Could Do Better

I spoke on the most recent episode of my podcast about the recent collapse of HMV and other high street retailers. I didn't really speak at length about it because I figure my podcast is more for jokes rather than for me dissecting the problems faced by the British economy. But that’s the nice thing about having a blog, if you don’t want to read about the economy you could just skip this post. Don’t though because I assure you that it’s going to be well interesting.

See also: every shop in Britain

The media narrative of the collapse of HMV, Jessops, Game, et al. (and indeed the narrative coming from those companies themselves) is that they have been crippled by the growth of online retailing and by rising rents on their stores. According to this view falling sales and rising costs were squeezing their profits. This view is easy to understand, which is probably why it is being pedalled. It is also false. HMV stores were all cash profitable, that is to say they were taking in more cash than they were spending because there are a lot of people (myself included) who still prefer to buy things in shops than over the internet. So why have they actually gone bust?

Unintended Consequences

As you are well aware, Dear Reader, everything in Britain is now made of horse. It’s interesting to note that whereas in English most animals have one word for the living animal and one for its meat (cow: beef, pig: pork, sheep: mutton) horses do not. It’s interesting but it doesn't really have to do with what I'm going to talk about today which are unintended consequences.

I've always enjoyed this sort of thing, where someone makes a choice which ends up affecting something which is apparently entirely unrelated. It’s a thing that always seems to have fascinated people, just think of how many books and plays and movies that you have read and seen featured unintended consequences as a plot point. It’s a whole bunch I bet. But the current horse crisis is a prime example, because did you know that the 100% horse lasagne can be traced all the way back to Romanian traffic regulations?

The Fiscal Cliff is Coming and it Doesn’t Exist

You may have heard recent talk about the “Fiscal Cliff”, and if you haven’t then trust me you will over the next few weeks. For those of you confused about what the fiscal cliff is don’t worry; everyone is confused by it and I'm about to tell you some things that might make it a bit less scary.  Essentially, over the next few months a lot of temporary laws in the United States are going to expire. These are laws which were brought in saying that taxes would be reduced for certain people for a number of years, or that certain government programmes would be guaranteed funding for a certain number of years. As the time limit on these all finish at roughly the same time that means that quite suddenly government spending will go down and taxes will rise. This has made people worry that the recession will start up again as suddenly a lot of money will be taken out of the economy. Trying to fix this is an even bigger problem as Republicans who control the House of Representatives want to cut spending and keep the tax cuts, whereas Democrats who control the Senate and the Presidency want to increase spending and get rid of the tax cuts. Either way this means increasing the deficit, which is the government’s debt.