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September 11, 2023



One further political effect of stagnation is the rise of culture wars. Because stagnation, as Friedman showed, promotes reaction and illiberalism, it creates a constituency amenable to whines about "wokesters." Also, though, much of the political class wants a culture war because it has no economic ideas: as Stian Westlake has said, the Tories have stopped thinking about economics....

[ Really important observation and insight, but I am startled at the leadership of Labour having stopped thinking about economics as well. ]


It looks like any economic growth will be at the cost of other parts of our wealth portfolio. Frack and wreck acquifers, build and ruin the countryside, etc. I’m not convinced there are easy answers here, Chris. Least not, answers which don’t create nasty trade-offs for people who won’t be compensated for their loss.


«Today, however, the defining feature of capitalism, and especially British capitalism, is stagnation.»

As usual our blogger when he talks about austerity or low growth seems to me to be hallucinating or repeating right-wing propaganda, that "we are all in the same boat" and everybody is sharing misery.

If the Conservative and LibDem governments of the past 13 years had been just distributing misery to everybody, how could they have dramatically increased their votes in 2017 and 2019? Are 14 million voters going to vote for more misery?

By using overall averages our blogger is spreading the hallucination of overall "austerity" or "stagnation", but in the actually existing UK a large part, the one that matters (tory voters), of the UK economy has been booming for 40 years, even if the majority has been stagnating or shrinking. The living standards and wealth of the upper and upper-middle classes has been doing well, and the lower middle (at least in the south) has been doing somewhat well too.

When I visit the Waitroses and M&Ses of the south-east in particular I don't seem them empty while everybody is selling shoestrings and apples at street corners, I see them packed with affluent, comfortable spenders. Surely that is not what happens in most of the "pushed behind" areas, but they just don't matter.

What has been happening for 40 years is *upwards redistribution*, not fantasies like widespread "austerity" or "stagnation".

Of course property prices have been reverting a bit to trend, after rising very fast in 2021 and 2022, but overall "the economy" (that is "investors") is doing still well, powered by deeply negative real interest rates (which are however shrinking).


«I am startled at the leadership of Labour having stopped thinking about economics as well.»

I see nothing of the sort: New Labour's leadership put economics at the centre of their electoral appeal, targeting NIMBYs, older mortgagees, affluent "centrist" voters.

«Party sees identifying 50-year-old male home-owners as key to electoral success this archetypical voter as male, 50 years old, without a university degree but with a decent job in the private sector and, crucially, a homeowner with a mortgage.»

The attitude is not new:

«We reach out not just to those in poverty or need but those who are doing well but want to do better; those on their way up, ambitious for themselves and their families. These are our people too. Not to be tolerated for electoral reasons, but embraced out of political conviction.»


«like any economic growth will be at the cost of other parts of our wealth portfolio.»

Since Reagan and Volcker any growth in per-capita GDP has been considered the prime cause of "inflation", by making labour markets tight via the "wage-price spiral", and resulting in rising imports, The main strategies against that have been offshoring and immigration, and very expensive credit for productive (mass-employment generating) industry.


Did Volcker kill Cost of Living Adjustments because they worked in practice but not in theory? In short, what is wrong with wage-price spirals given real purchasing power stability?

How does Ben Friedman account for the explosion in the popularity of jazz (which was first sold as "race records" in the Great Depression? Is that rather a large counterexample to his cherry-picked narrative?

Why do economists ignore financial trading when talking of imports and exports, when the trade in financial goods dwarfs real goods exchange by a factor of ten, at least?

And lastly, may I fix the following passage for Blissex?

《What has been happening for 40 years is ~~*upwards redistribution*~~ money creation by, for, and of the rich, not fantasies like widespread "austerity" or "stagnation".》


Mmm... I'm not convinced of these arguments because
1. He doesn't provide evidence of falling profits
2. He ignores the role a massively increased credit in driving yields (not profit but yields) so low. Basically it the credit explosion that has made real investment look so unattractive.
3. He ignores the fact that productivity is not a real measure, because "value" is dependent on both distribution and on regulation. It is a case of the old diamonds and water paradox.

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