Owen Jones has written and honest and thoughtful piece on what he thinks Labour might need to do in the case that Jeremy Corbyn is elected as its leader. One of his suggestions is:
- Economic credibility is key. So a Corbyn-led Labour party should set up some sort of ‘Council of Economic Advisors' composed of the various economic brains who back an alternative to austerity, and use it to flesh out a viable alternative based on clearing the deficit in a way that doesn't punish working people, disabled people, and so on. A big coup would be the use the Labour Party's considerable economic resources to hire the Nobel Prize-winning economist Paul Krugman as an advisor.
As someone who is not in Labour but who has become rather closely associated with what is called Corbynomics because it embraces some of my ideas can I warmly welcome this, based on personal experience?
First, no one person is the repository of all good ideas.
Second, those ideas need not all be in one party.
Third, they may not all be in the country.
Fourth, things do need scrutiny in depth and this idea clearly embraces that.
Fifth, the panel has to allow those advising to clearly support the broad ideas but not necessarily the party itself or some talent would be exlcuded
Owen's idea makes a lot of sense to me, as an outsider who has looked in.
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Anders Borg is available. He’s the man who balanced the national budget in Sweden in five years out of eight. He’s almost certainly read reports like this one
http://www.jstor.org/stable/1906924
which concludes mathematically that the value of government spending to the country is maximised when it’s balanced against tax receipts, and that you should not stray too far away from that.
I think a competent ex-chancellor from socialist Sweden would be a great asset, a credible opponent to Osborne, but the left in the UK have fallen head over heels for people like Krugman who are promoting deficit spending.
Rudi
Respectfully, that’s as close to economic illiteracy as it gets. MMT suggests why.
If a business ran with such an objective it would fail: it is putting cash flow before business
The same’s true of government. And the only reason the argument stacks is that it is assumed government is a residuakl after the private sector has played as it wants. I do not share that view
Richard
Britain is a pretty good place but could be better. Unemployment is below the average rate of the last 45 years, there’s been two years of decent growth, a lot of people want to come, but the government right now is currently spending £1.13 for every £1 collected.
I would look forward to a peer-reviewed paper that says the multiplier effect of government spending is maximised when overspending exceeds that ratio. Is there one out there? At the moment all we have is a ‘view’ that this level of overspending is insufficient, and a knee-jerk reaction that holding any other view should exclude you from Owen Jones’s panel giving economic advice.
Try reading some MMT then
You are getting close to offering bigotry and not reason
Rudi,
Sweden runs a current account surplus (exports minus imports) of 6.5% This is very similar to Germany’s 7%. If you are familiar with the concept of sectoral financial balances (but which I suspect you aren’t? ) you’ll understand perfectly that what may be appropriate for Sweden and Germany is quite inappropriate for countries like the UK and USA.
If you don’t yet understand that, you’ll perhaps be able to figure out why running a similar sized surplus isn’t the solution for all trading countries 🙂
So please do some economics homework and come back when you know what you are talking about!
Maybe…I’m not sure why Corbyn or any left wing group has to go out on a limb to prove their economic competence when we’ve had nothing but economic illiteracy from the right for the past 20 years or so.
I reckon if Corbyn came up with the most watertight economic plan ever devised, the media would still do their level best to pick holes in it.
I agree with this up to a point, but I believe, if they got the opportunity to put anything into practise, they should just get on with it and not play the media game.
I don’t think this is a media game
It’s about sharing best ideas before it ever gets that far, I hope
Certainly there is a need for the left to explain alternatives to austerity in clear to understand terms, but there is a risk of the usual running around in circles by the left trying to please everyone…which of course guarantees that you please no-one.
I hope this idea is genuinely constructive and not an effort to appease the right wing media.
As I understand Owen Jones’ idea need not be about appeasing anyone. Quite the opposite. It is about seizing the initiative and being pro-active rather than reactive. To lead, to set the agenda for discussion rather than sitting around trying to bat away the misconceptions and criticisms.
Setting the terms of the debate and taking it into new (and long-neglected)areas.
“…based on clearing the deficit”
It will fail at the first hurdle – it’s own logical fallacy.
The idea that the government budget deficit is a bad thing in itself needs to be met head on, not pandered to.
That is not what I would be wanting to talk about if on such a body
One thing that you can do is talk about deficit reduction on your own terms. Rather than expressing blunt hostility towards it you can emphasise the fact that PQE puts less pressure on the deficit than traditional fund raising (gilts).You can set your own timetable that foresees deficit reduction as an appropriate priority – post-recovery and at a time when full capacity, full-employment and target inflation have been achieved. You can cheerfully explain how higher growth and higher tax receipts will achieve this. You might even draw upon famous (popular) historic parallels.
That puts your opponents in the difficult position of speaking out against employment, social investment and growth. You can positively talk deficit reduction right down to the bottom of the priority list where it belongs.
Indeed. Talking of clearing the deficit validates neoliberal framing.
Doing so is a Losing Proposition
Vicarious modesty forbids me from mentioning one obvious name 🙂
I’d rather hope he doesn’t fall into the trap of parroting the Tories talking points for them with putting ‘clearing the deficit’ at the heart of his economic policy. He has to move away from their framing of the debate. Otherwise, a council of advisers is a great idea, you need a team to help carry the intellectual load.
Agreed
I like this idea. Building an economic policy platform with a range of expert support is important.
On a sort of related point, it would be good if you argued a bit nicer with people like Francis Coppola and Tony Yates. I don’t think they’ve coverred themselves in glory at all – but that doesn’t matter. You’re associated with Corbyn’s economic policies and, I think, bear some responsibility for improving and clarifying them through debate and selling them to experts and the general public. The tone of your argument doesn’t help that.
Also, remember what you write in your blog and in comments can be quoted back to people promoting Corbyn’s policies. Saying, for example, that you ‘don’t believe in the primacy of inflation targeting’, will be interpreted by most people as saying ‘things getting more expensive doesn’t matter’.
All the best
And why not you Richard as one of those advisors?
I have not seen ideas such as yours advocated for many years and so timely they are.
Private enterprise may be necessary but must be curbed. Why not an allowable return on capital of (say) 6% by way of dividend but heavy taxation above that level to stop exploitation?
The state must overall be in charge of major construction projects. That is clear.
The major banks privatised? Of course if they do not play ball!
And certainly your espousing of an exit tax on those who would look to flee the country having grown fat by exploiting the workers. Who would argue against that?
A breath of air not seen for too long!
HG
I doubt I would say no
But I do think it needs a broad base
I am sure that Jeremy Corbyn will be pleased to hear that you would be willing to serve on such a council. It would surely be the final proof for doubters (there is no need to name her!) that you are the architect and driving force behind Corbyn’s economic ideas.
You argue his case, you speak at his meetings, you make his arguments to cynics in the press. What more proof do people want?
What is so great about Paul Krugman? A very orthodox international trade economist (thesis: international trade is great) with a sveriges riksbank chocolate nobel and tireless booster of the very conservative hilary rodham clinton.
Seeing him getting duffed up by steve keen over actual banking operations recently also showed the brittle side that so many establishment economists share.
Does Corbyn really need such people?
Jones stating that coming third would be kinder on his nerves amazes me.
Its win or bust, new labour neither listen nor learn.
That is precisely the sort of hostility and narrowness that Jones is warning against and Corbyn doesn’t need. If you want the sort of purity that comes with alienating just about everyone you don’t get to be PM.
Krugman can be annoying, he is technically a New Keynesian (think ‘New’ like ‘new’labour). He has written one at least two papers that infuriate me but many more that I have enjoyed. He is the world’s best known and most tireless advocate against austerity, His practical advocacy tends to be far more progressive than his theoretical stance and he likes Corbyn and PQE.
Having him as one among a number of advisors would do no harm whatsoever.
The only purity I am interested in is purity of purpose. The same purpose that simon below refers to.
Jeremy Corbyn seems to be attempting the obvious necessity of including everyone,weighting those things that that matter to most people rather than trimming to the preferences and prejudices of the comfortably established.
It sounds radical, but radical only means going back to the root.
The only ones that will feel alienated are the establishment ‘thinkers’.
Jones’ (who I think is OK) handwringing is depressing, the guardian’s only supporter of Corbyn,now realising he will possibly win rather than coming a plucky third, gives us a list of things that will be used against him, and as a commentator only can, how to do it.
The only novelty is that Corbyn has something to attack, while the new labour candidates have very,very little. Maybe only the desire to make ‘difficult decisions’ on the lives of others.
As for Krugman, I agree he would do no harm, but what would be the gain of
the use the Labour Party’s considerable economic resources to hire the Nobel (chocolate banker version) Prize-winning economist Paul Krugman as an advisor.
I’m entirely unconvinced that an electorate will be swayed by the expensive presence of someone they have never heard of.
I’m all for using homegrown talent here.
I fully sympathise with everything that you feel so incensed about but I’m not so sure that a militant, hard line outlook is entirely compatible with the sort of inclusiveness that may be required.
You mentioned Simon’s comment. His view of the general public may have some truth to it but I wouldn’t recommend that he put it to them in those terms.
I’d prefer you thought of it as reolute and pricipled rather than ‘hard line’ and ‘militant’.
That sort of thoughtless phrasing works for the mail,not me.
If thinking about the kind of society we should be organising rather than pandering to what might play well with establishment media,’business’ and ‘markets’ is not inclusive, I honestly do not know what is.
Incensed is probably better than cowed.
In its own way this an actually an argument that’s well worth having. What you’ve described as ‘principled and resolute’ might also be described as uncompromising. Which need not be a bad thing. At least not always.
The argument between us was originally based on Owen Jones’ article which was largely about strategy and the compromises that need to be made. Although he doesn’t specifically say so, its also about the transition from an activist’s mindset to one that is suited to broad politics.
A huge and educative mythbusting operation will be required-this will require very gifted communicators that can get this across in plain language.
After nearly 40 years of vapid, sterile and vacuous individualism that has dumbed-down nearly everything under the sun we need to reintroduce the concept of ‘public purpose’ and collegiate thinking-this is a vast task to deliver to a narcoleptic, somnolent public that cannot see any further than it’s front room window.
Stephen Keen, now in the UK, and Ann Pettifor are two names which would enhance any such Council.
How’s this for a panel: Richard Murphy, Bill Mitchell, Prem Sikka and Joseph Stiglitz. Sure Stiglitz and Mitchell may not see eye to eye, but you need some differences of opinion on a panel – and more importantly all four have an interest in democracy and the common good. 🙂
You know you are destined for this! I can hear the people cheering now! “Rich-ard, Rich-ard, Rich-ard” as you reclaim for us that is due from corporations. Fantasmagorical work!
Actually, no I do not know that
I make no assumptions
And I could only do it with my current funding if my independence was no compromised
So I made a comment, not a prediction
A couple of points of caution on a worthwhile suggestion.
1) Any such council must have a tight remit, focused on ensuring that proposals are credible, specifically that our numbers add up, that our institutional proposals are workable, etc. Theoretical debates about the merits of MMT or IS-LM as frameworks are very interesting but need to be kept out of such a council’s deliberations, although they will of course inform contributions. In particular, there is no place for rancorous ‘snake oil’ style polemics.
2) Such a council must not exclude or marginalise party members and supporters from economic policy discussions. Jeremy Corbyn has stressed the importance of restoring discussion and democracy and that applies here too. Economic policy is not just for experts.
Despite the name MMT is not “Theoretical”.
Keeping MMT, and hence framing, in the margins = Losing the debate…
https://www.youtube.com/watch?v=4OVAROe3gW4#sthash.3H3nifvO.dpuf
Of course we need to debate MMT or any other view for that matter. I am following these discussions with great interest.
But there is a time and place for that and it would not be on a council set up specifically to advise a Labour leader on economic policy. People can arrive at similar practical advice from quite different theoretical perspectives, and that’s fine.
Making policy consensus dependent on theoretical agreement is a recipe for division and defeat. It turns a political movement into a theological sect. I lived through the left tearing itself apart in the 1970s through increasingly obscure polemics and I don’t want to go through that again.
Lyn,
There’s nothing obscure and theoretical about this.
To WIN progressives have to wrest the debate away from the right’s ‘home ground’ – namely the household budget metaphor.
MMT offers an alternative WINNING framing. Other progressive economists are mired in the mainstream LOSING one. If Corbyn just takes advice from the latter he will guarantee himself losing the argument – one that the left has been losing for 30+ years.
Its as simple as that.
I urge you to watch Bill Mitchell’s presentation on this very issue just last week… (NB: Richard and Ann Pettifor were present and both spoke afterwards from the platform):
http://bilbo.economicoutlook.net/blog/?p=31725
Stephen,
The framing is through the media, not through a particular economic theory. As evidenced by the fact that lots of “mainstream” economists argue for progressive policies from mainstream economics. Those arguments are better than the otherside’s but get very little hearing in the media. Partly because right arguments are more intuitive. Partly because right wing pareties tend to have less shame in making bad but persuasive arguments*. And partly because Labour and much of the left made a bad political calculation.
I don’t see how arguing from MMT will change this. It’ll just give people a chance to shout call weirdo-economics and say, “look, even these left wing economists don’t agree.”
*see the head of the CBI saying ‘everone knows the economy is like a household’
Donald,
‘Deficit doves’ do indeed get “very little hearing in the media” and moreover have done so for decades.
Richard Murphy comes up with a game-changing ‘deficit owl’ policy (PQE) and its all over the papers.
Doesn’t that tell you something?
IS-LM? How quaintly unexpected. It may best to let that old creature rest in peace.
Lyn does have a point though and quite a good one at that. The theological sect is quite apparent to those outside it.
Besides which, this whole framing thing is becoming a bit much and it appears to have lost its perspective:
“Other progressive economists are mired in the mainstream LOSING one.”
Really,? I mean seriously…
Yes very.
Richard started shifting everything with PQE. And both Ann and he agree with Bill Mitchell’s thesis that progressives are shooting themselves in the foot every time they promise to be ‘responsible’.
The last people Corbyn needs right now are mainstream ‘deficit dove’ economists because unless the debate does shift (and the doves won’t) then George Osborne will eat Corbyn for breakfast.
Sorry to come back so late on this but it may be worth noting that austerity policy does not exist (or prevail)outside of the UK & Europe. So it might also be worth looking at the way that social democrat parties in the rest of the world handle this one.
They don’t speak directly against the balanced budgets narrative , at least not very often, they talk past it. They are more inclined to give it a polite little token pat on the head and carry on promoting their own agenda which just happens to (more or less) put everything else on a higher level of priority.
With one of the lessons there being that if you pick a big loud fight on this particular point you ARE buying into their narrative by raising its profile and making it central . Austerity is becoming increasingly unpopular and the best thing to do is emphasise the positive things that you would do to change that.
That may include the fact that PQE is effectively deficit neutral unlike conventional borrowing (gilts) that growth is more effective in reducing debt than austerity because it raises employment, income and tax revenue – as do Corbyn’s proposed tax reforms. You don’t give that as your reason for doing it. You hit them with that if they insist on raising the matter. That then dismisses their concern without confronting it and it ties in neatly with all the things that you do want to emphasise. Re-framing begins in the areas where there is common ground and if you want to do it successfully you don’t make a point of telling everyone that that’s what you’re doing.
I’m not sure but we’re probably, actually agreeing here (on changing the narrative at least). Besides which, I am not aware of any truly progressive economist that accepts austerity – and austerity is the thing that you need to get rid of. Chances are that MMT-related ideas will be implemented before most people know what it is. They will then find out soon enough and at that point you’re winning.
I agree
This blog is techy and geeky
But if I were ever to do politics then the big issue is that PQE is about homes, transport, energy, broadband, flood defences and so much more
And that we need these things, have the resources to deliver them and the finance available to do so