Supply-Side Economics and Policies | Livestream | Aiming for A-A* Economics 2024

Join Geoff live for this fast-paced revision session on Supply-Side Economics and Policies

#aleveleconomics #tutor2ueconomics #alevels2024

VIDEO CHAPTERS
00:00 Introduction
04:02 Warmup – Big Reveal
06:16 Bubble Quiz
10:46 MCQs
13:19 Factors that affect LRAS
16:21 Key Data for UK on Supply-Side
23:07 Examples of free-market SSPs
28:01 Examples of interventionist SSPs
31:20 Exam gold on SSPs
32:09 SSPs to increase rate of new house building
35:20 SSPs to reduce economic inactivity

wasted money on
cures forgot how to fix
myself they say that time is
free then why is it’s so
precious oh I’ll
save
memories in my
head like
pooid on W they
remind you to look
ahead is running
[Music]
L
[Music]
run lately I’ve lost my
track lost my track I’ve saved the
deeper se de hoping I find
something something to bring back better
times oh I’ll
save
memories and night
head like
Polaroids on road
they you to look
ahead the time is running out running
out time is running out is running out
time is running out time is running out
time is running
out time is running time is
[Music]
running time is
[Music]
running
[Music]
what if my best days are over it can’t
be
[Music]
over they can’t be
[Music]
over time is running out what if my best
days are over they keep me
over
W the time is
[Music]
running good morning everybody Welcome
to our the 10th in our series of daily
revision sessions we’re going all the
way through to the exams we ain’t
finishing yet uh so the the revision
sessions will continue we like the 11:30
slot lots of people can join us uh and
if you’re watching live uh first of all
press like because we beat business
studies yesterday quite easily actually
truth be told and also least be
subscribed to the channel to contribute
to the chat window we have an amazing
group of students so motivated so
knowledgeable and they often help with
questions so that might be a question
we’re doing suppli and economics to and
polies so uh keep an eye on the chat
there there’s some incredible answers
come through uh and we try and to
Showcase some of them with our
production team on the screen so I am
fresh from a massive win for harri Town
last night we beat gimby Town haven’t
yet seen the Champions League highlights
so please don’t tell me the
scores uh welcome everybody if you’re
watching on um catchup just press that
pause button whenever you want to take a
moment to think about a question or grab
some some context from the presentation
and this presentation will be available
for download just a few minutes after we
finish now a little change to the start
today let’s look at something called the
big reveal so I’ve chosen a country with
a pretty good supply side there’s a
clue and uh so I’m going to give you
five Clues and you only allowed one go
each by the way let’s let’s put a little
little wider into the chat window so
which economy is this it’s ranked by the
way some people already started
answering before the first clue it’s
quite impressive it’s ranked fifth in
the latest World competitiveness
ranking we’ll showcase the first correct
answer that comes through Kieran says
Germany Kieran you’re out it’s home to
the largest sea port in the European
Union so that um I’m not great at
geography but uh that rules out South
Korea and Indonesia and
Brazil the third clue has a GDP Capital
well in excessive the UK we’re at
$48,000 they have
73,000 and uh it’s the 15th highest in
the
world do we have the right answer fourth
clue coming
up on the screen here yep so we may have
it’s the sixth biggest export of goods
in the world including oil and
pharmaceuticals and the fifth
clue is a football one the Sports One
the top socer club was created in 193
just a year before the Great War for
workers of the local electronics Factory
can somebody give me the name of the
Club it is the Netherlands well done
everybody and I think uh Jim pointed out
the first person to to get it right on
the screen what is the name of the
club Kirsty congratulations to you on
that and the a is and the club is not
ax what is the name of the club you’ll
remember it once we tell you it it’s not
far in
order everybody feverously searching on
Google for
this uh oh can we it’s PSV Phillips the
electronics company PSV einthoven of
course the Netherlands really good
example of country who suppli are is is
pretty good let’s move on to the bubble
quiz so I’ve got three three bubble quiz
questions for you all to do with supply
side economics so the number of answers
that are correct can range from nothing
or zero to all four so here’s the first
question uh this is quite challenging
which of these countries are in the top
10 in the world for research and
development spending R&D measured as a
percentage of their GDP now how many of
these are correct so in the chat window
post please the um how many answers you
think are right so if you think it’s all
four just put a b c d if you think it’s
just b or B and C post it in the chat
window uh so Teddy our head of school
says
BCD Victor says
ABC Anna says b and d f me Harrison says
BCD these look like my forecast GR a
level BCD Cameron goes for b and d and
Jennifer says
ACD a lot of you are CH choosing D
here’s the right answer coming up answer
is a b and c Belgium South Korea and
Sweden South Korea is actually second
Sweden third China is not in the top 10
in the world for R&D as a share of GDP
of course they typically manufacture
things they AR that’s to get to high
income States they’ll have to boost
their R&D substantially but they’re not
yet not there yet
next question coming up which of these
countries is ranked in the world’s top
10 Nations for High-Tech exports so it
depends what you includ they have a a
measure of exports have to have a high
degree of technological components in
them so yeah instinctive H says was
never going to be D because their GDP is
really high well they’ve got a high GDP
so even a small percentage of GDP
implies a lot of R&D doesn’t
it me so to Sparkle one of our great
contributors it’s coming with BCD Matt
Hardy C and D which of these countries
are in the top 10 in the world for
High-Tech
exports uh some lovely to see some new
people
today George has gone for CN D Felix be
Felix Mir BCD and Jack ABC let’s check
let’s see what comes up ab D harer
congratulations you got that right
absolutely brilliant answer well
done Japan is not not in the top 10 for
Hightech exports in fact what’s happened
with Japan a lot of um a lot of
high-tech production has left Japan lot
of Japanese multinational companies have
decided to um partly because of
deflation in Japan and two decades of
slow growth um Jacob and George have
come in with AB andd ahead of the answer
maybe still a good answer
though yes a lot of Japanese high-tech
exporting has actually been outsourced
to Southeast Asia to America now third
question is the hard
one
which of these universities were ranked
in the top 10 globally in 2022 now this
might
relate it might
relate to something we talked about
yesterday so what do we think here which
of these UK universities were ranked in
the top 10
globally in 2023 London School of
Economics LC Imperial College
London the University of
Edinburgh and Cambridge University what
do we think
so Greg has gone for Cambridge and
Imperial uh what do we think Millie says
where’s Nottingham Trent well it’s in
Nottingham
Millie uh s has gone for a and d George
says b and d plus Oxford I think so
George gone for B and D plus
Oxford uh Ellis stack Bandit one of our
great contributors Ellis is even top 50
by Qs somehow interesting point from uh
snack band what else have we got here uh
somebody said Sam says tried to sneak
tried to sneak into Edinburgh not always
easy okay here’s the answers coming up
the answers are Jack says Jeff wouldn’t
turn an opportunity to get Cambridge in
well it is indeed b and d uh yeah Alan
says which university did you go to Jeff
um I went to Cambridge Al if you’re
asking back in the day and actually
here’s a picture of my college CLA
College by the way I just want to make
make a point I I had a great time at Uni
um I met loads of people and both the
friends I made at University I’ve kept
in touch with pigeon says where’s Oxford
well it’s obviously at Oxford uh but I’m
not going to put Oxford on any screen on
any of my presentations it’s the second
rate University by any measure okay
three past past question multiple choice
questions past exams these are all from
2022 or 2023 so test yourselves on these
which supply side measure is most likely
to produce shortterm growth in a
country’s aggregate supply I like this
question
now three questions here can you get all
three right test
yourself oh sorry George saying Jeff
you’re rubbing in the fact that cambri
denied me I George I apologize but I’m
sure you’ll have a great time there as a
master student Jacob says a ria says a
Dan the man says a Daniela and Kate and
Eldridge all saying a George and Via and
Sam I think let’s double check it is
indeed a yes so migration is one of
those shortterm supplies policies a lot
of students in the exam by the way say
supply side policies have long time lags
not necessarily migration is a can have
a pretty immediate effect come on to
that in a second next question which
combination identifies a main aim of a
supply side policy and a measure used to
achieve this
Target and these these next two
questions all three of them
are um past questions from 2022 2023
including cie
uh and um other
examples so this is a great question
Angus and
Alice uh Kate and CLM have all got the
right answer let’s double check well
done to you he yeah growth driven by
deregulation if you’re believe in threee
markets that’s the answer good stuff
well
done um and final question which
combination of macro policies will be
most likely successful if the aim were
to reduce unemployment and reduce
inflation other words would shift the
Philips curve down to the left which
combinational policies would be like be
most successful if the aim were to
reduce an employment and reduce
inflation achiever an improvement in the
macro objectives both of
them again this was a 2023 question and
some good questions being asked at the
moment in terms of testing people’s
knowledge now we’re getting a difference
of opinion here you want to reduce
unemployment and cut
inflation uh adod and Reese
Lucas and Angus Freddy and Sam and
vidika all have the right answer I think
so well done to you here here it is yeah
suppli High policies to to um improve
labor
mobility and reduce indirect taxes help
to bring down
inflation excellent stuff really
good uh if you chose D there of course
because that would cause inflation if
you depreciate the exender inflation
goes up okay over to you team economics
here we go that’s crack on some supply
side can you just give me three facts
pleas that affect long run aggregate
supply over to
you they’re thinking about long Agate
Supply the Loos
curve kin curve or the neoc classical
curve what are two three really
important factors that drive aggregate
supply and again the more detailed the
better and we’ll showcase some of the
best answers on the
screen yep all good stuff not easy in a
minute by the way so don’t worry about
writing long sentences we’re just trying
to capture the
essence Ellie has a lovely point there
human capital comes into her
answer I’ll have something to say about
education and the second Matt I think
there’s a a nice way of uh improving
just making the answer slightly more
detailed G9 one of our great
contributors labor productivity avative
resources and how advanced technology is
don’t know the word for that well I
would call it Cutting Edge technology or
technology at The Cutting Edge by the
way I’ve just bought myself a new garden
strammer and it’s the absolute latest
Garden stre is it is cutting hedge
technology no question about it so if he
talks about investments in D improved
education now I want to talk about
education in a second here we’ve got to
be very specific here and investment in
infrastructure now crucially uh can I
just hold on Sophie’s answer there R&D
billiant education fine infrastructure
fine the real key when you get a
question on supply side is to go one
level below and give me give me an
example so what type of education what
type of infrastructure R&D in which
Industries so Sophie’s got three really
good points there to make it great
points you then give some detail
so if I look at my answers here coming
through uh well I haven’t chosen to
productivity of Labor and capital Factor
efficiency obviously you need to Output
per you need a growing population and
increased labor market participation we
talk about that today Innovation and
Enterprise you need small you know
entrepreneurship you need product and
process Innovation you need a high level
of net capital investment which is grow
investment minus depreciation and
increasingly of course
sustainable uh growth longer Agate
Supply can you find exploit extract and
protect your stock of natural Capital so
productivity labor Supply Innovation and
Enterprise the Capital stock and natural
resources okay all good stuff we’re
going to look at a couple of I’ve chosen
a couple of topical areas if it’s okay
with you just for two minutes can I work
through some of the key data on the UK
so supply side uh questions hugely
popular in the exam if you have a little
bit of knowledge and this slide gives
you it then you can get a long way in
the exam you can impress the heck out of
an examiner so the world economic Forum
publishes competitiveness
rankings uh it’s peer reviewed it’s not
it’s based on a range of indicators we
were 23rd in 2022 we dropped to 29th
last year 29th on the competitiv this
rankings mainly because of the high
inflation and the rising fiscal deficits
there’s something called Pisa this is
the sort of Education test schools
standardized test for education in maths
and languages and science we came 14
2022 which is okay it was one place
higher than the year before Singapore
and Taiwan are are top uh Freddy says no
way is the UK fourth of productivity
well we are the fourth in G7 for
productivity there’s OB only seven
countries many other countries have
higher productivity I’ll give you some
data on that in a second Freddy Germany
and United States ahead we have a very
low investment share a share of GDP
again I’ve got a chart for that in a
second it’s only 177% of GDP below the
average our r&d’s gone up it’s now just
below 3% of GDP p in part because of
change the way that we measure R&D we
now include more intangible
R&D I’ll take you through some charts in
a second people are asking what does
this mean we’ll look at some examples
R&D is B research and development so in
pharmaceutical be researching new drugs
new new treatments we run a current
account deficit of just over 3% of GDP
90 billion pounds now that is what I
call reveal preference you know the the
trade data tells you whether you’re
competitive or not really importantly
uh 9 22% of the work population working
age is economically inactive that’s
9.25 million people of working age are
not active in the labor market and we
built 233 houses last year I think well
that’s micro that’s not that’s macro
because it’s the whole UK it’s 100,000
below our Target and we are going to
look at seven and eight in a few minutes
when we think about policies supply side
policies so the UK does well on certain
things r&d’s got much better our
relative productivity is not miles off
let me just take you through a bit of
bit of data here so if it’s okay with
you I just want to spend three or four
minutes just giving you some background
on supply side performance of the UK
this is kind of really good stuff for 25
markers you obviously have to use the
data in the extracts but if you have a
little extra knowledge it makes a
difference so here’s our latest rankings
from the WF uh with 29th
overall um better on infrastructure uh
pretty good on things like um financial
services but not not great we’re not in
the top 20 in the world now used to be
the next slide shows the productivity
slowdown somebody said well what’s
happened to productivity what of course
what’s happened is that the productivity
growth has slowed right down
particularly since 2008 now this chart
shows GDP per hour with 2008 as 100
that’s your base level and it’s taken
from a new publication by John Van rean
published by the LSC and it does show
that had productivity continue to grow
at the the rate uh the pre-crisis trend
would it now be 24% higher than we are
now so productivity that’s a great line
for the exams by the way had
productivity grown at the same rate
before the financial crisis GDP per hour
and essentially GDP per head will be
about A fifth or a quarter higher okay
so load productivity slow down in part
the next slide shows why sorry it shows
more evidence this is relative
productivity this is output per workare
relative to the UK
so keep in mind this is the kind of data
you often get in exams this data shows
whatever UK productivity is the other uh
countries are percentage different so
Japan’s B basically the same as the UK
Canada a bit a bit ahead of us France
and United States much well ahead this
is output per worker okay and linked to
it is investment and this chart I think
is super important so this chart shows
the share of investment in GDP both
public and
private and you can see the red line the
UK the orange line and for many many
years we have been at or below the
bottom of the G7 average somewhere
between 17 15 and 20% of GDP now 177%
which is well below other industrialized
countries and critically well below the
likes of South Korea India uh obviously
China China is above
40% so out Decades of underinvestment is
a chronic a chronic um supply side issue
and then link to that the next slide
shows inactivity I’m going to focus on
that in a second I’m G ask you some
questions on this but uh a decade’s
worth of progress in reducing
inactivity from 24% down to about 20%
has been reversed in the last three or
four years some of it linked to the
pandemic not all of it though now keep
that in mind by the way we’ve got nine
nearly nine and a half million people of
working age in this country who are not
active in the labor market just over 21%
and the next slide is house building I
think yeah so the forecast the
government has a target of 300,000 homes
every year that’s just for England add
in Scotland and Wales obviously in
Norther Island you get to 340 okay but
uh persistently year on year although
there’s ups and downs house building
lies
below um forecast this is net additions
to the housing stock so the evidence is
we need to build at least a net 300,000
every year because obviously some houses
get demolished and some get unusable so
we need to be building probably
350,000 to add 300,000 to the housing
stock so we’re going to talk about that
in a second okay so I just thought I’d
spend a few minutes if it was okay with
you just talking you through some of the
supply side data for the UK the other
ones I just wanted to show was work
visas this is unbelievably interesting
so obviously the government we left the
European Union in the end of
2020 so we we ended free movement and
we’ve we’ve replaced it with a skilled
work visa
system uh and also a a shortage
occupation system and there all kinds of
different gradients now you need to earn
certain amount of money the government
just said you can’t if you’re a skilled
care worker for example you can’t bring
your family with you interesting
decision but the number of visas issued
last year was just under
500,000
500,000 so um this is a response to the
labor shortages in 2122 and obviously
the there’s a significant need for
skilled labor so work visas can have
quite a powerful short-term effect
okay back to you back to you as a group
uh you need to know the distinction
between a free market supply side policy
and an interventionist policy let’s do a
quick revision on this can you please
give me two of your best examples of
free market supply side policies over to
you I thought i’ just spend a bit of
time there working through some supply
side data with
you hopefully at the end of this session
you’ll have a just a really good appli
and context ready for the exam whatever
supply side comes
up so choose to free market or sometimes
called pro market supply side
policies good answer there from
Sam River W1 comes in privatization and
U Union reforms
good keep an eye on the chat when
everybody is answers come through
as always some superb stuff Liam’s got a
nice point in there Fay incentives to
work and they suggesting reforming the
labor market so reducing the minimum
minimum wage which I think is here to
stay TGM talks about reducing red
tape reducing trade B I like that answer
by the way that’s got a nice
International flavor to it here’s Liams
answer Liams Anderson deregulation of
green Bel land around the UK C is
encouraging investment into
infrastructure removal of migration
rules allowing greater quantity of Labor
some good stuff there a lot of you
talking about uh lower taxes lower
corporation
tax Freddy says corporation tax was cut
from 20 to 19% in 2022 well of course
it’s now gone back up to
25% since that famous 2022 budget which
didn’t last long really did it didn’t
last as long as the
Letts Evan talking about welfare reforms
incentivize work increase the labor
Supply yeah some good answers com
through um so free market policies yeah
so essential I’ll give you I’ll give you
lots of examples in a second or two but
free market is basically a shift towards
less government less State intervention
and more towards the kind of Market
approach so
deregulation such as telecoms Postal
Services the energy sector of course
we’ve seen lots of that in recent times
so lots of new telecoms providers lots
of new parcel companies new entrance
into the energy sector so the aim is to
attract new entrance enhance
contestability bit of a micro term there
increase investment and drive
productivity now please note
deregulation is not the same as
privatization privatization is the
change of ownership from state to
private you can
deregulate without changing ownership
the postal post office the roal mail
faced deregulation well before it was
privatized and a lot of people talking
about flexibility of the LA market so
promoting zero contracts for migration
flexible job contracts I’ve put there in
the past this might have included laws
governing trade unions my strong advice
by the way to everybody in this live
stream those watching on
catchup um is not to talk about Union
reforms quite honestly and please don’t
mention Margaret Thatcher um God bless
us all you know what happened in the
1980s and the 1990s was 30 40 years ago
the examiners are expecting from you a
much more contemporary awareness which
hopefully this this session will help so
please don’t uh sorry Nail’s got to go
he’s going to catch up later can we just
say um good buy to nail please but
thanks for coming we really appreciate
it and you’re going to get some love in
the chat wouldn’t it Teddy says that
that was the best prime minister in
recent history depends what you
definition of recent is Teddy of course
but she certainly made a big difference
to a lot of people’s
lives okay so free market policies great
stuff uh yeah what have we got there so
quite a few mentioned tax cuts both
person corporate taxes that will be free
market policy getting rid of red tape
bureaucracy privatization and
liberalization of markets other other
key things free trade if you’re a
believer in trade liberalization that is
a that’s a supply side policy so if you
open up markets to trade get rid of
tariffs and quotes allow Capital
Mobility across borders those would be
free market policies Marx says contest
abilities in micro XL well here’s the
point Max thank you for making that
point by the way uh Max Booker um most
macroeconomics have Micro foundations
and most supply side policies operate at
a micro level and if they’re
sufficiently successful they have a
macro effect so you can make markets
more contestable that’s a micro aspect
but it has a macro consequence
especially if everybody faces cheaper
prices okay
um moving on can we now give me two
examples of intervention
supply side policies have a
go what do we think interventionist
Supply
policies Yeah question there about
Supply performance in Argentina it’s
probably too early to tell but obviously
we’ve got a free market
Economist elected in
Argentina somebody asked me the other
day what what what have been the main
economic consequences of the of the
French Revolution
uh in the 18th century and I said it’s
just too early to tell
really okay pigeon comes in one of our
great contributors Regional policy yes
leveling up would be an interventionist
excellent minimum maximum wages Greg are
talking about healthcare investment to
reduce the long-term sick economic
inactivity great
stuff West talks about activist Regional
policy the snack Bandit subsidies for
R&D infrastructure
investment yeah you’re getting the idea
here so this is interventionist
approaches as opposed to free market now
there’s obviously some overlap between
the two Daisy some great points there
training schemes social
housing nationalization can be seen as a
supply side policy policies to reduce
poverty investment in infrastructure
you’ve got a fantastic uh hold there um
Jacob talking about leveling up
investment in transport infrastructure
subsidies for infirm
training um so Daisy and Jacob’s two
contributions there um absolutely superb
you’ve you’ve got that kind of depth
there Victor talking about government
spending infrastructure subsidies to
firms to lower average costs really good
Joor talking about uh subsidies to keep
Industries alive such as the steel
industry recently highlighted by Janet
Yellen very interesting so um the chips
that the Biden’s policies are very
interventionist he’s brought in the um
um us Recovery Act on things well worth
checking out biomics for some good in
good interventionist approaches there
wow superb answers I’ve I’ve gone for
minimum wages so I I would argue minimum
wage is a supply side policy because
it’s designed to stimulate active labor
Supply improve work incentives and
hopefully over time raise productivity
others say it isn’t others say that we
should move away from minimum wage but I
personally believe in it always have
done and always will and things about
State subsidies so state funded out for
nursing the years early years education
affordable housing funding for
Renewables funding for apprenticeships
financial support for students taking
degrees from low-income families the
list goes on doesn’t it so but
essentially they’re moving away from the
free market there to bring in a form of
intervention superb
stuff uh Martin says tariffs aren’t a
supply side policy well they can be seen
as an interventionist supply side policy
particular if you’re trying to promote
Supply and investment and jobs in a
protected industry so that’s fine in the
same way that trade liberalization will
be free market supply policy you believe
in free trade okay moving on almost done
everybody uh this is a really important
Point super important and hopefully this
next this last three or four minutes
we’ll give you a a feel for this please
if you get a question on ssps people
like SSP questions they’re really good
to get stuck into it but please please
avoid generic answers so a lot of people
like the government could spend more on
education than training of course it
could but you need to be more specific
than that what type of education what
type of training so the more detail if
you like the more granular detail the
better okay that opens the door for a
and a star evaluation because you can
then calibrate and say well one policy
might be better than the short term one
policy might be better in the long term
so please don’t just two things first of
all please don’t say the answer is the
government spends more
education and secondly please don’t say
problem with ssps is time laap
it’s so P it’s a bit like Grimsby town
it’s just not exciting I wouldn’t pay to
watch it so it wouldn’t pay the market
okay so with that in mind with that in
mind let’s take two questions to finish
with we know that the UK needs to build
more homes okay can you give me two
supply side policies that might increase
the long-term rate of new house building
in the UK over to you have a
go can you make it as specific as
possible in the next minute even if you
have to think of one policy ssps supply
side policies
yeah so kieran’s coming Builder
apprenticeship skins can we build on the
answer
please we’re looking to lift the rate of
new house building Jack’s got a nice
point about red tape for planning
permission so reforming planning
good um
yeah in ships within
construction the more more detail the
better good answers coming
through yeah really good stuff by the
way it’s not always easy to write in in
a minute we appreciate that and often
times in the next 15 20 seconds some
even better answers will start coming
through the chat as they already doing
now so we’ll TR to pick up on a couple
of them Liam talking about um subsidies
such as the affordable home scheme uh
Reduce by tape around the green
belt some really good stuff a lot of you
talking about apprenticeships which is
excellent particularly you link it to
building so appren ships for what for
engineering for surveying for
construction work that kind of stuff J
interestingly talking about reducing vat
and buying
Farmland to allow firms more cheaply to
invest in land and construct housing
reduces costs a really good point
linking vat as a fiscal supply side
policy okay if the the aim is to
increase Supply so it’s any policy that
increases Supply can be counted as a
supply side policy wow the answers keep
flying through some great answers coming
in here in mind planning reforms yeah so
cutting bureaucracy making more land
available for new housing trying to
overcome nimbyism nimbyism not in my
backyard as I look out of my window now
uh I can see some new houses being built
and uh there’s been some local
objections I don’t personally object to
new houses being built because I’m an
economist fiscal supply side policies
tax breaks subsidies grants so take away
VAT on building materials take away VAT
on on um developments on Brownfield land
or conversely tax undeveloped land where
housing permissions being given a lot of
businesses buy the land get the
permission they then don’t build so
maybe a land tax loads and loads um okay
Peter says Jeff what are some good
evaluation points for ssps that are not
about opportunity cost time well I I
will go through them in a second okay
last question today everybody amazing
numbers in the group now here we go
here’s a here’s a challenge for you
supplies have policies that might reduce
inactivity in the labor market trying to
give one short ter and one long-term
policy and try to be specific one minute
to finish off with over to
you you actually smashed the housing
question we’ve got 9 and a half million
people who are inactive who of working
age but not active in the labor market
it’s a barrier to growth it limits our
aggregate
supply so what policy
might reduce
inactivity keep in mind there Zach that
the unemployed are not inactive so
cutting benefits doesn’t reduce
inactivity because the unemployed are
not part of the inactive unemployed are
actively looking for
work pain the goat one of our great
contributors comes in with that point
there Michael ah I like Michael’s
point I’ll talk with three a
minute Zach says my bad Jeff thank you
for correcting me well that’s fine it’s
always good by the way I once ordered on
Amazon 300 bottles of
tipex that was a big mistake so Ben
Richard short-term allow greater
migration long-term investment in the
healthcare the 9 million that
economically enacting 3 million of my
healthful aged Ben that is exactly the
type of answer I’m looking for exactly
the type of answer you’re making a
distinction between short-term and
long-term supply side policies it
invites really good evaluation because
you can then say well you know what’s
the cost of how much are we going to
have to spend on Health and Social care
Grace talks about investments in
treatments to cure chronic health
conditions long covid absolutely and of
course
the you know George says Jeff surely
could return some of that tipex that’s
true actually yeah George is your middle
name toex by the way correct me if I’m
wrong and what else we got coming
through uh oh yeah house to talking
about four day work working week okay
talking about that the Boost
productivity okay so improve working
motivation and
productivity P says the Jeff’s getting
inol buying econ of scale with the tipex
that’s absolutely true by the way but it
was a big
mistake uh some some really good answers
wow that’s unbelievable can I share my
thoughts with you because we’re
conscious of time here this is my final
slide today by the way if you want to
take a screenshot uh feel free so
shortterm policies maybe increasing the
minimum wage above 11 44 maybe moving
towards 12 pounds or even higher to
encourage more uh students for example
to to work part-time as well as study or
get more people to make work pay to
reduce working
poverty uh a rising income tax free
allowances I thought some of you might
say well should we have an income tax
freance of £15,000 or
£20,000 to get people to uh look for
work
um subses for childcare costs the
government’s offering taxfree childcare
but often we don’t have the supply side
capability at the moment something that
affects me tax relief on pension
contributions for over 50s many of the
over 50s have retired
early uh and if they start working again
they they start paying a lot of tax on
their pensions expansion the work visa
program so Hopey you can see here that
there are some shortterm policies that
might make a difference within a year or
two possibly whereas longer term supply
side politices have a longer
gustation um policy So and I’ve used the
word investment
all all in all three examples investment
in preventative health services to
reduce chronic illness I think Grace
mentioned long covid investment in
transport and telecoms infrastructure to
improve mobility of Labor allowed more
people to work from home for example 4
day working week uh and investment in
human capital so stem education further
education degree apprentic ships and
back to work programs for the long-term
discouraged workers what I’m saying here
it’s a nice evaluation point it’s a need
point to say well actually not every
supply side policy takes a decade to to
to kick in sometimes you you need a mix
of policies operating at a micro level
to change incentives to grow the labor
Supply Sam say a short term within a
year not
really uh it’s it’s within a cycle okay
valuation points yeah so with three
Market policies for example what’s the
consequences for
inequality so if you cut tax rates at
the top end what are the consequences
for income and wealth inequality if you
subsidize Child Care who’s who’s going
to pay for that and critically are there
enough child care companies that can
make a profit to provide the services so
we’re finding for example that there’s
just excess demand for nursery places
because the government’s offered the tax
incentive but the nurseries many of them
are closing down they can’t afford and
they can’t expand there’s an elasticity
problem so often times with ssps There’s
an opportunity cost true but OPP cost is
is the uh the fiscal cost uh and also
the distributional consequences what you
really need if you can take P’s point
away there please what you really need
with the supply side is is a competitive
micro economy you need businesses you
need startups you need an ecosystem
where that promotes Innovation and
efficiency and dynamism in the economy
and and some countries have it South
Korea the Netherlands increasingly
countries like Mexico have a very
Dynamic uh and Diversified industrial
base and it shows through on the UK in
the UK we can’t even fill the potholes
in the roads we have millions on the NHS
waiting lists okay our supply side is
held back by a chronic lack of public
investment in my
opinion I’m just an oldfashioned
Cambridge
Economist well done
everybody um wow hopefully you found
that useful today if you did press the
like button if you didn’t find it useful
then just press the like button on the
way out there is so much to cover on
side isn’t a huge amount to cover and
hopefully we give lot of application the
answers in the chat window just
different level different gravy and I
like gravy okay they are a fantastic
quality answer now join us tomorrow I
think tomorrow we’re doing contestable
markets and then poverty and inequality
Matthew says well there’ll be more live
streams after you so we’re going to
carry on Matthew every day all the way
through next week the week after uh yes
next two weeks for sure is that right
yes I think so the week after the Monday
the 23rd of course we’re down in London
so I’ll do one on a Monday and then we
have four dates live in London the grade
boost of course and we crack on WE crack
on in the first two weeks of May we’ll
be doing daily live streams on key
topics so that’s all something to look
forward to I really I really enjoy doing
them by the way because they’re a great
group an expanding community of students
fantastic to be with you so take care
stay safe stay positive stay healthy
stay happy and see you sometime
soon