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Economists of all stripes would agree that investment and the application of technology drive economic activity. For decades governments around the world have made strenuous efforts to encourage investment and new technologies. Last year this orthodoxy came under fire from an unexpected source.
In an interview with Quartz Bill Gates made the case for taxing robots at the same rate as human workers: “Right now, the human worker who does, say, $50,000 worth of work in a factory, that income is taxed and you get income tax, social security tax, all those things. If a robot comes in to do the same thing, you’d think that we’d tax the robot at a similar level.”
This is a radical idea, the more so coming from someone whose fabulous wealth came from Windows, a technology which transformed the nature of work. So what is the rationale for introducing a robot tax now?
It would be hard to imagine life without mortgage and consumer credit.
Mortgages have extended home-ownership beyond the ranks of those on high incomes or with large amounts of capital. Credit has helped bring other major purchases, such as a new car or a kitchen, within the reach of most households. For the wider economy there are benefits too, since access to credit helps keep households going when incomes are under pressure.
The summer months tend to be pretty thin for media coverage of economics and finance. Like the rest of us, journalists take their holidays in July and August. Yet economics is no respecter of holidays and events and data have continued to pile up.
Emerging market economies have been the main losers from US protectionism and higher US interest rates.
Capital has flooded out of emerging economies to the US to benefit from rising interest rates. This has meant less liquidity and has sent some emerging economy currencies through the floor. Emerging market governments or businesses which borrowed in dollars, and many have, are having to cope with rising financing costs and a heavier local currency debt burden.
The imposition of tariffs on imports of steel and aluminium by the Trump administration in March has sparked a cycle of retaliatory tariffs. This is a serious outbreak of protectionism, one that is already acting as a drag on growth. Yet the global trading system is in rather better shape than it looks. This week’s Briefing explains why.
First, the bad news.
Holidays often prompt ideas of a new life in some idyllic part of the world. But money matters and liveable, pleasant places are often pricey. Exchange rates are obviously key and the ups and downs of foreign exchange markets can deliver odd outcomes (at a village market in Provence yesterday I paid around 50% more for a week’s shopping than I would at a Waitrose in London).
Our summer quiz offers a test of your knowledge of holiday-related trivia through an economics lens. The answers along with a brief explanation are at the end of this note.
The price of housing in emerging economies and the West has surged since the financial crisis. According to the Organisation of Economic Cooperation and Development (OECD), house prices in the richer, industrialised nations that make up OECD member states, have risen 26% since the trough in 2009. Emerging market economies have seen far greater increases.
Britain’s recent record on growing productivity and wages has been lacklustre. In the UK GDP per hour worked, the main measure of productivity, has risen by just 2.2% since 2010, less than a third the rate seen in Germany.
The behaviour of the equity market provides useful signals about where investors think the global economy is heading. As we move into the second half of 2018 here’s our mid-year assessment of what equity markets are telling us.
With the holiday season upon us we are launching our summer reading list. All are available free and on-line. You can save these articles on your iPhone or iPad's reading list by opening the links on Safari and tapping on the share icon (the box with an arrow). To print these articles please use the print icons, where available, on the webpages to ensure proper formatting.