Wednesday , October 17 2018
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Frances Coppola

Frances Coppola

I’m Frances Coppola, writer, singer and twitterer extraordinaire. I am politically non-aligned and economically neutral (I do not regard myself as “belonging” to any particular school of economics). I do not give investment advice and I have no investments.Coppola Comment is my main blog. I am also the author of the Singing is Easy blog, where I write about singing, teaching and muscial expression, and Still Life With Paradox, which contains personal reflections on life, faith and morality.

Articles by Frances Coppola

Vítor unbound

9 days ago

I always find the views of former policymakers fascinating, not least because of their tendency to become much more outspoken once they are out of office. Some express much more radical views than they did while in office: Larry Summers springs to mind, and Adair Turner. Others become critical of the institutions that they ran: Mervyn King, for example.
The latest former policymaker to reveal what he really thinks is Vítor Constâncio, Vice President of the ECB from 2010 to 2018. In a fascinating lecture at the London School of Economics, he discussed the causes of the Euro crisis, the policy responses to it, and what should be done to prevent such a disaster happening again. The entire lecture is on an LSE podcast (audio only, sadly), but Vítor released four of the slides from his

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Checkmate

18 days ago

With only six months left to the moment when the UK leaves the EU, the Brexit end game is upon us. If there is to be a Withdrawal Agreement at all, the Northern Ireland border problem must be solved within the next couple of weeks. But at present, both sides are well dug in and showing no inclination to budge. No-deal Brexit is looking increasingly likely.Nonetheless, the game is still afoot. In Salzburg, the EU appeared to strike a mortal blow to Theresa May’s Chequers proposal. After this, surely she had to compromise on her red lines?Not a bit of it. Mrs. May is sticking to her Chequers proposal, apparently hoping that eventually the EU will blink. She remains, as ever, oblivious to the mortal damage that this would do to the EU as a political project.But agreeing a deal with the EU

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Cake and cherries

23 days ago

Sometimes I despair at the naivety of politicians.Theresa May’s humiliation in Salzburg was an inevitable consequence of her belief that the EU would be willing to compromise its "four freedoms" to keep her in power. To be fair, press reports since the Chequers plan have suggested that the last thing the EU wants is a change of leadership in the UK. But it was a mistake to interpret this as meaning the EU was willing to become Theresa’s poodle. Nothing could be further from the truth.
The EU has said many times that the four freedoms are not up for negotiation, and proposals that tried to keep some of them while rejecting others have all been flatly rejected. Theresa’s prized Chequers deal was weighed in the balance and found wanting the moment it hit Michel Barnier’s desk. All the

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Do you remember yesterday?

September 15, 2018

It’s ten years since the fall of Lehman Brothers. Ten
years…. but it seems much longer. I look back on the mid-2000s as if they were
a past century. Those days are gone forever, and the future is increasingly
dark and uncertain. How a single event can change the course of history…“Do you remember
yesterday, that was a hundred years ago?” cries Lucretia in Benjamin Britten’s The Rape of Lucretia, shortly before committing suicide. Lucretia’s death was the event that brought about the
fall of the Tarquin dynasty and the establishment of the Republic of Rome. A
fundamental re-ordering of Roman society was triggered by a single act of
betrayal. Tarquinius raped the wife of one of his senior generals. She committed
suicide. Appalled, the Roman army overthrew him. No doubt Tarquinius had

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Patrick Minford’s holidays

August 28, 2018

Skewering Patrick Minford has become something of an economists’ bloodsport. I admit, I have done my fair share of Minford-bashing, though I do try to stay away from trade economics. Others are much better at lampooning Minford’s antediluvian approach to trade economics than me.But when Minford starts pontificating on the effect of currency movements on the balance of trade, I can’t resist getting out the shotgun. Minford is appallingly bad on anything that involves foreign exchange. He just doesn’t seem to understand how floating exchange rates interact with trade dynamics and capital flows. So it is unsurprising that his latest venture into this complex subject is as disastrous as the last.Here is Minford, in the Express, talking about Brits and their holidays:
The mood of British

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Job guarantees for the disabled

August 28, 2018

It took me a while, but it has now dawned on me why job guarantees might be very popular in the U.S., even among the sick and disabled. The clue is in this response to a tweet from Nathan Tankus:

It’s not just a problem for the technically disabled. Health issues are the #1 reason why people miss work and lose jobs. Many are too weak or previously injured or old before their time. Until Medicare for all, JG with benefits would be a fantastic lift for many.
— Bob Spencer (@binhkhe) August 24, 2018
Here in the U.K., access to healthcare is not dependent on being gainfully employed. But in America, it is. If you aren’t working, your access to healthcare can be very limited. Thus, sick and disabled people who are unable to work can lose access to healthcare. The very people who need it

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Life after death

August 12, 2018

[embedded content]
Last Friday, I watched my father die.
It was the first time I had witnessed death in a human being, though I have seen it in animals. I will never forget what it looked like. The pallor of death is quite different from paleness due to shock or illness. Even before death arrives, the blood drains away from the face as if bleached, leaving behind something more like wax than human flesh.
Right up to the end, I knew he could hear. He tried to open his eyes when I spoke to him. He knew that my brother and I were there. I don’t know if he was in pain, but his breathing was distressed, so I asked the palliative care nurse to give him morphine. Perhaps the morphine stopped him fighting the process of death. He died shortly afterwards.
I have sung about death many times: in

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Intermezzo

July 7, 2018

No doubt you are all wondering why Coppola Comment has been quiet for the last two months. There are two reasons: the first is personal – my father is seriously ill and needs a lot of my time. But the second will I hope be music to your ears. I am writing a book.
My forthcoming book will be called "The Case For People’s QE" and will be published by Polity, probably in Spring 2019. Yes, I know, the title makes it sound as if I have gone over to the dark side. But I assure you I have not become a Corbynista. My version of "People’s QE" has a long and hallowed pedigree, running all the way from Keynes through Friedman to Willem Buiter, John Muelbauer, Paul McCulley, Zoltan Poszar and numerous other sensible people. It’s really the outcome of much of my thinking and writing over the last

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A very British disease

June 17, 2018

The desire to judge people’s motives rather than addressing their needs is a “British disease”. We have been suffering from it for hundreds of years, cycling endlessly through repeated cycles of generosity and harshness. Each cycle ends in public outrage and an abrupt reversal: but the memory eventually fades, and the disease reappears in a new form. In this post, I outline the tragic history of Britain’s repeated attempts to "categorise the poor".
For centuries, successive British social systems have
recognised that there are people who cannot work, whether because they are too
young, too old, too ill or too infirm. These people need to be provided for by
others – in the first instance families, but where family support networks
break down, support must be provided by the wider

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Velocity Matters

May 10, 2018

An accounting
identity does not indicate the direction
of causation. Not ever.
I’ve been caught out on this a few times myself, usually
when I am trying to deduce something useful from national accounting equations.
But I’m merely a writer. People actually involved in the formulation of policy
should know better.
Here’s an attempt by people who should know better to
try to infer the direction of causation from an identity. On the St. Louis
Federal Reserve’s blog site is this
post by Yi Wen and Maria Arias. It purports to show that the reason why
three rounds of QE in the US have failed to raise inflation is because the
velocity of money has collapsed. And they then come up with some reasons why
velocity has collapsed, though sadly no ideas about what to do about it.
Their argument

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Arithmetic for Austrians

April 22, 2018

This piece grew from a number of conversations with people of Austrian economic persuasion, mostly Bitcoiners and goldbugs (which these days seem mysteriously to have converged). I thought of calling this "Monetarism for goldbugs", but decided to preserve the mathematical slant of the previous pieces in this series. But it’s monetary arithmetic, of course. And as Austrians tend to obsess about "sound money", it is specifically sound monetary arithmetic. (Note: Someone has pointed out on Twitter that the arithmetic in this piece is considerably more advanced than the equations themselves suggest. If you are bit rusty on the mathematics of change, I suggest reading the first piece in this series, Calculus for Journalists). 
Inflation is complicated
As "sound money" seems to mean "no

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The Bitcoin Standard – a critical review

April 11, 2018

For over a century now, the world has lacked a genuinely international means of payment. This is partly due to decisions made at the Bretton Woods conference in 1944, when the US dollar was adopted as the principal international settlement currency, rather than John Maynard Keynes’s suggestion of an independent global currency that he called "bancor". Although the Bretton Woods gold-backed structure ended in 1971, the US dollar became ever more dominant. In 2008, the dollar’s global reach enabled an American financial crisis to spread to the entire world, causing a deep recession and long-lasting malaise. Ever since, there has been a deep longing for a more stable international financial system, one which didn’t depend on debt, wasn’t dominated by the US and was immune to political

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The EU is not a bastion of protectionism

March 15, 2018

Jamie Powell at FT Alphaville has debunked the USA’s claim to be the least protectionist trade area in the world. With the help of a couple of useful charts, he shows that it comes in a modest ninth on the list in trade-weighted terms. Go Jamie. The "victim America" narrative really needs to be stamped on, hard. America’s trade deficit is not caused by mercantilist trade policies in other countries, it is an inevitable consequence of the dominance of the dollar – and is thus a measure of America’s post-war success. But in the course of debunking the USA, Jamie also incidentally debunked the Ultra Brexiters.
The Ultras insist that the EU is a bastion of protectionism, with extremely high tariff barriers to third countries. Indeed it does have very high tariffs for some products, mostly

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The sad story of Maplin Electronics

March 7, 2018

Last week saw two high-profile corporate failures in the UK. Toys R Us finally went into administration after a stay of execution over Christmas. And private equity firm Rutland Partners pulled the plug on geeky electronics retailer Maplin. Total job losses from both failures amount to something in the region of 5,000 across the whole of the UK.
No-one was particularly surprised by the failure of Toys R Us. The company had proved slow to respond to the rise of online shopping and the trend away from large out-of-town retail outlets in favour of small local shops. In the US, Toys R Us filed for Chapter 11 bankruptcy protection (the American equivalent of administration) in September 2017. Despite the American company’s insistence that its European operations were not affected, it was

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An Alternative Brexit Polemic

February 23, 2018

You would think, wouldn’t you, that an "Alternative Brexit Economic Analysis" by four highly experienced and qualified economists would be a rigorous exercise in economic forecasting, supported by excellent econometrics and with care taken to avoid confirmation and selection bias?  A new paper from the Brexit-supporting thinktank Economists for Free Trade critiques the Government’s recent forecast that Brexit would cause a GDP loss of between 2 and 8 percent over 15 years, with the "hardest" Brexit causing the greatest loss. Or at least, that’s what the paper says it is doing. But the way it goes about it is decidedly odd for something claiming to be an "Alternative Brexit Economic Analysis". The first section of the report is an extensive discussion of the reasons why no-one should

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The misery of Mitie

February 12, 2018

The failure of Carillion has brought to light widespread moral hazard in the outsourcing sector. For years, companies that deliver crucial public services relied on expectation of government support to keep their borrowing costs low and enable them to please shareholders by giving dividends they couldn’t afford. They, and the banks and investors that funded them, assumed they were too important to fail. So when Carillion was on the brink of failure, RBS tightened the screws, clearly believing that the UK government would eventually cough up (my emphasis):
RBS….insisted that this revised arrangement "would be in place until support from [the Government] had been agreed and that the terms of this support would determine whether other uncommitted facilities with RBS would be

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Clearing out Carillion’s cupboards

January 29, 2018

Those excellent researchers at the House of Commons Library have produced a briefing paper on the Carillion collapse. It is clear, succinct and well-researched. And extremely grim.The researchers seem to have gone back through the reports & accounts to about 2009. And they conclude that Carillion was a basket case not just in the last year of its life, but from about 2011 onwards. I’ve now done the same exercise, and I agree with them. Carillion’s cupboards were virtually bare, and the little that was in them stank.This chart summarises the mess that Carillion got itself into:

We need to be a little careful with this chart, of course, since it is comparing stocks and flows. But what it shows is that a large uplift in loans in 2010-12 generated absolutely no additional net cash revenue

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The Carillion whitewash

January 20, 2018

The Carillion whitewash has begun. Carillion’s interim CEO, Keith Cochrane, is spinning the line that had banks not pulled funding, its collapse could have been
averted. And the Financial Times has
released details of a letter Carillion sent to the Government at the
beginning of January, in which it asked for short-term advances to tide it over while it underwent restructuring. Labour MP Pat McFadden has written to the Treasury
Secretary asking whether it would have been more cost-effective for the U.K. Government
to support Carillion, rather than allowing it to collapse.
This looks to me like a campaign to deflect blame from Carillion’s management to its lenders and customers. We are being led to believe that it wasn’t insolvent, it was just illiquid, and depriving it of short-term

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The Fat Controller of the Lightning Network

January 17, 2018

The geeks to whom my post on probability was addressed responded exactly as I expected. "You don’t understand the tech", they said. And they went on about network routing protocols and Dijkstra’s algorithm. Someone even sent me a spec for an onion routing protocol for the Lightning network. I read it and sighed. They had completely missed the point.
To be sure, I had made an incorrect assumption about Lightning. I assumed that Lightning devs respected property rights. It turns out that they don’t even know what property rights are, let alone respect them. They see Lightning’s pathfinding problem as entirely a technical matter. If it were, then solving it would simply involve developing algorithms to oversee the network and find the most efficient payment paths. I did mention this

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Tribalism in political appointments

January 11, 2018

So Toby Young was eventually hounded into resigning from the board of the Office for Students. I confess, I was one of those who hounded him. I thought, and still think, that his appointment was wholly inappropriate.
I was not sorry to see Jo Johnson subsequently moved out of the Department for Education, either, though personally I would have sacked him. Johnson, who was instrumental in bringing about Young’s appointment, defended it to the House of Commons on the extraordinary grounds that Young was on a "developmental journey". It’s absolutely fine for Young to go on a developmental journey, of course, but not paid for by my taxes or affecting the lives of my children (my daughter is currently a university student).
But there is a much bigger issue here. Why was Young ever appointed

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Probability for geeks

January 9, 2018

The Lightning network is being touted as the solution to Bitcoin’s scaling problems. If lots of transactions can be taken off the main chain, the thinking goes, then Bitcoin can still take over the world despite its considerable performance problems. Lightning enthusiasts say that when fully enacted, the network will be able to process millions of transactions at, er, lightning speed, without compromising decentralisation, security or transparency.But there are dissenting voices. For example, in this piece, Jonald Fyookball disputes the claims of the Lightning enthusiasts on the grounds that the mathematics doesn’t stack up. Predictably, the Lightning geeks have fought back: the pseudonymous "Murch", a software engineer at the Bitgo cryptocurrency exchange, describes Fyookball’s

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Toby Young’s repugnant eugenics

January 4, 2018

Eugenics has a bad reputation. Even the word "eugenics" is repugnant to many people, associated as it is with atrocities – forced sterilization programmes in America, for example, and of course the horrors of Nazi Germany. We like to see eugenics as discredited pseudo-science that has been consigned to the dust of history. Never again will we treat people as expendable simply because of their inherited characteristics.
But ideas that we discard because of their horrible consequences have a way of returning, dressed up in respectable clothing. Eugenic ideas have existed – and been acted upon – since ancient times. The idea of eliminating those who are, or will be, a burden on society because of disability raises hackles now, but in ancient Rome it was regarded as a public duty. The

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The terrible price of austerity

December 28, 2017

In August 2014, I wrote this post arguing that harsh austerity during the Depression caused Hitler’s rise to power. At the time, my argument seemed controversial, at least in Germany. There, it is not the austerity of 1930-32 that is blamed, but the debt-driven hyperinflation of a decade earlier. Germans remain terrified of both inflation and debt to this day.I am certainly not the only person to identify a causative link between austerity and Hitler. Here is Paul Krugman slapping down Eduardo Porter in 2015, for example:
Yes, there was a hyperinflation in 1923, which may have helped radicalize German politics. But the proximate factor in Hitler’s rise to power was the great deflation of the 1930s, brought on by a disastrous attempt to stay on gold. 
Disastrously staying on gold might

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Thirty-three flawed Theses

December 18, 2017

Five hundred years ago, so legend has it, a dissident priest called Martin Luther nailed a list of 95 "theses" to the door of the Castle Church in Wittenburg. His action launched the Protestant Reformation. 

Last week, the dissident economist Steve Keen "nailed" a list of 33 Theses to the door of the London School of Economics. His aim was to launch a Reformation in economics as significant as the religious Reformation that Luther started. It was a bold gesture.But for such a movement to take hold, there has to be substance in the criticisms. And as I read the 33 Theses, my heart sank. For these are in no way like the 95 Theses.Luther’s 95 Theses are a brilliantly argued academic case against the (then) Roman Catholic doctrine of indulgences, which was a clerical scheme for fleecing

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Demolishing a straw man

December 13, 2017

This is David Hencke’s response to my comment on his blog. You can find the Coppola Comment version of my comment here.For the record while not replying to all your points.
1. I cover a wide range of topics on my blog – child sex abuse, domestic violence, bad treatment of the disabled, the rise of Jeremy Corbyn, dodgy privatisations, institutional racism etc.
2. Given the government has to write to everyone telling them when their pension is due, it is not beyond the wit of man or woman to tell everyone personally when the change came into effect.
3 your main point seems to be that pensions are not a right but a benefit that presumably could be means tested. I am afraid they are not marketed like that – with all the qualifying rules for NI to get one for a start. they are still a

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Never mind WASPI, just look at Back to 60

December 12, 2017

The Back to 60 Campaign is attracting the attention of some high-profile people. Michael Mansfield QC has publicly endorsed it, although he has backed off from providing legal representation in their claim for state pension at 60. And now the journalist David Hencke has written a blogpost about the campaign.The sole source of Hencke’s information about the campaign appears to be this video, in which a number of women complain about the effect that not receiving state pension at 60 has had on them and their families. As is all too often the case with 1950s women’s pensions campaign material, the video is littered with gross factual errors, such as the talk of "earned dues" being wilfully withheld, and the notion that the government is in breach of contract. There are also some frankly

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Trade and currency, a Brexiter’s delusion

December 6, 2017

If there is one industry Brexit has stimulated, it is the
production of daft ideas for regenerating the UK economy after its exit from
the EU. Many of the offerings have been from people who really like the idea of
Britain becoming a European version of Singapore. But the left wing is not
short of silly schemes either. This one, from businessman and self-styled economist
John Mills, is one of the silliest I have seen.John Mills is chairman of John Mills Limited (JML). On his
biography, he describes this as “a consumer goods company specialising in
selling products requiring audio-visual promotion at the point of sale, based in the UK but with sales throughout
the world.” Emphasis is mine, for reasons which will shortly become
apparent.
John Mills is also a long-standing supporter of

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Productivity and Employment: A Cautionary Tale

November 24, 2017

Ah, productivity. Who knew that our whole prosperity was totally dependent on a concept as nebulous as this?To be sure, it doesn’t sound nebulous. It is output per worker per hour. What is so difficult about that?The problem is how you define "output". Usually, we take this to mean GDP (gross domestic product), though we might use GNP (gross national product) or GVA (gross value added). In this post, I shall use GDP.As Diane Coyle has engagingly written, GDP is a deeply flawed measure. Yet we are obsessed with it. The Eurozone uses government debt-to-GDP and deficit-to-GDP ratios to justify harsh spending cuts and tax rises. In the UK, "WE MUST PAY DOWN THE DEBT!" roar the headlines, entirely missing the point that debt-to-GDP is a ratio, so even if we never borrowed another penny, it

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The Amazing Conversion of Sir James Dyson

November 20, 2017

“Will you tell me how long you have loved him?” asks Jane
Bennet, on receiving the astonishing news that her sister Elizabeth is to marry
Darcy, the rich aristocrat she used to hate.
“It has been coming on so gradually, that I hardly know when
it began,” replies Elizabeth. “But I believe I must date it from my first
seeing his beautiful grounds at Pemberley.”
This is from the end of Jane Austen’s Pride and Prejudice. Austen is lampooning the British 19th
century marriage market, in which women (and men) pretended to “fall in love”
when in fact they were marrying for money. But for cynics like me, such a remarkable
conversion has echoes in the 21st century. When someone suddenly becomes
an ardent supporter of an ideology they had previously – equally ardently – opposed,
always follow the

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More on productivity

November 15, 2017

The ONS’s latest flash productivity estimate is rather good. Productivity in Quarter 3 2017 was up by 0.9% on the previous quarter. Here’s what ONS has to say about it:
Output per hour growth in Quarter 3 2017 was the result of a 0.4% increase in gross value added (GVA) (using the preliminary gross domestic product (GDP) estimate) accompanied by a 0.5% fall in total hours worked (using the latest Labour Force Survey data). This fall in total hours was driven primarily by a 0.5% fall in average hours per worker.
Yes, yes, I know – economics jargon. Let me translate. ONS in plain English:
People are working fewer hours, but they are producing more every hour. 
Of course, this should be set against the backdrop of persistently low productivity since the 2008 financial crisis. Productivity

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