The truth about the Single Market

With Brexit negotiations about to get underway, one area that continues to get a lot of attention is Britain’s future trading relationship with the European Union. People still opposed to exiting emphasise the economic costs they fear from leaving the Single Market. Many fret that the two-year limit for Article 50 negotiations is too short a time to come up with a replacement trade deal. Moreover, if one is eventually agreed, possibly after some interim arrangement beyond the two years, they say it is bound to be a poor substitute for the advantages of full membership. Even many Brexit supporters seem to accept that more expensive and reduced levels of trade with the EU would be costly for the British economy, depicting this as a necessary, if unfortunate, expense of regaining sovereignty.

We should all be less negative about the economic consequences of changing Britain’s trading relationships.

The full article is here.

We need big, bold economic thinking in the Brexit era

It was predicted that UK chancellor Philip Hammond’s final spring Budget would be low-key and short on exciting announcements. Cautious and careful was the expectation. Leaving aside for a moment the row over tax increases for the self-employed, these expectations were broadly met. But that doesn’t mean the Budget was an insignificant event.

The Budget provided a revealing insight into the current state of politics.

The article is here.

The economicisation of a depoliticised public life

In my forthcoming book Creative destruction I describe the way that economic policy has been depoliticised since the 1980s. The fatalist perspective associated with Margaret Thatcher’s TINA – ‘there is no alternative’ – applied as much as anywhere to the workings of the market economy. The acceptance of TINA indicated the demise of left-right political contestation for changing and improving society through differently organised economic systems.

Politicians of all stripes embraced this TINA outlook and reduced the scope of economic policy to managing the economy. The primary goal was ensuring stability. Much of this management function was assigned to technocrats, including souped-up regulators, expert-led commissions and central bankers. This outsourcing by politicians of their economic responsibilities to unaccountable bodies and institutions reinforced the conservationist, status quo orientation of economic policy that has proved so damaging to economic performance. Pro-stability measures have tended to stunt the functioning of creative destruction and helped entrench our zombie economy. Continue reading

Keeping the zombie economy on its feet

On 23 January the British government introduced its long-flagged industrial strategy. It was another in a long line of disappointing launches of industrial policies. I wrote an article explaining that Theresa May’s ‘modern’ industrial strategy isn’t nearly enough to boost productivity. Moreover, government economic policies that have primarily propped on the zombie economy are making matters worse. The article is here

What my new book is about

Creative destruction: How to start an economic renaissance

To be published on 29 March 2017 by Policy Press

The mature economies have been stuck in a long, contained depression since the 1970s. The pressing question that arises today is not why investment and productivity have been so weak, important though that is. Rather it is whether we are hitting the limits of effectively muddling through this dismal reality. The financial crash of 2008 was the first significant indicator that sustaining reasonable living standards could no longer rely on an ever-expanding financialised debt economy. The subsequent recession was one of the sharpest since the 1930s but thankfully the system’s collapse was avoided. Can we expect to be as fortunate when today’s bubbles burst? Continue reading

Economists: culprits or scapegoats?

At the start of this year Andrew Haldane, the Bank of England’s chief economist, declared that the economics profession was ‘to some degree in crisis’. He highlighted its ‘Michael Fish’ moment before the 2008-9 financial crash when most economists were as off the mark as the infamous BBC weather forecaster in anticipating an impending hurricane in 1987. Haldane went on to admit – ‘a fair cop’ – that economic experts at his own Bank, as at the IMF, the OECD and the Treasury, had seen their gloomy predictions of the effects of a vote for Brexit confounded by what actually happened. The economy continuing to run along pretty much as it had before the referendum, even ticking up a little as 2016 went on.

The clarity of Haldane’s mea culpa about economists getting their predictions wrong wasn’t matched by his explanation for why. Continue reading