We can see in the United States right now the dangers of having a populist [1] president running the country during a serious pandemic. Incredibly 90% of Republicans trustthe president to give them accurate information about the outbreak. A president who first called the pandemic a Democrat hoax, and then said it was under control and now wants to end social distancing to celebrate Easter. Some of those people will be paying with their lives for this misplaced trust, but by the nature of pandemics plenty of those who are not Republicans will also share this fate. The UK also has a populist government. Johnson and his cabinet are where they are now because they championed a cause that pitted the elite and experts, who thought … [Read More...]
The economic (and political) effects of this coronavirus pandemic
This is an update of an earlier postwhere I described the results of a study I did with others on a flu pandemic. (It also appeared in a VoxEU ebook.) I have had a lot of enquiries from journalists in Europe about this blog and the paper, and of course what everyone wants to know is how similar is our modelling to the impact of this coronavirus. The features of this pandemic are now clearer than when I wrote the post, so I can say a few things on this issue. Our study looked at two cases: a base case and a severe case. The key parameters were the attack rate (how many get the virus) and the fatality rate (how many who get the virus … [Read More...]
Coronavirus and the consequences of a compliant media
This hasn’t been the new government’s first nationwide crisis. That was widespread flooding hitting many regions of the UK. As I explained here, that was partly a disaster created by the Conservative party (with a little help from their coalition partners). Journalists had their chance to make a story out of this by using the hook of Johnson’s non-appearance at any of the flooded towns, but it didn’t happen, just it didn’t happen on all the previous occasions we have had widespread flooding. Which is why spending on flood defences continues to be inadequate. Lack of criticism encourages a certain laziness, but also gives politicians the courage to do things that those in democracies with more accountability would not do. I think we can see both … [Read More...]
Fiscal rules: a primer for the budget
Do you want to know why fiscal rules should never involve targets for the debt/GDP ratio, or debt interest, or any stock measure, and why public investment should not be part of a fiscal rule? Read on, but first we have to establish two key principles. Principle 1: what are fiscal rules for? The way some economists are tempted to think about fiscal rules is in terms of economic optimality. What is the optimum debt to GDP ratio and what is the best way to get there? This misunderstands what fiscal rules are for. If every government was benevolent (always did the right thing for society) they would follow the optimal policy without the need for fiscal rules. Governments would just consult experts and do the right … [Read More...]
Low paid jobs for British born workers
I have always had a problem with those who focus on the need to reduce low skilled immigration. Skilled migrants are OK, so the argument goes, because the UK needs their skills, but we don’t need low skilled immigrants because British workers can do those jobs. At a microeconomic level it makes sense, and in a world where there is widespread unskilled unemployment it may make sense. But in a high employment economy like the UK today, it makes no sense at the macro level. To see this, let’s think about a stylised example. Suppose there are a fixed number of jobs at each skill level. You will always need the same number of engineers, care workers and so on. To make things easy suppose 50% of … [Read More...]
The UK’s place in the world
As an economist, I naturally focus on the economic aspects of the EU. The EU is mostly about economics. To counterpoise sovereignty as an alternative perspective to economics misses an important point: most EU rules stem from the economics of free trade within the EU. The EU wants common regulations to make it easier to trade. The EU wants restrictions on state aid to prevent countries giving their own firms an advantage over others in the union. Much the same applies to labour market and environmental standards. Economics is also involved in another aspect of being in or out of the EU, and that is how the UK sees its place in the world. Is the UK’s identity partly a European identity, or does the UK ‘stand … [Read More...]
The left needs to campaign for social liberalism
The continuingexpulsion of the Windrush generation from their home country to a country they hardly know, splitting up families in the process, is just a deliberateact of state cruelty. Why did the government go ahead with these deportations despite sitting on a report suggesting they should stop? Their pretext was that these individuals had at some stage in their lives committed a ‘serious’ crime, yet all had served their time for these offences. This act of cruelty is part of the Conservatives attempt to appeal to socially conservative voters, both traditional Tories and one time Labour voters. What do we call splitting up families just to make a political point? As Paula Surridge shows here, voters who were thinking of leaving Labour for the Conservatives in June 2019 … [Read More...]
What causes concern about immigration
It is part of folk law among politicians and most social scientists that concern about immigration is governed by the number of immigrants. So how do we account for the decline in the relative salience of immigration since the EU referendum (source)? There are of course many explanations for this decline. Perhaps people now see the benefits of immigration after all the post-referendum talk of nursing and doctor shortages. A rather more straightforward explanation is that people think that by leaving the EU the immigration ‘problem’ is being solved (i.e immigration numbers are much reduced). If it is the latter, then their knowledge is incomplete. Immigration from the EU has declined dramatically, which is not surprising, but this has been partly offset by a significant … [Read More...]
On the supposed gap in the centre of UK politics, or the alleged powerlessness of the UK median voter
A remarkable feature of the UK political landscape is how powerless what could be called the political centre currently feels it is. By the centre I don’t just mean individuals that call themselves moderates, but also UK business: capital if you like. How did this happen? It is a long story I’m afraid. The first and most obvious factor is the UK’s first past the post (FPTP) voting system for MPs. In earlier decades this was thought to empower the centre. If any party drifted towards a less central position in the political spectrum (left/right, or in two dimensions with open/closed), the other would quickly capture that centre ground and would be triumphant in elections. The wishes of the median voter were very powerful. But … [Read More...]
Why the Supreme Court must protect our constitution
This is a very short post about a critical matter. It will not be a ‘on the one hand, on the other’ type of discussion because there is one overwhelming argument. It is about protecting our parliamentary democracy, a democracy that in one area in particular relied on norms of behaviour that have now been broken. The Prime Minister has shut down parliament for his own political reasons, and the only institution that can stop both that and a Prime Minister doing it in the future is the UK’s legal system. Accordingto David Allen Green, Scottish judges are less disinclined to get involved in political matters than English judges. If this is correct, then the decision of three senior Scottish judges that Johnson had lied to the … [Read More...]
How should academic economics cope with ideological bias
This question was prompted by this study by Mohsen Javdani and Ha-Joon Chang, which tries to show two things: mainstream economists are biased against heterodox economists, and also tend to favour statements by those close to their own political viewpoint, particularly on the right. I don’t want to talk here about the first bias, or about the merits or otherwise of this particular study. Instead I will take it as given that ideological bias exists within mainstream academic economists (and hereafter when I just say ‘academic economics’ I’m only talking about the mainstream), as it does with many social sciences. I take this as given simply because of my own experience as an economist.I also, from my own experience, want to suggest that in their … [Read More...]
The Remainers urging people to vote for a No Deal Brexit
You might think the title above is nonsense: how can a Remainers vote for No Deal? I would have agreed with you a month ago. But since then I have noticed many so called Remainers saying that people cannot possibly vote for Labour in the forthcoming General Election because Labour, or Corbyn and his advisors, are pro-Brexit. These are the Remainers who are trying to persuade you to vote for No Deal. Anyone who gives the matter a seconds thought will realise that Brexit is impossible under a Labour government. I may have understoodthis sooner than most but it is not hard. As soon as you see that the Conservative party is (because of Farage and their Brexiter MPs) bound to No Deal, you can also … [Read More...]
Reaction to “There is only one alternative to Prime Minister Boris Johnson”
I anticipated that my last post would not be popular in many circles. I want to respond to some of the common themes from the responses in this post, but there was one reaction I was not expecting. First some background. Since the beginning of the year I have had an arrangement with the online edition of the New Statesman (NS) that my Tuesday post should be simultaneously published on my blog and in the NS. The arrangementwas working well. My last post was published by the New Statesman as usual. And then sometime later it was unpublished. The line my post took was not one the NS wanted to carry. I do not know the details of what happened but I can guess. The post was … [Read More...]
Understanding why right-wing populism succeeds
I have just been rereading “Populism and the People” by Jan-Werner Müller in the London Review of Books (May 2019). It is the most concise and I think perceptive account of the most worrying political development of our time: the rise of the right wing populist. This is Trump and Farage, but also Orbán in Hungary, Erdo?an in Turkey, Kaczy?ski in Poland, Modi in India and Bolsonaro in Brazil. What they have in common is a“populist art of governance … based on nationalism (often with racist overtones), on hijacking the state for the ends of partisan loyalists and, less obviously, on weaponising the economy to secure political power: a combination of culture war, patronage and mass clientelism.” But there is one standout paragraph for me, and … [Read More...]
Bill Mitchell’s fantasy about Labour’s fiscal rule
My last postabout outlandish attacks from some MMTers on Labour’s Fiscal Credibility Rule (FCR) was designed to be read by non-economists, and I didn’t want to bore them or waste space with all the fantasies Bill Mitchell has spread about the rule. But as I’ve had one of those fantasies tweeted back to me many times in response, I want to lay it to rest here. That fantasy is that the Bank of England somehow has control of when the knockout happens. The knockout is when the rule is suspended and instead you have as much fiscal stimulus as is necessary to get the economy out of recession. It is triggered when interest rates hit their lower bound. At that point all monetary policy has left … [Read More...]
After the Peterborough victory, has Labour’s Brexit policy been redeemed?
In the 2016 EU referendum, Leave got about61% of the Peterborough vote and Remain 39%. In 2017 Peterborough became a classic Labour Tory marginal where other parties were nowhere to be seen. It was exactly the kind of marginal that Labour’s policy of supporting Brexit is designed to keep. If you ask those who support Labour’s current Brexit policy, nearly all their marginals are like Peterborough. The only thing that might confuse people is that Peterborough is not really part of the ‘North’, where if you believe some simplistic accounts is where all the Leave constituencies are. As I showed in my last post, this is something of a myth. If there is a UK divide, it is between Scotland, Northern Ireland and London where Remain has clear … [Read More...]
Is Brexit still possible?
My last postwas about how Labour should move from supporting Brexit to supporting Remain, because there is no chance that their kind of Brexit deal either being approved by parliament or attracting majority support from voters. This holds before and after any elections. You may think Labour should support Remain simply because it is the right thing to do. I have written many posts saying exactly this. But many within Labour, including crucially Corbyn himself, do not agree. This is why we should also think about whether supporting Brexit is a feasible strategy, which is what my last post does. The post also shows why supporting Brexit will now lose Labour votes. But the logic of that post also applies to any deal, including the government’s own. … [Read More...]
Lecture on The Lies We Were Told
Too busy to write a post today, but I thought I’d take the opportunity to publicise my forthcoming lecture and discussion on my book. Its at Bush House, 44-46 Aldwych, London at 6pm on 23rd May. I’m lucky to have Rachel Shabi, contributor at the Guardian and Professor Aeron Davis, Deputy Head of Media, Communications and Cultural Studies at Goldsmiths University of London to lead the discussion. The lecture is organsed by The Progressive Forum, and further details are here. In the lecture I want to focus on three big lies told by politicians but also aided and abetted by the media. By big I mean lies that led to profound changes in most peoples lives or how we are governed. The first was austerity, where most of … [Read More...]
Labour Remainers can no longer trust Corbyn not to do a deal with May
I have arguedin an earlier post that it is highly unlikely that Labour could get Brexit through parliament after winning an election, because the Tories will unite to oppose it, and they together with Labour Remain MPs would defeat it. The NEC recently agreed they want a People’s Vote on any Brexit that the Labour leadership disagree with. So the only way that Labour’s current policy might allow Brexit without a People’s Vote is if the Labour leadership come to some accord with Theresa May and her government. The general expectationhas been that a deal between May and the Labour leadership on Brexit is pretty unlikely. With many senior ministers focused on who will succeed May as Prime Minister, any deal with Labour is likely to see … [Read More...]
Views on the minimum wage show economics to be an inexact science
.The hallmark of a science is not just having refutable hypotheses, but also changing its view when data shows the theory is wrong. Economics is often accused of not being a science. A good test case to see if that is true is the minimum wage. Basic economic theory suggests if you fix wages at above their level in the market, employment will fall as less workers are employed. However a number of empirical studies, the most well known of which was written by Card and Krueger in 1994, have suggested that employment shows no noticeable decline when a minimum wage is imposed or modestly increased. My reading is that the most convincing studies do show this result, but not all do, so the picture is not completely… [Read More...]