"Serious" politics

My qualified endorsement of the Greens has led to some consternation: how can an economist endorse a party which has some fruitloop ideas? I suspect that some of this bemusement is a form of culture shock; it arises from the gulf between my perspective as an economist and that of Westminster bubblethink.

From my perspective, the main parties are just daft. They are promising to cut the deficit although this risks exacerbating any future slowdown and ignores the fact that negative real rates make this a great time to invest in infrastructure. They want to curb immigration even though there's no economic case for doing so and such curbs might hurt long-run growth. They are silent on the UK's single biggest economic problem, stagnant productivity and have no ideas about what to do about the banks beyond regarding them as a magic money tree; you'd never guess from the election debate that it was banks that caused the financial crisis. They have little solution to the housing crisis. And they seem to think governments can raise billions from reducing tax dodging without telling us which loopholes companies are using and which they intend to close.

In all these ways, the mainstream parties are as loopy as the Greens - and perhaps more expensively so given that macroeconomic errors can have a bigger cost than micro ones. As Martin Wolf says, none of them deserve to win.

Non-economists, however, don't seem to appreciate just how silly the mainstream is. A big reason for this, of course, is that the media has constructed its own narrative of mediamacro which legitimates deficit fetishism and "concerns" about immigration whilst marginalizing other issues such as the economic cost of inequality and stagnant productivity.  

Mediamacro, however, is only part of the story. It is one of a number of practices whereby the ideas of those in power are given credence.

We see this, for example, in the way in which the media jealously guards its access to politicians to preserve the privileged dialogue of bubblethink - hence the hostility to Ed Miliband meeting Russell Brand. We see it in the way in which matters of choice are presented as necessities. We see it in the way in which some engagement with politics is approved and some (such as Milifandom) sneered at. And we see it in a host of legitimation rituals. These include the language of politics - who else uses phrases like "committed to", "pledge" or "the right thing to do"? - and even the dress code; Yanis Varoufakis is often called "unconventional" because he doesn't wear a tie.

Politics has many ways of creating and sustaining what Paul Krugman calls "Very Serious People" and Nassim Nicholas Taleb "empty suits" - men (generally men) whose judgments (always judgments) are sensible, sober, and wrong. One reason why I'll be voting Green is to reject this flummery.

Another thing: one might ask why there is no political party with entirely sound economics - one that: is concerned about productivity; anti-austerian; pro-market (in the right institutional framework); and egalitarian. But that's another question. 

Comments

[Natalie Bennett, riding across a rainbow on a unicorn that shits creamcakes]

If you want to vote for the student union pot party, good for you, but you've lost this reader's respect (not that you do/should care about that!)

[K]

"They want to curb immigration even though there's no economic case for doing so"

The voters don't really see immigration as an economic issue Chris, they see it as a socio-cultural one:

1) Integration, or more specifically the lack of it

2) Political correctness demanded of natives but retrograde attitudes of minorities are ignored

3) Special privileges for minority groups

4) No requirement to learn English

5) Added pressure on housing

6) Added pressure on the NHS

7) Added pressure on infrastructure

etc. etc.

[EbenMarks]

K, learning English is heavily required socially and economically (which is why most immigrants learn it), why must it be written into the law as well? And you can't make an allegation like "special privileges" without even a shred of evidence.

[Oakchair]

@K
So voters are bigots, that would rather make themselfs poorer then have to live by "those" people. That's a sad take on humanity.

[Keith]

Actually k 5,6,and 7 are economic issues. More immigration means a bigger tax base to pay for better housing, health care and infrastructure. The Government can invest in them if it chooses too. Rather than allow the proceeds of higher output to be diverted to offshore profits for example. Migrants usually learn the language of their new country and their children do. As for respecting other cultures different from your own you made a rather tendentious set of comments. Not everyone would agree with them, they are not self evidently true because you believe them yourself. A free society is one where people have different values and customs. Are you of the view some Committee should ban any diversity of belief and lifestyle?

Chris seems to be saying that voting is a luxury to be dispensed with as they are all useless. So time for some fun. I can see that the position of the parties on macro is bonkers. But maybe it is the fault of the voters for not educating themselves on the issues? If people cannot be bothered to learn about the variety of options and let politicians do their thinking for them they cannot expect to get much out of the politicians. Which includes party members holding their own leaders to account. No one in the Liberal party has kicked Clegg in the nuts and replaced him with a new leader. This is the party always claiming to be more democratic than any other, while lamely letting all their policies be junked by their leadership. Democracy involves the ability to sack your leadership.

It may be in fact the unwillingness of the party faithful to sack their leaders which explains why the main parties have bad policies. Sitting around hoping for a unaccountable cabal of leaders to solve problems is unlikely to work. You need to do your research make your demands and if the leaders do not go along replace them with those who will. The Chartists advocated election every year and the Levellers supported term limits. Too keep the leaders honest you must keep them on a short lead.

[K]

@Ebenmarks

A relative of mine works at a GP's surgery, and sees firsthand the large numbers of people who have lived in the UK for many years who speak zero English. And why would they? They don't work or mix with the locals and the NHS provides taxpayer-funded translators for all their appointments

@Oakchair

If by "bigots" you mean "would rather not see their communities changed beyond all recognition so that wealthy do-gooders in London can bask in the warm glow of moral superiority", then yes, I think most voters are "bigots", myself included.

"Those people" as you put it, those who make no effort to fit in or integrate, who have no respect for Britain or its cultural heritage, who only take take take and complain, well yes I'd be more than glad to see the back of them.

[UberLibertarian]

OK, but what's your ideology here Chris. As a Marxist I respectfully put it to you that you MUST want a smaller state, no?
For as long as we have the State in something like it's current form then ain't gonna be no Marxism. Agreed?
Let me be absolutely clear on this - ALL of the parties contesting this General Election are ideologically closer to each other than ANY of them are to Marxism.
Where do you actually see something like real Marxism at work in a polity such as the British Isles in 2015. Why, probably in rural Tory heartlands such as yours (I don't actually know where you live). What they used to call the Shires. Agricultural smallholdings and old established farms and such - they have run themselves along those lines since time immemorial. Because of the unpredictable feast/famine nature of farming it's a commonplace to find communitarian bonds of trust, and sharing in order to spread risk and indeed surplus in a manner which is indistinguishable from a communist practice.
So, a smaller state then. I look forward to photographic evidence of a large blue cross in the finest ink right next to...your friendly, local...Tory candidate!

[Dave Timoney]

Re "one might ask why there is no political party with entirely sound economics"

Politics can be thought of as an argument about the rightful place of economics in public affairs, relative to morality, security etc. The uber-right would argue a minimum (laissez-faire); the uber-left would argue a maximum (economics is social). Short of full socialism, economic debate will always be subject to subversion, e.g. the "maxed-out national credit card" trope and other mediamacro classics.

The competition for power produces a maximum of understanding (I'm sure George Osborne understands and accepts the paradox of thrift) and a minimum of admission (he acts as if he's never heard of it). No party can be too explicit about its understanding of economic theory as that would restrict its room for manoeuvre when allocating economic privileges. You don't want to be hoist by your own petard.

Politicians generally treat economics instrumentally (Thatcher's admiration for Hayek and Friedman was philosophical, not technical). Since the Lawson/Walters farce, politicians have been careful to keep economic theory off-stage, unless it can serve a narrow, tactical purpose (e.g. Reinhart/Rogoff).

There is an informal agreement across all the main parties to keep it this way (arguably, a key part of the neoliberal code), safe in the knowledge that fringe parties can be relied on to sabotage their own advocacy (e.g. the Greens bollix re a basic income).

In the circumstances, it is surprising we don't have more parties that deny the very existence of economics (mind you, UKIP comes close).

[Mark]

As a new Green member, I say congratulations. I felt the same thing reading through their manifesto - it has more detail than the others and seems to have a bigger idea uniting it. The "wacky greens" thing is just lazy.

And, as you say, the major parties talk bunk and not just economically speaking.

[Ben]

" you'd never guess from the election debate that it was banks that caused the financial crisis. They have little solution to the housing crisis. "

For this string of words thank you. On we go, deeper into the abyss.

The greens want LVT, that eclipses anything else for me including a few silly but trivial policies that might not be so bad in practice.

Apparently cutting pollution (Greens) is nuts but perpetuating serfdom (LibLabCon) is fine! Go figure...

[Steven Clarke]

@FATE

"Politics can be thought of as an argument about the rightful place of economics in public affairs, relative to morality, security etc. The uber-right would argue a minimum (laissez-faire); the uber-left would argue a maximum (economics is social)"

My immediate response would be that it was the other way round. Laissez-fairies would be happy to accept the spontaneous order* that emerges from the market. Conservatives and socialists would want to impose their own order (based on their preferred economic or cultural pattern) and would use politics to make that order.

*That order would constantly change - so perhaps spontaneous disorder may be a better term

[rogerh]

I wonder if it is possible at all for the UK or any European nation apart from Germany to build a successful economy. Most of the 'centres of excellence' already exist and no-one is likely to lay down a large scale operation in the UK in the next 10 years. So same same, just make sure you stay part of the cocktail glass and don't become part of the stem.

The campaign seems to sell us on the national figures when what is important is to consider how best to place your vote at the local level. Keep them lean - keep them keen?

[Dave Timoney]

@Steven Clarke

You appear to be equating economics with "the market". They are not the same thing at all. The former can be thought of as the justification for interventions - i.e. the admission that something can be done - which presumes that all markets are embedded within society and thus subject to human control.

The latter is a metaphysical concept that assumes a clear separation between the spheres of society and the market, with the presumption that the latter is beyond our full understanding or control (the invisible hand, the coordination problem etc).

[Ralph Musgrave]

Keith,

I do like your claim that “More immigration means a bigger tax base to pay for better housing, health care and infrastructure.” This may be news to you, but immigrants need houses to live in and health care, etc. Thus the NET EFFECT that immigrants have on the availability of housing, health care, infrastructure, and all other goods and services is approximately zero.

[Damy Mahl]

Ralph,

Not true. Immigrants generally accept a lower standard of living (numbers per household, etc.) and often work harder for the type of work available. The story is different after a generation (or so).

[Keith]

Well if Ralph is correct then the arguments used by K are not supported by the facts.

I was assuming that in general migrants are young and employed so boost the tax base more than they increase costs for the state. But that does depend on implicit assumptions about the characteristics of migrants. There are numerous arguments why inward migration is an economic gain. Most of the arguments used against migration can be turned around to support it depending on the assumptions you make. Which tends to be true of all economic debate as economics is based on utilitarian calculations. Migration gets treated in an un economic way for irrational reasons which are plain. While other issues such as taxation or welfare benefits get the same irrational treatment but usually in a less obviously irrational way. Class lurks behind technical debates about both.

My reservation about the type of libertarian anarchistic attitude often displayed by Chris and his population of commentators is that I think big words like "The Market" are meaningless. The market system cannot exist without the Capitalist State which grew up with capitalism in England and then elsewhere. The state is always complimentary to the private sector. There is no real inconsistency between the state and the non state. Social Democratic intervention is not anti Market or anti property as such. The social Democratic state aims to advance human goods that are not properly private. No one has ever shown how the claims of Libertarians and other anarchists can be applied in practice to social organisation; and from the Utilitarian point of view property rights must be contingent and not absolute. The traditional approach of radicals and socialist reformers is to advance the cause of humanity and human happiness based on good outcomes not abstract beliefs about market fundamentalism or Totalitarian ideas like those of soviet communism. The sort of person who trolls on websites and online newspapers pontificating about libertarian or anarchist utopias is deranged. Trying to reduce all of human civilization to economistic axioms is a kind of madness. I prefer the more sensible approach of social democratic redistribution with a constitutional state. Absolute private property rights are as much a threat to that as Totalitarian Stalinism or jihadi John cutting off heads.

[Ralph Musgrave]

Damy Mahl,

Re your claim that “immigrants generally accept a lower standard of living” that’s difficult to square with the much trumpeted claim by advocates of mass immigration that immigrants EARN MORE THAN natives!!

Your claim would be valid if immigrants devote a bigger proportion of their income to building up savings (e.g. equity in their house) than the rest of the population. But that's of no benefit to the rest of the population: it just results in more of the country being covered in concrete.

Keith,

Its blindingly obvious that if immigrants tend to be young adults (which is correct) then they’ll contribute more to the exchequer than natives. Unfortunately immigrants are HUMAN BEINGS (revelation) and grow old just like everyone else. So that argument leads nowhere.

Moreover, populations in the countries they come from are rapidly ageing, so having the UK nick their young workers achieves nothing for the world as a whole.

Re your claim that “Most of the arguments used against migration can be turned around…”, my response is: “OK, then turn them round”. No one is going to believe they can be turned round till you actually turn them round, amazing as that might seem.

As for the rest of your very long comment all about very abstract aspects of “free markets”, “capitalism”, “anarchists” etc, I’m sure that sort of stuff would help you get a Sociology degree. Indeed any old form of verbal diarrhea will help you get a Sociology degree. However I suspect that 99% of people reading your comment will regard that sort of stuff as irrelevant to the debate on immigration.

[Steven Clarke]

@Ralph

"Moreover, populations in the countries they come from are rapidly ageing, so having the UK nick their young workers achieves nothing for the world as a whole."

Erm, where I grew up there was a big Sikh community. They had done rather well for themselves as small business men, doctors, dentists, etc and lived in a nice part of town.

If they had never migrated here, I suspect they'd be very poor indeed.

So without migration, a large number of people would be poor.

With it, that number of people had become rich.

They had moved to a country where they could be a lot more productive. Immigration would certainly make the world as a whole richer as people could move to where they could be more productive.

I agree that 99% will probably regard that as irrelevant to the debate, because from their point of view, they don't like immigrants. End of. But we all hope that - slowly, gradually - economic and moral reasoning might temper emotion and prejudice.

[alanjohnstone]

"I wonder if it is possible at all for the UK or any European nation apart from Germany to build a successful economy." - Rogerh

Strange isn't it how we so easily forget how West Germany managed to integrate tens of millions of ossies into their economy after unification, how they accommodated a million who actually upped and moved to the west in a matter of a few years ...Just shows you caring and coping for immigrants is possible with the proper political will

[Leslie48]

Under PR maybe your preference would be OK but for many of us its Labour ( or in some South West places Lib Dems. but hold your nose) A lot of what you say is correct but how do we overcome the dreadful, disproportionate and manipulative Tory Press and their lapdog BBC ( Daily mail on Legs). Britain is no longer a proper democracy with possibly the most Right Wing press in Europe and the BBC has over the last few years lost its place as the impartial Public Service Broadcaster. The tragedy of modern Britain is a BBC that both churns over the Tory press agenda and reflects a SE shires right wing establishment which see the rest of Britain and its people (including Scotland) as somehow unworthy of equality in any way. The BBC is full of elite old men on massive salaries who have abandoned the original duties of our public broadcaster and bought into a Neo-Liberal pro- Austerity consensus. The Tories if they win will destroy the BBC and there will no one from the Left or Centre to support their privilege and betrayal.

[Guano]

The main selling point of the Greens is surely that they point to the long-term challenges that we face that are not brought to our attention by market mechanisms. Implicitly the other parties do not take into account resource and environmental issues because price signals don't tell us anything about them.

[Blissex]

«have no ideas about what to do about the banks beyond regarding them as a magic money tree; you'd never guess from the election debate that it was banks that caused the financial crisis.»

That "caused" is ridiculous! Banks are just a tool for policy, as you write, "a magic money tree" as they were pushed hard by the governments of the past 35 years (since the abolition of the "corset") to lend ever more at ever higher leverage ratios against collateral with ever more inflated valuations under ever more relaxed accounting rules.

The management and traders in those banks of course *enthusiastically* carried out government policy for ever higher leverage as it meant much bigger compensation for them, and they knew that when the policy resulted in inevitable trouble they would have stacks of paper trail showing they had carried out government policy and thus that they would be bailed out very generously, or else.

Ever rising leverage against ever more inflated collateral valuations is what I call the "debt-collateral spiral" and is the result of what Colin Crouch calls "privatized keynesianism" and both are government policy caused by the ravenous demand from the rentier middle classes of the South East (swing voters in marginals) for more and cheaper debt to satisfy their "aspirations" for bigger asset prices and thus to afford "ballet lessons and Carluccio's and Charlie and Lola" and "holidays in Torquay" and "San Pellegrino" instead of water and other "aspirations" of the "conservatory building classes".

The "magic money tree" was there for those "conservatory building classes" and the banks did not cause the crisis, they just were in for the ride.

[Blissex]

«They have little solution to the housing crisis.»

As far as "conservatory building classes" swing voters in South East marginals are concerned the "housing crisis" is that too many houses are being built, that there are too few immigrants to rent them to, and that therefore rents and house prices are way too low and are not growing fast enough to maintain the 150% yearly gross profit that funds their "aspirations" to an "upstairs" lifestyle ultimately paid for by poorer people than themselves.

As to the heirs of those "conservatory building classes" the "housing crisis" is that their parents or grandparents are having to slowly liquidate their estate by selling their properties or borrowing against them, leaving their inheritors little housing equity to be inherited tax-free. because a viciously mean government is not giving them many years of handouts for old age care that are 10 times larger than unemployment insurance.

[Blissex]

«SE shires right wing establishment»

That's where the votes and thus the money are.

The BBC management know well that the Tories want to privatize it or at least cut the licence tax, and that if they irritate or simply fail to pander to the Tory base in the «SE shires right wing establishment» the BBC will be unpopular and politically easy to dispose of.

The BBC also is careful to be "politically correct" on "values" because a lot of that «SE shires right wing establishment» is middle aged or older women who grew up in the 60s and 70s. Cameron and May know that well, thus their positions on gay marriage and criminal law.

[Blissex]

«Ever rising leverage against ever more inflated collateral valuations»

«As far as "conservatory building classes" swing voters in South East marginals are concerned the "housing crisis" is [ ... ] house prices are way too low and are not growing fast enough to maintain the 150% yearly gross profit»

«As to the heirs of those "conservatory building classes" the "housing crisis" is [ ... ] leaving their inheritors little housing equity to be inherited tax-free.»

And George Osborne knows all of this *very* well, thus most of his budget policies are designed to increase leverage to push up house prices by ensuring a steady supply of first-time buyers, because he knows very well that bubbles collapse when they run out of "greater fools" at the base of the pyramid.

So in a past budget George Osborne guaranteed 80% of a 25% deposit, thus raising the first-time buyer's leverage ratio from 4 to 20, for a big boost to prospective profits, and then more recently promised a cash handout towards a deposit (a handout worth more than a year of unemployment insurance) to further increase the leverage ratio for first-time buyers.

For every anglo-american government and their "aligned" economists the ideal credit policy is going back to the wonderful times when mortgages were available for 105%-110% of a property value (transfinite leverage!), a massive "magic money tree" for the "conservatory building classes".

All while "aligned" economists are "debating" very seriously "monetary" policy ("fiscal" policy is "class war"), when it is credit policy that matters, with the constant policy push towards higher leverage ratios, to benefit only those insiders whose profits are directly or indirectly dependent on them.

[Steven Clarke]

@Guano

"Implicitly the other parties do not take into account resource and environmental issues because price signals don't tell us anything about them."

Price signals do tell us about resource issues - their price will go up when they become more scarce.

I agree the price system does not currently tell us much about carbon emissions - but they could if such externalities were internalised via a carbon tax, or a cap-or-trade system, or enforced liabilities. Such an approach would be a market approach within the right framework.

Similar market mechanisms could be designed to ease congestion (road charging), promote better land use (land value tax) etc.

They don't require the State so much to overrule the market, but augment and create new markets.

[Guano]

"They don't require the State so much to overrule the market, but augment and create new markets."

Creating new markets is one way that the State could deal with these long-term challenges, but it could also use other mechanisms. It is, however, the State that will have to create these markets or these mechanisms: markets are unlikely to create them themselves. My point is that it is only the Green Party that is pointing to the urgency of creating some mechanism to do with issues that present-day markets don't recognise.

[theOnlySanePersonOnPlanetEarth]

"Price signals do tell us about resource issues - their price will go up when they become more scarce."

Prices can go up for various reasons! And is the scarcity natural or man made?

"Similar market mechanisms could be designed to ease congestion (road charging), promote better land use (land value tax) etc."

Leave the motorways for the rich, the true dream of our libertarians!

[Steven Clarke]

@TOSPOPE

Road charging exists in London. It's not that controversial.

If the problem is people are too poor to use the markets, redress their poverty. I suspect that greater equality and redistribution will be a precondition of using more market mechanisms.

[Guano]

I'm intrigued by the belief, which appears common these days, that all problems have to be addressed through market-based mechanisms. I go to meetings about anti-biotic resistance where government scientists talk about creating market incentives for the private pharmaceutical industry to invest in new antibiotics and other innovations, and the private pharmaceutical industry says very clearly that it isn't interested: the incentive for it to get involved would have to be very large.

There may be advantages of using market-based mechanisms wherever possible. There are issues that need to be tackled urgently and it would be better to tackle them directly. Whether they are addressed through the market or otherwise, tackling them is going to disrupt existing business models, which is part of the reason that only the Green Party is mentioning them.

[Chris Carter]

What do we make of Chris's "revealed preferences" in moving to Rutland?
Bit of a Billy Bragg (Dorset) going on?!

[Pete]

"They are promising to cut the deficit although this risks exacerbating any future slowdown and ignores the fact that negative real rates make this a great time to invest in infrastructure."

Ed Balls made this point in 2010.

He's been proven wrong every day since. Eliminating the deficit is the only policy - everything else is financial suicide. Even if it were to cause a slowdown, so what. It is the price we pay for Gordon Brown.

[Mrs Crewe]

And again I ask, the rampant anti-Semitism is just a bonus?

[Scipio]

Not sure the 'three facts of immigration' are in dispute at all by St Nigel of Brussels, who is depicted all over the page.

So what if they are here to work? Labour is a market, increase the supply, reduce the value. Might be good for GDP but is it good for the pleb workers? If not then their vote is wholly rational. Does migration improve GDP per capita or wages, especially for those at the bottom of the heap? This is what UKIP have been arguing about, 'wage compression' is one of their buzzwords. Is that a myth?

[Remarkable]

''They want to curb immigration even though there's no economic case for doing so and such curbs might hurt long-run growth.''

No, only the fact that it has been dire for the wages and job prospects of the working class this 'Marxist' claims to advocate for. But of course there is always some handy theory for why they are imagining it and why it has always been a pro business neoliberal policy and why in days gone by, non-politically correct trade unions always resisted it.

Then there's the curious matter of the 'environmentally friendly' Greens needing all this unsustainable growth to justify their open door policy. One of them appears to get it (http://www.theecologist.org/blogs_and_comments/commentators/2442607/love_immigrants_rather_than_largescale_immigration.html) but he remains marginal for sure.

With a 'left' like this, it's no wonder we are in the mire.

[Remarkable]

Oh yes, it's worth pointing out that the pro-migration zealots at NIESR are funded by American big business - chiefly the Rockerfeller Foundation. While CREAM at UCL gets serious heft from Peter Sutherland, Chairman of Goldman Sachs and founder of the WTO. He's also got himself the job of the UN's AND the Catholic church's migration representative.

You really can't make it up what the 'left' falls for these days.