The Truth about the News

Whenever we have a crisis somewhere in the world (which is most of the time), reporters invariably inform us that whilst people are in danger of starving to death, local market stalls are piled high with food that no-one can afford to buy. You do not need to have studied the basic principles of Economics to know that this is a nonsense. When you look at the sorts of food on offer in these markets, it is perfectly clear that, for the most part, they are perishables. Clearly it is in no one's interest for this food to be allowed to rot. Basic forces of supply and demand will ensure that these markets are cleared. In other words, if people cannot afford to buy the food at the initial price on offer, the price will fall until they are able to afford it. It is not in the interests of the stall-holder to throw away food without some payment to at least cover his/her variable costs. This is not in any way to undermine the important issues regarding malnutrition and poor health in the...

One of the problems we face when the media take up economic issues is that there is often a tendency to over simplify. In essence, the term 'productivity is a straightforward concept: output per worker, however, this seemingly simple idea conceals a great deal of complexity. The problem comes especially when we attempt to measure productivity and then draw comparisons over time. You should already be well aware of the problems associated with measuring national output, those are then multiplied when that is divided by the number of people in the workforce. Lets just take one example to portray the difficulties: Recent official statistics have suggested that productivity in the UK has been falling in recent years. Technically that is probably true, but we need to have cognisance of the reasons for this before reaching judgements. There has been a massive increase in labour intensive production in the UK agricultural sector.  This ceteris paribus must lead to a fall in overall pr...