I am one of 163 signatories to this letter in the FT this morning:
The UK economy needs reform. For too long it has prioritised consumption over investment, short-term financial returns over long-term innovation, rising asset values over rising wages, and deficit reduction over the quality of public services.
The results are now plain. We have had 10 years of near zero productivity growth. Corporate investment has stagnated. Average earnings are still lower than in 2008. A gulf has arisen between London and the South East and the rest of the country. And public services are under intolerable strain – which the economic costs of a hard Brexit would only make worse. We now moreover face the urgent imperative of acting on the climate and environmental crisis.
Given private sector reluctance, what the UK economy needs is a serious injection of public investment, which can in turn leverage private finance attracted by the expectation of higher demand. Such investment needs to be directed into the large-scale and rapid decarbonisation of energy, transport, housing, industry and farming; the support of innovation- and export-oriented businesses; and public services. It is clear that this will require an active and green industrial strategy, aimed at improving productivity and spreading investment across the country.
Experience elsewhere (not least in Germany) suggests a National Investment Bank would greatly help. With long-term real interest rates now negative, it makes basic economic sense for the government to borrow for this, spreading the cost over the generations who will benefit from the assets. As the IMF has acknowledged, when interest payments are low and investment raises economic growth, public debt is sustainable.
At the same time, we need a serious attempt to raise wages and productivity. A higher minimum wage can help do this, alongside tighter regulation of the worst practices in the gig economy. Bringing workers on to company boards and giving them a stake in their companies, as most European countries do in some form, will also help. The UK's outlier rate of corporation tax can clearly be raised, not least for the highly profitable digital companies.
As economists, and people who work in various fields of economic policy, we have looked closely at the economic prospectuses of the political parties. It seems clear to us that the Labour party has not only understood the deep problems we face, but has devised serious proposals for dealing with them. We believe it deserves to form the next government.
David G Blanchflower
Bruce V Rauner Professor of Economics, Dartmouth College; Professor of Economics. University of Stirling; former member, Bank of England Monetary Policy Committee
Victoria Chick
Emeritus Professor of Economics, University College London
Lord Meghnad Desai
Emeritus Professor of Economics, London School of Economics and Political Science
Stephany Griffith-Jones
Emeritus Professorial Fellow, Institute of Development Studies, University of Sussex; Financial Markets Director, Initiative for Policy Dialogue, Columbia University
Simon Wren-Lewis
Emeritus Professor of Economics and Fellow of Merton College, University of Oxford
On behalf of 163 signatories. The complete list of signatories is here
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Nice one!
I wonder which bandwagon you will jump on when Labour get obliterated at the polls..you’ve done the SNP and the Greens, where next?
After all it wasn’t long ago when you were claiming labour and in particular Corbyn and McDonnell were unfit for office
How about I’m on no bandwagon at all?
I just comment?
Why not look at what I actually do?
Thank you for using your professional knowledge and experience to bring
intellectual rigour into the debate. We need this. We need you.
I have no problem with the arguments advanced, and I acknowledge the competence and knowledge of the signatories, but you and your fellow-signatories, from a perceived position of authority and influence, directly or indirectly, are telling voters that a specific political party “deserves” their votes. That simply does not work – and certainly not with British voters.
At this stage in the campaign I don’t attribute much credibility to any of the political polls. All I know is that whatever gap there might be between the Tories and Labour will close when people get close to the election day and then decide. However, I have a horrible feeling that, deserving or not, Labour will struggle to achieve its 2017 seat total – not to mind increasing it. Despite its surge to 40% of the vote in 2017, its index of proportionality (IOP, the ratio of its percentage of seats won to the percentage of votes won) fell to just over one (having being 1.34 in 2010 and 1.17 in 2015). For the large national parties and geographically concentrated parties the index is generally well in excess of one. But it seems to be falling over time for both Labour and the Tories. The Tories’ IOP fell from 1.38 in 2015 to 1.15 in 2017 which deprived Theresa May of her majority – despite the Tories’ vote share increasing by 5%.
The precipitate fall in Labour’s IOP to one in 2017 meant that it was piling up votes in safe seats and just falling short in some Labour and Tory marginals. Inevitably there will be swings and roundabouts in some constituencies as there always is with FPTP. Labour will gain some seats it didn’t expect to win and lose others it expected to hold, but I can’t see it increasing its IOP by much – perhaps up to somewhere between 1.05 and 1.1.
With an IOP value in this range and capturing between 37.5 and 40% of the vote Labour would be looking at between 260 and 280 seats. However, once the SNP gets close to 50 seats in Scotland (it has maintained an IOP of 1.8 in the last two elections) and the Lib Dems, Plaid Cymru and the Greens secure around 25 between them, this will be enough to prevent a Tory majority. And that is probably the best we should hope for.
Is there something wrong wit expert opinion?
Why?
There’s nothing at all wrong with the expression of “expert” opinion. My principal concern is with the final declaration that Labour “deserves” to form the next government. It would have been far better to sign off with something along the lines of “We strongly commend Labour’s policy proposals to the UK’s voters when they come to decide who will form the next government”.
I’m also a tad uneasy about self-selecting groups of “experts”. Rightly or wrongly, there is a public perception that such groups have a particular axe to grind. Many of the signatories, in various combinations, are associated with public declarations of support for various progressive, left-of-centre policies. They can often be dismissed, perhaps unfairly, as just the “usual suspects” sounding off. The impact might be greater and more effective if the signatories included “experts” not normally associated with these exercises. In these instances I often ask myself: “What would Keynes say or do?”
Finally, selectively using experience in Germany or in other European countries to bolster support for specific policies is problematic. In the first instance, a majority of UK voters have decided to exclude themselves from many of the political and economic practices and processes EU member-states perform individually and in common. And secondly, and perhaps more importantly, current German fiscal and industrial policies are counter-productive and ultimately damaging to itself, to the smaller countries in its orbit and to the European project.
Fair enough deserve: these letters frequently use language that the signatories can put up with
The rest, I think we have to disagree
Paul you ask the question “What would Keynes say or do”. You could equally ask in the face of obscene levels of inequality and poverty “What would Jesus do”. Well we know what he did . He threw the money lenders out of the temple.
I think I followed your reasoning correctly, but your reasoning/argument does not hold water. Forgive me if my heavy metals overload or plain-old misapprehension causes me to misunderstand, but it is logically dubious to cite ‘IoP’ figures as a measure of party x’s deservedness or otherwise of a vote. IoP (the format of which you certainly used), or Gallagher Index figures are, neither of them, a measure of the ethical content (or whatever it is that results in ‘deservedness’ of votes). They are more a measure of proportionality and, I would argue, tell us more about the electoral system (when it is FPTP anyway) – rather than any qualitative characteristic of the recipient and their manifesto/offering/tender.
I’d say when you build an argument for or against ‘deservedness’ you must be careful to only cite premises that apply strictly to the subject of the syllogism. Labour’s un/deservedness of your or my vote is not determined by the voting system that will be used to calculate the election’s results.
I agree with many of the points you make, but syllogistic integrity is important to human reasoning and everything I hold dear.
@ qwertboi,
I apologise for the confusion which caused by my jumping from the “experts'” declaration of Labour’s deservedness to some speculation on how Labour might actually perform in electoral terms irrespective of its “deservedness”. The key link is that the ultimate authority rests with the people and they will decide.
Thank you for this.
Polls turning a little sour for some too
https://uk.reuters.com/article/uk-britain-election-poll-icm/johnsons-conservatives-see-lead-over-labour-narrow-to-7-points-icm-poll-idUKKBN1XZ22D
The huge uptick in voter registration will be partly down to the deadline but the new record peaks appear to be driven by the Labour manifesto and yesterday’s climate news
https://www.gov.uk/performance/register-to-vote
An impressive list of signatories and a well argued case for Labour – a no brainer really for anyone wanting to get rid of the Tories and their dreadful legacy of austerity, hostile environment et al. I am very reassured by this as I can now vote for them with more confidence, especially as the Green candidate in my constituency has withdrawn. I hope there is no back tracking by the Labour right wing and the Green New Deal is not watered down and fiscal “prudence” rears its ugly head again.
Hi Richard, Can you help us with answers to concerns by SME owners.
P.31-34 in the Grey Book is confusing.
1) Under Labours current proposals, will it be a companies PROFIT or a companies TURNOVER that is used when determining which of the 2 proposed corporation tax bands applies to a business?
2) Under Labours current proposals, will the basic rate dividend tax band of 7.5% increase to 20%?
I am concerned that we will lose votes as I think SME owners feel they will be taxed more particularly if they are Ltd companies. They also might be effected by dividend tax increases (if they pay themselves from dividends ) and they are often not in the top 5%.
Can you reassure them ?
Mandy
I am sorry, but I don’t speak for Labour and did not write the manifesto and so cannot provide the reassurance you seek
Mandy, I although a member of the Labour Party and a voice ( as with every member) in the determination of its economic policy I cannot answer your question, but I would offer my opinion that it would be profit not turnover that would apply. If you would like like your voice to be heard join in the democratic debate and consideration. I like many others want the welfare of the self-employed and the SME sector to be at the forefront of our Labour Government concern. For example all infrastructure costs to be supplied as of right. No home at risk because of business failure for starters. In return for equal gender pay and no employment discrimination generous tax treatment.
I strongly suspect this is profit as turnover would make no sense
I think it is an error
But I cannot confirm that
Will this make it to “What the Papers Say” and equivalents? I hope so, but doubt it. If so, cue Michael Gove!