Tag Archives: will hutton

Putting the leaves on the Magic Money Tree

Putting the leaves on the Magic Money Tree, seeking a radical Liberal approach to economics.

Fairness and the pursuit of it is essentially the purpose of the Liberal Democrats. If that is the case, how then do we expect to be taken seriously without that we have a radical agenda for economic reform?

The last 40 years of our national political story has been dominated by the Thatcher / Reagan /Hayek economic experiment. It has failed. If we agree that to be the case, then it is essential that rather than pretend to seek a better way to manage the status quo (in just the same way that we are supposed to be able to grow an economy without equality of access with our competitors to our nearest and largest market) that we commence the task of considering alternatives.

Free from the constraints of any economic dogma we are free to consider options in the widest and freest sense. Essentially, I believe that our core instinct is one where intervention and constraint of seemingly uncontrollable forces are our natural territory. Capital is like water, if left unchecked it will seek the easiest route. Unlike water, capital fails if it does not engender belief in those then required to consume its final output.

To this end the Social Liberal Forum are commencing on a series of events looking to consult and define a new exciting, entirely radical, free approach to economics.

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If you read one thing today, read this: “Britain is being led to an epic act of national self-harm” – by Will Hutton

Well done to Will Hutton, in the Observer, for marshalling the words to brilliantly sum up what I have been thinking since June 24th 2016.

I am not one of those who feel despair about our country. But I am old enough to have experienced what economic hardship and chaos feels, to an extent. This isn’t going to be pretty. Numbed by the valium of insane and misplaced national pride we are sleep-walking to the most awful economic disaster.

Here’s a sample of what Will Hutton says today:

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Opinion: Getting radical with the money supply

Last week the OECD forecast that Britain was about to experience a double-dip recession, for the first time since 1975. Vince Cable in his Centreforum paper Moving from the financial crisis to sustainable growth asks “How far should monetary policy now be expanded further in the UK to boost demand and head off a period of poor growth?

He goes on to say “There is no possibility for further meaningful interest rate cuts – real short term rates are now minus 4 percent. That means further recourse to quantitative easing.

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LDVideo: The sage of Twickenham returns

During the financial crisis and subsequent recession it was rare to go a weekend without Vince Cable making an appearance on our television screens to share his thoughts on the latest piece of economic news. Since entering government as the coalition’s business secretary, though, he has kept his wider economic analysis more-or-less to himself, concentrating instead on the important task of running his department.

However, yesterday Vince took part in a talk at the Guardian Open Weekend, in conversation with Observer columnist Will Hutton, where he shared his thoughts on the economic recovery, the future of the banking system and – perhaps most interestingly – on changing the focus of the Bank of England. Here are the highlights, courtesy of the Guardian:

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Plan C: The Social Liberal Forum’s economic prognosis

There has been a very welcome recent revival of policy thinking in the Liberal Democrats, despite the large cuts to the party’s official policy research staff. This has included a new think tank (Liberal Insight) and good work by Richard Kemp and the local government sector in encouraging imaginative plans for making use of the new legal powers going to local government.

Added to this is the Social Liberal Forum’s further foray into economic policy-making, following up on some of their successful events with their first policy pamphlet. Prateek Buch’s “Plan C – social liberal approaches to a fair, …

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Opinion: Lib Dems should welcome and put into practice most of the High Pay Commission’s recommendations

Some bald statistics before the ranting begins: In 1979 the top 0.1% of earners took home 1.3% of the national income; by 2007 this had grown to 6.5%. In 1979 the top 1% took home 5.93% of the national income; by 2007 this had grown to 14.5%. In 1979 the top 10% took home 28.4% of the national income; by 2007 this had grown to 40%. In 2010 alone, executive pay in FTSE 100 companies went up by an average of 49%, against a 2.7% rise amongst employees in these firms. Top bosses now take home nearly 7% of total …

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Opinion: Will Hutton and his killer fact – the questions that need an answer

We are all experts when we blog. So, let me break with convention and start by admitting I am no economist. What’s more, I really hope I am wrong.

If you read the discussion in the Observer on the future of the economy you might have been struck, like me, by what seemed to be a killer point from Will Hutton. Challenging the notion that government borrowing is unsustainable he pointed out that when he was a child in the 1950s the level of borrowing was even higher as a proportion of national income than it is now. Doesn’t that …

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Opinion: Dr. Balls makes the right diagnosis, offers the same old failed prescriptions

Leading commentators on the political economy must have been flattered to hear many of their principles and policies given lip service by Shadow Chancellor Ed Balls this week in his speech to the Labour party conference. Flattered only to be deceived, sadly, as lip service is all he paid; underneath the rhetorical support for a reformed political economy promoted by the likes of Will Hutton, the Institute for Public Policy Research, Ha-Joon Chang and others, Balls’ prescription for the UK economy amounts to little more than tinkering with the same old policy levers that haven’t worked in the past.

Mr. …

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Predicting the future: we didn’t turn Japanese

Shortly after the Conservative Party won its fourth general election in a row in 1992, a symposium met to consider the question of whether Britain – formerly a country with regularly rotating government between the two main parties – was turning into a political version of Japan, where the same party had been in power for nearly forty years.

Even between the event occurring and the publication of a book based on it, Turning Japanese? Britain with a Permanent Party of Government (eds. Helen Margretts and Gareth Smyth), political events in both countries had taken a dramatic turn. In Japan the LDP lost power, starting a period of much greater political fluidity with even subsequent LDP Prime Ministers struggling to restore their party’s previous dominance. Meanwhile in Britain the collapse of the Conservative Party’s economic policies following Britain’s enforced exit from the European Exchange Rate Mechanism (ERM) quickly made the government appear very vulnerable, even if debates in Labour continued on whether, as John Smith preferred, one more heave was all that was needed or whether, as Tony Blair insisted on after John Smith’s death, a more radical reshaping of the party was required to win the next election.

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Hutton review publishes its interim report into fair pay in the public sector

Yesterday saw the publication of the interim report from Will Hutton’s Review of Fair Pay in the Public Sector, commissioned by the government.

The bald headline from the report is one of modest reform: moving toward recommending the introduction of a 20:1 maximum ratio between the top and bottom salary in any public body. This ratio is more generous than existing pay arrangements, but it is more radical than that superficially makes it appear.

First, the ratio has been increasingly and is likely to continue to do so, particularly with public sector structural reforms the government is planning. So introducing a cap that looks modest now may yet have a radical impact in the future.

Second, as I wrote in June:

It provides a fair pay benchmark which campaigners, pressure groups and the public can use more widely. Whatever is decided to be the formal extent of its applicability, there is nothing to stop people pushing for its wider adoption and there is good evidence that pay at the very top of the private sector has got out of control, increasing far faster than profits, turnover or other performance would justify. Partly because of the number of firms who set their top pay saying that it must compare well with the rest of the sector, there has been a self-reinforcing upward spiral in pay as everyone pushes up everyone else’s top pay.

A 20:1 ratio would still allow for generous top pay, but stop that cycle – if it ends up applying more widely. Whether or not that happens is not just a matter for central government. For example, even if the government holding the majority of shares in a bank does not mean the 20:1 ratio applies to that bank, that doesn’t stop a campaign to introduce such a ratio. The use of the 20:1 ratio across large parts of the economy will provide a clear benchmark that will make those sort of wider campaigns more effective.

It’s easy to see how over time the 20:1 ratio could become a standard applied to suppliers to the public sector, by ethical investment funds, by good corporate practice lobbyists and more.

The full report (or at least the executive summary) is well worth a read, particularly for information such as this graph:

Fair Pay graph

Will Hutton Review of Fair Pay Interim Report

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A quiet fair pay revolution

Largely overlooked in the Budget was the confirmation of plans to introduce across the state sector a new standard for fair pay. The intention is that the best paid will receive no more than 20 times the salary of the lowest paid.

There is a wealth of detail still to be worked out, though reassuringly much of that work lies in the hands of Will Hutton, who is heading up a commission on fair pay in the public sector. Particularly important are questions of how broadly the public sector is defined (similar to the questions raised by Freedom of Information legislation, whose remit …

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DLT: John Maynard Keynes 1883-1946

Duncan Brack and Ed Randall, authors of the Dictionary of Liberal Thought, have kindly agreed to let us publish extracts on Lib Dem Voice. Last month’s instalment was Mary Wollstonecraft

This month’s entry on Keynes has been selected as it is particularly topical in the current financial climate – and the next two entries to appear, Keynesianism in Februrary, and the Keynes Forum in March, complete the series.  If you can’t wait until March, the entire Dictionary of Liberal Thought is available on Amazon here and can also be bought at the Westminster Bookshop.

John Maynard Keynes 1883–1946

The most influential and important economic thinker of the twentieth century, Keynes’s most important academic works were concerned not only with challenging accepted economic theory but also with finding solutions to real economic problems; his ideas came to underpin the post-war economic strategy of Western governments. He was an active Liberal and contributed to Lloyd George’s reshaping of Liberal Party policy in the 1920s; he also helped to found the Liberal Summer School.

Key ideas

• Human decision-making under uncertainty is necessarily based on subjective expectations of utility (this reflects the fact that human beings lack a sound basis for calculating probabilities).

• Economic recovery from war requires great magnanimity in order to fashion a programme of economic assistance and cooperation that serves the best interests of victors and vanquished alike.

• A stable world requires the strong to help the weak, and intelligent international cooperation is essential in order to build the foundations for general prosperity and diminish the risks of future conflict.

• It is possible that where an economy’s aggregate output is below its potential, it will suffer an extended period of high unemployment and depressed output; public policy should therefore be designed so that government is equipped to raise effective demand in such circumstances.

• The need for an international reserve currency, managed by an international clearing union.

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Recent Comments

  • David LG
    @Geoffrey Payne I believe the 50 seats figure was for if Farage enters the race. The MRP polls I mention (two this year so far) will be based on polling data fr...
  • Katharine Pindar
    @Peter Martin. I feel your pain, Peter, in that no party is committed to redistribution, since I also would like to see the ratio in industry between workers' p...
  • Geoffrey Payne
    @David LG, look again at the first paragraph, it does mention 50 seats! With our voting system it is a bit of a lottery trying to predict how many seats we will...
  • David LG
    I really don't care for the pessimism of the first paragraph. Most recent MRP polls have us winning around 50 seats already, and the only reason it's not higher...
  • David Raw
    Yes, indeed, Mary Reid, I most certainly do, and after nearly sixty years of doing that I hope you will allow me to reply to that. It's not what's stated on...