Winner of the New Statesman SPERI Prize in Political Economy 2016

Tuesday 2 August 2016

Blanchflower on the Economic Advisory Committee

David Blanchflower has an article in today’s Guardian about his experience on Labour’s Economic Advisory Committee (EAC) which was chaired by John McDonnell. I agree with a lot of what he has to say in the article, but not with the picture painted of how the committee was used. He ignores the formation of Labour’s fiscal credibility rule which is an important and tangible consequence of the committee’s advice, and Mariana Mazzucato’s work featured strongly in John’s speeches. (More details here.) By ignoring these things he allows some critics to conclude that we were being used just for our reputations: that is simply false.

He also fails to mention the groups John McDonnell established to look at particular economic policy areas: groups that were quite independent of the EAC and the Labour party. The one on the Treasury chaired by Bob Kerslake (details here) will probably report at the end of this year, and if our discussions are anything to go by it should be of great interest to anyone concerned about this key part of the UK’s machinery of government. David himself was chair of a similar group on monetary policy (of which I, Adam Posen on John McFall were also members), and again preliminary discussions were very positive, so personally I regret David ended that at the same time as he resigned from the EAC.

I have seen so much nonsense written about how we only met twice (largely our choice), and about who attended (the only person not to attend either meeting was Thomas Piketty, and he resigned before David Blanchflower because of the pressure of other commitments). I and other members did not resign from the EAC: see the joint statement from 5 of us here. That statement was critical of Labour’s inability to prevent Brexit: I give my own reasons for making this criticism here. As David notes in the article, I feel strongly that for Jeremy Corbyn to continue after 172 MPs voted no confidence in him as leader would be disastrous for the Labour party. However I also believe John McDonnell should be praised for openly involving academic economists in policymaking, and in being prepared to use their advice.   


  1. I do hope you'll send this to The Guardian because it isn't the impression they've been giving for quite some time.

  2. Is Blanchflower angry at the Lib Dems as well, given that the Ashcroft poll put Labour on 63% Remain and the Lib Dems on 70%, which was less than Green?

    That attack looks like a straw man to me, reflecting other previous frustrations rather than the numerical evidence on the referendum.

    I don't know if its the case but Paul Krugman has stopped frequently blogging for the first time since he began his blog, coinciding with his support for Hillary Clinton. I can imagine he is getting sent quotes from his own columns about opposing the Iraq war, unlike Clinton who voted for it.

    I look at Corbyn as a conscientious objector, for whom the economy is less important than stopping the British military. And those rare guys can be very stubborn.

  3. Your inability to foresee that in a contest between Corbyn and Smith your criticisms of Corbyn will be milked for what it’s worth and even extended betrays a political naivety and I dare say professional misjudgement. Unlike Mariana, you have descended into the political arena by exploiting a position you were appointed to on the basis your economic (not political) expertise. In this arena, most people cannot see beyond the FACT that you’re supporting the same candidate as Blair, Alastair Campbell, John Mcternan, and a host of Labour MPs that have used their access to the media and even Twitter to insult LP members these past 10 months. You compound it by basing your political support of Smith solely on the COUP most members detest and are determined to crush. Why should the PLP be rewarded for insulting the membership? I tell you, Smith will lose very badly and you will be diminished both as an economist and a political analyst.

    1. Now that makes me very angry. I was writing my blog, which was occasionally political, well before the EAC. I was invited on, quite rightly but bravely by John, with no conditions attached to what I said. I've taken a position on this contest - as I did on the 2015 GE and Brexit - because I think people will be much better off with one outcome rather than another. By being on the EAC we saw ourselves as helping Labour, not just one part of it, and it is only in the interests of Labour that I'm arguing now.

      There are so many misconceptions in what you say. Why should this have any impact whatsoever on my ability as an economist - or do you only rate economists who follow your politics. I like everyone else think Corbyn will win - my abilties as a political analyst will only fall if that does not turn out to be the disaster for Labour (and the left) that I foresee. I suggest you stop seeing this as a morality play and start thinking about consequences.

    2. Anonymous 2nd Aug 2016 06:39 - At the risk of being awarded the OBN, this is the type of comment that exemplifies the one dimensional nature of many of Corbyn's most fanatical supporters and what they get so wrong. Krugman gets similar attacks in the US from Bernie supporters: "you're either with us 100% or you are a traitor to the cause". Anyone who has followed Simon's and Paul Krugman's writing can clearly see that they are among the most important supporters of a progressive, liberal democracy who provide hugely important and influential intellectual ideas and credibility to liberal democracy. The left desperately needs advice of the quality provided by Simon and Paul Krugman in order to counter the spin and crank policies of the right. One of the most effective counters to the right wing is economic analysis that demonstrates the right wing are pushing completely economically stupid policies, particularly as the right regards it as their domain of competence. As well as the vital economic policy information the political commentary is very useful too and helps clarify the political options while Simon's media analysis is class leading and I wish that more people were following it. You may disagree with Simon's conclusions but it is idiotic, spiteful and detrimental to the left wing progressive movement to cast doubt on his motives. Labour has got itself into a complete mess and it's complicated - there is lots of blame to go around and there are lots of opinions - the key thing is good faith. Simon always writes in good faith, and that demands reciprocation. There's enough bad faith in this debate without adding to it.

    3. Hang on though, this piece is essentially Simon Wren-Lewis pointing out several areas of the article written by David Blanchflower where he has let his bias cloud his judgement - omitting details, which would have brought balance to his argument, so as to portrait Corbyn's Labour in a more negative light.

      "Why should this have any impact whatsoever on my ability as an economist...."
      It's not so difficult to imagine Blanchflower ask the same question. I can't imagine he sat down to write a twisted, biased, hatchet-job of an article deliberately. Yet, unknowingly maybe, he did. Is it too much to consider your ability to judge economic matters could be similarly compromised? I'm not trying to attack you - I'm just pointing out the obvious. The moment you say 'I support Smith', then everything you say about Smith or Corbyn has to have an asterix next to it.

      ".....or do you only rate economists who follow your politics."
      This must be one of the pro-Corbyn nutters is it? The 'Mutually Assured Destruction' post makes a similar 'most people who support Corbyn can't be reasoned with' stance.

      For the record, I'm no Corbynista. But I can see Labour won elections by ignoring their core vote and shifting to the more affluent. These chickens have come home to roost as their ignored core vote disappeared and went where all the desperate go - nationalism (UKIP, SNP) or religion. Labour's unelectability predates Corbyn's leadership. I don't think we can try to retrace our steps to 1997 with a guy who will support or decry big Pharma's attack on the NHS depending on which side of his mouth his is speaking.

    4. Its not that at all. I know from discussions that different members have different perspectives and experiences (we did not just have formal meetings), and David gave his. I wrote this because others started up the 'they were used' meme after reading David's article.

      I'm not quite sure what you are trying to say here. Because I write something that argues McDonnell should be congratulated for setting up and utilising the EAC, what I say in support of Smith cannot be trusted? I kind of think its the other way around.

  4. I would have liked the panel to last much longer than it has although,with what is happening elsewhere it is being undermined sabotaged even,which is a shame! for the sake of humanity please change the way economics is used! to distort and contort rather than nurture humanity!onwards!

    1. Either McDonnell or Smith can start it up again. It is not being sabotaged by anyone.

    2. Not a single PLP member will comment let alone commit to starting t up again!that i have asked!

  5. There was a newspaper review of Coggan's book Paper Promises that noted:

    "Accepting JK Galbraith's point that it is a prerogative of the rich to find social virtue in whatever suits their immediate needs, Coggan acknowledges that a consumer doesn't see the world in the same way as a financier, and that how one interprets the economic realities of the moment depends absolutely on where one stands in the economic nexus."

    Is that not also true here in the ways that tenured professors write counter to the hopes of precarious (economically) lefties? Both people are speaking from their own positions vis a vis security in the 21st century. One man's common sense is the other's biggest fear and vice versa. Neither is wrong. But both are right.

    Im not sure how such a dilemma get's fixed. Or are you making a pitch for McDonnell to stand for Corbyn? Which might well be the way to go.

  6. I hope John gets it going when Jeremy's re-elected with a bit more of a Marxist economic flavour (there's plenty out there who're as good at algebra as the next academic if that's what's needed for credibility these days)

  7. "for Jeremy Corbyn to continue after 172 MPs voted no confidence in him as leader would be disastrous for the Labour party"

    You think Owen Smith would *not* be a disaster for Labour?

    You think a successful coup against the Leader would *not* be a disaster? You think that because the gang (172) is much larger than team Corbyn, better to side with the gang?

    That is typically 'academic economist': argue on the basis of numbers only, no sense of political principles or integrity. You seem oblivious of the notion that Corbyn is being courageous in standing up to the establishment; all you can see (from your Ivory Tower) is the number '172'.

  8. Nicely said Simon. It needed saying. I enjoy your forays into the political dimension, I do have an interest in economics but it was those that drew me here.

    It is a difficult time to speak in the public domain on these matters. Please don't stop.

    (for the record, I still intend to support Corbyn at this point - but I'm still listening.)


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