Everyone agrees that the UK Institute of Fiscal Studies is great. It is perhaps best known for its commentary of macro budgetary issues, but it does a great deal of detailed top class research into the micro impact of different forms of taxation, and much more. Today it released its assessment of the different political parties’ plans for spending and taxation policy after the election. It makes two very important points: that the Conservatives plan much greater cuts than the other parties, and that there are important gaps in how much each party have told us about how they will achieve their aggregate plans (with probably the biggest ‘black hole’ with the Conservatives, although do not expect to hear that comment on the BBC).
At the same time as reading this document, I was also writing my next macromedia myths post, where I complain about the lack of media exposure given to the problem of the liquidity trap or Zero Lower Bound, and why this problem is central to the critique of austerity during a recession. So I thought I would just check that these terms appeared somewhere in the IFS document. They do not. All I can find is this paragraph:
“A lower level of borrowing would imply debt falling more quickly. This would have the benefits of leading to a lower level of debt interest payment and potentially leaving the UK better placed to deal with any future adverse event (such as the public finance challenge posed by an ageing population or any future recession). But reducing debt more quickly would also require more in the way of tax rises and/or spending cuts.”
If I have missed a section where the risks of rapid deficit reduction when interest rates are still so low are discussed, I shall remove this post. But if such a discussion is indeed absent, I think I can reasonably complain. Why has the IFS chosen to go long on numbers, and short on ideas? Their analysis is a key resource for the media, and so if the IFS do not even mention such basic macro points when discussing macro policy, it becomes a little less surprising that the media also ignores them.
I have always tried to emphasise that I regard the mediamacro problem as a system failure, rather than a problem with particular newspapers or journalists or editors. I have also tried to stress that I remain unclear as to what the critical drivers of this problem are: a biased print media, the role of the City or something else. That something else could potentially include, at least in the UK, the way academic ideas fail to be transmitted to the media by academic think tanks.