What was the most important point about Ed Miliband’s speech to the last Labour party conference before the election? The UK media had no doubt. It was that he forgot to mention the deficit. No matter that Ed Balls had spent much of his previous day’s speech laying out their policy on the deficit, which has been intelligently discussed by the IFS and others. Miliband had in his speech forgotten the paragraph where he says how important the deficit is, and he was going to be taken to the cleaners for it.
I’m not just talking about the right wing press here. Channel 4 news likes to think of itself as being a little more highbrow than other news programmes, and I’ve no doubt that conservatives would describe it as left wing. So here is a link to John Snow’s interview with Miliband yesterday (skip intro and question on middle east to about 3 minutes in). He asks Miliband what the greatest issue facing the next British government is. Miliband responds that it is getting the country to work for most working people rather than be stuck with a more unequal country. Interesting answer, but inequality is not an issue mediamacro recognises. It was a trick question. Now that is twice that you have forgotten to mention the deficit, responds Snow. How could you not mention paying off this appalling deficit? Snow continues. Surely it is the most important issue of all. It is the essence of our economic crisis. And so on.
Now my point here is not about bias, and how this interview could have been scripted by George Osborne. It is about the banality of it all. If you are going to talk about the deficit, ask some real questions about the differences between Labour and Conservative plans. Ask why Labour thinks that debt should not come down more rapidly. There are lots of meaningful questions you could ask. But trying to make a great issue out of a forgotten part of a speech is just silly. It is gotcha journalism for those who get their economics from listening to political commentators. The implication that the deficit is all important, and linking it in a causal way to the recession, is mediamacro at its worst.
What is the really important thing that has happened in the UK economy over the last six years? It is not that the deficit went up and then has started coming down. It is that UK productivity has stalled, and as a result real wages are lower than when the recession began. That is what really matters. That is not a ‘political judgement’; it is what most economists and most ‘ordinary people’ will tell you. But not in mediamacro land. So when Cameron gives his speech to the Conservative party conference, and does not mention this terrible productivity performance, I doubt if one single journalist will even bother to ask why that was not in his speech. This is journalism at its most pathetic.
And what did either Balls or Miliband (or indeed this blog) suggest should be done about productivity?
Saying it would be better if productivity were higher is not actually a policy.
Labour does have something to say about the deficit, hence the oddity of Miliband forgetting to say that section of the speech.
Nothing about productivity appeared in Miliband's written speech, so he never forgot about it, which is why no news outlet asked him about it.
I would be very interested to know what this blog thinks should be done about productivity. The views about the evils of the media in not asking about things Miliband has never expressed any opinion or policy about, not so much.
a good point. The problem of low real wages for the majority of workers is not just a problem of productivity (the pie not growing) but also a problem of pie distribution, and Milliband could have talked about that.Delete
Although maybe talking explicitly about redistribution is verboten for a Labour party wanting to get elected in this country?
Miliband did go on at great length about falling real wages (although not in those explicit terms), which is arguably more important than productivity.Delete
On productivity itself. I think a part of the answer is that aggregate demand is too low and that productivity stats are low due to a large chunk of capacity being under utilised due to insufficient demand. The solution in that case is pretty obvious.
But Miliband did mention inequality in his response to Snow's most important question. So there was an opportunity to question him further on that. That would have been interesting. But no, that was not part of mediamacro's script.Delete
SpinningH: A.Paterson above neatly answers your point - but whilst you are correct to ask what "Balls or Miliband (or indeed this blog) suggest should be done about productivity", surely an even more important question is what the government presently in power who are actually controlling the levers - in the shape of Cameron/Osborne - propose to do about poor productivity and weak real wage growth. The fact they don't even mention the issue - which negatively impacts on the majority of the UK population (making it an enormous, unavoidable issue) - tells its own story and ought to help many undecided people how to vote next May.Delete
Sadly, I don't think there is much that can be done about poor productivity. S W-L hasn't suggested anything and nor has anyone else really (save for the usual suspects calling for further supply side reform.)Delete
Miliband and Labour also have no policies at all to enhance wage growth. Labour' s answers to the 'cost of living crisis' don't address that. Proposing to freeze energy bills and raise the minimum wage by 2.5% above CPI are more or less it, and neither will change wage growth. The former is just daft and arbitrary price fixing of the most knee jerk kind. The latter is worse than leaving the decision with the low pay commission and is so small in any event that the Tories should just match it.
Miliband would, no doubt, have much preferred to have been asked about inequality. Labour does have some proposals to tax the rich (the crazily impractical mansion tax, and the revenue neutral 50p tax band.))
It is the job of interviewers to ask about those topics politicians don't want to be asked about. For Labour that is the deficit, wherre the news story was Miliband's forgetfulness. If you don't think it newsworthy that a politician forgets to deliver 20. minutes of his text, on the areas where he is politically weakest, you are wholly unrealistic about journalism.
You are right. It is wholly unrealistic to expect an interview with a prospective PM to try and inform the viewer about what policies might be, and how they differ from the policies of others. Instead it is just a form of entertainment designed to reinforce a particular political view. How silly of me. Must try and be more realistic in future.Delete
A mixture of confused generalisations and mostly inaccurate (at best) and untrue points raised which appear to be written as self-evident truths, suggestive of a significant lack of knowledge of economics. Plus you have again talked about Labour! - When my point was expressly concerning the most important group of people at this time - those in power. Please focus on the Conservatives and their complete lack of acknowledgement of the productivity/wage growth problem, and therefore their lack of policies to address this issue.Delete
The first paragraph however is most revealing.
"S W-L hasn't suggested anything and nor has anyone else really (save for the usual suspects calling for further supply side reform.) "
Both completely untrue, demonstrating a staggering ignorance of both the problem itself and what has been going on in economics these past 5 years - much research and many suggestions have been forwarded relating to potential remedies - including from SWL who in the last few years has discussed them on this very blog, along with his own ideas...and of course not just supply side reforms!
Just three are...
Your last paragraph is largely incoherent in a number of ways. Indeed it is "the job of interviewers to ask about those topics politicians don't want to be asked about". Did I suggest they shouldn't? I even said that it was correct to ask! My comment then clearly stated that "an *even more important question* is what the government presently in power...", highlighting that journalists should be asking Cameron/Osborne about the productivity issue and wages. Again, rather than just focussing on Labour, for consistency shouldn't you also be demanding journalists ask the Conservatives about this topic which they clearly don't want to be asked aboout?
An impressive straw-man attack in the final sentence - "If you don't think it newsworthy..." I do. Plus, it wasn't 20 minutes of text - unless you read it incredibly slowly. The straw-man attack is neatly completed with the final thrust "you are wholly unrealistic about journalism". Its so impressive since in my above comment I wrote "***you are correct to ask what "Balls or Miliband (or indeed this blog) suggest should be done about productivity"***.
In a sincere was I suggest you read things through carefully multiple times, drop the prejudices and political bias, don't generalise and construct false positions for others - particularly not for the host of the blog (did you get around to apologising to him for the falsehood you fabricated so you could then falsely accuse him of 'cherry-picking data' back in the summer?). Lastly and maybe most importantly, stick to whatever your strong points are -which means giving economics a very wide berth.
@SpinningHugo - The suggestion that this line of questioning is merely a journalist asking difficult questions doesn't wash.Delete
First off, in asking "how are you going to deal with the deficit" the interviewer is begging a number of questions:
What priority should be put on deficit reductions?
The threat of the bond markets has not materialised, there is still the question of what level the national debt will be stabilised at but Reinhart-Rogoff, the main bit of research used to justify concern over debt levels has been thoroughly debunked.
Is austerity the right solution for the deficit?
We've had mild austerity and unimpressive growth, countries that have had more austerity have fared even worse.
The line of questioning taken by Snow as well as the media narrative in general assumes that deficit reduction is of great importance and austerity has to be the solution despite good reasons to doubt both answers.
Furthermore, I'd have to ask if you expect anyone interviewing Cameron next week to do a similar gotcha and patronisingly explain how his government has failed to address rising wages.
Exactly. Snow's role in this interview reminded me of the Monty Python skit, "Argument", in which the paid "arguer" confutes denial with refutation (or disagreement with discussion). I enjoyed the few, brief moments in which Miliband struggled not to laugh. In what tiny segment of human experience is a nation's debt the most important issue it faces?Delete
somebody ought to tweet this to @jonsnowc4ReplyDelete
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A fine study could be undertaken of the last 6 years into metamacro; what journalists and politicians have said and emphasised as counterposed to the discourse of the econoblogs largely coming out of the universities.ReplyDelete
I guess its stalling productivity, falling real wages, falling real household incomes. The role of government fiscal policy in helping this along - e.g. increasing VAT, doing nothing about house price or rental cost inflation etc. Wages are being squeezed, and the costs of living have gone up. I would have probed the 10p tax rate plans - so how much better off would the lowest decile or quartile of earners be? what would be the commensurate reduction in benefit claims? will they stick with the 10p tax rate, or cancel it after 12 months like Gordon Brown did?ReplyDelete
Excellent post, but a little surprised that (as far as I'm aware) Miliband hasn't 'closed the circle' by not only pointing out the decline in real wages as a result of stagnant productivity, but strongly linking it to the worse deficit reduction figures broadcast this week where as one economist interviewed summed up “Slow progress in cutting the deficit is mostly down to muted wage growth constraining income tax revenues". And..."Higher borrowing was largely driven by weak income tax receipts, reflecting weak wage growth..."ReplyDelete
I refer to the Guardian article on this - but wanted to check the Telegraph's take on it but so far have not found (using Google) anything mentioning the increased borrowing and Osborne this week. They do have of course Miliband missing out the deficit paragraph, which appears is far more important than Osborne actually missing the deficit reduction and having to borrow more (again)! Strange days indeed...and begs the question where (in the polls) would the Conservative party be without the predominantly right-leaning media of this country - the Daily Mail, Telegraph etc?
There are three topics that are associated with the recent three term Labour government in important and negatives ways: Iraq War/WMD, The Deficit and Immigration. It is striking that Milliband did not talk to the last two at least in his speech and any commentators would be likely to query such ommissions.ReplyDelete
The productivity decline, along with the output gap, are rather arcane concepts that fascinate professional economists and interest no one else at all. It would be startling if any mainstream news coverage asked about either, and even more so if Ed (or DC/NC/NF) could give a remotely useful response. I doubt if a trained economist could give a good answer - most likely these arise from problems in measurement and definitional problems.
Ironically, Cameron/Osborne should be questioned by commentators about the deficit - in the sense that it is not a problem, but merely being used as the excuse to pursue the ideological goal of a much smaller state.Delete
Similarly, "The productivity decline, along with the output gap", whilst indeed arcane to most, should really be of great interest to people and may easily be 'decoded' and therefore understood by all: Particulalry the former which is linked directly to stagnant/falling real wages and declining living standards - things most people have experienced and can easily relate to. The fact that commentators and journalist do not highlight this simple concept, but instead focus on the non-existent deficit problem only serves to illustrate how poor the standard of political/economic reporting is, as well as the extent of their political bias.
Let me translate those terms into colloquial english.
Stalling productivity=stalling wages. Though wages can be raised ahead of productivity in the short term, productivity growth is by far the most important cause of wage growth. Do you think people don't care about wages?
The output gap=unemployment. A negative output gap causes needlessly high unemployment that is (relatively) easy to get rid of. All you need is some monetary and/or fiscal stimulus. Surely there are a lot of people who would want to bring down unemployment.
While the concept of an output gap is very useful, you have a point in that there is currently quite a bit of disagreement about how it should be measured.
Do think some of the problem is that it is very difficult to measure productivity in predominately service based economies? What's the productivity of a nurse? so that the question is meaningless.ReplyDelete
See GDP by Diane Coyle pages 126 et seq
The problem is not only that 'mediamacro' - more or less equivalent to Paul Krugman's Very Serious People - wants to talk about irrelevant topics. The problem is also that the politicians, even 'strong' ones like Ed Balls, let them. How should the interview have gone?ReplyDelete
SNOW: "But surely the greatest problem is the Government deficit" (or something like that).
MILLIBAND "The deficit is indeed a problem which the current Coalition has made much worse despite it being at the heart of their declared policy when they came to office. Why is it much worse now? Because the Coalition has failed to get the country working again to the extent that there are increasing tax revenues to pay for all the vital things that only government can do, like the national health, care for our older citizens (add ad nauseam). Sure, unemployment has come down, and this is good for Britain, but it has only come down at the expense of reducing productivity, having to subsidise minimum wage jobs, basically failing to allow the market to create the wealth through increasing productivity which alone could make better, more sustainable, economic jobs for all our people"
You get the idea (I don't write politics but it honestly doesn't have to be that hard).
What made Salmond a master politician was his ability to rebuff and rebuff again all the propaganda from the so-called 'establishment'. He always begins like that demolishing the other side before he offers his counter arguments. I did not agree with his nationalist goals but as a more radical politician he got 45% of the voters ; sheer craft and intelligence and experience of handling silly TV hacks.Delete
The London BBC replicates Tory Press ( 6 papers) each day on its press coverage and then its interviewing hacks adopt the same agenda ignoring the other issues the Leader of the Opposition discussed. So Today, silly PM and screeching Newsnight do not get us far in UK political, economic and sociological analysis. A bubble of bias if I saw one.ReplyDelete