Why defeating Brexit is so important

First we were accused of ‘Project Fear’, because we pointed out that making it more difficult to trade with countries next to you would hurt the economy. Now we are accused of acting like scientists working for the Nazis.

The waves of economists, businessmen, scientists, university leaders, doctors, historians and more shouting loud that Brexit would be harmful has been incredibly impressive. It reflects the fact that this is not a debate with decent arguments on both sides, but a pretty open and shut case. But I think it reflects as well the nature of the pro-Brexit campaign.

Not just that Leave have lied openly and repeatedly. Not just that they have used lies to provoke fear (Turkey). It is that they are trying to deflect the blame for failing to adequately fund public services on to migrants who are just looking for a better life. And it is working. More people feel they have personally benefited from migration than otherwise, but most people also ‘know’ that migration has been bad for the NHS. Such incorrect beliefs appear immune to expert opinion because large parts of the media shut that opinion out, and ideologues deride experts. 

Of course these lies play on basic fears about unfamiliar people. But the way our society used to respond to this in the past was by uniting behind truth and humanity, and through patient explanation. If some politicians tried to fan fears of migration by, for example, talking about rivers of blood they were quickly slammed down by the majority, and it has to be said also by the media. And our society was better for it.

Today those politicians talking about a breaking point in front of pictures of refugees are given large amounts of air time by the broadcast media. Those pretending we are about to be swamped by Turkish migrants are cheered on by nearly all of the tabloid press. Populist politicians are about to lead once proud centre right parties on both sides of the Atlantic. And one brave Yorkshire politician that argued against all this was shot dead in the street.

We cannot continue to let this pass. It will not stop with Brexit. When Brexit fails to improve our public services or our economy there will be other scapegoats. Maybe migrants already here, or nasty foreigners who failed to give the beneficial trade deals the Leave campaign pretend we will get. In the US right now it is already happening, and this Brexit campaign shows that the UK has no inbuilt immunity to it. This is how it goes, as it has gone in the past.

We cannot let this pass.      

Brexit and the Left

There seem to be two strands of opinion which encourages people on the left to vote Leave. The first is an intense dislike of what has happened in the the Eurozone: see Larry Elliott for example. The second is a wish to take seriously working class concerns over immigration.

I share the intense dislike over what has happened in the Eurozone (EZ). You only need to read, for example, what I have written about Greece to see that. Yet I cannot see how UK exit from the EU will change for the good how the EZ works. Crucially why should it change the current politics of Germany that has been so important in many of the bad decisions the EZ has made. As we are not part of the EZ, it is difficult to see how UK exit will help its demise, if that is what you want.

As we will be leaving the EU and not the EZ, the message Brexit sends to Europe is not that the EZ is fundamentally flawed but rather that the UK is incapable of being part of any cooperative agreement among European countries. I am internationalist by nature so I do not want that. The idea that Brexit will shock the EZ into mending its ways, then thank us for showing them the light and invite us to rejoin whatever is left is pure fantasy.

There is one way the EZ crisis has impacted on the UK, and that is migration. It seems reasonable to assume that one reason immigration into the UK from the EU is currently high is because of considerable youth unemployment in many EZ countries. Which brings us to immigration concerns.

Take this from Kate Hoey for example. She seems to be arguing that free movement in the EU is a means of keeping down the wages of the low paid. The first point to make is if labour mobility keeps wages down in the destination country, it should increase wages and/or reduce unemployment in the country the migrant came from. As migrants move from lower to higher wage countries, then migration tends to equalise incomes. This should normally count as a plus from a left wing perspective.

But does migration have this effect on the receiving country? There are many reasons why it might not, and the evidence does not point to strong negative effects on wages. But I think the case for migration is stronger than that. A pretty robust finding is that migration at the kind of levels we are now seeing does not do any harm to GDP per head, and could improve it. Another robust finding is that current migration benefits the public finances. This is both important and pretty obvious..

Migrants tend to be young, healthy and working. They provide more in terms of resources than they take out by using public services. I remember having a conversation about this with someone who lived in Spain. He said if anyone should be angry about free movement it is Spain, in having to take lots non-productive British pensioners who will be a burden on Spain’s health service. This was also one reason why Merkel could be so open to refugees: Germany is really worried about the implications of their aging population. [1]

If migration falls following Brexit (a big if), and if we add in the other negative effects of Brexit, we will have a large increase in the government’s budget deficit even at full employment. Given government policy on how holes in the deficit are to be filled, this NIESR analysis suggests you are talking about large hits to the lower paid.

None of this is to deny real grievances about reduced public services and lower pay. Once again I do not think I and many others could be accused of keeping quiet about the stupidity of current austerity. But just as the grievances are real, it is also important to understand the real causes.

A consistent result in polls is that migration is a concern mainly in areas where there is little of it. In this poll only 19% of people say they believe immigration has had a negative effect on them personally. (More believe they have experienced positive effects.) Yet over 50% say it has had a negative impact on the NHS. In reality the NHS is in crisis because of government policy, not because of immigration. But to know that you need to talk to the experts and look at the figures. Instead most people will just have read the newspapers, many of which have taken every opportunity to play up the ‘threat’ of migration. As Paul Mason nicely puts it, you can tell this is a fake working class revolt from looking at those leading it.

This is part of a more general point on migration. Migration appears to be at worst neutral and probably beneficial for medium term UK prosperity, so if there are problems for some groups that can be fixed. At which point those on the left say that is naive because it will not happen. That is a reasonable point, but the same point applies in spades to the immediate aftermath of Brexit, which will amount to yet another shift to the right. The regulations that those running the Leave campaign want to ‘free’ us from are those protecting workers and the environment.

To make this clear, think of two realities (economists would call them states of the world). One (the status quo) involves those currently in charge remaining in charge. The second (left renaissance) involves left wing governments coming to power in the UK and elsewhere. It seems to me that if you stay in either one of these two realities, Brexit is clearly bad. (For a similar argument, see this by Alex Andreou.)

Under the status quo, the EU is currently a moderating influence on this right wing UK government. A post-Brexit Boris Johnson government would take away worker rights that the EU currently ensures and, as the deficit deteriorates, cut welfare benefits including tax credits. This alone will dwarf any benefit working people might get from less immigration. Under a left renaissance migration benefits the economy as a whole as well as those who migrate, and these gains could be fairly distributed. My feeling is that some Brexit supporters on the left move freely between these two realities in order to justify a vote for Brexit.

[1] One fair point made in comments on earlier posts is that migrants need to be housed, so resources are used to provide additional housing. (More generally new labour needs new capital of various kinds.) But housing also represents why migration can be beneficial to everyone. We need to build more houses anyway, but according to the industry we have an acute shortage of skilled construction workers. Of course this is an indictment of UK training programmes, but that cannot be turned around quickly. For those with construction skills, it is surely better to be building houses where they are really needed than being unemployed in places they are not.

More on Brexit and the politicisation of truth

I watched the BBC’s early evening news on Saturday: not something I would normally do but for the football. (Unfortunately I cannot find a recording of it.) The bulletin reported the IMF post-Brexit forecasts, and then (for balance) had Patrick Minford saying why the IMF had got it all wrong. The impression most non-economists viewers would have received is that the long run economic impact of Brexit could go either way.

I think we can talk about at least four types of politicisation of truth:

1. Ignoring facts: ‘shape of the earth: views differ’ type reporting.
2. Ignoring expert pluralities: for uncertain outcomes, failing to mention that one side is a minority view. The economics of Brexit is an example.
3. Allowing politicians to create untruths. Labour profligacy caused austerity is an example.
4. Repeating politically generated untruths. For example 'the 364 economists were wrong'.

The first is created by the overriding need for balance. The second and third may be, but they can also just reflect inadequate reporting, which is responsible for the fourth. They all are examples of political views overriding truth.

A clear Brexit example of ‘shape of the earth: views differ’ style of reporting is the £350 million a week figure. Furthermore it is a clever lie, because it focuses attention on a direct benefit of Brexit, and away from probable costs. (I’ve no idea if this is true, but I once heard that when Joseph McCarthy claimed there were many communists working in government, he would keep changing the number. As a result, the topic of conversation became how many there actually were, rather than whether there were any at all and whether it mattered.) It is not the only example from those campaigning for Brexit.

In practice I think more damage is done by the treatment of uncertain events with probable outcomes. The medium term cost of Brexit is of course uncertain. But a huge majority of economists think it is much more likely to be an economic cost rather than an economic benefit. So Minford was proposing something that only around 5% of UK economists believe. That is widely acknowledged on all sides, so when the BBC or any other media organisation fails to mention that, they distort the truth. Or, to put it another way, it is not balance at all but favours the Leave side. Another example from those campaigning for Brexit is the prospect of Turkey joining the EU. 

This is a generic problem which politicians and others exploit. There is a huge consensus among climate scientists, yet if the ‘balance’ model is applied to global warming - which it will be if the subject gets politicised - we get the media giving the impression of scientific division. That is why in the US over a third of people think that scientists do not generally agree about man made global warming. Perhaps it is also why so many people think Brexit will not be a medium term cost to them.

Power without accountability in our tabloid press

Even though I have been doing this for four and a half years, I still found it unnerving when, after typing ‘UK media bias EU’ into Google, one of my own pieces comes up on the first page. The gist of that (mid-April) post was if the broadcast media stuck to their ‘shape of the earth: views differ’ policy, our EU membership might disappear as a result.

What I took as given in making that comment is the partisan behaviour of the non-broadsheet press. In a more recent post I argued we should not take this as given. Martin Kettle subsequently spelled it out very well here. He wrote “Remain or leave? Politics or the press? The question on Thursday, just as Humpty Dumpty said, is which is to be master.” But is this kind of sentiment just a form of Guardian writer/reader transference: blaming the messenger of working or lower middle class views because they abhor those views? Is this, as comments on my own post suggested, just the tabloids reflecting the views of their readers?

Forget the straw man of newspapers telling readers what to do. The concern is not with which side newspapers formally endorse. It is about how stories are selected and portrayed. [1] Like the recent front page story from the Mail about migrants in a lorry saying “we’re from Europe - let us in”. Except they didn’t say that. Incredibly the Mail is not the worst offender for putting stories like that on its front page, as the montage below shows (source @kwr66 HT @mehdirhasan).

But maybe readers of The Express want to see countless stories of the migrant ‘threat’. But if this is so, you would expect the press as a whole to be balanced in publishing either pro or anti Brexit stories, reflecting the balance of the polls. But research finds that, when you weight by circulation, pro Brexit articles outnumber pro remain articles more than 4 to 1. (You can see a pictorial version of the same point from a different source here. Or for another source here.)

But even though the ‘only reflecting their readers’ canard is untrue [2], there is I think a more important point. I don’t just want false or misleading stories about the migrant ‘threat’ to be balanced by an equal number of misleading stories about how wonderful migration is. I want stories that contain some real facts, so that people who read these stories can be informed. I want a situation where we no longer have nearly 60% of the population believing Turkey will be an EU member within 10 years. (In 2013 the British appeared to be the worst informed about Europe among Europeans.)

It is sometimes said that telling facts is the job of the broadcast media, and newspapers are about opinion. Right now I would turn that around. The broadcast media are so frightened of appearing biased that they describe clear falsehoods as simply ‘contested’. In the soundbite world they inhabit, that is as far as they go. They set up debates rather than explore issues. They broadcast opinions rather than facts: the opinions of politicians. In print you can go further: you have the space to present the facts and back them up. That is what the broadsheets at their best do.

Why does the Mail or the Sun not do that? Because their owners have a clear line to push, and all too often the truth gets in the way of that. They will not tell their readers that restricting immigration will make it less easy for them to see their GP or wait longer in A&E. They will not tell their readers this because they would rather their readers believed otherwise. [3]

Facts like these get in the way of the Leave campaign. They would prefer an emotional rather than rational debate. Shamefully, they play on the emotions of nationalism and the threat of others. They will not tell their readers that there is no chance Turkey will join the EU in the near future because they want to use that false threat to generate fear - indeed vote Leave leaflets headline with this threat.

And I have to say, as others have done, that those who distort facts to whip up such emotions for political gain have to take some responsibility for the tragic side effects of their actions. When politicians do this we can, in time, hold them to account. When the owners of newspapers do this it appears we have no recourse, and they can go on doing the same again and again. If there is an issue with ‘control’ in our country, it is not with Brussels bureaucrats but with a small number of press barons that wield such power without a trace of accountability. [4] We need to find a way to ‘take back control’ of the means of communicating information.

[1] Declan Gaffney gives a nice account, in the context of stories about benefits, of how this can be done.

[2] In this mythical story of reader reflection, the owner of the paper only dictates the newspaper’s line because only he can truly sense the wishes of his readers. So when Murdoch instructs his journalists to write more anti-Miliband stories, it is because he just knows this will sell more papers.

[3] Another line apologists for these tabloids use is that readers are well aware of their paper’s political bias, and it does indeed seem to be true to some extent. But when these readers see no alternative source of facts (and most readers of these papers will not seek out alternative sources), the misinformation pushed by these papers sticks.

[4] Before anyone says ‘freedom of the press’, note that in the UK the broadcast media have to conform with a code that requires both impartiality and accuracy when reporting news. Does that mean our broadcast media is not free? That code is enforced by Ofcom. Why not apply something similar to news content in the press?

Postscript (26/06/16): one more piece of evidence for the distortionary impact of the tabloids is how biased the public's view is of key facts, and the bias all goes in one direction.

Postgrad teaching and Keynesian economics: a survey

This post is joint with André Moreira, an economist at the Bank of England

Three years ago one of us got into a discussion with Paul Krugman and Brad DeLong about how dominant, or otherwise, the New Keynesian model of business cycles was in academia. That post contained a footnote with an idea: why don’t we look at what the top schools actually teach their post graduates, to see if there are a large proportion of students who are not being taught any Keynesian economics. We came together with the idea of doing just that.

We initially thought that we could do this by ‘simply’ contacting the academics teaching core macro courses and asking them for their syllabus. You can probably guess the problem we encountered, although thanks to those who did respond. So instead we decided to survey recent students. That worked much better, with one exception we note below. (The results are written up in more detail as a short paper – see the top of the main list from this link).

We decided to ask a simple question: “Approximately what percentage of the core Macro sequence that you received covered models involving price and/or wage rigidities (including New Keynesian models)? Please round your answer to the nearest 5% mark.” We sent this question to graduate students at the top 15 schools during 2014/15 [1]. Here are the results

Table 2: Survey results

The one school missing is Chicago. Contact information for these graduates is not publicly available, and we were told by both the course administrator and the academic in charge of the course that they have a policy of not divulging the email addresses of postgraduates, even after we made it clear what we wanted them for. We also received no information from our earlier requests for a syllabus.

Of course no simple question like this is perfect: at NYU, for example, the first year teaching focuses on methods, and Keynesian analysis is covered in a later (but optional) course. We found no major discontinuities according to the year students entered the programme (a few variations are noted in the paper), and the information matched the syllabus information from those who had been good enough to respond to our first survey. We sent the results to course teachers a few months ago for any comments or corrections.

The main message we draw from these results is that, in at least the top schools, there is no major divide between a group that teaches Keynesian economics and those that do not. There is a large amount of variation among schools, but there is little evidence of the marked bifurcation among top universities that some discussions of a saltwater/freshwater divide might suggest. We suspect opinions will differ on whether the variation we still found is natural in a discipline like economics or is an indication that something is wrong.

We would be interested in any thoughts about whether it would be worth taking this analysis further in any way.

[1] Top 15 according to the IDEAS ranking of economic institutions as of September 2013.

Brexit despair

Among everyone and everything I read at the moment there is a mixture of disbelief and despair over the now distinct possibility that the UK will vote for Brexit. Obviously that is partly because I tend to read other economists, and as Chris Giles notes economists are virtually united in believing Brexit will be bad for the economy. (If you cannot access the FT, read Paul Johnson.) But it is also because there is a clear educational divide in support for Brexit, and I suspect most of what I read comes from one side of that divide. The only other event that I can imagine causing an equal degree of unanimous disbelief and despair would be if Trump looked like becoming President.

There is disbelief because it makes no sense. Of course there is a minority who hate the idea of sharing sovereignty, and another minority that really hate immigrants. But these two groups combined would not be enough to win a referendum. Instead we have a much larger group that are concerned about immigration, but their concern appears to be not worth very much to them. This was something I noted some time ago, but it seems to be a robust result: in a recent ComRes poll 68% say they would not be happy to lose any income to secure less immigration (perhaps because they believe less immigration will raise their income).

It makes no sense because economists are as sure as they ever are that people will on average be worse off with Brexit. But a large section of the population have either not got the memo or have ignored it. This will be an important point when it comes to what happens after Brexit: for many Brexit will have been a vote to control immigration, but only because a lot of those same people think that immigration can be controlled without making them worse off. In other words it will not be a clear mandate for voting against a Norway/Switzerland option, because anything else will make people worse off (as most MPs know).

There is despair because economists and others who think Brexit will make people worse off have no way of getting their message across to those that really need that information. I know Gove has said he is fed up with experts, but I’m not convinced most people are (for reasons given here and reiterated here). But writing articles in the Guardian or letters to the Times will not get through to those we need to hear the message (see final chart here). It is why I wrote this. For academic economists I think it is part of a general problem that the media are losing interest in what we think, which is why I wrote this for the Royal Economic Society newsletter.

Whether we do or do not leave the EU, I hope one result of this referendum will be that otherwise sensible people will stop saying that our tabloid press is not that much of a problem. It might not be if our broadcast media were brave enough to report facts, but instead it is obsessed with balance, as well as being heavily influenced by what some tabloids say. How else can you account for 58% of people thinking that Turkey is likely to join the EU within ten years, which in reality is close to a zero probability event. Democracy can become dangerous when a few people have so much control over the means of information.

Defending George Osborne on Brexit once again

When a good part of the electorate are in cloud cuckoo land, you may have to leave planet earth to talk to them.

Economists are pretty certain - as certain as they ever are - that Brexit will reduce medium to long term growth relative to staying in the EU. A large section of the UK public either do not know that, or do not believe them. They have been told, in some cases by people that should know better, that these assessments by economists are ‘just another forecast’. They are told that economists cannot forecast one year ahead, so how can they possibly know what will happen in 10 years time. [1]

Against this they have the certainty that you cannot control EU migration from within the EU. They feel intuitively that austerity was the right thing to do, and the government confirms this, so the pressure they see on public services must be due to immigration. The papers they read say this day in and day out, and never mention that migration helps the public finances. And then there is the money - however much it is - that we would certainly save by not paying into the EU budget.

As a Chancellor you know this is fantasy. You know the OBR will take account of consensus opinion after Brexit and revise down their projection of UK trend growth over the next decade or two. You know that will inevitably mean lower tax receipts, so you will have to raise taxes or cut spending at some point. But you also know that if you try and add realism, by saying this might not have to happen immediately (and should not happen immediately if Brexit causes a short term recession), you just muddle the message. So to bring home to people this is not just ‘another forecast’, you talk about an emergency budget immediately after Brexit.

Is that scaremongering? Well it is not in the same league as pretending we will soon be ‘flooded’ with Turkish migrants because they are about to join the EU.

When Jeremy Corbyn was asked how he rated his enthusiasm for staying in the EU out of 10, he said 7 to 7.5. It was an honest answer. But the general consensus was that it was not a good answer in terms of the politics of the moment. He needed to send a ‘clear message’ that we needed to stay in the EU, and so should have avoided answering the question. All this makes me glad I’m not a politician. But as far as George Osborne is concerned, I think he just sent a ‘clear message’.

[1] Just in case it needs spelling out, assessments of the long term impact of Brexit are counterfactuals, or conditional forecasts. Of the ‘if the supply of apples falls, their price will go up’ kind. They are much less uncertain than the unconditional forecasts about what will happen to inflation and growth in a year or two.