Colin McAllister

Guest speaker was Colin McAllistair,  a well-known local personality, now retired, lecturer in economics for many years at Dundee College. His talk concentrated on the relationship between inflation, unemployment and interest rates, a topic of particular interest given what has happened to western economies since the financial crisis of 2007/8 when banks imploded, interest rates gradually shrank to almost zero, and businesses were going bankrupt, and ending more recently with rising inflation, higher interest rates and demand for higher wages. Colin began by explaining the previously accepted wisdom of the 'Phillips Curve' which argued that economic growth brings inflation which should lead to more jobs and less unemployment. This theory has to some extent been disproved as a result of the period on stagflation in the 1970s when there was inflation alongside rocketing unemployment. Colin went on to distinguish between ‘creeping inflation’ where people adapted their behaviour to cope with a modest level of inflation, and ‘rampant inflation’ where there was usually a significant wage-push which resulted in increased unemployment, more imports and greater use of capital. He highlighted many interesting points: a real factor often overlooked by government was the huge number of people capable of working but who did not because the benefit system made working unattractive; the universal credit system, which he argued, had many merits if properly implemented; the power of labour had diminished in recent years as its options were much reduced due to the concentration of business into increasingly large companies. He also touched on was the 'Laffer Curve' which shows the relationship between tax rates and revenue collected, noting that if tax rates are too high the revenue collected will fall. Governments should always remember this. This fascinating talk was much enjoyed by the members of the Club. Douglas Jackson gave a generous vote of thanks.