Tag Archives: economics

Please stop saying people don’t vote against their economic interests. They do it quite deliberately, all the time.

I’m hearing the same argument uttered over and over again  – ironically by both sides  – in the Brexit debate.

Remain supporters keep saying ‘no-one in Britain voted to be worse off in the referendum campaign’, on the presumption that folk don’t vote against what they believe is in their economic interest.

Leavers, for the same reason, believe that they’ll get a great deal in their Brexit negotiations because ‘it’s in the remaining EU member countries’ economic interests to do so’

Both sides are of course wrong. People make quite deliberate decisions against their economic interest every day. The reason why political folk don’t realise this is because they are brought up in a culture of Fiscal and Monetary economics. The real world works rather more like Behavioural Economics.

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Story telling might lead to economic revolution

It is extraordinary how compartmentalised everything is – especially when we are campaigning in local elections.

We, few of us, who know a little about the way public responsibilities are demarcated between different layers of government, have a kind of sense of corrosive superiority as we expect campaigners to demand the right reform from the right level.

But partly this is just a function of sclerotic centralisation. The Treasury has a crushing monopoly on economic policy because, well – it always has.

Partly because of that, and because there is almost no local economic data collected about where money flows (the exception is bank lending to postal district level, forced on the banks by Lib Dem peers in 2012) – Whitehall doesn’t see the economic innovations at local level.

And in particular, they don’t see the emergence of a new generation of local entrepreneurs who are no longer prepared to wait patiently for the Chinese to invest or the government to give them a grant – and are trying to transform their local economies a bite at a time.

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Fixing the Budget. Are we looking at the problem the right way?


Whenever we read articles on reducing the government’s budget deficit the underlying assumption is invariably that it needs to spend less and obtain more taxation revenue. This approach is known as economic austerity. We all know from our personal experience that if we have a debt problem we have to spend less and/or earn more to get out of trouble. So that must work. Or must it? All politicians in all parties need to get this one right if nothing else. Any government’s spending and taxation policy impacts just about everything else in its ‘to do’ list.


We saw in the last Parliament that the Coalition ‘reluctantly’ raised VAT to 20% to increase taxation revenues. All spending plans were subject to extreme scrutiny. Various bodies in the Treasury, or the Office of Budget Responsibility had previously been at work and had produced figures to show the extent to which the deficit would shrink over the course of several years. Usually just before the next election, hey presto! We’d have that surplus we were always promised.



It never does work. After a couple of years we see articles and more articles in the press saying that the Chancellor has been ‘blown off course’ by this or that event, and the story is usually that whereas government spending has been kept to plan the taxation receipts have been disappointing and consequently the promised date of a budget surplus is further away than was first predicted. There are lots of articles along these lines for anyone who cares to search them out online. There are never any at all, as far as I know, saying that the situation has turned around better than expected.

Posted in Op-eds | Also tagged | 26 Comments

“Look after the unemployment, and the budget will look after itself ” (Keynes 1933). Is he still right?


Keynes was undeniably a genius of his time, but he wasn’t infallible. We should not just assume that he was always correct. As with all prolific writers we can cherry-pick quotations to suit our own political purposes. If we want to argue for more government spending, we can use this:

For the proposition that supply creates its own demand, I shall substitute the proposition that expenditure creates its own income.

(Collected Writings of John Maynard Keynes, Volume XXIX, pp 80-81)

Keynes meant that the mere supply of a commodity is not enough to ensure the sale of that commodity, but money from all government spending inevitably ends up in someone’s pocket. This is a statement of the obvious, maybe, but he evidently felt it needed making anyway. On the other hand, if we are suspicious of what sounds like “magic money tree” economics, as many scathingly describe any deviation from their understanding of ‘sound money’, we can find this quotation:

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We need to balance the Budget over the business cycle as Keynes suggested, right?

Firstly, we do need to ask if Keynes did suggest that. There are arguments either way on this point.  Keynes’ view unfolded and developed starting in the bleak 1920’s in Britain. There was no ‘roaring twenties’ for the UK economy as the government deflated the economy to try to fit the Pound back on to its pre-war Gold  Standard. Keynes then did argue that governments should run deficits if private spending declined and reduce those deficits when future growth was strong enough. This has been interpreted by many that his intent was that the budget was to be more or less balanced over the business cycle. If anyone is …

Posted in Op-eds | Also tagged | 17 Comments

Opinion: Solutions to Inequality: Quakernomics and Economic Justice

  1. Unemployment
  2. Subsistence wages
  3. Hazards to Health
  4. Harm to the environment

These are the four results of unregulated capitalism according to Mike King in Quakernomics. In his book, which I highly commend, he details the history of Quakers in industry and how they modelled an ethical capitalism which served the community. “Quakernomics is the enthusiastic pursuit of economic activity as a social good.” We can always learn from history. In this blog I will explore what lessons gleaned from the Quakers can be applied to economic and social problems today.

The Quakers valued the entrepreneur, but gave equal value to the workers who brought new ideas to fruition. Equality and the worth of every individual were key. Owners and workers were interdependent.

Posted in Op-eds | Also tagged | 44 Comments

Deserving of more than a footnote: George Watson and The Unservile State

The Unservile StateThe announcement that the Cambridge academic George Watson had left the Liberal Democrats £950,000 in his will was one of the most surprising political stories of 2014.

George Watson was a distinguished literary scholar and a lifelong Liberal. After working for the European Commission as a translator and interpreter during the 1950s he became a Fellow of St John’s College, Cambridge, in 1961 and remained there until he retired in 1990. As a scholar, he was known for serious bibliographical work, spirited polemics, and a traditional approach to literary criticism. He also made two forays into electoral politics, contesting Cheltenham in 1959 and Leicester in the 1979 European Election.

Watson is perhaps best remembered by Liberal Democrats, however, as the editor of The Unservile State – a 1957 volume billed as ‘the first full-scale study of the attitudes and policies of contemporary British Liberalism since the famous Yellow Book’ of 1928.

Posted in Books | Also tagged , , , and | 9 Comments
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