Duncan’s Economic Blog

Britain’s Broken Economy – And How to Mend It

Posted in Uncategorized by duncanseconomicblog on September 22, 2010

The New Political Economy Network (Npen) is today publishing an ebook “Britain’s Broken Economy – and how to mend it”. You can download it, for free, here.

I’ve got a post explaining some of the background on Liberal Conspiracy today.

Jonathan Rutherford and Aditya Chakrabortty have a longer piece in today’s Guardian.

And you can listen to Jonathan and Aditya discussing the book with two of Labour’s better new MPs, Chuka Umunna and Rachel Reeves, here.

As a disclaimer, I am one of the authors. So go have a look.

12 Responses

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  1. Luis Enrique said, on September 22, 2010 at 11:00 am

    Duncan,

    I have very mixed feelings about that ebook – I share some of the broad criticisms and objectives (once translated into language that I find less objectionable) so really I ought to be supportive, but people like Rutherford and Murphy drive me crazy. I think they’re pure bullshit artists and I cannot understand how you can have anything to do with them. And Elliot’s foreword is depressing. “Fighting a guerrilla war against neoclassical economics” … what, against externalities, asymmetric information, agency problems etc. all the good stuff that’s been absolutely mainstream for decades? How can the economics editor of the UK’s leading left wing newpaper write that crap? He’s the f*cking economics editor and he appears to be utterly ignorant of the subject. There’s so much empty verbiage in there … I’ll try and come back with something more constructive!

    • duncanseconomicblog said, on September 22, 2010 at 11:06 am

      Luis,

      Comments are most welcome.

      Have a look at chapter 7, which is the most “macro” based. Thoughts appreciated.

  2. Agog said, on September 22, 2010 at 4:25 pm

    Does anyone outside of academia take neoclassical economics seriously anymore? That’s an honest question – I’m curious – does anyone actually try and make money using it as a predictive framework?

  3. Luis Enrique said, on September 23, 2010 at 9:17 am

    I’m sorry Duncan, I suspect it may be down to a matter of style and differing taste, but I really hated it, and articulating why would take too long. I think it’s packed full of vacuous twaddle-speak and strikes me as being written by people who don’t understand the words they are using (your co-authors, I presume) and have a very poor understanding of economics. Sorry to be so negative.

    I presume the chapter you point to is your work. If you were to boil it down to some concrete proposals what would they be?

    1. keep interests low long-run but accompany that with restrictions on private sector lending (against lending for consumption and property).
    2. establish a state investment bank to direct investment where you think it needs to go (sectors, regions)
    3. using a higher minimum wage, the creation of higher wage state-created jobs and higher benefits to redistribute.
    4. give tax incentives to employee owned firms

    Are you advocating printing money to finance govt spending or big tax increases? Do you have some idea of how to stop inflation spiraling?

    (I like the ideas of government led investment in infrastructure and industry and I think trying to raise wages at the lower end of the distribution is a very worthy goal, even if I’m not sure how to do it).

    • duncanseconomicblog said, on September 23, 2010 at 9:22 am

      Thanks for the comment – and sorry you didn’t like it. Honesty much appreciated.

      Yes, that be the specific policy platform for me.

      Speaking personally, I don’t mind (in current conditions) using a form of QE to finance investment. I know that is contentious. But if we are going to print money, I’d rather it was used to finance infrastructure.

      In the medium term, taxes are going up.

      I’m not too concerned about inflation in the medium term. Obviously one to watch.

      • Luis Enrique said, on September 23, 2010 at 10:14 am

        Well thanks for taking my rudeness with good grace.

        Wouldn’t you need to worry about inflation, if what you are doing here is setting out the the left-wing’s long-run economics policy? If you’re just talking about short-term interest rates, you’re just advocating what the BoE is already doing. Hardly radical. Surely you are talking about holding rates down after the point at which the BoE would want to be raising them to cope with inflation.

        How large would tax increases have to be to finance these better paid govt jobs and all this ‘social’ investment that may not yield a positive private return? Don’t you think higher taxes have any sort of effect on investment, labour supply, job creation etc.? I presume you think don’t think a much higher minimum wage would damage job creation significantly. I’m not sure about that.

        p.s. one of the things that bug me I commented on Worstall’s site, also I presume you’ve seen S&M’s post on this.

        • Luis Enrique said, on September 23, 2010 at 10:14 am

          [by short-term interest rates I mean all rate over next few years, not rates on short-term loans].

          • duncanseconomicblog said, on September 23, 2010 at 11:36 am

            This all deserves a longer answer.

            I’ll blog this weekend on it.

  4. Luis Enrique said, on September 23, 2010 at 9:19 am

    I should add, chapter 7 was twaddle-speak free (even if I bridle at phrases like “democratic control of the credit system”)

  5. Tom P said, on September 23, 2010 at 11:20 am

    Hi Duncan

    I don’t understand the claim in the pensions chapter (p34) that the private sector does not bear any of the burden of paying private sector pensions. What is this getting at? I know you didn’t write it, but thought you might understand the point being made. It sounds a bit odd?

    • duncanseconomicblog said, on September 23, 2010 at 11:39 am

      Hi Tom.

      I believe the analysis is suggesting that if one totals the cost to the state of pensions (state pensions, subsidies to private sector pesnions, direct pensions to retired public servants, etc) the figures is £125bn. Which is more than the total value of all pensions paid in the UK.

      A lot of this difference can be explained in terms of the various fat fees in the pension management industry.

      Obviously some firms do bear the costs of their pension schemes, the point (I believe) was that in aggregate they don’t.

      Happy to pass on comments to the original author of that section.

  6. Tom P said, on September 23, 2010 at 1:19 pm

    how’s it going at the ITF by the way? be good to meet for a catch-up at some point.


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