There is something of an oddity in the debate over the nature of the problems facing the UK housing system, and therefore by implication where the focus of policy attention is best directed. I’ve remarked on it before but it struck me forcefully this week when reading Christian Hilber’s new briefing, prepared with the aim of informing the election debate, UK housing and planning policies: the evidence from economic research. This was reinforced by Andrew Lilico’s contrarian post at CapX yesterday, which argues that there is no housing crisis and never was one. I don’t agree with Lilico’s overarching argument, but in the course of his discussion he makes a very important point. [Read more…]
As we move towards the General Election strands of news and snippets of information have emerged which circle around the issues but there is a gap in the middle where the story could – and should – be.
I’m thinking here of housing-related aspects of the party manifestos: cuts in inheritance tax on property versus mansion taxes. I’m thinking of the observation that buy-to-let lending was the only component of mortgage lending not to stall in February. I’m thinking of Hannah Fearn’s argument that removal of the obligation to invest pension pots in annuities can be interpreted as a move to recapitalize the bank of mum and dad. And finally I’m thinking of Christine Lagarde’s words of support for George Osborne’s strategy for economic management.
So what’s the story that is missing? [Read more…]
Today’s FT carries a front page story (£), based on research by the Health Foundation, stating that the financial ‘black hole’ facing the National Health Service is bigger than previously forecast. This is a result of a sharp decline in productivity during 2013/14. It is suggested that the NHS will need an emergency injection of cash after the election, whoever forms the next government.
This productivity decline follows an increase in the number of agency nurses employed in the wake of concerns about understaffing. It also follows the reorganisation that followed the 2012 NHS and Social Care Act. There is, as one might wearily anticipate, dispute over whether the reorganisation has also contributed to this drop in productivity.
Three things struck me on reading this FT report. They are not entirely novel thoughts, but I’ll share them anyway. [Read more…]
For three days this week Manchester played host to the (un)conference Boom Bust Boom Bust: why economics is for everyone. The organisers put together an impressive programme of speakers and participants, including a number of the highest profile academic economists, political economists, and economics commentators in the UK. The programme also included a number of contributions from policy professionals and activitists. The fact that the event was organised by enthusiastic students from Post-Crash Economics Society at the University of Manchester and other UK institutions makes this doubly impressive.
A characteristic that united the unconference organisers and the contributors is a dissatisfaction – at the very least – with the way that mainstream economics tends to approach its subject. Pluralism and non-mainstream perspectives on a range of key economic issues and debates ran throughout the event. A second characteristic was a desire to move economic debate out of the seminar room and elite policy circles in order to engage a wider public in deliberation about some of the biggest challenges society currently faces. [Read more…]
Alex Tabarrok posted yesterday on the relationship between the economics blogosphere and academic economics. He identifies three contrasts between economics blogging and publication in academic economics journals:
- Blogs are fast, journals are slow
- Blogs are open, journals are closed
- Journals reward cleverness, policy requires wisdom
He notes that blogs play a key role in policy debate not simply because it is possible to conduct the debate on a timescale that is relevant to policy (fast not slow) but also because blogs allow you to do things that journals don’t value. The journals worry about the logical consistency and coherence of models, and are less concerned about whether the models capture particular real world situations in meaningful ways. In contrast, policy needs the judicious application not just of an economic model but also “economic history … psychology, politics and law”. The sort of knowledge useful for policy is hard to represent in the academic economic journals. It is inherently eclectic: wisdom not cleverness.
These aspects of Tabarrok’s post reminds me of some of the comments made by policymakers who participated in the debates at the UK Treasury a while ago on what sort of economics education is useful for policy.
But Tabarrok takes things further than that discussion with his second point. [Read more…]
Nick Clegg has a rather extraordinary post at the Telegraph today.
The second half of the post is pretty standard: the Libdems are less spendthrift than Labour and less ideologically anti-state than the Conservatives. Split the difference and aim for the sensible centre.
But in order to grab the opportunity to reiterate this message he has to find a hook to hang it on. And the hook that he – or, presumably, someone in his team – chose was the Greek election.
He makes some comparisons between Greece and the UK in 2010 when the current UK coalition was formed. In doing so he resuscitates some myths about the state of the UK economy and, therefore, makes some implausible claims about the role of the Libdems in government. [Read more…]
Several econ bloggers have had things to say over recent days about the distinctions between mainstream and heterodox economics. It’s a discussion topic that carries a cast iron guarantee of raising the blood pressure of everyone involved. It’s one I’ve blogged about several times previously, but not for a while.
The proximate cause for this debate springing back to life, in the UK at least, was the broadcast of a Radio 4 programme about economics education which some mainstream economists (notably Tony Yates) felt was hopelessly one-sided in its support for heterodoxy, without giving those working from a mainstream perspective the space to respond.
But the discussion has taken a bit of a novel turn. Several of the recent contributions have focused on politics. The starting point is the argument that heterodox economists adopt the stance they do in relation to the mainstream because their sympathies lie on the political left, whereas they perceive mainstream economics as supporting a right wing agenda, now including large doses of austerity. [Read more…]
Mervyn King’s stint on the Today programme yesterday was curious. It was much anticipated in some quarters. The reality then proved to be less revelatory than some might have hoped. I’m not sure what people were expecting – after years of buttoned-up discretion it was unlikely he was suddenly going to let all hang out. But some of the interpretation of King’s comments has been intriguingly partisan.
We are now only too familiar with the Coalition’s inclination to pin the blame for the financial crisis of 2007-08 on the last Labour government. But asked directly yesterday whether he thought Labour were to blame he stated:
I am not going to talk about individual parties’ culpability because I think the real problem was a shared intellectual view right across the entire political spectrum and shared across the financial markets that things were going pretty well.
There were imbalances – we knew things were unsustainable – but it was not entirely obvious where it would come unstuck – and I think that is something everyone shared, and the right thing is to make it better for the future.
Recent economic news is unlikely to fill many with Christmas cheer. Estimates of recent growth have been revised downwards. The current account has deteriorated sharply. The deficit is now in “worst since records began” territory. And it is consumer spending, rather than investment, that is sustaining the growth that is occurring.
Most news outlets seem to have focused on the current account deficit. Whether the deficit is bad news or not can be debated. Most commentators take it to be a bad sign – Britain isn’t paying its way – whereas contrarians such as Tim Worstall at Forbes argue that under floating exchange rates the current account situation shouldn’t necessarily be a major cause for concern. The complementary capital account surplus brings matters into balance and all is right with the world. I suspect that that position is rather too complacent: the long-term sustainability and desirability of ignoring the current account is by no means self-evident. But that is a discussion for another day.
I was intrigued by the way in which the growth figures are being narrated in some quarters. [Read more…]