I did another Twitter poll yesterday, this time on a decidedly relevant economic theme:
All the usual sample selection warnings apply, although this time I would suggest that those who engage with me on Twitter are likely to know more about fiscal rules than people do on average.
In the glossary to this blog I suggest that:
There are no such things as fiscal rules. There are instead fiscal choices.
However, many politicians, and most especially those who have responsibility for the finances of a jurisdiction, often claim that such rules exist. Those politicians create what they described as fiscal rules to justify the fiscal choices that they have made with regard to the macroeconomic options that are available to them.
It may be that those who claim that they know what fiscal rules are do understand them. It would be good if they did. But, it is just as likely that they think that there are really are things called fiscal rules that must be complied with. That would be a shame when the reality is that so-called fiscal rules are nothing more than a pile of mumbo-jumbo created by the likes of Rachael Reeves to supposedly validate the decision that she has taken to impose austerity on this country without any real explanation for doing so being provided.
It worries me that there is economic ignorance on the scale admitted by those who took part in this poll. I am sure there is a strong element of truth in the regard in the replies given.
It worries me as much that politicians must know this, and despite that fact choose to talk in riddles, using such terms as fiscal rules, which they must know are meaningless to most people, seeking as a result to obscure the truth of what they are talking about.
Throughout my professional life, I have always thought it worth the effort to try to de-jargonise, as far as possible, what I have talked about with people who are not trained in the field in which they have sought my expertise. This takes effort. You have to imagine that you do not know what you have learned. Then you have to imagine what it is that is confusing the person who does not have your skills, because all too often they are unable to explain what that is. Only then, can you really work out what it is that the person in question wants clarified so that they can make properly informed decisions. Thereafter, you have the task of explaining in ways that the person might understand. Most, especially as a professional accountant, that is what I always tried to do for my clients. It seemed to work.
It seems to me that very few of our professional politicians try to do this. Especially when it comes to economics, but by no means only in that case, they usually speak in jargon. Doing, so they try to claim expertise. They appear to not understand is the true expert does not need jargon to explain what they are talking about. The expert's skill is in relating a complex issue to the experience of the person they are taking to.
So why does Rachel Reeves love talking in jargon? Is it she does not understand economics enough to talk in any other way? Or does she use it as a way of claiming expertise? Alternatively, does she just not know what she is taking about? Or, is she simply trying to hide the truth? I fear it is the last of these options. And that is not good.
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People talk jargon because it makes people seem like they know what they are talking about.
The mainstream media do not question it, because it would seem like they don’t know what they are talking about.
The people don’t question it, because it makes them feel stupid.
Jargon is designed to obfuscate (hide) what’s going on.
Agreed
In addition to jargon, the trick is to speak British, i.e. adopt a cut glass accent, use big words and convoluted language, and project one’s voice. It intimidates many, not some, people. As a bankster lobbyist, I received the training. I was good enough for radio and podcasts, but froze for TV, so avoided that medium.
A colleague and I met Reeves around 2010. He, now head of public affairs at our biggest retailer and still a Tory activist, thought she was wooden and hid behind jargon.
I can do the blabber
Not doing the blabber is what counts
I agree re Reeves…
Over fifty years ago Postman and Weingartner wrote “Teaching as a Subversive Activity”
A central strand of their pedagogy was that all students required “crap detecting” skills.
This involved education of critical faculties to detect:-
“misconceptions, faulty assumptions, superstitions, and even outright lies’
Sadly, much if not most formal education has taken an alternative approach. That the political class benefit from this is undeniable.
So here are the Big Six.
Definitions and expressions that aim to enlighten us all, as articulated by its apostles..
1. ‘Reeves’ securonomics is more than a slogan – and more radical than it looks’ says Labour List
Securonomics ……
2. is a hands-on rebalancing between market forces and state control, tipping more power towards the latter” Kate Andrews
3. “an approach that recognises the informational and capacity constraints of government”, Reeves (recapping Hayek on command economies)
4. “Governments and policymakers are recognising that it is no longer enough, if it ever was, for the state to simply get out of the way, to leave markets to their own devices and correct the occasional negative externality” (So Reeves has read Samuelson..)
Productivism ……
5. “emphasises the dissemination of productive economic opportunities throughout all regions and all segments of the labor force. Unlike neoliberalism, productivism gives governments and civil society a significant role in achieving that goal.” Rodrik
Modern Supply Side Economics ……
6. “prioritises labour supply, human capital, public infrastructure, R&D, and investments in a sustainable environment”. Yellen
Aye, right…
so its all…… basically neoliberalism, but with a bit more state involvement and a lot more b*llshit.
Neat
I would have voted no. I don’t know what Labour’s fiscal rules are because I am not interested. I know that whatever they are, they are meaningless and can be changed at will. Their only value is to indicate the thought process of the politician responsible for them.
Thought process? What thought process? The thought that we can safely say anything, and relying on the fact that when we do not deliver, most people will have forgotten*.
*Easier for the Conservatives because they have the support of most of the Press; and the Press de facto establish the News Agenda of the day and week, that dictates the News Agenda for the Chartered and Franchised broadcasters news agenda. The billionaires who own the Press will switch to Labour in the interest of ensuring all economic policy follows the dogma of Neoliberalism; but note that the Press trust Labour less, and hold their allegiance to Labour on a shorter leash.
“Fiscal Rules” … we, LINO are following these rules – not like the Tories who have none & have sown chaos in these fair isles. (I assert copyright btw – :-)).
If you stray into the land of “fiscal choice” – this opens up questions from the erm…. “electorate” – “so what choices are there?” – LINO can’t have that – this would be tantamount to questioning the erm “wisdom” of Saint Rachel of BoE and in turn the infallibility of LINO’s “Dear Leader”. The upcoming election is between those that have faith in LINO infallibility and its ability to produce miracles such as the fishes loaves and the feeding of the 12 million (St Wes of NHS is getting practise in on telly as I write) . Obviouysly, the dark side of chaos (aka Tories) have no answers – just more of the same – whereas LINO faithful can already see the sunlit uplands of growth – is that a growth unicorn we see dancing on the sunlit turf.
As with the Tories (2010 – now), LINO is a largely faith-based political experiment, given past events what could possibly go wrong with this approach?
ABLINO – anything but LINO.
People instinctively feel more comfortable knowing that “the rules are being followed”…. even if they don’t know what those rules are. There is an assumption that the rule makers must know what they are doing…. but they do not.
How about a fiscal rule that “tax, borrowing and spending will always be conducted in the best interests of our country”? It is a rule.
It is
A good one..
I have come to the conclusion that we need a long term solution to the public ignorance of economics; but not the rubbish that leads to Trussonomics. It seems to me we need to introduce civic economics to the school curriculum, but only in conjunction with an introduction to double-entry bookkeeping. The proposition that every debt comes complete with a necessary credit has been allowed comprehensively to evade public understanding (to say nothing of the deep ignorance of economists, whose education is bereft of the critical fundamentals of accounting); is no longer sustainable.
The remaining problem even if we decide to do it? We have insufficient numbers of the knowledgable, to teach it ……
We are sunk, and show the resolute imbecility of a people who insist on staying sunk.
I can only try to do this with videos
We are now trialling set ups to do this
My desk now looks as if it is in the middle of a studio
I wish you more than luck……prevails.
Simon Wren-Lewis is equally sceptical with his ‘Mainly-Macro’ blog. Reeves can’t pretend she is doing the obviously right thing.
Thank you.
I just had a quick read of the current and last posts.
Wren-Lewis is right to urge the Treasury to be skeptical of the Bank of England. A dozen years ago, it was remarked that the Bank appeared to be in control of the Treasury, not the other way.
I suspect Richard Feynman explained it perfectly “if you can’t explain something to a first year student, then you haven’t really understood!”
So I question how many senior people in the treasury actually understand, as per Feynman, economics. The evidence that the standard approach hasychanydespite it’s obvious failures suggests that 1 they don’t understand it. 2 they are failing to ask questions about it. So they have answers that are unquestionable, rather than unanswerable (for now) questions.
That is a sign of set of closed minds.
“So why does Rachel Reeves love talking in jargon?”
Because she knows that the public do not understand it, and switch off listening when they hear it. That makes it safe to talk tripe, knowing that it will not have much adverse political effect on voters. Her political opponents, or independent critics may object – but she is confident most voters are no longer listening.
Simple.
Thank you, Richard.
You are right to highlight this.
In addition to its obsession with fiscal rules, from recent engagements with the shadow Treasury and Business teams, one gets the impression Labour wants to enhance the role of the OBR (and the Bank of England).
The shadow teams think these elite / elitist technocrats have the answers to everything, government and governance should be depoliticised (hence the regular references to Truss and plans to have the private sector involved at all levels and in all corners of government) and politics / politicians, the public and civil society should be content to stay out.
Pointing out that there were problems before Truss (and Johnson) and the Bank is equally culpable is heresy. One could also wonder what is the point of voting when much of the British state will soon be privatised, except the losses, of course.
This Labour belief in elites seems to me to be a sign of a mssive lack of self-confidence based on a deep-seated awareness of inability
LINO differing from the tories only in that they have some idea of their inadequacies. The technocratic approach will fail (ref Colonel Smithers) . & in that respect, the LINO approach is no different from the tory approach: loyalty is key & even if something makes no sense – the importance is not to question (ref Colonel..) thus is LINO the continuity party for 2010 – 2024 ideologies . It is most odd that apart from this blog, little is discussed in the main stream media.
by the way tories now tearing themselves apart (Tory MPs not tory enough – 200 of them are socialists apparently):
https://conservativepost.co.uk/calling-conservative-party-members-deselect-your-mp-if-theyre-not-being-conservative-enough/
country is going mad.
Agreed
Thank you, Richard.
I agree.
It can get embarrassing, too and to Johnson level, when shadow cabinet members parrot cliches and stock answers* that don’t address the question that one has asked. *Responses that appear to have been beamed forward from the 1980s and 1990s, but do not take into account changes in circumstances, especially climate change.
We have little idea what Reeves actually thinks she knows, as to what scope there will be to fix the NHS, local authoriites schools , the economy etc.
We do know that all her sound bites , such as ‘iron clad’, ‘fiscal rules’, ‘fully funded’ are aimed at trying to avoid ‘Labour tax bombshell’ headlines in the Telegraph/Sun/Times etc. Thats all Starmer seems worried about – that’s what he thinks could stop him winning the election .
Even some right wingers in the Party have pleaded with him to allow more ideas to be discussed. But far from ‘let a thousand flowers bloom’ he seems more controlling than Big Brother and Mao Zedong added together – dressed up in his human rights clothing
Its not ‘jargon’ as in the formal language of a particular specialism but her slogans are supposed to sound like straightforward common sense – but as you say Richard, utterly meaningless.
“We have little idea what Reeves actually thinks she knows …”
Effectively voting for Labour is the same as trying to guess how many angels can stand on a pin head. Why should I waste a vote on a pointless guessing game! The propensity also for u-turning effectively also turns their general election manifesto into a chip shop wrapper!
I wonder how many people voted no, but would have answered ‘Fiscal rules do not exist’.
Back in 2008 it was a commonplace for Bankers to appear on our screens to claim that they couldn’t be blamed for not foreseeing the Crash because they never understood all the financial mumbo-jumbo in the first place.
In other areas of life it has long been accepted that ignorance is no excuse for breaking the law.
Until dishonest bankers and other crooked financial engineers start going to jail the situation will not change. Like cheating footballers who dive to try and get penalties, the reward if successful hugely exceeds the punishment for being caught.
Worse, the very big fines – at least they looked enormous to the public, with lots and lots of £zeros….00,000,000s – were complacently paid by the miscreants, as a fairly cheap form of the ‘cost of doing business’, sometimes repeatedly without further let or hindrance from the inconvenience of mere regulation. These so-called huge fines were extracted from the finance sector by the regulator post-2008 for what they chose to call “mis-selling” – a concept nobody ever adequately explained, but rationalised something that looked really bad into an unfortunate event that may happen to anyone, like tripping over a loose carpet (let me think of a scenario; ‘oops, I tripped over my keyboard and it suddenly mis-sold, somehow’); poor example? I would love an explanation of 2008/post-2008 “mis-selling” if anyone would care to provide it.
In any case making of it all an unhappy accident, or an Act of God; and thus cleverly avoiding all the scandalous nonsense about using the law, prosecution and jail against those responsible for the Financial Crash. Can’t have that; who would do any business… or take any risks?
As others have said here, Labour is running with the herd mentality on this, for fear of scaring the horses. Once elected maybe there will be a bit more room to move. I am ever the optimist!
As to explaining fiscal rules to the unsure, I try with an umbrella analogy. You may have a strict rule about carrying your own already purchased umbrella, that says you can only use it Mondays, Wednesdays and Fridays, (to save wear and tear), however this is rather stupid rule as it may well be teeming down on on any other day when you most needed it.
Wish I’d brought my brolly.
If I may extend the umbrella point Mr Richardson?
The rain it raineth on the just
And also on the unjust fella;
But mainly on the just because
The unjust steals the just’s umbrella.
Think of it as a metaphore with respect to UK serfs (the just), UK gov functions of various sorts (umbrella) and UK govs (the unject fella), 1980 to the present and possibly the future.
Which leaves the open question – how long are we going to allow the bloody government to steal our bloody umbrellas!!”
Love the poem Mr Parr as well as the idea the govt have stolen(privatised) our umbrellas. Umbrellas were built for rainy days but for some bizarre reason ours have been confiscated just when we need them.
Some might think me pessimistic, but I can’t help but think that Rachel Reeves statements at this time are designed to allow the incoming Labour government to paint a despondent financial picture which it will then allow them to say, within the year, look what a Labour government has achieved in their first year, which justifies themselves in loosening the economic rules. Remember this and vote Labour next time.
You are ever the eternal optimist Maureen despite the following going on:-
https://labourheartlands.com/selling-out-the-nhs-the-shocking-links-between-labour-mps-and-private-healthcare-donations/
Figures taken from the Members’ Register of Interests
https://www.politico.eu/article/keir-starmer-labour-party-uk-election-u-turns/
27 U-turns so far
Or indeed this:-
https://www.standard.co.uk/news/politics/labour-lucy-powell-angela-rayner-george-osborne-conservative-b1095010.html
Are British politicians incapable of much in the way of joined-up thinking? Apart from the odd few it would appear so and bullshit is the order of the day. What is this telling you about the voters?
Fiscal Rules are much like NATOs 2% Rule. On paper it doesn’t exist. There are no penalties for breaking the “rule”. It is purely an aspiration. These aspirational rules are political tools and aid the politician to get the policy that he wants. Whereas a proper rule would limit the politician and the rule would prevent him from making the decision he wants.
The politician doesn’t want a would with rules, but he wants us to believe that they exist.
Instead of fiscal rules how about Rawls Difference Principle? “ the notion that social and economic inequalities can be justified only if they ultimately benefit everyone, and, specifically, that they should be ‘to the greatest benefit of the least advantaged members of society’ “ (Free and Equal – Daniel Chandler)
So, the Chancellor on proposing a new policy, or the MPC on proposing a hike in interest rates should spell out exactly how it will be to the greatest benefit of the least advantaged.
I so agree…
I suspect they’re mainly signalling to the billionaires, banksters and media barons that they won’t upset the neoliberal order. More cowardice than conviction.
Starmer & Reeves are leaving nothing to chance (even afraid of upsetting the Murdoch press according to today’s Guardian). The fiscal rules nonsense is so entrenched, like the nation’s credit card and a govt fiscal deficit is a burden on our Grandchildren, that they are not going to risk going against the mainstream and allow themselves to be painted as reckless. This side of the next election it is simply not going to happen.
I doubt whether either of them have read Kelton’s book or watched Randy Wray or Bill Mitchell on YouTube. We’ve got to find a way to convince them.
Another fiscal rule has bitten the dust.
In the U.S.A, r* (r-star) represents the “natural rate of inflation” which I think perceived wisdom claims is around 2% in the UK, and which the Bank of England has a statutory obligation to meet by the government.
New research suggests that the natural inflation rate is “surrounded by very high uncertainty, making it a blurry guidepost for monetary policy”.
A history of r* can be found in the paper below.
Sources
Inflation and the 2% target @ Bank of England
https://www.bankofengland.co.uk/monetary-policy/inflation
BIS Quarterly Review, March 2024 17
Quo vadis, r*? The natural rate of interest after the pandemic, BIS Quarterly Review | 04 March 2024
https://www.bis.org/publ/qtrpdf/r_qt2403b.htm
Anything used as a target becomes almost unmerasurable
Physics tells us you change something by observing it. Inflation is definitely like that, not necessarily at all beneficialy
If the fiscal rules were actually rules, you would expect some consequences for breaking them.
It should be pointed out that during the financial crash and COVID the so called rules were broken with no consequence.
During George Osborne’s time he regularly changed the rules to suit the results of his policies particularly about the elimination of the deficit and reduction of so called debt.
So it is easy to see as you say that these are choices that can be changed at will.
If only the will was there.
As Richard has pointed such is the dire level of understanding anything about the way the UK economy works you get the nonsense from the Starmer Party the country has run out of money:-
https://www.standard.co.uk/news/politics/labour-lucy-powell-angela-rayner-george-osborne-conservative-b1095010.html
This woman Lucy Powell and all the shadow cabinet are sucking on the public teat!
As I wrote before: “The so-called ‘Fiscal Rules’ straightjacket, as Richard has elaborated, is not based on any coherent logic. Getting past this bogus road-block requires coming up with an alternative set of rules that could be promoted as a component of establishing a fairer taxation system. These tax adjustments, while eliminating the gross inequality in the UK, will in turn justify desperately needed investment in the NHS, Schools and our crumbling infrastructure.
It must be a totally logical set of ‘rules’ that will expose the illiterate garbage spouted by the main political parties. Formulated to cope with the real challenges that we face with the climate crisis, homelessness and growing inequality, it must reverse all the asset stripping destruction caused during the unnecessary austerity years of Tory greed. An all encompassing name with a memorable acronym: Financial Investment in Infrastructure for Carbon-Neutral Equality and Wellbeing – the ‘FIICNEW Rules’. We might have people confuse FIICNEW with ‘Think New’, unintentionally of course… Not perfect, but if not the ‘FIICNEW Rules’, something similar that provides a bold redirection, that is comprehensively thought through, so that in comparison to the current ‘Fiscal Rules’ the new ones would actually make sense.”
Any other innovative ideas for naming an alternative set of ‘Fiscal Rules’ to blow Reeves’s jargon out of the water?
The best rule is that ‘we will do all we can to improve the well being of those least off in this country.’ It’s a rule, and it’s hard to argue with.
Your objectives are exactly the same as my own objectives, but this has to be presented in a bite size chunk that is compact enough to make a banner headline. Hence my feeble attempt to fulfill that criteria with: “An all encompassing name with a memorable acronym: Financial Investment in Infrastructure for Carbon-Neutral Equality and Wellbeing – the ‘FIICNEW Rules’”. A headline ‘hook’ might read: “End Fiscal Rules with FIICNEW?” The name spelled out is a self explanatory rejection of austerity and a clear recognition of the dire need to invest to achieve equality and public wellbeing. Other titles are available…
Some coarse humour here but I find covers matters quite nicely – I particularly enjoyed the part, 60 seconds in, about the first past the post system and the choices our “democracy” gives us:
https://youtu.be/8sRoYvFTE3c