Thinking about macroeconomics with Anneliese Dodds

Thinking about macroeconomics with Anneliese Dodds

While writing, Responsible Opposition, about Sir Kier Starmer’s 1st speech of the year, I pointed out that Anneliese Dodds would be giving the Mais Lecture, which had been previewed in the Financial Times (paywall). They said that she will,

 …  call for a ‘responsible fiscal framework’ based on ‘pragmatism, not dogmatism’  … [and] … signal … that the Labour party is backing away from the hard-left economic policies of former leader Jeremy Corbyn, seeking instead to fight the Conservatives on economic competence and protecting the UK’s recovery from the damage caused by the Covid-19 pandemic.

Chris Giles – Financial Times

The speech has now been delivered and I heard/watched it live. The first thing to say is that I do not consider this to be a repudiation of late stage Corbynomics.

I needed help to work out what was said, it was a very low key speech, certainly not in the style of a UCATT shop steward, more in the style of one of the academics from the cast of Inspector Morse. There was no emphasis and so we need to work out what’s important and what is just said in passing. Stephen Bush points out the unusual nexus of welcome from James Meadway & Chris Giles, he writes,

… [ the speech] attracted a glowing write-up from the FT’s influential economics editor Chris Giles and an approving tweet from James Meadway, the adviser who more than anyone bar John McDonnell himself shaped the Labour Party’s economic strategy under Corbyn

Stephen bush – New Statesman

Meadway’s tweet was trolled by Richard Murphy, who was one of the authors of Corbyn’s original Corbynomics manifesto and is a supporter of modern monetary theory (MMT), but Labour stepped away from these monetary & fiscal policy  ideas after 2016.

I found the speech underwhelming, almost academic in its tone, which given the host may have been appropriate. I am certainly of the view that it is not a step away from or a rejection of McDonnel’s policies. If anything, the call for a ‘responsible fiscal framework’ based on ‘pragmatism, not dogmatism’ is an attack on Osborne and the politics of austerity and his remaining fans in the Tory party. She praised the independence of the Bank of England, but this has had its problems; it failed in 2008 and it was politicians that rescued the economy and the argument for its independence is based on the argument that politicians and their electors can’t be trusted to make the right decisions. If those decisions are painful, why should they? Independence is a way of baking in neo-liberalism. She was clear however that monetary policy is not enough to build a successful macroeconomy.

Over-relying on monetary policy levers for economic growth – as the UK has arguably done for the past decade – can lead to undesirable outcomes. Without accompanying fiscal action, low interest rates and gargantuan quantitative easing programmes can exacerbate inequality and concentrate economic gains in the hands of those who were already asset-rich, at the expense of those who rely on income from their labour. Risky indebtedness, especially combined with a highly unequal distribution of assets, can exacerbate inequality.

Anneliese Dodds

She spoke on fiscal policy; did she repeat McDonnel’s Golden rule? If she did, she qualified it by saying that borrowing to invest is only available because of the low interest rates. I have two things to say, firstly, I thought interest rates are a policy instrument, so if a government which is a currency sovereign wants them low, then low they are! Secondly, defining what is current account expenditure is not simple. Why is the education budget not considered an investment in human capital?

Is this as good as it gets? We are to be grateful that a Labour Shadow Chancellor still intends to borrow to invest and that monetarism is no longer part of Labour’s macro-economic tool kit.

On the upside she mentioned wealth inequality and aggregate low wages as constraints to growth but no mention of remediation which would be an effective wealth tax, a better minimum wage, reformed procurement policies and labour law reform. She also mentioned critically the growth in value of unproductive assets, such as art and wine; but surely this is the result of quantitative easing and a side effect of the increasing marginal propensity to save by the rich, again addressable by a wealth tax.

She announced a series of technical changes to the budget management process, all of which are good, but not particularly left wing and so likely to be nicked by the Tories. These consist of ensuring equality & carbon impact analyses on the budget and spending plans and placing a longer term time frame on the budget together with using more very long term bonds.

I also noted that while it seems that Labour is committed to a high wage, high skill economy, our reticence to talk about the means by which we select the short and medium term winners is not talked about; under Corbyn’s leadership, the new National Investment Bank was to be the instrument for seeding innovation and new jobs, but the means of funding it, and the way in which loans and grant were to be allocated remains unclear.

I submitted a question on this i.e. selecting industrial and innovation winners, which the moderator, Prof. Barbara Casu put as her first question; if Anneliese Dodds had wanted to talk in detail, this would have been in the speech, it wasn’t and her answer to Professor Casu’s question added no clarity.

It was a very technocratic speech, delivered in a technocratic style, presumably designed not to frighten the horses. It was a rejection of both modern monetary theory (MMT) and fiscal consolidation but not a manifesto for socialism.

ooOOOoo

The speech was introduced by the Dean of Faculty at CASS, Paulo Volpin, and the questions moderated by the Professor of Banking, Barbara Casu. Both would seem have been initially educated in Italy, I hope that the new immigration rules post Brexit will allow others to follow their route and come to the UK to teach.

I have written previously about Corbynomics on this blog and also on MMT on my bliog, and on my wiki, and on QMT in my obituary on David Graeber, on the blog. …

How to make Labour’s policy and manifesto

How to make Labour’s policy and manifesto

Consultation is currently taking place as part of Labour's review of the way it makes policy.

Below are set out suggested responses to the questions the party is asking in the consultation. They are also attached as a word document here and a PDF file here.

Responses can be made up till 3 February, either on Labour's website here or emailed to here.

These will be more powerful if you could get a party unit to approve a submission, but there is not much time left.

The Labour Party web site offers the ability to upload the document, if you do this do not forget to add the name of your organisation to this document and to the relevant fields on the website. Otherwise, you can paste each response into the relevant question and amend it if you see fit.

The text of the submission is below/overleaf ...

Labour’s vote: where does the next tranche of voters come from?

I wrote a pissy little piece on the polls the other week but in doing so looked back as far as this one at politico goes. They mark certain key events on the chart, but miss some which I think are important, such as the 2019 Euro-elections, and key counter pandemic events, including Cummings and his drive to Durham and the breaking of the growing corruption story. They also miss the Skripal poisoning, the failure to leave on May’s first deadline, Corbyn’s new red lines and Labour’s NEC’s shit Brexit position for the Euro-election. I’d argue that Labour’s opposition to May in early 2019 won it voter share, but it’s behaviour after that didn’t. Labour’s voter share began to rise after it’s fixed ’19 Conference. The rise and fall of UKIP/LibDems would seem to be the story of the summer and autumn of 2019 suggesting that the electorate was polarising over the issue of Brexit, but that Farage gave up when he realised that his fucking about was jeopardising the Tory vote and there’s no explaining the ludicrous implosion of the LibDems.

The big problem here is that throughout the six year period, with the exception of the 9 months, from June 17 to April 18, Labour’s vote share is under 40%, to reach the FPTP tipping point voter share needs to be above that. It’s a fact that Labour needs to win votes from the Tories but there is some evidence that so-called radical economic policy might win some of the working-class Tory or Brexit Party vote back, if in fact this vote was ever Labour’s. It might be of benefit if the Liberal Democrats recovered some of their vote, especially since they are clearly positioned in the model of European Liberal Parties of ‘dry’ economics, with a dash of social liberalism, add several dollops of constitutional reform and a dash of political sectarianism. If they are kicking lumps out of the Tories who cares? One problem they face is they are not asking themselves these questions either, of where their voters will come from politically or geographically?

How does Labour increase its voter share to over 40%? Where will they get them from politically and geographically? Purges and abstentionism is unlikely to do it unless “Team Starmer” are relying on the idea that Govts lose elections, oppositions don’t win them. If that’s the case, Labour could be waiting a long time. …

Electing the GS? Not such a good idea!

Electing the GS? Not such a good idea!

So Momentum have decided that unlike in their own internal affairs, that the best answer to the crisis in democracy in the Labour Party is to elect its General Secretary.   I think this is wrong, critically, without a recall, this would be worse because the individual elected would have a mandate to do what they wanted. It would be poor even with a realistic recall mechanism. This article summarises my proposals, and republishes the idea of a member’s ombudsperson.

In my article, Labour Leak – Closing the Stable Door , I look at a series of reforms that Ithink would make things better. I argue that the Party needs better “controls”, segregation of duties, and better record keeping. I also argue for a new disciplinary system that needs a segregation of duties between, investigators, prosecutors, judges and a right of appeal and that it conforms to the principles of natural justice guaranteeing the right to a fair trial, innocence until proven guilty, the proportionality of any sanctions and that our rules respect the rights to privacy and free speech. The powers and inclination of the NEC to hold the GS accountable to policy, rules and law needs to be examined, there may be some changes that can be made but this is a cultural change, without a change of culture most of the rest of the reforms will fail. I also argue for a more professional management of money and financial controls, greater transparency on staff management, recognition of Chakrabarti’s comments on staff recruitment and management and accreditation by “Investors in People” and “A great place to work”.

There are a number of roles that should be examined to ensure they are sufficiently independent of the GS and the NEC and accountable to the law or their professional ethics. In this part of the article, I note, that proposals for an Ombudsperson were made to the Democracy Review but didn’t make it to the final report. I have with help retrieved the Ombudsman proposal as I think that it’s worth reviewing and should be part of a reconfiguring of the compliance function where the Head of Compliance is made independent of the NEC & GS and accountable to the rules and law. Compliance should tell organisations what they can’t do, while they retain the right to legal advice.

What’s needed is a renewal of a culture of decency so that the bureaucracy and the elected NEC members behave properly and fulfil their duties of trust. I have argued to change Labour’s rules to incorporate the Nolan principles as duty on all role holders but especially the NEC members, but unless recent wrong doing is punished, it’ll become just another policy to be ignored and circumvented. …

Why did nothing come out of the Brexit meaningful votes?

Why did nothing come out of the Brexit meaningful votes?

When the last Parliament had its Brexit meaningful votes, nothing passed. I wrote about the politics and consequences and said that others would write about Labour and the TINGE, it’s taken until now. My article is mainly just reporting but it seems I wanted a 2nd Referendum in which I would have campaigned for remain, The question I ask today is what would have happened if Labour’s No voters had voted Yes, the chart below shows what would have happened.

A requirement for a 2nd Referendum, the Customs Union and the so-called Common Market 2.0 which contained most of the single market commitments would have passed if Labour’s No voters had voted Yes. This isn’t a Labour problem made by Remainers.

I should add the other’s No votes to see the blame shared by the Lib Dems & SNP, maybe tomorrow and we should note that there were 91 Labour abstentions on the vote on Parliamentary Supremacy, enough to have changed the result but I have assumed otherwise that all abstentions were pairings and would not have made a difference. …

Another stitch in time

Another stitch in time

Duncan Shipley Dalton writes, at the end of an exposition on the impact of the Human Rights Act on the Labour Party’s rules and my proposal to incorporate the ECHR directly into the rule book,

McDonnell is now proposing the left need to have a proper manifesto for Party reform with a clear plan of restructuring and reforming the Party. Would have been nice if that had been done when those like Dave [,that’s me that is,] and CLPD were pointing out these things years ago! Assuming McDonnell means it and is not just trying to divert energy to stop the current boat rocking it is a worthwhile idea. In my view the whole Rule book should be re written. It is a mess. A top to bottom rewrite to democratise the whole thing. Take away the kind of NEC discretion that gets abused , Local Govt selection rules, PPC selections, officers, Regional Officers etc. It means though a movement of ‘real’ democratic power to members. Jeremy and others talked about it but were not very good at giving actual power to members. The current leadership seem to be graduates of the Mussolini/Kim Jong Un school of democracy, so it is hard to see them agreeing to relinquish any real power to members. It is the right thing to do but it is hard to see it happening in the currently circumstances.

@baronvonduncs
 …

Icy determination to control

Icy determination to control

I am struggling through Minkin’s “The Blair Supremacy”, and have come across Eric Shaw’s reviews, which I plan to skim through today, but on the first page, Shaw states,

Minkin locates the origins of Blairite managerial thinking in the formative historical experience of its central protagonists, the internal strife that tore the party apart in the early 1980s. Blair, Brown and their allies were resolved to end what they saw as the party’s ‘dangerous proclivity to public exhibitions of internal conflict’ (p.131). Obsessed by what they saw as the party’s ‘lurch into extremism’ ‘New Labour’ was driven, Minkin cites one minister as saying, by ‘an icy determination that it was not going to happen again’ (p.130). Hence the core New Labour principle of party management: an electable party was one that was tightly managed and regulated.

Eric Shaw – The Blair Supremacy: A study in the politics of Labour’s party management

Looking at the disgraceful shenanigans going on at the top of today’s Labour Party, it’s clear we’ve been here before, although the New Labour project persuaded the Party to turn off it’s democracy; it didn’t impose it. Is this another example of “History repeats itself, the first time as tragedy, the second as farce”?

You might look at New Labour and Party Management, on my wiki, where I host and comment on Emmanuelle Avril’s paper …

Labour and antisemitism, some thoughts

Labour and antisemitism, some thoughts

I have now read the EHRC Report, Investigation into antisemitism in the Labour Party, and this is what I think needs to be done. I have published some thoughts already and I believe that it is necessary that the Labour rectify its rules and culture to make it a place where discrimination is both absent and shunned, where perpetrators have the opportunity for contrition and that suspensions and expulsions are a last resort applied only after a fair trial. I am particularly incensed to find there has been no policy nor procedures to guide the investigation nor the determination of discrimination complaints because it’s so basic. However, before I look at the specific recommendations, I want to look at some context. The first is Human Rights law, and the second is that the failings are so basic that anyone of good faith will insist that any remedy is applied to all complaints and disciplinary processes and affairs because the failings are systemic, not specific to handling antisemitism complaints. The article then looks at what a fair and independent process might look like and asks that it take account of the ECHR’s Article 6 and 11, the right to a fair trial and freedom of association. It calls for the retention of the NCC and the provision of legal advice to ensure its independence from the Leader and the NEC. It recognises that the Party must be considered institutionally racist and that attempts to fix the problems have been dogged by factionalism. It calls for the adoption of the Nolan Principles. It recognises that things were worse under McNicol until Formby was appointed. It reaffirms that Labour’s policy and rules are made by Conference and not announcements by the Leadership. These issues are explored in greater detail overleaf …