Many people have been asking me where Danny Blanchflower had disappeared to of late.
The answer was that Danny was thrown off Twitter by Twitter, seemingly for criticising their blue tick policy, and they have said there is no way back, which is quite absurd.
But, with some encouragement, Danny is starting a blog. The first is here. It seems likely that I will have the job of promoting it, which I will be here and on Twitter.
The blog is entitled:
This is the idea at the core of our Mile End Road economics, which relies on observation of the real world.
The first edition is on inflation and is worth reading in full. I will quote this from Danny's comments on the UK:
CPI inflation in in the UK in contrast is a disappointing 8.7% after eight of the last ten months in double digits. Despite 12 successive rate increases and asset sales by the MPC which appear to know not what they do. Sadly, these rate rises have hardly any impact at all on inflation which was caused by supply chain issues after the pandemic, the Ukraine war and Brexit. Brexit and its devastating impact on supply chains, especially for food, is what sets the UK apart from every other country. This can't be fixed by rate rises.
Unsurprisingly, in their own survey, confidence in the Bank of England is at record lows. Then Chancellor Hunt said it would be just fine to create a recession? Really? I don't think so. We know that inflation hurts but purging it comes at a cost which turns out to be worse. Slowing the economy means a rise in joblessness. Recent work** has looked at wellbeing and found that a one percentage point rise in the unemployment rate has a six times higher impact than inflation on life satisfaction, is four times higher for smiling; enjoyment five times, nine times for sadness and thirteen times for pain. Thirteen!
He concludes:
Larry Summers in a BBC Radio 4 interview this week got it spot on. Brexit, he noted, is an “historic economic error” that damaged the UK economy and drove up inflation. The problem for the MPC is that twelve rate rises have lowered the CPI by around a percentage point – rate rises can't compensate for inability to import cheap food and materials. The treatment isn't working but it seems more of the same is planned, why?. To get CPI to the 2% target or so, following the MPC's logic could well require rates to go beyond 25% with the same (pathetic) success rate. UK borrowing costs are back to where they were under Truss as the markets haveonce again lost confidence in UK PLC. The moron premium is back. Where is that lettuce?
A very good question.
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Richard, Danny needs to do a little work on his blog. I could see no way to subscribe to it even though it was clear that he expected readers to want to do that. Also, his links are not hyperlinks — you’d have to copy and paste them in order to use the links. But it is early days, I guess.
I will be pointing this out
Can you also drop just one word in Mr Blanchflower’s shell-like?
Paragraphs.
Thank you
Is he trying to out-typo you as well?
He’s always done that
The UK has a public inquiry into Covid. It badly needs one into Brexit and particularly targeting the economic effects. It also needs to be quick to stop the dinosaurs at the Bank of England doing further damage to the economy. You might have thought this is something Starmer would have been calling for instead of the nebulous “we’ll make Brexit work”! If he was genuinely clued up about the economy he’d also be challenging the decisions being made at the Bank of England wouldn’t he. As they say you can tell a lot about a person by the actions they don’t take!
The EU is the epicentre of neoliberalism, why is everyone keen to rejoin?
Maybe because it isn’t just that?
Sadly when it comes to the economy, inflation, Brexit etc. Ed Davey is more progressive and clearer in messaging than Starmer.
Keir Starmer is following a sales pitch outlining why he would be a better manager than the current managememt. We are told all the benefits of what a labour government would look like (it certainly doesnt look like a Corbyn government). We have a set of aspirations (return to growth, create jobs, reduce crime, etc). However, we haven’t been given much to work out what he would do once he is the manager.
I picked this up from a previous post of yours – it’s just what we need to widen debate on these issues – from an ex-member of the BoE which is now nothing but a neo-liberal cell.
I have to laugh at Danny quoting Larry Summers though – the same man who pro-actively and aggressively prevented financial derivatives from being regulated that led to the 2008 crash.
Well – maybe it’s that fact that enables Larry to recognise a similar disaster when he sees one.
Excellent stuff from Danny.
I wonder whether after those ex Treasury Permanent Secretary Nick Macpherson tweets whether interest rates are not actually about supporting sterling. Macpherson appears to suggest that is the case and it is a certainly a consideration since the UK is so dependent on imported food. If Sterling were any weaker then food inflation would be still worse.
If that is the case of course a central bank interest rate rise it is very poorly targeted and has lots of collateral damage – but there is no reason why bank base rate changes should apply to mortgages – we could rediscover building societies and efectively kick banks into touch!
Explored a bit further here http://www.progressivepulse.org/economics/why-are-mortgage-rates-dependent-of-the-us
Lots of issues there Peter that I am thinking on
Mr May,
Support for your view was given by Catherine Mann (an MEPC member), who was preaching interest rate rises to shore up sterling in a speech in June, 2022. While Mann also mentioned inflation in her speech, it seemed focused principally on international financial flows; a reminder that we are all here essentially as fodder to sacrifice ourselves, in the interests of the City of London.
Hi folks and thanks for the shout out Richard
I am trying to work out the gremlins it is all new t me!
Thanks for publicising
Danny B
You’re welcome