Winner of the New Statesman SPERI Prize in Political Economy 2016

Thursday, 30 June 2016

Personal annotations on our statement

Writing group statements, like writing joint letters, is never easy, particularly when it is done under the pressure of time and events. Good writing also never comes from committees. But I am happy that the statement that five of us released yesterday about Labour’s Economic Advisory Committee (EAC) expresses what I wanted to say. But from interchanges on twitter it is clear that people read things in different ways, so I thought it might be useful if I explain why I am happy with it. Needless to say what follows are my own views and may not be those of my colleagues who signed it.

I want to start with the beginning of the statement, which the media predictably ignored. In particular:
“Our collective view is that the EAC, and its various policy review groups, has indeed had a positive influence on the development of Labour’s economic policy, and we hope it continues whatever the result of current divisions.”

There were some who, when the EAC was set up, said it was just for show and would have no impact. In my own area of fiscal policy rules that proved to be completely unfounded. The EAC was important in creating Labour’s new fiscal credibility rule, which brings fiscal rules in line with mainstream monetary and fiscal policy in an age where liquidity traps can easily occur.

What the media did pick up on, as you would expect in the current situation, is this:
“We have always seen this body as providing advice to the Labour party as a whole, and not as an endorsement of particular individuals within it. For example we all share the view that the EU referendum result is a major disaster for the UK, and we have felt unhappy that the Labour leadership has not campaigned more strongly to avoid this outcome.”

When I accepted an invitation to be part of the committee I was heavily criticised by some for ‘providing legitimacy’ to particular politicians they did not like. I replied at the time that no endorsement of individuals was requested or given (the first sentence above), but also that any legitimacy that may have been obtained was more than offset by a vulnerability that comes from the freedom of EAC members to criticise decisions if we wished. That is of course what the second sentence does.

How do I justify this criticism? Again I must stress this is just my personal view. I have written right from the early stages of the Brexit campaign that I saw this as about the benefits that many people saw in being able to control EU migration, and weighing this against the economic cost in doing so by losing access to the single market. It was vital therefore to take seriously the warnings of economists that these costs could well be large. Jeremy Corbyn however seemed to suggest that when these warnings were repeated by the Chancellor they should not be believed because he could not be trusted. I doubt that was critical to the result, but it was nevertheless a serious economic, tactical and political error.

The final point I want to make is what was not said. We did not resign from the EAC, as Danny Blanchflower has done. [1] Again speaking personally I have always stressed that it should be possible, and indeed it is vital, for economists to give economic advice to politicians without having to endorse all their policies or capabilities, just as a medic or climate scientist might do. Resigning in this case would have been inconsistent with that view, which is why I did not take that step. I am also happy to remain part of the independent Kerslake review of the Treasury, which will report later this year. 

[1] Despite misleading reports suggesting otherwise, Thomas Piketty resigned over two weeks ago because of the pressure of other commitments.    

14 comments:

  1. "Jeremy Corbyn however seemed to suggest that when these warnings were repeated by the Chancellor they should not be believed because he could not be trusted. I doubt that was critical to the result, but it was nevertheless a serious economic, tactical and political error."

    I suspect that this depends on your perspective.

    Recent history (the Scottish referendum) had shown that for Labour to tie itself to a Tory campaign would be a disaster. So there was a balancing act to be done - to have your own campaign on your own terms - but of course a lot of this wasn't covered by the media.

    And Corbyn is perhaps a bit too straight/honest in his approach - too nuanced. He has been castigated for his 7 out of 10 remark about the EU - but isn't that just an honest assessment that a lot of people might share? And in the article that you link to, he is criticising Osborne, quite justifiably because he has a record of over-statement and abuse of statistics. Yet the rest of the article and his speech is very much pro-EU.

    I'm not sure what you're expecting Corbyn to do. Lie during the campaign, like everybody else on both sides?

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    1. "And Corbyn is perhaps a bit too straight/honest in his approach - too nuanced. He has been castigated for his 7 out of 10 remark about the EU - but isn't that just an honest assessment that a lot of people might share?"

      Prof Wren-Lewis said the exact same thing in a recent post - though added that it wasn't politically savvy. This particular point may therefore be preaching to the converted.

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    2. All Corbyn had to do was acknowledge that there would be tax increases and more austerity. True. Its just a question of whether it happens now or over the coming years.

      As for appearing with Tories I agree that was understandable. But he didnt appear in any of the TV debates - presumably as he and all his advisers knew he wasn't up to it.

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    3. @Aar - I'd be interested to know what would have been more politically savvy.

      @SH - I tend to agree that he could have phrased something along the lines of your first sentence. But I suspect that they didn't do this for fear of being misrepresented (because he is all of the time) as endorsing Osborne's predictions, which were fundamentally dishonest.

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    4. "All Corbyn had to do was acknowledge that there would be tax increases and more austerity"

      Good job he didn't then. There does not have to be. We need sane policy after Brexit and Wren Lewis st all can help with this.

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  2. I sent an email to Tom Watson's office in February 2013 asking him why he hadn't put more pressure on the BBC to challenge the Tories over their economic untruths and the reply I got from his staffer Paul Moore was that:

    "Mr Watson cannot intervene or offer advice on a specific query from a resident living outside of West Bromwich East."

    Maybe if Mr Watson had done his job properly...

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  3. Corbyn can deservedly be criticised for pouring cold water on the Treasury's report on leaving the EU, but so can Nicola Sturgeon, who has so far escaped criticism. It would be unlikely to tip the balance, but it didn't help. His seven out of ten comment was reasonable, since nobody could seriously think the EU deserves ten out of ten.

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    1. It was the SNP that came up with the idea of calling realistic economic projects 'Project Fear'.

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  4. I apologize. I took the statement as a message that you were resigning. New Labour and their analogues in the US are blaming Corbyn which I see as unfair and opportunistic. Vox:

    "Leave won big victories among traditional Labour voters in Northeast England. Arguably, a serious Corbyn campaign in those areas would have been able to sway enough people on the basis of pure political partisanship to flip the results. Brexit, many argued, was Corbyn’s fault."

    Is that an accurate statement about Labour voters? I don't see it as Corbyn's fault. He wasn't leading the Remain campaign.

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    1. It also seems a bit rich that he is criticised by the Labour Right for not delivering votes that were lost to Labour under Blair. Blair lost 4 million votes - many of them "traditional Labour voters" in "Labour heartlands" - the ones who have turned to UKIP.

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  5. I think our MPs have to take the lead here.
    Yes, the vote was for exit, but only by a 2% margin.
    Nearly half the voting population wants to stay in the EU, and many that want to leave also want to maintain the '4 Freedoms'.
    In fact (to my surprise) all the 'outers' I spoke to on Saturday were pro- the 4-Freedoms but anti- the political structure of the EU.
    Just because we voted out, it does not mean that we should let the swivel-eyed loons take the reins. Our MPs must step up and ensure that, if there is to be an EU exit, it is done in an open and cooperative way, retaining the Freedoms that the majority of the UK population wants.

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  6. Don't blame Corbyn for the referendum result.

    http://www.newstatesman.com/politics/staggers/2016/06/dont-blame-jeremy-corbyn-polls-show-only-tory-voters-could-have-kept-us-eu

    NK.

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    1. Just to be clear, I didn't (see text of post).

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