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June 08, 2006

Comments

dearieme

"Feel free": then your attachment to leftism must be like mine to Queen of the South - a sentimental attachment to boyhood things.

Ann

The left is obsessed with redistribution but doesn't want to think about production, because production requires incentives, and incentives might mean that 'the elite' can't force their own outcomes on everyone. Marx liked the idea of unlimited wealth, because with unlimited resources the only issue is distribution, not production.

Leftists don't like to think about rules, systems or incentives - they want to dictate outcomes, and that only works if all wealth simply falls from the sky, rathering than depending on effort and ideas. They want to look only at how much people take out of the economy, while totally ignoring how much each person has contributed to it. It would be 'unfair' for one person to have more simply because he worked harder!

Bob B

"whilst Labour politicians like Evan Durbin, Douglas Jay, Tony Crosland and even Wilson were keen economists."

That wasn't half of it. Attlee's first chancellor, Hugh Dalton, had taught economics at the LSE and had to his credit what was at one time a famed text on public finance. Gaitskell, the Labour leader between Attlee and Wilson, had been a reader in economics at UCL in the 1930s with a notable published paper on: "Notes on the Period of Production," Zeitschrift fur Nationalokonomie, Vol. 7, 1937 on (arcane) Austrian capital theory and that a year after the publication of Keynes's General Theory.

I think the Keynesian affiliations of Labour economists is being overdone here. In any case Butler, as Conservative Chancellor in the 1950s, was anything but hostile to notions of Keynesian fine tuning of the economy by demand management - hence frequent journalistic references in those times to Butskellism to reflect the broad consensus on macroeconomic policy across the front benches of the two main parties. The problem with that in retrospect, as JCR Dow persuasively argued in his book: Management of the British Economy 1945-60 (NIESR 1964), was that fine tuning probably exacerbated cyclical instability.

If anything, the distinctive difference of Labour economists was more on issues of microeconomic management, hence the continued Labour commitment to state ownership of the public utilities and basic industries and the tardiness of Labour to support relaxation of price controls or the liberalisation of the market for rented housing.

However, the past is a different country. Remember that Macmillan, as PM, in 1961 announced the foundation of the National Economic Development Council and the National Economic Development Office, highly corporatist institutions inspired by what was at the time construed to be France's successful economic planning system.

The issue - eloquently and effectively documented in Andrew Schonfield's British Economic Policy Since the War (Penguin 1958) - was that the performance of the British economy in the 1950s had conspicuously lagged that of the West German and French economies when the governments of those two countries were notably less committed to Keynesian fine tuning. From that emerged a consensus that fine tuning alone wasn't enough . . That was the consensus that Mrs Thatcher broke with on her election to government in 1979.

dearieme

Mr S & M, your Herculean output at the moment might mean that you are out of touch with World News; if so, I bring you glad tidings. Mr Rooney's sore toe is quite recovered.

Neil Harding

Ann: "They want to look only at how much people take out of the economy, while totally ignoring how much each person has contributed to it. It would be 'unfair' for one person to have more simply because he worked harder!"

These sweeping statements are so partizan. There is a balance to be made between 'rewards for effort' and 'equality' - obviously!

You say the Left ignore 'what people contributed'. I would make the same accusation of the Right. A lot of those on the top earnings have got there through their priveleged position rather than through effort. This has to be addressed as well, but is something the Right conveniently tend to ignore.

I would love to shadow someone on £1m+ and see how they justify being paid over a million times more than some in the developing world.

Bob B

Sunday Telegraph, 25 May

"Sir Terry Leahy, the chief executive of Tesco, the UK's largest supermarket group, received a pay rise of almost 25 per cent last year.

"The annual report, released this weekend, shows that Leahy was paid £3.98m in salary, bonus and other benefits in the year to February 25, compared with £3.19m in the previous 12 months. His basic salary rose by 6 per cent to £1.1m and his benefits increased by 44 per cent to £97,000. He was also granted 1.28m shares.

"The increase comes after Tesco reported a 17 per cent rise in group sales, including VAT, for last year to £43.1bn. Pre-tax profits at the chain rose by 18 per cent to £2.2bn."
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/05/28/cntesc28.xml&menuId=242&sSheet=/money/2006/05/28/ixcitytop.html

Bob B

For comparison:

"It was reported in various newspapers this week that, in time, Manchester United could be handing out £100m contracts to some of their bigger name players; the likes of David Beckham, Roy Keane and Ryan Giggs. It was also stated that United were planning a three-tier wage structure with certain players put into the following pay brackets: £75,000-£100,000 per week; £30,000-£50,000; £10,000-£25,000. It might seem a staggering amount of money for players to earn, but you have to remember that there are more millionaires in the boardroom than there are on the football field. It is also worth considering that the money United pay their players, and are proposing to pay them in the future, is simply a reflection of the club’s success – professionally and commercially – which is down to the players. They are the ones who have made the club so sellable, all over the world, and so it is not unreasonable that they are duly rewarded."
http://www.givemefootball.com/pfa.html?newsID=240

PrestoPundit

The left abandoned economics when it learned there was no answer to Hayek. Durbin and Gaitskell thought they had answers to Hayek -- turns out they didn't.

Note well -- among those who support a "basic income" are Milton Friedman and (on some reading) Friedrich Hayek.

Note also that among the economists who "get" Hayek -- at least to some degree -- are Herb Gintis, Samuel Bowles, and Philippe van Parijs ..

Leftist economists aren't what the use to be.

dsquared

there is also the small point that a very, very high percentage of economists are in the habit of producing completely misleading advertising for economics by spouting some piece of right wing propaganda or other and calling it "basic economics". Or doing what I mentally label "doing a Tim Worstall" and calling leftish commentators "economic idiots who don't understand economics", for understanding the economics of a question better than themselves.

Martin

Chris,

Where economics, particularly the so-called 'economic consensus' touted by, inter alia, Alex Tabarrok and Owen Barder, fails is that it only views people as being azy and greedy. By its nature it cannot factor irrational action into its equations. In a secular age economics has become a religion; and 3% rise in interest rates might unmask the false god once and for all.

angry economist

Hey I am an economist, and a wee bit of a leftist, but I can maintain an objective analysis of economics, analysis etc. I get fed up with people making a hash of economics. I get fed up often!

I think the issue is that the definition of "economist" is very broad; and the use of economics as a crutch by many to prop up their ideological positions.

Just what is an economist? some would envisage a person who gets knee deep in figures and spreadsheets. But I have seen other folks who call themselves economists, but spend their days analysing minute changes in equities. And then others who are economic commentators.

For me an economist should be able to do robust economic analysis.

From my observations - in both left and right, there is just too much poor economics and analysis. There are many examples of wooly attempts to use economics to justify decisions.

Personally I spent the first 10 years of my career in economics getting over the wooly ideological notions attached to it, and the certain myths that prevail. It took me a lot of work and investigation to get through a load of b*llsh*t. Still, some of it is hard to get rid of.

Overall though - journalists are not economists

Bob B

If I may say so, discussion focused on specific (policy?) issues is more illuminating than resorting to name-calling.

The public debate over the Euro brought to centre-stage the clash between the political case and the economic case - Blair was obviously aware of the difference because he repeatedly made the distinction and eventually deferred to the Treasury's economic analysis despite his expressed enthusiasm for joining because of the "overwhelming" political case. Sadly, in the EU too many thought that politics necessarily trumps economics. The trouble is that policy decisions are apt to have downstream economic consequences whether those consequences are intended or not or welcome or not. It is prudent to understand what the economic consequences of policy initiatives are likely to be before making political decisions.

Igor Belanov

I think Bob B is a bit confused here over the issue of the Euro. Blair has never been in favour of the Euro or the consequences of further European economic integration. It suited him for a while to appear to be more 'reasonable' than the Tories on the subject of the EU, but the record and rhetoric of the Labour government ought to have put paid to that idea.
The 'economic criteria' set down by the Treasury was in essence a political decision to cloak the government's unwillingness to join the Euro in 'pragmatic' terms. Brown, even more so than Blair, would not hand over economic decision-making to the European Central Bank, again, for political rather than economic reasons.

Bob B

Sorry to disappoint but I'm not in the least confused about Blair's enthusiasm for signing Britain up to join the Euro prior to the Treasury publishing its assessment of the "five tests" in June 2003. Blair in 1997 wanted British business to prepare to join - a costly commitment that would have amounted to billions by the time all the tills, coin-in-the-slot machines and cash dispensers had been modified - before Parliament had voted in favour of joining. A quick google yielded this in a news report of 27 July 2000 on the BBC website:

"In the memo, published in Thursday's press, Mr Blair restates government policy on the single currency, saying the case for joining is 'overwhelming' in political terms."
http://news.bbc.co.uk/1/hi/uk_politics/853312.stm

And all that ignors the consequences for the house price bubble if mortgage rates in Britain had to be cut to the low interest rates prevailing in the Eurozone.

Bob B

Addendum:

"John Monks has marked the first ever address by a TUC general secretary to a Liberal Democrat conference by setting out his vision for a Britain at the heart of Europe. He also called on the prime minister to be more active in winning the political argument over the euro."
http://news.bbc.co.uk/1/hi/uk_politics/932010.stm

"Current weaknesses in the eurozone should not obscure the long-term benefits for the UK if it adopts the single currency, Trade and Industry Secretary Patricia Hewitt has said. There are huge advantages for British business, and in particular manufacturing, in joining the single currency. Speaking during a visit to Thailand, Ms Hewitt said there would be 'huge advantages' for business if the UK joins the euro."
http://news.bbc.co.uk/1/hi/uk_politics/2643029.stm

"The prime minister certainly favours joining the single currency at some point in the future - he told last year's Labour conference that it was the UK's 'destiny' to do so. He is thought to see euro entry as helping to seal his place in history."
http://news.bbc.co.uk/1/hi/uk_politics/3026735.stm

"Foreign Secretary Jack Straw has insisted a referendum on the euro will go ahead when Chancellor Gordon Brown's five economic tests have been met."
http://news.bbc.co.uk/1/hi/uk_politics/3184281.stm

"The UK Government should push ahead with plans to take Britain into the euro even if it brings no positive economic benefits, Labour Party chairman Charles Clarke has said."
http://news.bbc.co.uk/1/hi/uk_politics/1685957.stm

"The UK's economy is getting into step with the eurozone, and the country could benefit from joining the euro, according to a report from the National Institute of Economic and Social Research. A report from the House of Commons Treasury select committee, to be published on Friday, is expected to come to similar conclusions. The study comes a day after the leak of a memo by Tony Blair, in which the prime minister argued the political case for joining the single currency was 'overwhelming'."
http://news.bbc.co.uk/1/hi/business/855310.stm

"UK Prime Minister Tony Blair has told Japanese investors that he wants Britain to join the single currency. In an interview with the Nihon Keizai Shimbun newspaper, Mr Blair said he wanted 'Britain to be a part of a successful single currency'. But in now customary fashion, he qualified his remarks by saying that economic conditions for joining had to be right first."
http://news.bbc.co.uk/1/hi/business/844431.stm

Bob B

How times change perspectives!

From 3 July 2000:

"The controversy over UK membership of the European single currency has intensified after the head of the Invest in Britain Bureau warned that any delay in joining would lead to a 'manufacturing meltdown'.

"Andrew Fraser, whose job it is to attract overseas companies to Britain, says in a leaked memo that there will be more high-profile closures if the government does not say that membership of the euro is 'indispensable.'"
http://news.bbc.co.uk/1/hi/business/816773.stm

From 29 June 2005:

"The UK attracted a record number of investment projects from foreign firms last year, official figures have shown. Government body UK Trade and Investment said nearly 40,000 jobs were created in 2004/05 from 1,066 investment projects. That was an increase from the 25,463 jobs created by 811 projects in the previous year.

"The figures showed a 61% increase in the number of IT and software projects to 240, with research and development projects up 22% to 101. A total of 451 projects were in the services sector - the most popular sector for investment - while 268 projects were in the manufacturing sector.

"'The figures being published today show that the UK is still viewed globally as one of the best places in the world to do business,' said Trade and Industry Secretary Alan Johnson.

"'International comparisons continue to show the UK as Europe's top investment destination,' he added."
http://news.bbc.co.uk/1/hi/business/4632923.stm

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