When PoliticsHome interviewed
me about what the Blanchflower review of monetary policy might come
up with (which will not report for some time), I couldn’t help but
end with a plea.
“My biggest fear is that some people may try and put their political spin on anything we recommend, even when those recommendations come from an analysis of the technical academic literature. When I accepted an invitation to be on Labour's Economic Advisory Council, one or two people did suggest that this would damage my reputation as an economist. Given that being a member placed no restrictions on what I could do or say in public, or any obligation to support party policy, I thought it was an extraordinary accusation to make. Can you imagine a medic being told that they had damaged their reputation by advising policy makers about medical research?”
I used the example of medical research for reasons outlined here,
and because I like comparing economists to medics.
As the economist Paul Romer has noted
(see also here),
political discourse is not like scientific discourse, and it is a
problem when academics sometimes adopt a political way of thinking in
their day job. In political discourse it is critical whose side you
are on. If you are on one side anything that favours or helps the other side is presumed wrong. So when I agreed to be on Labour's Economic Advisory
Council (EAC), many of those that were opposed to Corbyn’s
leadership naturally assumed that I must be a Corbyn supporter. When
I said
that if George Osborne set up an equivalent of the EAC and invited me
I would agree, and that I had indeed given advice to his Treasury and
his advisors, the accusations changed from being the enemy to
aiding and abetting the enemy. [1]
We were aiding the enemy because I and other EAC members are
‘providing legitimacy’ to the new leadership: we are being used
for our reputations. And sure enough, here is John McDonnell doing
exactly that in a recent speech:
“We’ve enshrined these commitments in our Fiscal Credibility Rule, drawn up with help from the world-leading economists on our Economic Advisory Council.”
Except that is exactly what happened: I gave a paper at the first EAC
on what I thought the fiscal rule should be, it was discussed there,
McDonnell’s team then developed it internally, discussed their
version of it with Labour’s shadow cabinet and the rule was made
public.
Labour’s new fiscal rule, as far as I know, is the first fiscal
rule that sensibly responds to the possibility that monetary policy
can run out of reliable ammunition (QE is much less reliable than
fiscal policy), and I hope that sets an example that others will
follow. [2] I also think politicians should get credit for listening to
economists and adopting sensible rules or creating useful
institutions. That is exactly what Gordon Brown did in 1997/8, and
what George Osborne did in 2010 in establishing the OBR.
In my view the EAC is a useful innovation in economic policy making,
because the link between academic economics and policy has become
weaker in recent years for various
reasons. The EAC is unusual in part because it makes the politician
who set it up vulnerable. Any member of the EAC can, if they wish,
publicly criticise Labour policy and get additional media coverage as
a result of EAC membership. And academics being ideas people rather
than political people might be particularly prone to do that. That is
a level of vulnerability that many politicians would avoid. (See this
for example.) That is one reason why it is misguided to suggest that
we should have given our advice in private rather than through a public body like the EAC.
Some who are enmeshed in political discourse say that policies are
two a penny and can be put in place in an instant: it is only
leadership and winning that matters. I suspect much the same is true
for many (not all) political commentators, who often see policies as
simply weapons to attract voters. As Gaby Hinsliff remarks,
many political commentators have a bias to those they see as winners.
But I don’t want a world where academics only give policy advice to
politicians who they support or who they think will win. It
politicises economics, and that can damage
the credibility of the subject.
Because academic economists, or academics of any kind, give advice on their policy area to politicians should never have to mean that those academics support
those politicians. People enmeshed in political discourse
find it hard to understand that, but I refuse to accommodate them. My
job is economic policy, and I while I will do what I can to try and
get politicians to adopt policies based on sound economics, those
means do not include adopting a political discourse.
[1] For the record, no one in the Labour Party from 2010 onwards
asked me for my advice on any occasion. This was despite (or maybe
because of) everything that I wrote opposing George Osborne’s
austerity policies and defending the Labour government's fiscal
policy on my blog (which started at the end of 2011). Had they done
so, I would have gladly given it.
[2] Those who might be tempted to see the zero lower bound knockout as just a 'loophole', you just betray your mediamacro mindset. Those tempted to say anyone on the left would have adopted this type of rule, go read some MMT.
