The classical economic assumption, from the days of Adam Smith, is that we all have free will and this freedom ensures the best possible outcomes for the economy, provided those decisions are based on greed and self-interest. This week’s episode opens with a student questioning Milton Friedman about the freedom of a man who couldn’t afford to pay h…

Ever wondered why Britain’s roads are riddled with potholes, why the trains keep breaking down and why there aren’t enough hospital beds? Simple. Britain is not making enough capital investments. Taking the public and private sector together, it amounts to about 6 percent of GDP, well below the 22% in the US - which has its own infrastructure probl…

Steve Keen says he builds his economic model based on the motivation of three types of actors. First, the worker, who wants to maximise his or her wage. Then there’s the capitalist who wants to maximise profits. And the financiers who wants to lend out as much money as possible with the best possible returns. How does Steve’s model change if most b…

What causes an economy to fall from a peak? Many economists will argue it’s exogenous shocks but, as Phil and Steve discuss, there’s not too many of those around. Maybe COVID was one, but even that came about because our economic system has drawn us closer to wildlife habitats. Or is it a lack of resources? We run out of capacity to produce more, w…

It’s a sad fact that war can pay. The US arms industry is one major beneficiary. The UK is a long way behind, but it also a big supplier of armaments to the world. If governments of the world upped their defence pending to 3 percent of GDP that would see a massive increase in demand for weaponry. In Britian’s case it could re-engage the manufacturi…

Phil tells Steve that he’s always struggled with Karl Marx’s idea of surplus value. The idea that workers work for themselves, then a bit more to create the profit for a business. Phil says, that seems like a cost-plus approach, whereas in his marketing days, it was all about creating a brand that people would pay more for. The extra value was crea…

Europe and the US are both recovering from the same problem – COVID and the inflation that followed. But last week the Fed in the US dropped interest rates by half a percent, with markets expecting a soft-landing for the US economy. Europe, meanwhile, is struggling, with Germany’s economy heading backwards for more than a year. So, when the big dif…

The UK’s unemployment rate is 4.1%, the inflation rate is growing at 3.1% and the economy is growing at 0.6% quarter on quarter. That’s how the economy is doing, what more do we need to know? Well, it would be useful to know whether the unemployed are predominantly in certain income groups, or that income growth was greater in particular parts of t…

The pandemic was the biggest economic disturbance since the second world war. In both cases supply chains were severely disrupted, either by German U-boats or, more recently, factories and borders closed to stop the spread of disease. On the face of it, though, we have got off relatively Scot-free. We haven’t seen the massive fall in GDP experience…

A couple of years ago, when warning of the need to fight inflation, Jerome Powell, Governor of the US Federal Reserve says interest rate would rise and jobs might disappear. Yet, interest rates have risen, and unemployment hasn’t fallen anywhere near as much as expected. So, what’s going on? Does it mean, thankfully, that monetary policy isn’t work…

Some call it the silver tsunami. The wave of old people putting pressure on government budgets. And, as baby boomers retire and young people produce less and less children, western populations will continue to age. That means less productive capacity and more people dependent on welfare. On today’s podcasts Phil & Steve talk through the three optio…

The last time interest rates were this high they came down rather fast. This time central bankers are determined to manage a slow unwind and deliver a return to growth without wreaking havoc on the economy. Will they be successful? This week Steve Keen argues the high interest rates are inflicting damage without treating the problem. Inflation is b…

Complex systems don’t have to be complicated to provided deep insights into the real world. That’s the view of Doyne Farmer, special guest on this week’s podcast. It’s an approach he shares to economics with Steve Keen. Steve develops systems from the top-down, whereas Doyne’s work focuses on agent-driven bottom-up modelling. But they arrive at sim…

It’s curious isn’t it how we talk about household savings, rather than net debt. Many people do have money squirreled away in savings accounts, for a rainy day. That rainy day comes when hey lose a job and need that cash to pay their mortgage. So we are saving to help pay off an existing debt at a later date. How cockeyed it that? A lot of that mon…

So, if economics is all about the allocation of scarce resources, isn’t energy the most scarce resource? And yet its not really included in any economic models. We look at labour and capital as the drivers of growth, but energy is just a contributor to those factors, not a key factor in itself. Yet without energy humans wouldn’t survive and machine…

We are obsessed with the need to own things, not least, our homes. But for younger people that is increasingly becoming a pipedream, unless they are lucky enough to gain a healthy inheritance. Even then it’s going to come later in life. In the meantime, we save like crazy, and even when we do get a house, we spend decades paying it off though a hef…

The global share market has always been dominated by the US, now we’re seeing a number share of very large tech companies claiming a larger slice of that pie. Even though they are trading with price to earnings ratios well beyond the historic average, these companies won’t fail. They dominate the market, with billions of customers, low production c…

Labour has romped to victory in the UK and they need to get cracking on all their election promises. One of those is the creation of Great British Energy. Keir Starmer points to the number of foreign interests owning energy generation in the UK. But, as Phil highlights this week, foreign companies are also heavily invested in energy distribution an…

In the UK the proportion of the population aged over 65 has grown from 16 percent in 2000 to over 19% today. It’s a similar story throughout the western world as the population ages. That’s seen as an enormous liability for governments who will have to pay out pensions to their old folk. Hence the drive to get people to put money into private schem…

Carla Denyer and Adrian Ramsay recently launched the Greens Manifesto in the run up to the UK election. Phil and Steve discuss it on this week’s podcast and conclude the one thing that seems to have slipped down the priority list, is all the green stuff. They talk about fixing broken Britain, like every party, and correcting wealth inequality. They…

The UK election debate changed tune when Nigel Farage agreed to stand for Reform, promising to cut migration and rid the UK of all the problems these nasty foreigners are responsible for. Elsewhere the recent European Union elections saw a sharp shift to the right, again driven by concerns over migration. If Donald Trump wins again in the US at the…

Imagine if Keir Starmer, the UK Labour leader, had said, let’s not get too obsessed with government debt. If we go down that road we won‘t be able to provide the public services we need, our infrastructure will crumble further and we’ll simply see the country’s productivity erode further by the day. Unfortunately, he didn’t say that. Instead, he ha…

There’s been a debate brewing post-pandemic about how much inflation has been elevated by companies increasing their margins. The evidence of that is the increased profits, not just in the tech sector, which has helped increase the share prices of these companies, evidenced by record levels across the US share market indices. This week Steve Keen s…

The UK is heading to the polls on July 4th and the Conservative Party is heading for annihilation. Yet, when it comes to espousing sensible ideas from textbooks, Rishi Sunak had the making of a good Prime Minister. For example, tackling productivity by building the necessary infrastructure, investing in education and building cities and regions whe…

Steve is on hols this week, so Phil takes a look back at a couple of Debunking Economics podcasts from just before Donald Trump took office. In many ways he stuck to his promises. He tried to cut immigration, he introduced protectionism with hefty tariffs on China and he cut taxes. Now he’s promising more of the same, although Biden might have beat…

Should we tax wealth more? The UK’s Shadow Chancellor Rachel Reevs wouldn’t be drawn o the question at an FT forum recently. She said the UK is already a high taxing country. But around the world the wealthy are getting wealthier. Is that a bad thing? Some would say that if they are making money creating growth for the economy, then why would you w…

UK Labour leader Keir Starmer has said if he wins the next general election, within 5 years he will have re-nationalised Britain’s railways. Phil asks Steve whether it naturally follows that this will lead to an improvement in services and lower fares? Steve reckons you any need to look at government run services elsewhere in Europe to answer that …

The new industry is struggling to survive, with far reaching consequences on public accountability and democracy. Steve says part of the problem could have been fixed with a suitable micropayments system, so readers could consume articles without subscribing to papers in full. Phil’s not so sure, pointing to the fact that an increasingly large prop…

There are two types of people who buy gold. Speculators who see it as a risk-adverse asset class to buy when other investments look a little shaky. There are also those who hold onto gold because they believe paper money has no intrinsic value and is therefore susceptible to collapse. Zimbabwe, who’s paper currency has been undergoing decades of in…

How effective are our current strategies against climate change? In this episode, Ravi Chidambaram welcomes Professor Benjamin Horton, Director of the Earth Observatory at NTU, to tackle this pressing question. They discuss vital climate change issues, debunk common myths, and explore the impact of the Paris Protocol. Professor Horton shares his in…

Sadly for Donald Trump, America seems to have been doing quite well in his absence. It has weathered the pandemic and inflation better than most. GDP pr capita is rising faster than most places and consumer spending is on the up. In fact, the main reason the Federal Reserve isn’t cutting rates is because the economy is doing so well they don’t see …

For a while now Dr Edgar Feige has been a proponent of an automated transactional tax. The idea is that we get rid of all taxes – income tax, sales tax, corporate tax, excise, capital gains, import and export duties, inheritance – and replace it all with a tax on all transactions Every transaction, which can be easily identified through bank accoun…

There’s been a lot of speculation lately about the role of immigration and its impact on inflation. Does a flood of foreign workers push down wages, which contains cost and keeps prices down? Conversely, did the low immigration levels post-COVID add to the wage pressures because, combined with sickness from COVID, there were a lot less people for e…

The Bank of Japan has just lifted interest rates for the first time in 17 tears. The central bank has kept rates in negative territory in the mistaken belief that it would encourage banks to lend an people to borrow, helping to boost their flagging economy. Steve Keen says it’s based on the mistaken belief that banks lend money from their reserve a…

One analogy that economists like to use is that of the Capitol Hill Babysitting cooperative in Washington DC in the 1970s. Government workers set-up a babysitting group, where they to it in turns to babysit each other’s children, so they could enjoy nights out without paying for childcare. There were quite a few on the group, so payment was formali…

The UK Chancellor Jeremy Hunt delivered what is almost certainly his last budget, promising the usual stuff – more investment, more jobs, better public services and lower taxes. And, miraculously, all of this will be achieved by lowering government spending. Despite the rubbery figures, Steve Keen argues that the budget ignores the key principle, t…

Is sustainable investing facing a crossroads in today's market? In this episode, we welcome François Boutin-Dufresne, Managing Partner at Nordis Capital, to delve into the intricacies of sustainable investing. Join us as we discuss Nordis Capital's contrarian approach to ESG investing, focusing on sustainability and non-financial capital. Learn how…

The UK Debt Office has started selling bonds to retail investors through the primary market Previously the only way you could buy government bonds was through financial institutions, through ETFs, for example. The reason giving for opening it up to consumers is that it will allow them to “contribute more significantly to meeting the overall financi…

Elon Musk has his fingers in many pies. Social media, space travel, internet access, AI. Even tunnel drilling. He’s grown from developing a modest series of online city guides, to being one of the richest men on the planet. Is he a genius, or simply a Trumpesque style wheeler and dealer? This week phil – not a big fan – asks Steve – massive fan – w…

The concept of American Exceptionalism has been talked about for decades, mainly by Americans. Now the term is back in vogue because the US has shown the fastest recovery from the pandemic and subsequent inflation. It’s also a period of intense speculation in US shares, driven by phenomenal rises in the value of big tech stocks. Is this something t…

Rishi Sunak, like most politicians, is adamant that he can grow the economy by getting businesses to be more productive. But can businesses really grow the economy by themselves, if the government just gets out the way? You might think that by employing more people, or creating more widgets, you are helping the economy. But there’s one big constrai…

Have central banks waited too long before dropping interest rates. Over the last week or so we’ve had Jerome Powell, the Governor of the Fed, saying inflation is coming down but they want to see more data before they’re convinced enough to drop rates. The Bank of England’s Andrew bailey said pretty much the same thing. And the ECB. But, as Phil and…

Yanis Varoufakis joins Steve nd Phil this week to talk about the thinking behind his new book technofeudalism. The ‘cloudists, as he calls them, aren’t operating in the market, they have replaced the market. They learn from us tell us what we want to buy and then sell it to us. Their capital is the algorithm they have developed, but also the inform…

If Trump has one sensible policy its his drive to reindustrialise America. Since he left the Oval Office we’ve had global supply chains challenged by the pandemic, wars and a downturn in economies we used to rely on for cheap goods. The financial advantage of outsourcing to Asia is losing some of its gloss, and the uncertainty of supply has to be a…

Is it right that the growth opportunities of businesses are determined by the vagaries of the finance markets. Companies wanting to raise debt through bonds or bank loans face higher costs right now because of the rise in interest rates. Someone with a great idea could be held back because of the cost of borrowing. Whether its borrowing or issuance…

As you’ll hear at the start of this week’s podcast Warren Buffet isn’t a big fan of private equity firms. He says they lie, so they are not a good choice for investors, like pension funds, for example. But they are even worse for the companies being acquired by private equity funds. Morrisons is an example. A successful supermarket chain with a lon…

The UK government has been refusing the pay demands of young doctors in the UK who held a series of strikes in 2023. Their argument is that pay has been declining in real-terms since 2008. Unless pay catches-up there will continue to be a drain of new recruits, which will impact patient safety and put undue pressure on those left working in the NHS…

Our podcast listeners often ask which economics books they should read to get up to speed on some of the discussions we have, and to understand more about the way the economy really works. This week, for those with a wad of book tokens gifted to them at Christmas, we look at a selection that are worth getting stuck into over the holiday period incl…

Central banks assume there is a natural rate of interest – a point of equilibrium at which the demand for loans matches the supply of loans. They believe if interest rates have been too low, they risk over-heating the economy, risking inflation. But does it work? Steve suggests that interest rates should be fixed, with control of the economy manage…

Keir Starmer will be the UK’s next Prime Minister. Few things in life are more certain. So why did he see the need to write an opinion piece for the Telegraph extolling the virtues of Margaret Thatcher. He said she had freed up Britain’s entrepreneurial spirit. Really? She also created massive private debt, driven by a tax-incentivised housing bubb…