One of the myths perpetuated by mediamacro is that management of the public finances is all about controlling our debt by keeping deficits down. As with so much of mediamacro, this is something no academic macroeconomist would say. Econ 101 (first year undergraduate economics) tells you that the deficit should rise and fall with the economic cycle. In particular in major recessions deficits rise rather a lot, and that is exactly what they should do. Econ101 also tells you that in a...Read More »
Why do some find the economics/health trade-off so hard to get? Because it’s like the Phillips curve.
The distinction between the short run and long run traditional Phillips curve (not the New Keynesian variety) is so ingrained in economists that it seems obvious to us. We sometimes forget that it took many years for policymakers to understand it. I think something similar is happening with the economics/health trade-off in this pandemic. There is undoubtedly a short term trade-off between imposing greater restrictions (in extremis, lockdowns) to improve health outcomes (a good) and the...Read More »
If anyone still doubts that Brexit was our Trump moment, look at some of the same characters (Tory MPs, newspapers, even voters) who supported Brexit getting behind what has become an anti-lockdown crusade. I use the word crusade deliberately. Rather than religion it is ideology that drives most anti-lockdown proponents. That ideology is libertarian, although to borrow a phrase from Chris Dillowon mask phobia, this libertarianism is just solipsistic narcissism. What the crusade isn't,...Read More »
This post follows on from my posttwo weeks ago, where I argued that there was a degree of inevitability that led us to governments led by Boris Johnson and Donald Trump. To summarise that argument, it is that right wing neoliberal governments in both countries have pursued policies that benefit the few rather than the many, and so to win elections they have pushed socially conservative ideas. But that push has been limited by a knowledge that some socially conservative policies can damage...Read More »
Sunak and most Tory MPs do not understand the economics/health trade-off, and many people will die as a result
It is well known and generally accepted that despite warnings from China, Italy and elsewhere, the UK government were late in imposing a lockdown that reversed the march of the virusThat mistake cost tens of thousands of lives, and a severe hit to national output. You might have thought that this colossal error would have made the government fear the virus. Surely mistakes would not be repeated. But as Harvard epidemiology professor William Hanage notes, having not learnt the lessons...Read More »
Is it a coincidence that the two countries that first championed neoliberalism (under Thatcher and Reagan), should end up with autocratic, populist and incompetent leaders (Johnson and Trump) in what is best described as a plutocracy? The thoughts below are, to use a phrase that Philip Mirowski once used about something I wrote, untutored, so comments via twitter (or DMs, or emails) will be gratefully received. Before addressing that question, there will be some who will think I am...Read More »
Whether its COVID or Brexit, this government is continuing to fail terribly at everything it does. Will Conservative MPs do anything about it?
Testing failureSo for many visits to grandparents are off. No one should dispute that the government needed to do something after a sharp increase in the number of positive tests. However there is also no doubt that one of the factors pushing them to act was the partial collapse of the test and trace infrastructure. Stories of people being told their nearest test was tens or even hundreds of miles away, or that no tests were available, abound, and now we have leaks of hundreds of tests being...Read More »
The UK Treasury bears some responsibility for the disaster of 2010 austerity, yet it has not accepted or understood the mistake it made. As a result it risks repeating the mistake, albeit in a milder form.The problem is that fiscal prudence is basic to the way the Treasury operates, and with few exceptions other priorities, including the macroeconomic health of the nation, are not allowed to get in the way of that goal. Only the most determined Chancellor can change that. It is a longstanding...Read More »
That is the question addressed in this debatebetween Jonathan Portes and Bill Mitchell. I found the discussion very frustrating, because it is really a debate about medium term inflation forecasts dressed up as something more fundamental. Both Mitchell and Portes agree that there is no need for taxes to rise to ‘pay for’ the fiscal costs of the pandemic. In an age of ultra-low real interest rates, shocks to the debt to GDP ratio like the Global Financial Crisis and the pandemic should be...Read More »
You can call it a second wave, or a resurgence of the first wave. But whatever you call it we are seeing in some European countries a steady (and occasionally rapid) increase in new cases after a longer period when new case numbers have been coming down or been stable. A good reason to not call this a second wave is that the first wave never went away. Changing social behaviour, aided by government support and a lockdown, reduced new case numbers rapidly. However governments relaxed the...Read More »