the time.  View this as a sort of saving space!

Value and Doctor Who

Today is Doctor Who’s 50th anniversary.  Seeing that I wanted to do an “economics of Dr Who” post … but how do I do that?  All the Time Lords are dead, and the other people involved are either human or weird aliens that are in conflict in some way.  There isn’t really much of an economy to discuss here.

However, there is one point.  The idea of “value” for an individual when material scarcity has ebbed away.  The TARDIS can make whatever things the Doctor wants, so he is hardly in material need – or even suffering from a material want he can’t satisfy.  In that case, what is going on?  Well this video gives us a hint.


He can go anywhere in time and space, create any material goods he wants, and as a result at his current age he is fully satiated – he gets no real additional satisfaction from any of it.  As a result, he finds other people who find wonder in it and lives through them – his relationships with others become an important part of how he finds value, and defines his purpose and character.

If material scarcity heads away, the things individuals find value in will change.  In such an environment policies that “target” things without a recognition of this change – no matter how well intended – will be poor policies.