Vince wows the IFS
Written by Tim Leunig on 9th July 2008 – 9:21 amOn Monday Vince Cable gave the 2008 Institute for Fiscal Studies Annual Lecture. (The Telegraph, among others, has highlighted his speech).
This lecture is the sort of thing that Chancellors and members of the monetary policy get to give, not opposition politicians. It says something of the respect with which Vince is held by serious economists that he was invited to deliver it. And did he deliver. This was a serious speech, by a serious economist, for serious economists. If that’s you, read it in full.
For most people it was a speech about bubbles, going back to the Tulip mania in the 1630s, and talking about our recent housing market. Vince has – to his credit – been worried about this since 2003. His proposals were:
1) The Bank of England’s mandate should include asset as well as general prices (using the Swedish model, and as advocated by former MPC member Sushil Wadhwani);
2) Bank capital adequacy rules should be tightened in booms, to stop banks getting carried away;
3) The creation of a counter-cyclical national land value tax;
4) That banks should offer those with mortgage arrears shared ownership;
5) That government should allow social housing agencies to borrow to buy 150,000 properties a year at wholesale prices from desperate building firms;
6) That we need more credible (read, more restrictive) fiscal rules; and
7) That we need more liberalisation in energy and food markets – both of which have seen big price rises recently, unlike more liberalised sectors.
The press release, powerpoint slides and full speech are here.
Posted in News
9th July 2008 at 9:39 am
Can we please adopt this speech as party policy? It shows every sign of not having been through a committee.
9th July 2008 at 9:51 am
Yes, it’s wonderful, isn’t it. And several people in my office say it’s the best policy they’ve heard in ages.
9th July 2008 at 10:43 am
Pity that Vince felt constrained to limit his call for LVT to business rates only. Having gone to great lengths to correctly blame the imminent and likely massive “bust” on almost 2 decades of property (i.e. housing/mortgage credit) “boom”, he ducked the opportunity to push for a shift of our own policies in the obvious and logical direction. LVT (SVR) on business land - including on commercial and residential land banks - is already Lib Dem policy. It’s how domestic property is taxed AFTER it’s built that remains the crux of current and future credit crunch problems.
9th July 2008 at 11:19 am
As Joe said, can this be policy now please.
9th July 2008 at 11:53 am
@ Joe & James
Exactly. Vince for emperor.
9th July 2008 at 12:28 pm
@Andrew D
Agree. We have to counter the “Great Tax Clawback Scam” as some put it
See http://scrapincometax.blogspot.com/2008/07/ricardos-law-great-tax-clawback-scam.html
9th July 2008 at 12:42 pm
Speaking as an economist, “Wow!”.
As a LibDem, for the next two years the theme of politics is “It’s the economy, stupid.” On the economy, our thinking is way ahead of Tories and Labour. In every way, what Vince is saying is more adequate than anything the others are getting in a twist about. We must register all this as where the LibDems stand before before Osborne and Brown/Darling try to produce inferior copies as their battle cries.
9th July 2008 at 2:33 pm
Um, what they said… ^
9th July 2008 at 4:47 pm
David,
You are exactly right. The economy should be our first and last concern. At the moment, this is certainly true for the electorate…
9th July 2008 at 5:09 pm
Implicit in the fact that the Telegraph accorded so much attention to this speech (following on from what amounts to positive reviews of Nick Clegg recently by them) is an interesting shift in their editorial position back to a more whiggish Morning Post style and suggests a serious level of underlying scepticism of the Cameron project among some of the traditionalist media.
9th July 2008 at 6:54 pm
Should we be playing up to any possible sympathy of the Telegraph?
16th July 2008 at 3:31 pm
There may well be a topical motion to conf on this basis, so I hear.