The ´natural rate of unemployment´, also called ´Non-Accelerating Inflation Rate of Unemployment´ (NAIRU) or ´Non-Accelerating Wage Rate of Unemployment´ (NAWRU), is as, on this blog, Lars Syll states (here and here), a dangerous tool. According to NAIRU/NAWRU theory,

a) When unemployment falls below a certain threshold, an inexorable increase in inflation will start. This is simply not true, considering the facts.

b) As NAIRU/NAWRU theory is untrue, it can´t be measured by estimating a relation between inflation and unemployment. It is hence measured by what boils down to a short-term (3 year) running average of headline unemployment. Actual measurements are more or less equal to the recent rate of unemployment

c) This means that when unemployment suddenly explodes to

Who decides what statistical offices measure and how they measure it? And what are the implicit values embedded in these decisions? Recently, the ILO issued a new manual on measuring productivity. Below, I´ll discuss the questions posed. But for starters, it is essential to realize that economists measure monetary productivity, not physical productivity, which leads to problems with ever-changing prices. This will be part of the discussion.

The ILO (International Labour Organization) is the only tripartite international organization (governments, labour, and employers). One of its tasks is to assemble statistics on labour and organize the global discussion about the concepts of ´unemployment´ and ´labour´. To give an idea, they assemble statistics on paid labour, forced labour,

Peak Babies was in 2012. At this moment, we´re back to the level of forty years ago (and the most recent data may well be an overestimate). For the first time in centuries, cohorts entering the global labour market will soon be smaller than the cohorts preceding them.

Even when there are significant differences in levels between countries, the years around 1970 were a turning point everywhere. In 1965, the relentless movement towards below-replacement human reproduction started. Aside: that won´t be a blessing for the environment. The 10% wealthiest people cause about 50% of all unsustainability or something like that, meaning that a much smaller global population can still wreck the planet.

Do not underestimate the magnitude of the decline. In Seoul, the fertility rate has

Like John Stuart Mill, I´m more interested in credit than in money. Developments in the amount of credit provided are much more instructive to the economist than data on money. Look at the graph below (no. 2 in the ECB press release) , a highly Post-Keynesian graph that originated from the pre-Euro Bundesbank and is now published by the European Central Bank. It shows that money growth in the EU is relatively moderate and, more interesting, caused by a combination of

1) lather large inflows of money from outside of the Euro area (I do not know from which country) in combination with

2) a sizeable negative effect from ´longer term liabilities´. People move money from overnight accounts, which are included in the ´M3´ definition of money, to longer term accounts which are not

Hyperinflation is defined as over 50% inflation per month. Let´s define ´normal´ inflation as anything between 0 and 1% per month and anything between 1 and 50% per month as superinflation (1% a month is still a lot, yearly!). Before President Milei, Argentina already knew superinflation. After Milei, inflation accelerated, and the country almost entered a period of hyperinflation. It´s still nearly 200% a year. The maximum monthly increase of the consumer price index was over 24%. These increasing price increases were not caused but enabled by a sudden spurt in the amount of money and, to an extent, caused by a massive devaluation (which increased prices of imported goods and which, looking at the current account, was totally unnecessary).

Graph 1. Year-on-year inflation in

Eurostat published new data on employment in Europe. Average employment growth is +0,9%. The average hides stark differences. A Germany-centered core consisting of Germany, Austria, Sweden, Estonia, Finland, and Hungary shows declines. Surprisingly, it excludes Denmark, Belgium and the Netherlands. The South does better. Countries like Portugal, France, Greece, and, especially, Spain post above-average increases. But unemployment in these countries is still high (over 5%), even when EU long-term unemployment hit a historical low (1,9%, Eurostat, series starts in 2005).

Table 1. Employment growth in Europe. Source.

How come? Labour market participation rates of men went down after about 1970, but this was more than compensated by increasing participation rates of women.

Executive summary: if investments are needed, do not reform. Invest. Investments are the reform.

Angus Maddison (historical patterns of growth) and Jan Kregel (leading post-Keynesian economist) were the intellectually dominant forces during my economics study in Groningen around 1982. Let´s apply their frameworks to Greece.

Growth, as we measure it, has many sources: increasing the productivity of existing activities (the mechanization of the potato harvest), shifting labour from low-productivity activities to high-productivity activities (supermarkets outcompeting small groceries), or using less stuff to produce more stuff (the increasing fuel efficiency of planes). One source of productivity increases is, or used to be, old people who retire and end low-productivity businesses

Because of libertarian policies of the Milei government in Argentina, poverty and food deficiencies are increasing. People are getting less healthy and, hence, less able to care for themselves and their loved ones. One problem we thought we got rid of but resurfaces in Argentina: vitamin A deficiencies. Children are getting sick and starting to go blind.

Vitamin A helps your body protect itself against many diseases. Thanks to concerted action and diffusion of knowledge and action, progress has been global. Argentina is, thanks to the Libertarian policies of the Milei government, regressing. It´s the New Old Africa. Look here for WHO data and here for Vitamin A policies in New Africa, where they want people to be healthy.

Here, a little more about the essential role of Vitamin A

The new UN report on deaths in Gaza makes for Grim Reading. According to the admirable work of UN data sleuths, details close to 10.000 of the official 40.000+ deaths have been added. These are only the direct victims; indirect victims (starvation, stress, sickness) are omitted. One of the findings is that, unlike during earlier periods of war in Gaza, killing is indiscriminate. Many of the victims were women and children (graphs). The youngest victim was one day old, and the oldest was 97 years old. ´Völkermord´, to use the German word for genocide.

Graph 1 and 2 and 3. Age pyramids of deaths in Gaza in 2024/2025, 2021 and 2014.

At the same time, the destruction is, according to the report, ´discriminate´ and targeted at wiping out families and civil society. At the same

Introduction<

The 2024 Sveriges Riksbank Prize for Economic Sciences has been awarded to Daron Acemoglu, Simon Johnson and James Robinson for work on the influence of institutions on long-term economic progress and growth. Much has been written about this, for instance by ´Pseudoerasmus´ here and by Radford here. In this article, an ´in-depth´ analysis of a part of the work leading to the the prize, an analysis of the long-term impact of the Dissolution of the English monasteries (1535) on the economy, will be provided.[1] Developments in England are compared with developments in Fryslan (formerly: Friesland), a province in the northern Netherlands. Contrary to the situation in England, in Fryslan, not the land-owning gentry but land-renting and using farmers were the heroes of

In Europe (the Euro area, to be precise), both unemployment and inflation are down, according to Eurostat,. Which, again, shows that the Phillips curve, a crucial concept behind neoclassical macroeconomic thinking that assumes a more or less stable negative relation between unemployment and inflation (high unemployment will bring inflation down), is not the place to go when predicting or analysing inflation. Sometimes, this relation is specified as a relation between wage increases and inflation. But that relationship does not hold either: keeping wage increases below the level of inflation does not curtail international inflation (while it will wreck households and the national economies). And assuming that a country like Spain needed 20% inflation to keep inflation in check (no,

The end of the post-World War II ´Pax Americana, an almost eighty-year period of peace for European countries allied with the USA, will soon lead the EU to end the prohibition of monetary financing of governments by the European Central Bank (ECB). This might take the shape of the ECB providing credit to an entity purchasing Eurobonds, which will further increases military spending. At this moment, there is based on the Maastricht treaty of 1992 a strict prohibition of monetary financing by the ECB. This prohibition can be understood as part of the peace dividend (graph 1) reaped after the implosion of the USSR in 1991. It is related to post-1991 ideas about ´the end of history´ and the illusion that the Pax Americana would last forever.  

Graph 1.

Source

A prohibition of

This post was written because of a tweet by David Andalfatto, who wondered why medieval and early modern Europe, a society that built cathedrals, did not show any per capita growth. Per capita growth is an average, and when the rich get richer, it can increase even when the number of poor and destitute increases. The question is: was something like this the case in the time of the cathedrals? I won’t give a definite answer. But I will go beyond ´real´ GDP per capita (ultimately a monetary average) and delve into physical-technological, personalized development. And it´s all about glass (picture: ´Het straatje´ by Vermeer (1658?); at the end for comparison a picture of an 1820 street in Amsterdam).

Glass windows were a great invention, enhancing the quality of houses and the

The population of Argentina is suffering. The purchasing power of people who still have a job is down (a lot), and unemployment must have doubled (it was 5,7% in the last quarter of 2023) if it has not tripled. Less government spending, less consumer spending, and, no doubt, less private investment means that Argentina is experiencing an economic disaster which will scar the country for decades. Retail sales (volume): down around 20% while, at this moment, people will still be able to use their savings to maintain their standard of living!

About half a year ago, the unreformed libertarian Melei became president of Argentina. His economic recipe: shock therapy (including a HUGE devaluation). The first results are in. Retail sales: down around 20% (volume, year on year). Meaning

To the death toll of the violence in Gaza, around 15.000 additional deaths of infants and children between 1 and 5 have to be added. This is a rough and, in my opinion, a lower-bound estimate. However, the calculations are based on robust information, and sizeable additional mortality in infants and young children in Gaza is real.

Next to the direct victims of war, there are indirect victims who die because of lack of proper medical care or because of harsh circumstances. Here, I´ll present an estimate of additional deaths of infants and children between 1 and 5 in Gaza. The estimate is based on the demographics of Gaza and on the article ´Implications of armed conflict for maternal and child health: A regression analysis of data from 181 countries for 2000–2019´ by  Mohammed Jawad

Some time ago, I delved into the unique advantages of the Theil index of inequality over the Gini index, when data is available. The Theil index offers a distinct advantage in its ability to provide a consistent quantitative deconstruction of inequality. It does so by utilizing various concepts such as class, region, gender, or any other relevant factor. This feature allows for a comprehensive explanation of (changes in) inequality using the same set of concepts.

The Theil index enables us to quantify:

Within-group inequality

Between-group inequality
Michiel de Haas provides a teachable example of how to do this and how to analyse such information in his article ´Reconstructing income inequality in a colonial cash crop economy: five social tables for Uganda, 1925–1965´in the

Graph 1. The increasingly inefficient use of carsSummary: parking places are a woefully inefficient use of space. And ugly. Cars are a woefully inefficient use of machinery. Using them, in combination with bi-directional charging of cars, to produce solar can amend this. Doing this the right way, parking places can be beautified, costs will go down and life will be more pleasant.

A typical car is, like a washing machine, a household appliance. As such, they are woefully inefficient. The average car serves fewer and fewer people (graph 1). Around 95% of the time, they are not used. Aside: when preparing this article I discovered that we know a lot about km. traveled per person and time spent in cars. But it’s not easy to obtain dependable information about the amount of time

There is no ‘tragedy of the Commons.’ But a tragedy of the absence of Commons-as organizations, let’s call it ‘the tragedy of uncommons’, does exist. Below, I will provide the example of the island of Ameland in the Northern Netherlands, in line with the historical examples of successful Commons mentioned by Elinor Ostrom (especially those for Switzerland). 

Ownership is a multi-dimensional concept. Up to the 1795 revolution, the island of Ameland, north of Friesland, was not a part of the Dutch Republic, and ownership relations were somewhat archaic. The best way to understand this is to consider ownership a bundle of rights. In old Dutch deeds, some of these rights were described as “eer en feer, macht en gewalt,” loosely meaning: “political and juridical rights, the rights to

Right-wing ranters in my Twitter timeline are pooh-poohing the whole climate discussion without doing their homework. So, here’s a little reader to aid and abet (sorry, early retired teacher and that all).Let’s start at the beginning:1. CO2 is measured at the Manua Loa station. Results are clear, robust, and stark: CO2 is increasing.

And no, CO2 is not ‘following temperature’ as the latest lazymeme from the lazyright wants to have it. It’s following us. We’re causing it. A ‘mass balance’ approach yields that {human production of CO2} = {Δ CO2 in the atmosphere + Δ CO2 in the oceans}. Human production is, by the way, increasing. To dispel one myth about the interpretation of these results: sometimes it’s stated that gross flows are thus large that small net additions do not

No Christmas celebration on this blog this year. But a story about communities: the Commons of Buren and Hollum on the Waddensea island of Ameland. Commons have been studied by Elenor Ostrom. Studying Commons is of prime importance: we only have one earth. Reading Ostrom makes one optimistic. One of the things she mentions is the age of commons. Often, they survived centuries. Commons, which invariably voluntarily set limits on the use of resources, are sustainable. The Ameland Commons are no exception. They were also democratic and based on at least some measure of equality. Just like in other commons, on Ameland there were systems to appoint the managers. In Ballum, these were elected in a yearly election in a local pub, every head of a household had one vote. In Hollum there was a

Not all prices are market exchange prices. I’ve been writing about administered prices (here and here) and ‘commons’ prices (here). In January, I hope to make a first small step towards a badly needed periodic table of prices. Today a new element, Gift Exchange Prices. Gifts are like the Greeks. They come in many varieties. But always, something is transferred from somebody to somebody, even when there often is no market price or even transfer of ownership. There might be a transfer of honor, prestige, and risk. Or goods like a diamond ring or services like helping somebody to move. The difference between Gift Exchange and Market Exchange is spelled out in the table below. It’s important to realize that it’s not always the giving but accepting that counts. Accepting a gift often leads

According to the Monetary Statistics of the European Central Bank, the credit impulse to the Euro Area economy is getting even weaker (graph 1, the yellow part of the bars). Which not only forbodes a recession but already is a recession.

Graph 1. Monetary developments in the Euro Area. Source.

This interpretation (the EA is in a recession) gains credibility when we realize that most of the remaining net credit is used to finance the purchase of existing houses and not to finance new investment or consumption.

The blue part of the bars shows that households and companies are moving deposit money to savings accounts (with a higher interest rate), which are not included in M3 money. Net external assets are, at the moment, however increasing. What does this mean? First, we

Will lower central bank interest rates at this moment lead to lower consumer rates? No, they won’t. The, at this moment, low rates on existing debt will continue to increase for years on end, cutting in household spending and hampering the possibility of households to pay down their debt.

Figure 1. Interest rates for new mortgage contracts, the Netherlands.

At this moment, Central Banks seem to take a break when it comes to increasing their interest rates. Maybe they will even lower rates. This, however, won’t stop consumer debt interest rates from increasing. Graph 1 shows interest rates for new mortgage contracts in the Netherlands. These are, thanks to the recent and feverish increase in central bank rates, up. However… looking at households and legacy debt, rates on

Claudia Goldin won the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. I can write about her work. But here, I will be inspired by her work. One of the events she emphasizes is that women’s participation in the ‘GDP’ labor market became less after say 1860, as shown in the figure. Below I will investigate if this model (this is a model) can be used for the interpretation and analysis of my data on long-term agricultural development (yes, it can).

The decline of women’s work in agriculture is well-known for farm production of butter and cheese. In many areas, women (the farmers’ wife [no, Grammarly, not ‘wifes’], servants, sometimes daughters) produced butter and, in areas specialized in dairy production on larger farms, butter and low-fat cheese or

Eurostat recently published new data on EU unemployment. The question: how is Southern Europe doing, after the Great Financial Crisis of 2009 when unemployment rates in Spain and Greece were above 20 and even 25%? Compared with the years directly after 2009 Spanish and Greek rates are down a lot, even when levels are still above 10%. But this is not all there is. Next to ‘normal’ unemployment, which is still at a crisis level, economic statisticians also define broad unemployment as ‘people working part-time who want more hours’, ‘people seeking a job but not directly available’, and ‘people available but not seeking’. The reason to define these categories is that people are classified as ’employed’ even when they work 1 hour per week and want to work much more hours. Normal

At this moment, there’s quite some ‘graphology’ when it comes to inflation. Here, an example by Paul Krugman. Here, Larry Summers. And an example by a younger chap, Joey Politano. (Caveat: ‘X’ kicked out some links when I was writing this blog (or at least they disappeared), it might happen again)). All of these economists are really ahead of the pack when it comes to knowledge of economic statistics (methodology as well as results). They also know a thing or two about economic theory. Look here for a paper by Bolhuis, Cramer, and Summers (the same!) in which they argue that inflation around 1980 inflationary spell was not as bad as indicated by their measure of consumer price inflation and (as they admit) about as high as indicated by the data in the graph below (meaning, in their

Producer prices in the UK are declining. Does this mean inflation is over? Hmmm… Many economists have difficulties understanding the present aftermath of an inflationary episode (which might be followed by new episodes…). Which is, considering their theoretical framework, understandable. They look at only one set of prices: consumer prices (or, in the case of derivatives ‘core prices’ and many others‘, even only at a subset of this set). Instead, they should expand their frame of reference and look at more sets of prices and, consistent with economic theory, at the relations between these sets.

We do have the data. Here, you will the ‘inflation dashboard’ of the Dutch CBS, which is not just based on consumer prices but also on wages, interest rates (‘translation not available’).

As nobody else bothers, I’m tinkering with designing a (badly needed) periodic table of prices. Look here and here. Economists are fond of ex post market prices – i.e. prices paid for actual transactions. But other kinds of prices abound. Administered prices, shadow prices, cost prices and more. Each of these prices are important and are used to influence the production and distribution of goods and services. Each of these are, separately, defined on all kind of webpages. but an intelligent overview and categorization is lacking. Hence this series. Today: insurance prices for hay and milk cows in Friesland, 19th century. What kind of prices were these? The answer: ‘commons-prices’, to introduce a neology.

After 1810, Frisian farmers established mutual fire insurance companies.

I’m tinkering with the idea of a kind of periodic table for prices. Below, a very rough sketch of what I have in mind relating to administered prices and market prices as well as the sectors of the national accounts (cost prices, shadow prices etcetera have to be added).

Gardiner Means defined the difference between market and administered prices (quoted in Gu (2012) on p. 13):

“In an engineering economy prices are fixed by administrative action for periods of time. Price is determined before a transaction occurs. In a trading economy prices are developed in the process of trading andprice is not determined until the transaction occurs. In an engineering economy supply and demand never equate except by coincidence“.

Earlier I discussed how the Dutch central bank

Recently, Robert Lucas, who was called an economist, died. This is not about him, but about his kind of economics as tweets and obituaries show that it is not yet generally understood what kind of science the neoclassical macro-economist like him produced. Their most egregious failure: after decades of work, they do not even have a shimmer of anything which could pass for a neoclassical way to estimate the macro economy, even when their ideas are squarely at odds with the macro economy as we measure it. Theory without measurement.

Lucas used – like many others – the concept of the representative consumer. A macro economic model which presupposes that the economy consists of 1 person, A Robinson Crusoe model – or fantasy? Which is faulty, as the essence of a macro economy – its