Go back to Part 1 of Adam Smith and the Financial Crisis Banking in the 18th century Unlike many economists today, Smith’s understanding of what bankers actually do is pretty accurate. He describes how the issue of ‘promissory notes’ by banks can increase economic activity. In Smith’s day what was ‘promised’ in the issue of […]
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Adam Smith and the Public Purpose Adam Smith, the great Kirkcaldy-born philosopher and economist, observed plenty of banking activity, including crises, in his career. What can we draw from his thought in this time of economic troubles? If Adam Smith were the free-market fundamentalist the guys and girls at the Adam Smith Institute (ASI) would […]
At the end of January 2010, UK government debt stood at £848bn and around 60% of GDP. The European Commission says ‘additional fiscal tightening measures’ are required. The Tories warn that investors are getting anxious and that the ratings agencies (who also certified the security of mortgage-backed derivatives) are about to downgrade the UK government’s […]
An important step in making economic scholarship relevant to the post-crisis world may have been taken last week in Cambridge, UK. A number of economists that do not subscribe to the majority view of how the economy works met to consider what a ‘New Economics’ might look like. While new in several senses, the ‘New […]
Is ‘economic activity’ always a good thing? The banks hit by the bonus tax have raised the spectre of lost incomes and tax revenue if they choose to relocate away from the UK. The British Broadcasting Corporation (BBC) has recently sought to justify the licence-fee by calculating the revenues its commissioning generates for independent production […]
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The Economics of Theft
A Church of England vicar has recently said it’s OK to steal from supermarkets if you’re hungry and desperate. This is against the law. Apart from the 8th commandment do we have any idea why? It’s annoying to be stolen from, certainly, but it’s also unpleasant and dangerous to be poor. The social, as opposed […]
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The Truth of Unequal Pay
There is at present an unprecedented wave of concern about pay disparities. We have the bankers’ bonuses, both main parties promising to limit high salaries in the UK public sector and a vigorous debate in Scotland about the high levels of pay of some Health Board managers. Last week, the New Economics Foundation (NEF) published a […]
After the banking crisis and the debacle surrounding the collapse of MG Rover, a British car manufacturer, it’s surely time for a rethink of corporate limited liability. The Phoenix Consortium, an ad-hoc partnership of four businessmen friends led by John Towers, extracted at least £9 million each from MG Rover, thanks to a sum […]
Banks are returning to profit. The new chief executive of the taxpayer-owned Royal Bank of Scotland complains that We sometimes feel as if commentators variously want us to go back to over-lending, to operate on a ‘not-for-profit’ basis, to never entertain a client and to offer employment conditions that deter the best and brightest. All […]
Can’t help, not won’t help by Diarmid Weir Key assumptions of the New Labour government seem to be that businesses were just crying out for the chance to do socially useful things. They really wanted to take on more staff if they had a bit more training or work experience. They were apparently crying out […]