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September 22, 2014

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Ben

The whole thing isn't credible when you can have a small number of people owning most of the land in the UK. Politicians who do not propose sharing the common wealth aren't credible IMHO now that the internet is here.

So that leaves out UKIP/Lib/Lab/Con.

Luis Enrique

possibly they just mean something vague like "who do voters trust with the economy" and afaik, as to what that is based on, the idea that good economic management means lower deficits is not confined to better-off voters. Does anybody have data on how responses to questions like "should the govt cut the deficit?" vary by income?

Ralph Musgrave

Another important factor is sheer ignorance about the relationship between deficits, national debts, interest rates, unemployment, etc. And this isn't just a UK phenomenon. See Bill Mitchel for the appalling ignorance amongst IMF economists for example:

http://bilbo.economicoutlook.net/blog/?p=24922

Stevenclarkesblog.wordpress.com

You're surely right that there's a bias here, but it seems so insidious and widespread that it seems unfair to pick on one or two people (although I'm sure these people are paid enough to challenge all their biases and assumptions).

Unfortunately, the debate about economic credibility seems to have been successfully framed in such a way that those who are toughest on the deficit are more credible. (There's a depressing parallel with being toughest on immigrants, or benefits claimants - as if toughness is the only virtue voters respond to, rather than being smart, clear-thinking and problem-solving). And this framing seems to have been unconsciously internalized by most, other than a few free-thinking souls such as yourself.

It always seems to be that those who are best at framing debates are those with the worst ideas!

Luis Enrique

I am not sure I understand - there's a difference between being fiscally tight and pro-austerity. Most people who oppose austerity favour tax increases, which I think you would still call fiscal tightening.

Sticking with your meaning, as I understand it, what does credibility not based on fiscal tightening look like?

saying: "we will deliver good things, the deficit will stay large over the long-run, but that doesn't matter because X" and being believed

or

"we will deliver good things, without cutting public spending or raising taxes, and the deficit will shrink because of reason X"

I don't know what X might be. If there is no X, maybe the fiscal-tightening-bias isn't a bias but good sense?

what do you think those who do not suffer from fiscal tightening bias might be able to credibly claim about their economic policy and our fiscal future?

From Arse To Elbow

Not so long ago, I doubt a political commentator would have used the phrase "economic credibility", because they wouldn't have presumed to be able to make an essentially technical assessment.

We appear to be back in a world where the BBC's economics coverage has been fully re-politicised. Expect "business confidence" to start moving up the charts.

The departures of Stephanie Flanders and Paul Mason now look telling, even more so than the ongoing struggle between Chris Cook and Duncan Weldon on Newsnight.

Deviation From The Mean

You could make a career of documenting BBC bias. But thanks for this illuminating article.

Phil Beesley

"So, I'm not sure what the reason for Montague's bias is."

Maybe, like many UK citizens, a few journalists distrust the former Chancellor's advisor, best mates when the financial world went tits up.

Maybe, like many UK citizens, journalists are aghast that Ed Balls is presented as the next man to manage Britain's money.

"What's going on here is a double ideological trick."

Do you seriously believe that they (whoever they might be) are so clever? Might the double ideological trick be an invented response to a simple question?

The quick answer to any question about Ed Balls is: Ed Balls is an arrogant dick head.

James

It's not just the media, Osborne and Balls know exactly what they're suggesting and deliberately play up "credibility". We all know that credibility means austerity, like that other favourite "tough decisions".

But why would both parties be going out of their way to claim the austerity mantle? Aside from bond markets and the right wing press... austerity is essentially a bribe for middle class voters. Middle class voters are relatively untouched by government cuts and, more importantly, by promising to suck demand out of the economy for years to come both parties are effectively bribing the over-leveraged middle classes with low interest rates.

People can live with stagnant wages if they have historically low mortgage repayments; the nightmare scenario is rising interest rates. Both parties know this and both are promising to act by sucking demand out of the economy. Once again the UK housing market is wrecking the wider economy and Kirstie Allsopp's constituency is holding the rest of the country to ransom.

Sib313

Maybe you are right. But you could also interpret the comments as a more general point about economic competence. This doesn't have to equate to fiscally tight, just internal consistency and a lack of wishful thinking.

It isn't obvious that either government or the opposition have these quantities where it matters. Neither side seem to have many policies that identify the major structural problems of the UK economy and address them. Property taxation (and planning law) is egregiously unfair and regressive but instead of sensible reform we get nothing or an arbitrary mansion tax. Income tax and national insurance are illogical and messy, but both sides seem to want to make it more complex because proper reform might hurt important groups of voters even if it led to major benefits for the economy.

A plague on both their houses unless they offer some radical reforms that might actually work instead of tinkering to pander to interest groups of particular blocks of voters.

gastro george

"Maybe, like many UK citizens, journalists are aghast that Ed Balls is presented as the next man to manage Britain's money."

Journalists, aghast? I don't think journalists like Montague, Humphries, Naughtie or Robinson have any real idea about economics. They operate in the business/political/media bubble, and this is just their lingua franca that recycles and reinforces itself - and then gets reflected in opinion polls. They are Very Important People, and must lead our discussion even while they know so little about it. I don't know about Balls, but he plainly operates in the same milieu and either doesn't understand or is trapped by the framing. Judging by today's performance, both.

rogerh

Balls is in a bind. The idea that when you are in deep debt you can take on a bit more debt, buy some fancy new kit and the economic engine will roar into life - this seems a tough sell. Apart from the UK, the French, the Spaniards, the Italians and the Americans would all try the same stunt if it showed signs of working. The UK experience seems to be the money gets soaked up by the wealthy and little if any new kit gets bought.

Back in the 70s & 80s the mantra was 'we pay ourselves too much', well that has been 'cured' at the bottom end which leaves the middle and upper end untouched. Realistically the middle is a target except for two big and interrelated snags, housing and votes. If you put a crimp in middle class wages you mess up the house market and the economy seems rather dependant on housing debt, and the votes will soon get you too. The current approach seems to be to gnaw away at the bottom end of the middle class whilst leaving the upper end untouched. So just what policy could Balls come up with that anyone would believe in?

Neil Wilson

"Maybe Balls' looser fiscal policy might raise bond yields a little."

Assuming it does, and since government spending into the economy increases the amount of money searching for bonds there is no evidence that it does, then the result would be less government spending.

That is deflationary requiring a response from the central bank - which involves buying bonds, either directly under QE or via altering the tradeoff between reserves and bonds in the banks.

There is no borrowing. The creation of government bonds is savings led. Savings wanting safe havens create the shortfall in tax that causes the creation of higher paying government bonds.

Neil Wilson

" For more intelligent discussion of those plans, try this and this."

Hardly. None of them discuss the sectoral balances at all.

Andreas Paterson

@Luis "what do you think those who do not suffer from fiscal tightening bias might be able to credibly claim about their economic policy and our fiscal future?"

That the cost of government debt will not shoot up and government debt will stabilise at a sustainable level?

@Chris - I think the problem is that the problem here is that credibility has become defined by a kind of ideological shouting match that the Tories ended up winning. It is pretty much an underlying assumption in any interviews that Conservative proposals have the approval of the imaginary credibility goblin.

Luis Enrique

Andreas,

well that would do it! but if we can expect debt to stabilize at a sustainable level without fiscal tightening, what's all the fuss about? Why aren't the IFS, for instance, saying don't worry the debt outlook is fine?

my candidate X would be outright monetary financing of fiscal stimulus

Luis Enrique

it is possible that the public finances are in a dire state and that stabilizing them is the most important problem governments will face and that fiscal tightening necessary. if that is the case, then seeing credibility in these terms is not "bias".

I do not know whether this is the case, but I think that accusations of bias need to be accompanied by a convincing argument that we needn't be worrying so much about the deficit, otherwise it is question begging a little

Andreas Paterson

@Luis - You are of course correct that there's an awful lot we don't know, and there is the possibility that tightenting is urgently needed to prevent a looming debt financing crisis. I do however think the low yelds on UK debt, combined with the fact that the UK borrows in it's own currency make a pretty convincing case for this being a highly unlikely possibility.

I think the problem is that the default "credible" position assumed by the media is not one derived from a sensible analysis of potential deficit reduction paths that would ultimately lead to a stable borrowing, sustainable debt scenario. I think ultimately it's the media who are begging the question in a far greater way in assigning so much certainty to what is "credible".

Roman Phonics

Too easy. use a translating device and discover what a phrase means in english ......example..****She asked Nick Robinson: "It's about economic credibility here, isn't it?"******* that translates to *** It is something to do with economics please say yes ***

Roman Phonics

Also psychobabble run run run away F f f far better what do u say

Another Chris

Quite agree squire, and they were at it again this morning. Listening to Nic Robinson this a.m. made me considerably more likely to vote Labour. I'm sick to death of the Tory mantra that everything wrong in the world is Labour's fault and I wouldn't mind betting that a good proportion of the population think the same whether they have the slightest idea if it's a justifiable claim or not.

Conservative isn't working one might say.

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