Winner of the New Statesman SPERI Prize in Political Economy 2016

Friday 13 May 2016

Media, Economics and Brexit

Martin Sandbu at the FT says “It is now fair to say that the debate on the economics has been won by the Remain side.” He was of course talking about what the Bank of England said yesterday, rather than the 196 economists who signed our letter, but together they present an important test for the non-partisan media. The extreme difference between the amount of coverage the Bank got (blanket) and our letter got (practically zero) tells us something important about how media coverage works: the Bank is after all just a collection of economists. [1] (The list of those who signed our letter can be obtained from here.)

The media will not, of course, go as far as Martin and say the economic argument has been won. But what they can say is that all the leading economic institutions and the overwhelming majority of academic economists think that Brexit will involve significant short term and long term costs. That is now a statement of fact, which readers of some very non-partisan tabloids may not be aware of. My guess would be that there are at least 25 academic economists who think Brexit will involve significant costs compared to each one who thinks it will bring benefits. As I said here, that is as close to unanimity among economists as you will ever get. As it is a fact, saying that it appears to be so in no way breaches impartiality.

They could go further. The main response of the Leave campaign has been to say all economic forecasts are hopeless. They are no doubt referring to unconditional macro forecasts of the ‘what will growth be next year’ type. However the assessments made by all these economists and economic institutions are not unconditional forecasts, but conditional forecasts: what difference will Brexit make. They are much more reliable than unconditional forecasts. (This point can be got across with simple analogies: a doctor will tell you that being overweight increases the chance of a heart attack, but not when you will have one.)

So trying to discount the near universal assessment of economists by referring to macro forecasts either represents dangerous ignorance or deliberate obfuscation. But for those with little knowledge of these things, it is a deception that could work. Pointing out the difference does not breach impartiality, but informs the debate.

Brexit in the UK, and Trump in the US, represents a critical challenge to the ‘shape of the earth: views differ’ style of reporting. ‘Balance’ should never involve ignoring facts that are awkward for one side, or not challenging statements that are false. How many journalists (particularly political journalists) recognise this may determine two critical elections for both the UK and the whole world.

[1] Of course letters are not random samples, but it is not often you get letters from 170+ academic economists. The letter is important because academic economists are hardly part of the establishment, and indeed academics are usually able to say what they think without fear of any consequences.


  1. 'Balance' isn't understood in relation to facts, but instead to opinions.

    Thus balance requires that baseless argumentation is given generous airtime, if baseless opinions are widely held.

    There is a genuine absence of a media outlet that defines itself as impartial to the facts, rather than impartial to opinion (the de facto position of the BBC).

    Funding would be a problem. Advertising? Partisan government? Both palpably interfere with broadcasting...

    But if monetary policy can be delegated, why not objective media? It's surely a public good.

  2. Yet again there has been a BBC Charter renewal without forcing the BBC to use academic peer-review data from UK universities (which are state-funded, like the BBC), and instead BBC journalists will continue with their inane political centrism delivered with the cynic's sneer.

  3. The economics argument is one thing. But there are political arguments that could trump economics. Getting rid of unions might be, on balance, economically suboptimal (greater inequality, less purchasing power, etc.), but attacking unions augments elite power. So good-bye, unions, if it is political possible (and elites made it possible in the UK & US from Reagan & Thatcher). Dress it up in identity politics and you get workers voting right-wing--makes little economic sense, but it's all about power.

    Don't presume Brexit is primarily about economics. From my observations, it's more about sovereignty (politics) and power (also politics).

    So, I agree with your assessment of Brexit--but the picture is far bigger and requires breaking the narrow confines of macroeconomics and returning to political economy. Right now, it's like you folks are sticking with Newtonian mechanics as taught in high school, while the motion of the heavenly and earthly bodies is governed by mechanics of general relativity.

  4. I'm not sure how far the following thought goes but ... a clear majority of UK economists advocated joining the Euro currency union. So maybe a little bit of 'views of the world differ bias' is useful because weight of opinion does not equal probability of being right? This does not amount to a defence of Brexit media coverage.

    1. Do you have a reference to that poll? Who were 'economists' in this context?

    2. here:
      happy to be told not representative!

    3. Fascinating result, economic historians and macro-economists in favour, monetary economists against. US macro-economists, of course, were against. (Although their monetary economists, interestingly enough probably were in favour as the Euro keeps the government's hands off the money supply.) Mundell whose model Krugman always uses as gospel, is actually a firm supporter of the Euro.


  5. The Brexiteers don't appear to have any sense of irony. If "all economic forecasts are hopeless," what about their own assertions of economic nirvana after leaving the EU.

  6. You say that there has been near unanimous agreement amongst economists that the answer to the question "Will a post-Brexit Britain be more or less prosperous than one that remains within the EU?" is that Britain would be less prosperous, and whilst I would agree I would argue that that is not the most important question.

    Consider this question, "Would a post-Brexit Prime Minister be more or less able to make Britain more prosperous than were Britain to have remained in the EU?" Consider that you are the Prime Minister and shall remain there for some time:

    You could take in as much migration as we do at the moment (or more),
    It seems obvious that trade with the EU would reduce but if Britain could trade more with the rest of the world the answer to this question is yes.

    It seems that Britain could make up this lost trade with the rest of the world. The EU currently acts as a tool for agricultural protectionism and if we could rid ourselves of agricultural import tariffs and farm subsidies we could all have much cheaper food: with similar things able to be said about other industries. (At this point the argument I want to make is that the REAL reason to get rid of agricultural protectionism is because of the hugely beneficial effects it would have on those in the developing world, but external benefits are so often ignored in this debate) It seems reasonable then that Britain could be better off in the long-run if certain policies be pursued. (NB. Simon, I would highly value a response to this claim and a counter argument if you believe such a "perfect government" could not pursue policies to make Britain more prosperous in the long-run.)

    The next thing to be said is rather obvious: That's all very well but it isn't going to happen. To this the response is very simple: not to the letter of optimal policy and not straight away but soon enough some version of this optimal policy will be implemented. Why? Because when in a democratic society an optimal option will be chosen by a group of rational and self-interested voters. One might well argue that voters will not always make the best choice (eg Austerity) but we must always start from an assumption of rationality and then break it down from there or else all trust in democracy and markets must be misplaced.

    Anyone who does not trust their voters and relies on this lack of trust as part of their argument must be willing to do so openly, and up to now I have not met anyone willing to use this as the final piece of their claims.

  7. Would be interesting to hear what your view is of this:

    "Former BBC Trust Chairman Sir Michael Lyons Says Broadcaster Is Biased Against Jeremy Corbyn"

    I think there is a lot of feeling, not just with this, but with other issues as well that given large funding cuts institutions are being intimidated into 'toeing the line'.

  8. Hi Simon - just a quick question. I often read your blog and have a number of times shared on facebook your posts. The frustrating thing is that it comes up on my wall with a preview pain that says your comment about how you have to moderate comments rather than coming up with the title of the blog and the first couple of line that show what the blog is about. Is there any way that can be changed?

    Dave Evans

  9. "The letter is important because academic economists are hardly part of the establishment, and indeed academics are usually able to say what they think without fear of any consequences."

    Are you serious? City-BOE-academic economists are a very closely knit group. Where were academic economists when the financial crisis was building up during the Great Moderation- hardly if they were not part of the establishment were they bringing the City, the BOE or Government to account. Ultimately it seems many macro-economists end up working in the City. At the global level you can add the IMF - closely associated with MIT and the Fed, with that of Wall Street, and Chicago/Minnesota. A few economists have taken on the establishment, such as Stiglitz and the Washington Consensus, but this is very rare. You will usually end up being sidelined if you try that. Remember the invective he got? The economics profession, especially the macro-economics profession is a very powerful force for groupthink and keeping things the way they are.

  10. The following I think is a very balanced view of Brexit scenarios. Being a market based forecaster it does not rely on Krugman-Mundell gadget based arguments but also understands the real economic rationale behind the Euro - trade financing.

    “The “remain” scenario would be mildly credit positive across sectors as it would end uncertainty surrounding the “EU question” for the medium term with limits defined on the extent of UK integration. The effects would, however, be insufficient to result in upgrades in any sector, including the sovereign rating. However, EU migration to the UK would remain high and the same UK/EU tensions could re-emerge in the longer term.”

    “UK exporters would benefit from improved price competitiveness, due to sterling’s depreciation. But UK companies with significant foreign currency debt would face servicing issues. ”

    I like the second quote – it is balanced between the Krugman neo-classical model view and those that properly understand why many countries actually like the Euro – trade financing.


  11. .
    I have no opinion on Brexit versus Remain, I am, after all, an American, but:

    The impression that I am getting of the debate is that Prime Minister David Cameron and fellow Remain proponents are using compelling logic to support their cause. Normally you would expect them to prevail, especially since Prime Minister Cameron is clearly the highest functioning and capable politician in the UK.

    However, the Brexit proponents, while appearing to use logic are really using psychology, appealing to a dread of loss of sovereignty and general revulsion over subservience to a foreign entity.

    Logical economic arguments may not override psychological appeals. Many may view the price of a few thousand pounds for their sovereignty to be a fine bargain.



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