Some election non-issues

I said yesterday that there are many questions which aren't big election issues but which should be. Here, in no particular order, is a list of some:

1. What, if anything, can be done to raise productivity (pdf)?

2. Is our big external deficit a sign of worryingly high domestic borrowing, or is it rather due to the overseas savings glut?

3. Given that work makes people more miserable than pretty much any other activity, what (if anything) can be done to improve (pdf) job satisfaction?

4. Should we raise the inflation target, or lower it?

5. What should be the mix of fiscal and monetary policy? Labour is offering us a less tight fiscal policy. For a given inflation target, this implies a less loose monetary policy. Is this a good thing or not?

6. Is the financial sector too big, perhaps because it diverts talented people from other occupations or is a source of instability? Or is it instead the industry in which the UK has a comparative advantage?

7. Are there good positive arguments for a sustained smaller state, or is this merely a by-product of fiscal austerity?

8. Is wage-led growth really a feasible way of boosting trend growth?

9. Are we in an age of permanent secular stagnation? If so, what can governments do to combat it?

10. Is privatization of some NHS services really just a way of enriching the private sector, or could competitive tendering, properly organized, improve NHS productivity?

11. What's the best way of protecting workers from exploitative conditions? Is it legislation, or strengthening workers bargaining power through a tighter labour market and stronger unions?

12. Is hierarchy really the best way of structuring public (and private!) organizations? Or has managerialism been pushed too far, with the result that we are losing the benefits of cognitive diversity and the best use of dispersed, fragmentary knowledge?      

13. Given that there's reasonable evidence that worker ownership can raise efficiency as well as happiness, should governments do more to encourage it? If so, what?

14.Is the rise in wealth and power of the 1% since the 1980s a problem - in economic or social terms - or not? If so, what to do about it?

I don't pretend this is a complete list: it's confined only to economics. In some cases - such as questions 12-14 - there are obvious reasons why these are not on the agenda. But in others, the silence is less easily explicable or justifiable. And I'm not sure whether the fault lies with politicians, the media - or voters.

Comments

[TickyW]

Some more questions:

1. What about the workers?
2. Should we build more houses?
3. Should workers be elected to boards of directors?
4. Should charitable status be removed from fee charging schools?
5. Should a basic income or negative income tax be introduced?
6. Should additional council tax bands be introduced?

[Brett]

1. You'd first want to look at productivity on a sector-by-sector basis. What sectors have noticeable productivity gains? Do they have anything in common? At least off the top of my head, more venture capital and looser bankruptcy laws tend to help with new entrepreneurial ventures.

6. There might be some people who are being diverted to the financial sector, but realistically they're not going to do something else unless that option is really there - sort of like how recently some fresh talent that would have gone into Wall Street here in the US has gone to Silicon Valley instead.

10. The devil is always in the details and the management when you engage in some degree of privatization. I will say that you almost certainly won't save any money by moving services in a more "single-payer" direction - the single-payer systems (like France and elsewhere) get somewhat better results at higher cost.

11. Tighter labor market, although that tends to only push wages up from the bottom first. I think when it comes to new firms, it's more important that failed ones be able to discharge workers quickly rather than cheaply.

13. Hard to say on this one. Do you favor cooperative startups? Favor more employee power within existing firms? The problem with our data on cooperatives is that we don't really have an economic example where they represented the bulk of businesses IIRC - lots of unexplored territory.

[twitter.com/stevehem]

I fear the answer to 1. is 'reduce participation rates in the labour force', but maybe that's an unacceptable tradeoff.

This is a great list. It's tragic that none of the debates will have any rational debate about any of this.

[Ralph Musgrave]

My answer to “2” is that the lower are interest rates on government debt, the more the deficit is down to “overseas savings glut” rather than Britain doing anything wrong. In the extreme, where rates are zero (i.e. where government debt becomes the same thing as base money) that effectively means foreigners are determined to hoard piles of £10 notes under their matresses. If that’s what they’re determined to do there’s not much we can do to stop them. Though I’d recommend maintaining inflation at 2% so that the value of those notes hoarded by foreigners lose value: i.e. we profit at their expense.

Rule Brittania, Brittania waves the rules.

[TC]

1. Planning reform (esp cities). Education. Capital allowances. Smart industrial policy (easier said than done). Infrastructure investment (ditto). [Also, more unemployment, artificial restrictions on hours, limits on immigration - since you ask]
2. O'seas savings
3. Premise is faulty. But, nothing.
4. Keep as is.
5. Not. Mix is right given debt constraints.
6. Comparative advantage
7. There are such arguments.
8. Not in most circumstances.
9. No.
10. The latter, could help.
11. Legislation
12. Hierarchy within organisations seems best yet, but operating within open (market) systems so others can be trialled.
13. If premise correct, no need to do anything.
14. Probably yes. Don't know, probably a mix of things.

[Rafi]

Poverty?!

[Ben]

The big question for me:

if wages rise what stops this feeding through into house prices (which are set by available credit)? If nothing stops this then workers get no share of productivity except - it all goes to the rentier.

[rogerh]

They are not election issues because they are hard to understand and hard to answer, a spin doctor's no no.

If the UK sold lots of goods and services we would have plenty of cash and (maybe) many of these issues would go away. Perhaps we are looking at an end-game here. The UK has become a tightly constrained and top-heavy society lacking the ability to monetise new saleable ideas. Necessity is a good driver for creativity but for too many simply getting a house becomes the main objective. So we have the potential for ideas but no-one dare risk losing a place of the property ladder - stick to accountancy.

Sadly the necessary reform to housing will be electorally impossible and may wreck the banking system so we are doomed to a long slow glide path to poverty.

[Bill Posters]

How can we get Julie Etchingham elected as PM?

[Aremay]

Anyone for foreign policy? Anyone at all? Ukraine, Syria, Yemen, Egypt and Nigeria are all on fire. China is provoking its immediate neighbours. Japan is re-arming. Russian bombers are regularly probing our airspace. Our relationship with our closest geographic neighbours faces a deeply uncertain future. There are plenty of alarm bells being sounded about our diplomatic and military capacity. Our economy is one of the most open to the flows of goods and money (and people) in the world, and substantially more than most economies of an equivalent size. What, exactly, is the vision for the future?

[Rory Maw]

Great and thoughtful set of questions!

1. You've fallen for the fallacy of averages. What's happening to the mix of employment? Fewer people working in capital-intensive, high (labour) productivity North Sea oil and financial services, more in labour intensive services, fewer in public sector where cost = productivity (now there's a nonsense!) means lower average productivity but is that good or bad? We could raise the minimum wage and price the least productive out of work (France?) but again that's hardly a good thing.

2. Both

3. Lower unemployment means fewer people working in jobs they wouldn't voluntarily choose. That seems like a good way to go so reduce barriers to hiring (NI, employment law) and allow us to find work we prefer

4. Why have one? Abolish the central bank

5. I suspect they'd relax both and increase inflation

6. Let the market decide. I suspect the UK has a comparative advantage (language, location, concentration of skills, common law) but if it doesn't then it won't last. And what's the alternative: Soviet-style directing of career?

7. Yes, many. Economic reasons: plenty of evidence that 10% more state = 1-2% less GDP growth pa so we'll all be twice as wealthy (well, on average!) in 20 years as a result of better resource allocation, reduced corruption, pork-barrelling etc. Moral: better to allow people to make their own decisions, assert their own priorities, support their preferred charities etc

8. Only if it's driven by productivity otherwise wage growth will reduce trend growth by reducing employment

9. No, we're not in secular stagnation. That whole meme is a misdiagnosis of the current economic environment where much of the rise in living standards isn't captured by GDP stats (improving quality, sharing economy, increased leisure, "free" online stuff). There's nothing (positive) the government can do.

10. The private sector will only be "enriched" if either a) it provides those services at lower cost, higher quality or both or b) the tendering process is deficient. Having worked at senior levels in the NHS for 8 years, I can tell you that it desperately needs more innovation, fresh thinking and willingness to take business risks. That requires incentives and currently the incentives favour the status quo.

11. Always a better-operating labour market as bad employers will then fail to recruit and retain staff. (Legally privileged) Unions tend to reduce market efficiency, create more unemployment and serve either those already in (that specific) work or political ends not workers' interests

12. The market would decide, if allowed. Unfortunately in areas such as banking, regulation serves to protect the incumbent by raising barriers to entry (I know, I looked and gave up). State involvement favours the already-wealthy and lawyered at the expense of the would-be insurgent. So strip away regulation and allow new entrants to use that localised knowledge!

13. Stop biasing the tax system to steady (low) income over irregular and lumpy profit by flattening tax rates. Reduce/abolish CGT or increase the threshold for entrepreneurs relief, stop demonising enterprise and celebrate those who took risks, even those who failed but tried. Reduce comfortable public sector employment options with their protected pensions, long holidays, generous benefits and "job for life" mentality

14. No, it's not a problem. It's the inevitable result of globalised markets, which have hugely reduced world-wide poverty and inequality at the (possible as the data are contested) "expense" of greater in-country inequality in some nations. Am I worse off because Walton, Dyson, Zuckerberg or Ronaldo is hugely rich ... or do I and millions of others benefit massively from their products/services? Evidence shows >95% of the value of innovation goes to consumers, not the innovator ... unless the state privileges them!

[Igor Belanov]

Rory Maw is Milton Friedman and I claim my £10.

[Ariadneassoc]

Interesting thoughts; as an HR professional I think your points 1,3,11,12 and 13 are not necessarily political ones ( though obviously they have a political dimension) but ones that could be tackled by my own profession

[theOnlySanePersonOnPlanetEarth]

"Is privatization of some NHS services really just a way of enriching the private sector, or could competitive tendering, properly organized, improve NHS productivity?"

It will certainly be a way of enrichment or it wouldn't be up for discussion! The problem with improvement of the service is that if they introduce GP fees for example, this will lead to many people simply having no GP service, when before they had one. But the stats will only be available for those who see GP's. So the stats may improve but the actual service, when taking those into account who are priced out, may substantially decline. so a very dangerous question to ask, and framed in a way that makes me wonder what kind of leftism you subscribe to.

Incidentally, HR cannot begin to tackle problems 1,3,11,12 and 13 and anyone who thinks they can is fucking mad.

[BCFG]

Carrying on from Rory's comment.

Capitalists tend to reduce market efficiency.

Within the actual logic of the market is the concentration and centralisation of wealth. leaving the market to itself always results in this, without exception.

Tax rates favour the wealthy as they are better able to avoid taxes, workers do not have this luxury! Their real tax rate is the effective tax rate.

'Risk takers' receive huge government help and subsidy. Stop subsidising the risk takers and let them, well, take the risk.

As has been shown on this site many times workers take more risks than that entrepreneurs.

Globalised markets are a myth, they are in fact the product of transnational institutions, backed and funded at state level.

The biggest reducer of poverty is state capitalist China, where state involvement in the economy is huge.

Global inequality is at staggering levels, as OXfAM showed.

So the conclusion, don't let the market decide and get rid of capitalists. Stop using tax payers money to provider welfare for the rish.

[BCFG]

and also stop using tax payers money to provide welfare for the rich!

[John Problem]

"George?"
"Yes, Dave."
"Have you seen this list?"
"Is it that long one from - whatsis name?"
"Yes. What do you think?"
"Too many items. All rubbish."
"What if the voters reads it?"
"Who cares? Come on, Dave, you're getting paranoid!"
"Yes, but. The bloody polls show Ed is level with me. After all I've done for the country. Not fair. And I'm worried."
"Don't be. See Lynton."
"Sam doesn't like him. She thinks he's creepy."
"She's not the only one. Anyway forget that list. We need to bury it. I'll call GCHQ."