In economics I think it fair to say that there are still an enormous number of dinosaurs alive, well and still kicking too much. The world will not be a better place until they either change their spots (excuse the mixed metaphors) or retire. Take this from Martin Wolf in the FT as evidence of the breeds continuing inability that must eventually guarantee its extinction:
The UK election is a competition in irresponsibility. The Conservatives promise to take the UK out of the world's deepest free trade area, though nobody knows quite how and when. Labour is even more obscure on Brexit and outbids the Tories in making expensive, radical and incredible promises, across the board.
Yet the economic realities will not respond to the charms of Boris Johnson or Jeremy Corbyn, as voters may. What are those realities? Four need particular attention: productivity; employment; investment; and the external balance. These realities are linked and impose tight constraints on the true, as opposed to fanciful, choices the UK now faces.
I despair! What are the realities that need facing? I'd say they are climate change, loss of biodiversity, immediate physical threat from flooding and our inability to manage growing worldwide population unless action happens now. But Wolf takes the small and old world view, not only suggesting that the old myopic belief that growth can solve all issues is still of relevance but actually ending up suggesting a financial constraint to make sure that whatever might be really needed cannot happen. This logic, and all that flows from it is amongst the biggest of the threats that we face as a country, people and population.
And what's the chance of beating it with a Tory government? Close to the square root of near enough nothing, I'd suggest. And that's what is so troubling.
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The issue is that the real groundhog day is if a Tory government gets in – more austerity, more lies (they said they would electrify the Midland Mainline and then reneged on that when they got in), more divisive language (female Tory MPs leaving because of abuse only have their own party to blame I’m afraid) and more selling off the family silver (privatisation).
If I were able to leave this country I would say that the British people deserve what they get – “Stick a fork in the arse – they’re done” as Lou Reed said. But that opportunity has long gone for me so I will end up suffering too.
Sticking with the devil you know? Never was there such twisted wisdom as that!!
But who knows – really? – who knows?
I can understand your sense of despair, but there is good work being done and not necessarily behind the scenes:
https://www.theguardian.com/commentisfree/2019/nov/15/labour-austerity-green-new-deal-economy
I can only hope that Prof. Mazzucato, her colleagues and her team are closely involved in policy formulation and implementation – irrespective of which of the main parties is in a position to form a government.
In addition, it appears that Labour is re-thinking its well-intentioned, but hare-brained, proposals on worker shares:
https://www.theguardian.com/business/2019/nov/15/labour-plans-workers-stake-firms-profits-policy
However, to be fair to Martin Wolf, there are issues about economic stabilisation that need to be addressed, although I accept that he presents these issues inappropriately as constraints, as you have noted. The Fiscal Credibility Rule, devised by Jonathan Portes and Simon Wren-Lewis and subsequently modified and adopted by Labour, is an attempt to provide a forward-looking assurance about the process of economic stabilisation. I know you view it as an anathema. I also find it problematic on a number of grounds, but my principal concern is that it would fall foul of Goodhart’s Law. Any government that applied it would be subject to continuous pressure from bond and currency market participants testing its application, it would be gamed ferociously and it would eventually cease to be of any use.
The fundamental problem is the false separation of the use of fiscal policy and monetary policy tools and of the perceived authority to apply them. The existential threat to the Eurozone (and to the economic functioning of the EU) only came to an end in 2012 when Mario Draghi felt he had secured sufficient political support to override the inane and ultimately disastrous objections of Germany and other member-states and he was able to declare he would do “whatever it takes”. And that saw off the disaster capitalists in the bond and currency markets who were seeking to pick Eurozone member-states one by one.
And that is all any democratically elected government can do when it comes to any threat to economic stabilisation in relation to the external current account balance, the internal balance in relation to employment and investment/savings and in relation to inflation. They simply have to declare (and mean it) that they will do whatever it takes using all the monetary, fiscal and other policy tools at their disposal.
One very worrying question remains. Can one country, however large its economy relative to its neighbours, successfully pursue a suite of monetary and fiscal policies generating outcomes that will deviate markedly from the confected markers set by the EU’s Macroeconomic Imbalance Procedures? Will a commitment to do whatever it takes provide sufficient protection from the disaster capitalists in the bond and currency markets?
Re the last, yes
Try Portugal
“He’s less than 100% wrong.
“…productivity; employment; investment; and the external balance.””
Dunno about the external balance, but the others are vital. Producing what ? To what end, would be a pertinent question though. Employing whom ? According to Priti Patel we’re going to be employing lots of trained medical staff and other key skills workers from abroad. Why ? Because we gave up training and educating our own population or piss them off so much with appalling managements that they emigrate or just give up and go home. And investment. We’ve had lots of that. If you can call investing in casino chips an investment.
Empty words Mr Wolf. You have to explain what the hell you’re talking about.
The FT is one of the most highly rated newspapers in the UK. And even that publishes shite.
What I think Richard is despairing of (as a heterodox sort of person) is how some despair change and trying something new even though there is ample evidence that the orthodox ways they are addicted to simply do not work.
You are right
You might find David Graeber’s review of Robert Skidelsky’s book “Money and Government: The Past and Future of Economics” in the current New York Review of Books very illuminating. (https://www.nybooks.com/articles/2019/12/05/against-economics/) In a long article he discusses why obviously false economic theories have such enduring appeal. As is often the case, the obviously false economic theories benefit the elite and there is no pressure to discard them.
I know and like Robert but we do disagree on money, and it’s role