Monday , December 9 2019
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Simon Wren-lewis

Simon Wren-Lewis

Professor of Economic Policy at the Blavatnik School of Government, Oxford University, and a fellow of Merton College. This blog is written for both economists and non-economists.

Articles by Simon Wren-Lewis

The othering of Jeremy Corbyn

2 days ago

By otheringI mean treating Corbyn (or more generally the Labour left) as beyond the pale in terms of conventional politics. Othering implies that because of his past or current beliefs, associations and actions Corbyn should not be even considered as fit to be an MP, let alone a Prime Minister. Other politicians can be evaluated in conventional ways, but this does not applyto those who are othered. Othering has a number of distinctive, and potentially useful, features. Let me list two. First, those who associate in any way with those othered are themselves regarded as questionable. I discovered this myself when I joined Labour’s short-lived Economic Advisory Committee, as I discuss here. This can be a potent threat. Second, those who are othered can be discussed in terms that would not

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Some thoughts on Labour’s campaign

5 days ago

The importance of this election cannot be overstated. Voters have a choice between re-electing a government that since 2010 has done untold damage to this country and which will be led by someone totally unsuited to be Prime Minister, or giving a minority Labour government a chance to do better for a few years. The fact that the polls suggest the public want more of the same illustrates how close we are to becoming an authoritarian, populist (in the Jan-Werner Müller sense) right wing state where it becomes very difficult for any opposition to break through.This post looks at some key aspects of Labour’s campaign so far, in I hope a helpful fashion. Tax and spend One of the dangers Labour faces is that they appear to be promising too much. Voters are skeptical of manifesto promises at the

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Will UK voters really vote for the Republican party and our own Donald Trump?

9 days ago

There is so much about today’s Conservative party that is very similar to the Republican party in the US. To establish this, there is no better place to start than our future Prime Minister for the next five years, if polls are to be believed. Trump and Johnson are both inveterate liars. They lie when they have no need to, just for effect. To take some recent examples. He told Andrew Marr that the Tories don’t do deals with other parties, when everyone can remember the Coalition government and the DUP. (Marr, as so often with interviewers, let that pass.) Johnson has said that the extra money he has allowed for the health service is the biggest boost for a generation. In fact it is smallerthan the increase in spending from Labour from 2004 onwards. There are many like this. He has lied all

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In defence of the IFS, and why it cannot tell the whole story

12 days ago

Our own fiscal council, the OBR, is very restricted in what it is allowed to say by the party that created it. As a consequence, it is absolutely essential that we have widely respected bodies, principally the IFS but I would also include the Resolution Foundation and the National Institute (NIESR), that are able to provide good quality economic advice at all times, but particularly before General Elections. A good example is the Conservative manifesto published last Sunday. Without the IFS, it is quite possible that it would have made extravagant promises on public expenditure and it would have also included some tax cuts. But because the media treats the IFS as authoritative and impartial, this year they will have judged that the political costs of a manifesto like that exceeded the

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Is Labour’s economic plan credible?

16 days ago

Labour have a huge set of spending proposals, many of which are unequivocally good like extra spending on the NHS, some are open to debate like abolishing student loans, and only one that I think is foolish (keeping the state pension age at 66). It would be good if all the debate was about these spending pledges. However the standard excuse for why you cannot have these things has always been about paying for them. There are actually two issues here. The first concerns current spending, around £80 billion each year or about 4% of GDP, and public investment, expected to rise by about £50 billion a year or over 2% of GDP. Labour’s current spending increase is financed £ for £ mainly by higher taxes on corporations, capital gains and high earners, while the investment is financed through

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How to disguise a really big lie? Put it on a bus.

19 days ago

The Tories, and particularlytheir leader, lie all the time. It is quite shameless. But there is a corollary to this. If your whole campaign is based on one big huge lie, make it your main slogan. Because, even today, many voters still think you wouldn’t dare lie about something so important. Unfortunately recent history suggests otherwise. We all remember the £350 million for the NHS lie in the 2016 referendum. It was famously on a bus. Except it seems that a good part of the voting population has forgotten the reason that slogan is notorious. It was a huge lie, the opposite of the truth. The have forgotten because the Tories have a new bus with a new slogan that a lot of voters appear to believe. In reality it is as big a lie as the one made during the referendum. Also consider the key

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The Tories will never undo the impact of austerity

23 days ago

One of the impacts of 2010 austerity we saw again last week. Widespread floodingruining hundreds of homes, and costing a life. Can we say those floods were caused by climate change? Not with certainty, but climate change has made this kind of flooding more likely. Can we say the lack of spending on flood defences under a Tory government made the recent floods worse? Not with certainty, but lack of spending has increased the damage flooding does more generally. In 2007 the Labour government commissioned from Michael Pitt (no longer available on a government website, but available here) which stated:“The scale of the problem is, as we know, likely to get worse. We are not sure whether last summer’s events were a direct result of climate change, but we do know that events of this kind are

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Corbyn and Antisemitism

26 days ago

There is no doubt that the Labour party has an antisemitism problem. But the figures (see below) suggest it involves a tiny minority. Claims that the party is “riddled with antisemitism” are a deliberate lie. What makes antisemitism claims against Labour powerful is that they are associated with Jeremy Corbyn. In particular many have suggested that Corbyn himself is antisemitic. And if you present the evidence is a certain way the claim looks like a strong one. I am no Corbyn fan, and actively campaigned against him in 2016. My problem with him was not antisemitism, but Brexit, and my fears came to pass this summer. But I could see immediately that there was something odd about the evidence produced to suggest Corbyn was antisemitic. With a couple of exceptions, they all related to his

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The differences between Labour and the Conservatives on fiscal policy

November 8, 2019

The Conservatives have learnt the lesson of 2017, and have ditched austerity in order to offer higher spending to the electorate.They hope voters decide that there isn’t much difference between the two parties on this score. But voters would be wrong to do so. In Labour’s case the extra spending is sustainable, whereas for the Tories it will not be. There are two reasons for this. The first is that the Tories are not proposing large tax increases, while Labour almost certainly will – in the last election corporation taxes and taxes on high earners. (In 2017 the IFS suggested their match between extra current spending and higher taxes wasn’t perfect, but they agreed Labour would keep within its fiscal rule, which is what matters.) That means for a given fiscal stance Labour should have more

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LibDem fantasies about the December election

November 5, 2019

There is one fact that too many people are currently in denial about. If Labour stay roughly where they are in the opinion polls then Johnson will lead a majority Conservative government from 2020 until 2025. We will either get his hard Brexit deal, or something worse. No ifs or buts, no caveats. It is just impossible for him not to win. Could a realistic LibDem surge at the expense of the Tories prevent that? The short answer is no. There are just not enough seats that they can win. A realistic objective is for them to get another 20 seats, with a few more if they do really well. That is just not enough to offset the much bigger losses that Labour would make to the Conservatives if Labour continued with its current polling. This would be just a repeat of the failure of the SDP in 1983. At

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Tactical voting advice for December 2019

November 2, 2019

According to a surveycommissioned by the Electoral Reform Society, around a quarter of voters plan to vote tactically in the forthcoming General Election. That is a lot of voters, although I would argue the number should be higher. This raises the obvious question, which is who should I vote for in my constituency? For many it is a good question, because the current polls suggest that the result is not obvious. Take, for example, the seat of Kensington in London. If you look at the last election the answer seems obvious. In 2017 Labour just won with just over 42.2% of the vote, with the Conservatives on just under 42.2%. The LibDems got just over 12% and the Greens 2%. So if you are inclined to vote LibDem or Green it seems obvious to vote Labour. There is a websitethat effectively tells

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Journalists’ own pact with the devil

October 29, 2019

While Dominic Cummings is no genius, he does have a good understanding of how the UK media works, and therefore how to manipulate it. There are many ways to do this, but one of the most obvious is to use privileged access in return for uncritical coverage. This is how it works. One of the prizes journalists most aspire to is being first with the news. To get an ‘exclusive’ story. In the political world the biggest generator of news stories is the government. This gives the government the potential to act as the devil to which journalists can sell their souls to. The value of access increases when the government reduces the amount of information it supplies for free in other places like parliament. The price journalists pay to be given privileged access to news, or more generally some

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Brexit is a denial of economics as knowledge

October 22, 2019

A well known Brexiters said it was almost worth doing Brexit because of the anger I feel about it. He is right about the anger. The prospect of Brexit has filled me with the same horror as austerity did. The connection between the two is obvious. Both involve subjecting the whole country to a policy that basic economic ideas tell you will do nearly everyone harm. We have seen nothing like this in my lifetime. The only person to try austerity (by which I mean fiscal consolidation in a recession) was Thatcher, and the policy was reversed (not stopped, but the consolidation was undone) within two years. Every government, and especially Thatchers, has pursued regulatory harmonisation and tariff reductions to increase trade. Now in just one decade we have seen both austerity for seven years and

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Is this good for Johnson, whether he wins or loses?

October 18, 2019

I have no idea whether Johnson will get his deal through on Saturday. As the broadcast media is obsessed by headcounts I will leave it to them. What I will say is that the idea that MPs will be taking a decision that has a profound influence on everyone in this country (in which will do such serious economic and political damage to the UK) on the basis of only two days of scrutiny with no assessment of its impact is just absurd, and typifies everything that is wrong about Brexit. Who knows why Johnson changed strategy during or before his meeting with Varadkar. Maybe it was fears about securityin Northern Ireland after No Deal created a border. Maybe he always had the idea in mind of going back to the EU’s original plan to keep Northern Ireland in the Customs Union and Single Market. It

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A People’s Vote or a General Election: how does Johnson’s new deal change things

October 15, 2019

There is a big debate at the moment among those who support a People’s Vote (PV) about whether it should become before or after a General Election (GE). Let’s assume for now there are sufficient MPs willing to vote for the PV before a GE option, and that Johnson prefers a GE which he thinks he can win so there would be no PV. From a Remain point of view, should a GE or PV come first. I last discussedthis when a Johnson deal was dead and there was talk of the Conservatives advocating No Deal in a General Election. I made the point, which those advocating a PV before a GE do not appear to have considered, that if parliament passed a PV before a GE Johnson could boycott that PV. As I was told at the time that I was not living in the real world, let me explain why I think a Johnson boycott

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If the UK and EU can do a deal is everything now fine?

October 11, 2019

In case you hadn’t seen it, hereis my article that was published in the Guardian yesterday. It was my luck that on the evening of publication, and after it appeared that Johnson had put a hopeless deal to the EU, his talkswith Varadkar suddenly sounded positive. But is everything as it seems? The obvious point is that one set of bilateral talks do not make a deal. Both parties had reason to sound positive. The EU does not want to be blamed for obstructing a deal, and Johnson wants grounds for going into the forthcoming election with the prospect of a deal. Cummings rhetoric is quite consistent with that, as they want to make No Dealers believe that will be what eventually happens and they also want Dealers (not least MPs in his party and cabinet) to think a deal is possible. He also wants

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The Liberal Democrats in the next General Election may win a few seats at the expense of a Johnson overall majority

October 8, 2019

Brexit could be decided in the forthcoming General Election. If Johnson wins an overall majority (or a majority with the DUP) then Brexit will happen: maybe something like May’s deal but more probably No Deal. As I suggested in my last post, holding a People’s Vote before the General Election has no impact on that reality. If in contrast Labour wins (most probably with a Labour/SNP understanding) then Brexit dies at least until the following election. That is because Corbyn is sure to lose a Public Vote on his own deal (if it gets that far), because the Tories will not take part and Remainers will back Remain. There is a messy third outcome, where neither the Tories or Labour have a workable majority. Even if that parliament contains a majority of MPs who support a referendum, holding one

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Should a second referendum happen before the General Election and what should accompany Remain on the ballot?

October 5, 2019

Some have suggested that an interim abC Prime Minister (abC = anyone but Corbyn), appointed by parliament after dismissing Johnson in a vote of no confidence, should hold a second referendum before a General Election. If the idea of this is to end the Brexit issue before an election, I think it is misguided for one simple reason. Johnson is likely to boycott the referendum. The reason is straightforward. Brexit is the issue that could win him the General Election. If the polls are correct and he captures most of the Brexit vote, but the Remain vote is split between Labour and the LibDems, then he gets to form a government with an overall majority for the next five years. I know there are reasons why that might fail, but it is the centre of his strategy. The alternative where he gambles on

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How the Brexiters have controlled the narrative around Brexit

October 1, 2019

“Senior allies of Boris Johnson have warned that Britain will face civil unrest on the scale of the gilets jaunes protests in France or the riots in Los Angeles if Brexit is frustrated.” So reportsthe Times. A well known far right activist sayson TV that he is amazed that there have not been riots yet, and also says there should be. In truth the absence of riots is not amazing at all. Let us leave aside the implication that when Leavers protest it will be a riot rather than a peaceful protest. If you are talking about people protesting or worse on the streets you are not talking about Vox Pops where people tell an interviewer that they are angry parliament has failed to get on with it. You are not talking about responses to opinion polls. Instead we are talking about evidence that people

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This is the most dangerous UK government we have seen in our lifetimes

September 27, 2019

It used to be the case that a Prime Minister that had deliberately shut down parliament against its will might have felt sufficiently ashamed that they would have resigned when the courts found against them. It certainly would have been true for most of my lifetime that they would have shown some contrition when the verdict became clear. If you ask me to prove those claims of course I cannot, because no previous PM would have even thought it permissible to shut down parliament against its will. But since WWII many senior politicians have resigned when they made a mistake of this magnitude. But Johnson is a Prime Minister like none before him, as Steve Richards showswith authority. If instead they had appeared unapologetic and kept insisting they were right, political parties in the past

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Corbyn stakes everything on tactical voting by Remainers

September 24, 2019

Those who argue that a Corbyn led Labour party can never win a general election need to remember the days after the 2017 election, when Labour were ahead in the polls. Contrast Corbyn’s and May’s reactions to the Grenfell fire, and don’t imagine Johnson would be much better than May. Grenfell itself was a consequence of a ‘let’s end red tape, private sector knows best’ culture that is still rife in the Conservative party, and will not change if a Conservative is Prime Minister after the next election, whether that is a majority or minority government. In those days Brexit was still relatively new, its impact on the economy had only been partially felt, and frankly it’s stupidity not fully realised. The implications for Ireland were not yet widely understood. Brexit seemed inevitable, and

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On the supposed gap in the centre of UK politics, or the alleged powerlessness of the UK median voter

September 17, 2019

A remarkable feature of the UK political landscape is how powerless what could be called the political centre currently feels it is. By the centre I don’t just mean individuals that call themselves moderates, but also UK business: capital if you like. How did this happen? It is a long story I’m afraid. The first and most obvious factor is the UK’s first past the post (FPTP) voting system for MPs. In earlier decades this was thought to empower the centre. If any party drifted towards a less central position in the political spectrum (left/right, or in two dimensions with open/closed), the other would quickly capture that centre ground and would be triumphant in elections. The wishes of the median voter were very powerful. But this assumed that the desire for power would always triumph over

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Why the Supreme Court must protect our constitution

September 14, 2019

This is a very short post about a critical matter. It will not be a ‘on the one hand, on the other’ type of discussion because there is one overwhelming argument. It is about protecting our parliamentary democracy, a democracy that in one area in particular relied on norms of behaviour that have now been broken. The Prime Minister has shut down parliament for his own political reasons, and the only institution that can stop both that and a Prime Minister doing it in the future is the UK’s legal system. Accordingto David Allen Green, Scottish judges are less disinclined to get involved in political matters than English judges. If this is correct, then the decision of three senior Scottish judges that Johnson had lied to the Queen in asking to suspend (prorogue) parliament may be overturned.

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Some observations on tactical voting in the forthcoming General Election

September 10, 2019

The first and most obvious is this. If you say you are a Remainer, or if you understand the nightmare that No Deal will create, or want to end the threat to democracy this government is, you haveto vote tactically. The converse is also true. If you don’t vote tactically, you by your actions are supporting a No Deal Brexit. You will be partly responsible for a No Deal Brexit. If you want a Brexit that does not involve crashing out, you might tell yourself that the only way of getting a good deal is to keep No Deal on the table. But it is obvious by now that Johnson has no intention of even trying to get a deal, because he knows the EU will not budge on the need to prevent a hard border in Ireland. Amber Rudd in her resignation letter made that clear, as have many other Conservatives. If

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Different kinds of fiscal stimulus

September 6, 2019

Newspaper day. In the Guardian I have a piecethat looks at how we should regard any tax cuts that Boris Johnson may announce as part of the forthcoming election. And make no mistake tax cuts are coming (we already know they intend to cut the tax on petrol), because the spending review signalled that the governments rule will change, as Chris Giles discussesin a good article in today’s FT in which I among other economists are quoted. . In the Guardian piece I argue that tax cuts are a bad idea because in the context of us leaving the EU they will almost certainly produce unsustainable increases in the deficit without much of a compensation in higher output. As I say in the Giles FT article, policies that if unchanged would lead to steady and permanent increases in debt to GDP are not a good

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Do Conservative MPs really think they can cope with the consequences of No Deal?

September 2, 2019

Dear Conservative MP You are no doubt bracing yourself for the short term consequences of crashing out of the EU. But you still feel that once we get over the shortages of food, fuel and medicines, things can get back to normal again after three mad, Brexit obsessed years. But have you thought about what the new normal will be? It will be anything but normal, and it will not be a nice time to be a government MP. The first and most obvious departure from recent normality is the breakdown of peace in Northern Ireland. A hard border is an inevitable result of crashing out. That border is the end of the Good Friday Agreement (GFA), and anyone who tells you otherwise knows nothing about Northern Ireland or hates the GFA. Stormont government, already broken for two years, has almost no chance

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Johnson suspends parliament to force a crash out Brexit

August 30, 2019

On Brexit at least (and who knows what may be next) UK democracy has been suspended. Yesterday the Prime Minister drastically reduced the number of days parliament will sit until we automatically crash out of the EU. On the critical issue of Brexit, the Prime Minister has become an unelected dictator. He intends to use his dictatorial power to restrict the supply of medicines and food to the British people.The device he has used is a quaint part of the UK constitution where the Queen decides when parliament sits or does not sit. Nowadays the Queen has no power so she takes advice from the executive. The Prime Minister instructed his lackeys to ask the Queen to prorogue (the technical name for suspend) parliament for 5 weeks and the queen approved. It is as if the President could shut down

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A New Macropolicy Assignment

August 28, 2019

With central bankers rightly pessimistic about fighting recessions, maybe it is time to give that responsibility to politicians, while keeping central banks in charge of keeping inflation at target. At the recent Jackson Hole conference of central bankers there seemed to be a general acceptancethat central bankers just do not have the tools to effectively fight a new recession. I discussed some of the reasons here. The most familiar is the lower bound for nominal interest rates, but Anna Stansbury and Larry Summers arguethat even before we get to the lower bound interest rates may be an ineffective stabilisation tool when they are very low. [1] This is not a problem specific to this period of time. Most people agree that the natural real interest rate (the real rate at which inflation is

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Why a November General Election looks most likely, and why a government of national unity will not happen.

August 24, 2019

When I wrote thisbased on Johnson winning a November general election, someone asked me whether it was a prediction or a warning. It was both. I still think it is the most likely outcome..Here are my thoughts that led me to that conclusion, which of course may be completely wrong.  Putting Brexit to one side, Johnson needs a larger majority to govern. So an election sometime in 2019 seems very likely. It is also clear he wants this to be a ‘people versus parliament’ election, where of course Johnson represents the people and parliament ‘is colluding with the EU’ to block No Deal. He has hit the ground running with various popular measures. So the key question is when in 2019 the election will be. There seem to be three possibilities. An election before 31st OctoberAn election announced

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Why did the UK become a failed state?

August 20, 2019

‘I should be the leader of a government of national unity’. ‘No you shouldn’t, someone else should’. I’m afraid if you were hoping I would write about this nonsense you will be disappointed. It seems to me right now nothing more than just another way for those who really dislike Corbyn to attack him and those who support Labour to attack everyone else. Rebel Tories will be hoping a crash out Brexit can be stopped another way, and if that fails or in the unlikely event that Johnson ignores parliament, who has the relatively unimportant job of leading a caretaker government will be decided days before it needs to be decided, and not before. The discussion is one illustration that the UK has become a failed state, where a government about to do great harm to those it governs draws comfort

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