Home > Economics > Everything’s rosy, of course……

Everything’s rosy, of course……

“HSBC sees China and America leading global mega-boom” blasts the headline from the Telegraph yesterday:

“The greatest global boom of all time has barely begun. Over the next forty years, economic growth will quicken yet further as the rising powers of Asia, the Middle East, and Latin America reach their full stride.”

Right, so everything’s rosy in the world of global economics. Until, of course, you read the small print:

“HSBC works from the assumption that mankind will avoid the energy crunch and overcome the eco-deficit, a term used to describe the world’s depletion rate of non-renewable assets. It calls for $46 trillion of investments in alternative forms of energy to break out of the carbon trap, and head off a supply crisis that could derail growth.”

So we have a headline grabbing message with no caveat whatsoever, yet the body of the article explains that the assumptions behind the forecasts are of stupifying proportions. In order for the Mega Boom to materialise we just need to find as much cheap and easy energy sources as we’ve been used to the last 100 years or so, we need to stop damaging the environment and we need to find more clean water and cheap food to feed everyone, plus we need to invest far more money than we’ve currently spent bailing out the banks.

I think we can just sweep these little assumptions under the carpet, can’t we? Doubt they’ll affect the outcome of the forecast.

Bad science, bad economics, and bad journalism.

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Categories: Economics
  1. David Lilley
    June 18, 2011 at 1:35 am

    I am on here because I cannot get on Reuters because my computer is so old and the BBC HYS has become so restrictive.

    The big story of the day may be that public sector workers get 43% more per hour than private sector workers doing the same job but this is under-reported and there is no call for a peer review of the report from Policy Exchange.

    Then we learn from Danny Alexander, the Treasury Secretary, that the average retirement benefit of a London headteacher would need a £1.6m pension pot in the private sector to be its equal. This is not repeated by the BBC.

    Then we learn that you would have to put 37% of your income, every year, throughout your working life to equal the retirement benefits of a public sector worker on the same wage. We learn this from PcW an accountant with a reputation to keep whilst at the same time learning about low pensions in the public sector from the unions despite the fact that some of them may only have been public sector workers for a
    If you are a union employee you are in the private sector and you have to drum up business to justify your employment and enhance your career.

    Others may sell Ipads and asprins but the union is selling better conditions and the more persuasive it is the better its income and salaries. They will gladly promote the perks of the public sector that are paid for by the private sector if it increases their membership and salaries. If they are representing public sector workers the last thing they will mention is the 43% advantage in pay paid for by the private sector.

  2. June 18, 2011 at 1:15 pm

    David

    I understand the disparity between public & private sector wages, and having met Phillip Hammond a few weeks back it is clear that the Gvt is keen to close this gap.

    However, you’re analysis seems to presume that the public sector has outgrown the private. When in reality it could be more plausible that the private sector has been beaten down by exposure to global wage rate pressures. Rises in nominal wage rates have given the impression of overall growth for everyone but this has been overinflated by massive growth in personal, corporate & Gvt debt.

    Private sector jobs are far easier to outsource, and so we are actually in the grip of global labour cost arbitrage. Austerity just pulls the public sector back down to the private sector level of subservience to such market forces!

    I’m part way through an article written in 2005 which clearly outlines what is happening to us now:

    http://gloomboomdoom.com/gbdreport/download/GBD0511.pdf

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