When economists play political games

I saw you talking to those people the other day. You really should think twice before being seen to talk to people like that.

Similar lines could be taken from countless novels about class, race or some other form of social exclusion. When I agreed to be part of a group that would occasionally advise the new Shadow Chancellor John McDonnell on economic policy, I must admit I hadn’t expected something like that to be said to me by economists I respect. Political hacks would say it for sure, but economists interested in promoting good policy?

Just to be clear, McDonnell’s group places no restrictions on what its members can say in public about policy. We are not required to support or endorse Labour policy. Indeed, to the extent that Labour does adopt a policy that any of its members disagree with, the group gives those members a slightly higher public profile if we make that disagreement public. As the media generally fails to distinguish good economic advice from political spin, a direct channel like this group seemed like a good idea, with no cost to its members except their time. Except ...

On Monday McDonnell announced a U-turn: he would no longer support Osborne’s new fiscal charter. The media focus, as ever, was on the ‘political shambles’ of a U-turn, with only the occasional suggestion that the charter itself was economic nonsense. (The body of this FT leader was an exception.) A few economists on twitter, however, suggested that this political shambles somehow reflected badly on the members of the advisory group. One described the members of the group being ‘branded’ by association. If other economists reading this sympathise with that view, you need to read on.

As this FT piece suggests, the new Labour position of not supporting the charter is likely to find general support among the advisory group. (We have not yet met.) Indeed, as I said to the FT, a huge majority of macroeconomists — particularly if they know something about fiscal policy — would recommend opposing the charter. I have no idea if the views of any of the group had any influence on this U-turn, but if it did that means the group is having some influence, which has to be a positive thing. Indeed, as I know some of those making this ‘guilt by association’ charge actually oppose Osborne’s charter, they should welcome the fact that we may have helped change Labour’s position. Instead they are saying his change of mind reflects badly on us!? It makes no logical sense, unless something else is going on here.

As I said in an earlier post, I am happy to give advice on macro policy to any of the mainstream political parties, whether I agree with their current macro or other policies or not. Over the past five or more years I have given public and private advice to Treasury officials working for the actual Chancellor. I feel strongly that governments should and can follow good macroeconomics whatever their political persuasion. For me to say I’m not going to talk to you because I do not like your policy on X would be as silly and childish as it sounds.

So what is going on with economists who would not blink an eye at me giving advice to a Chancellor whose policies I often (but not always) oppose, but suggest that when it comes to the Labour party there is some kind of guilt by association? It seems to me that they are, knowingly or not, part of a political game. The game is to give the current Labour leadership some kind of pariah status. If we were talking about a party like the BNP, that might make some sense, but for the main opposition party in which a radical leadership is going to have to reach a consensus with their less radical MPs it does not. Unless of course your primary interest is to support another party. Which is why the government and many journalists want to foster this pariah status frame of mind. It is a shame that some economists who are parroting this guilt by association line seem not to understand the political game they are inevitably playing.