This is the idea at the core of our Mile End Road economics, which relies on observation of the real world.<\/p>\n
The first edition is on inflation and is worth reading in full. I will quote this from Danny's comments on the UK:<\/p>\n
CPI inflation in in the UK in contrast is a disappointing 8.7% after eight of the last ten months in double digits. \u00a0Despite 12 successive rate increases and asset sales by the MPC which appear to know not what they do.\u00a0\u00a0Sadly, 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.\u00a0\u00a0This can\u2019t be fixed by rate rises.<\/p>\n
Unsurprisingly, in their own survey, confidence in the Bank of England is at record lows.\u00a0\u00a0Then Chancellor Hunt said it would be just fine to create a recession?\u00a0\u00a0Really?\u00a0\u00a0I don\u2019t think so.\u00a0\u00a0We know that inflation hurts but purging it comes at a cost which turns out to be worse.\u00a0\u00a0Slowing the economy means a rise in joblessness.\u00a0\u00a0Recent 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.\u00a0\u00a0Thirteen!<\/p><\/blockquote>\n
He concludes:<\/p>\n
Larry Summers in a BBC Radio 4 interview this week got it spot on. Brexit, he noted, is an \u201chistoric economic error<\/i>\u201d that damaged the UK economy and drove up inflation.\u00a0\u00a0The problem for the MPC is that twelve rate rises have lowered the CPI by around a percentage point \u2013 rate rises can\u2019t compensate for inability to import cheap food and materials.\u00a0\u00a0The treatment isn\u2019t working but it seems more of the same is planned, why?.\u00a0\u00a0To get CPI to the 2% target or so, following the MPC\u2019s logic could well require rates to go beyond 25% with the same (pathetic) success rate.\u00a0\u00a0UK borrowing costs are back to where they were under Truss as the markets haveonce again lost confidence in UK PLC.\u00a0\u00a0The moron premium is back.\u00a0Where is that lettuce?<\/p><\/blockquote>\n
A very good question.<\/p>\n","protected":false},"excerpt":{"rendered":"
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,
Read the full article…<\/em><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35,198],"tags":[],"class_list":["post-70371","post","type-post","status-publish","format-standard","hentry","category-economics","category-mile-end-road-economists"],"_links":{"self":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/70371","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/comments?post=70371"}],"version-history":[{"count":1,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/70371\/revisions"}],"predecessor-version":[{"id":70372,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/70371\/revisions\/70372"}],"wp:attachment":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/media?parent=70371"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/categories?post=70371"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/tags?post=70371"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}