This post is a follow up to a postby Chris Dillow. He makes two claims about macroeconomics. To understand this you need to know about the distinction between mainstream and heterodox economics. It is difficult to define what divides the two groups (papers/chapters are writtentrying to do so), but we can make some observations. Most economists in academic departments are mainstream, and heterodox economists fall into lots of different schools. Another observation is that mainstream economists almost completely ignore what heterodox economists do. What is not true is that all heterodox economists are left wing and all mainstream economists are not. Chris’s first claim is that much of heterodox economics is the macro that was fashionable many years ago. The second is about the mainstream. He… [Read More...]

One of the rules in this pandemic is that Johnson’s government does not learn from mistakes. Johnson, his ministers and many of his MPs prefer a self-serving libertarianism to looking at evidence. As a result, England has got rid of every measure aimed at reducing the chance of passing on the virus, while most other countries have retained some controls like mask wearing. Ministers are even telling workers to go back into the office, just as they did last summer. The lesson they failed to learn from the summer of last year is not to imagine you have solved the COVID problem. Last summer cases and deaths were low, restrictions were lifted and despite what their scientists were telling them many in government thought it was… [Read More...]

The combination of Brexit, Covid, and an immigration policy that favours skilled (in practice higher paid) workers has created severe shortages of some lower paid workers. We are seeing that today among lorry drivers, crop pickers, food processors, butchersand other occupations. There are two, seemingly compelling, arguments for why this might be a good thing. The first is straight supply and demand: a worker shortage means employers raise wages to attract workers. The second is that shortages increase productivity, as firms seek labour saving machines that will reduce their demand for labour. If, like me, you think reducing low pay and increasing low productivity are good things, what is there not to like? Few should begrudge the wages in some of the industries discussed by John Harris… [Read More...]

The Democratic primaries for the 2020 presidential election turned into a two horse race between the candidate of the left, Sanders, and the candidate of the centre, former Vice President Biden. Their political style and positions were very different, with Sanders being a bit like Jeremy Corbyn and Biden a bit like Kier Starmer. But when Biden won, he united the party under a common platform, and his government in some areas has been surprisingly left wing. Starmer too won against a candidate from the left, and he did so on a unity ticket. In reality Starmer has followed a very different path. I don’t want to examine whether Starmer always planned to confront the left, or whether he wanted to try unity but was persuaded or pushed… [Read More...]

In September the right wing press began a campaign to get GPs to see more patients face to face. All the right wing papers joined in, with the Mail having a five-point manifesto for GPs which included calls for the Government to “act to ensure a greater proportion of GP appointments are in person”. It might seem odd that the Mail should launch this campaign at a time that COVID is still widespread in the population, and GPs are already overworked from both this and also vaccinating a large number of their patients. In mid October, the new Health minister Sajid Javid offered GPs new money, but only if they increased the number of patients they saw face to face. League tables giving data on how… [Read More...]

Of course it is impossible to know for sure. However the following graph is suggestive.Since Johnson abolished all English COVID restrictions, including mask wearing on 19th July, UK cases have oscillated around a number like 500 per million. In contrast, Spain (which had a similar Delta peak to the UK) has seen cases gradually falling to around 50 per million, and has also kept compulsory mask wearing in various situations along with other restrictions.. France’s Delta wave was a little later and smaller than the UK’s, but since that ended, cases have also come down steadily, and they too have kept some COVID restrictions including mask wearing in risky situations. [1] Have I chosen France and Spain because it fits this pattern? Other European countries of a… [Read More...]

Most of the controversy around the extra spending for the NHS and social care announced last week focused on the higher rates for national insurance. As Rachel Cunliffe explained here, national insurance contributions are a tax just like income tax or VAT. The misconception that they are payments into some pot of money that you get back later helps explain why this was the tax of choice for Johnson, although the fact that it is not as progressive as income tax (excluding, in particular, rent or interest income) probably helped too. I’m not going to talk about why national insurance is a very bad way to fund this additional spending because that has been covered else. However my first myth is that this unfairness has something about… [Read More...]

The general expectation is that they will, but is this the right thing to do? Inflation in August was above target at over 3% (total or core). UK earnings are estimated to be back to their pre-pandemic levels, despite GDP being well below pre-pandemic levels. Chris Giles forcefully puts the case for some tightening. It is tempting to argue against any tightening by drawing analogies with the US. Their inflation has been running at around 5%, yet the Fed has not yet started tightening, despite a far stronger fiscal stimulus in the US compared to the UK. One argument for ‘seeing through’ current inflation is that it stems from temporary shortages following the end of the pandemic. Latest data for core inflation suggestsinflation rates are… [Read More...]