As my posts are usually written just before Budgets happen, I will add a postscript after the Budget To say that much of the media treats Budgets as if the government was a household is not really accurate. Much Budget analysis treats the government as a cash constrained household, such that any change in expected tax revenue is regarded as money the Chancellor has to spend or give away. Most households don’t work like that, because they have the capacity to save and borrow. The government of course finds it much easier to borrow than households. Unfortunately some governments encourage the media’s attitude to Budgets. On this occasion, however, the government’s fiscal rules are medium term, with targets always five years into the future. So there is… [Read More...]

The prime minister’s inability to shake up her cabinet highlights the weakness of her position [Read More...]

The BBC has never been completely independent of the government. But that is no reason to ignore its gradual transformation over the last thirteen years into a media organisation that has become increasingly prone to do the government’s bidding. A process that began out of fear has now become institutionalised through the appointment of a once deputy chairman of a local Conservative party and council candidate as director general, a Conservative party donor deeply involved in party politics as Chairman, and a former Communications Director for Theresa May on the BBC Board. Political appointments have been made to these senior positions at the BBC before, but we have not had a government like this before. A government that is far more prepared to interfere with established institutions… [Read More...]

It is not as simple as it seems [Read More...]

In May last year I wrote about a new bookby Eric Lonergan and Corinne Sawers called Supercharge Me. The book argued, in essence, that economists should stop thinking about carbon taxes as the way to tackle climate change, what we could call the big stick, and instead think about carrots in the form of subsidies and public investment designed to get green industries to a scale where their rapid growth would be inevitable. The Inflation Reduction Act (IRA) is essentially a climate bill passed in the US that does exactly that. It is full of carrots, sometimes open ended carrots, designed to promote greener industries, financed not with carbon taxes but higher corporate taxes and lower drug prices for medicare. As I largely agreed with the central… [Read More...]

Bagehot remembers several surreal visits to a frozen St Petersburg and a booming Moscow [Read More...]

Paul Krugman once said that to improve a country’s standard of living over time “productivity isn’t everything, but, in the long run, it is almost everything”. I want to use a recent Resolution Foundation study to examine a slightly different question, which is what determines differences in prosperity across countries. The answer is very similar, but with an important modification. The Resolution Foundation report by Krishan Shah and Gregory Thwaites compares productivity and (PPP adjusted) incomes per household in the UK with the US, Germany and France, and with France it looks at both 2008 and 2019 so we can look at the comparison over time. But it starts with the following chart which includes many more countries. This plots GDP per hour (productivity) on the horizontal axis against… [Read More...]

The home secretary’s departure could tilt the balance of power in both the cabinet and the party at large [Read More...]

This isn’t a headline from the pre-Truss era, or immediately after the ill-fated Kwarteng budget – see the date. It’s as if they believe Truss was not brought down by the markets but instead by some left-wing plot. That the Mail and Telegraph could print headlines like these so soon after the Kwarteng/Truss debacle might seem extraordinary, but I fear it’s just an extreme example of something I wrote about a few weeks ago, and that is the failure of the Conservative right to learn from its own failures and events generally. This post explores why there seems to be an inability to learn and adapt on the political right in the UK. As Steve Richards emphasised recently, the Conservatives after their catastrophic defeat… [Read More...]

Labour’s so-so performance in the local elections raises questions about Jeremy Corbyn’s leadership [Read More...]

The BBC intends to commission reviews on impartiality in various subject areas, and last week it published its first on fiscal policy (taxes, spending, government debt and all that) written by Michael Blastland and Andrew Dilnot. I think it’s a good report, and the BBC’s coverage in this area would be a lot better if its suggestions were widely followed. As I coined the term mediamacro to signify the disconnect between macroeconomic knowledge and what was said in the media, I very much welcome this attempt to bridge that gap. However at the end I want to note two fundamental problems, one of which at least the authors could not avoid. The report starts brilliantly with a chart published by the BBC. Although this just plots ONS… [Read More...]

Liberalism needs nothing less than a great rebalancing if it is to regain its intellectual and political vitality [Read More...]