At the launch of the Resolution Foundation’s report, “Ending Stagnation”, [Press Release], they had a bunch of speakers, including Sir Kier Starmer, Labour’s Leader, whose speech is posted at Labour List. It seems Hunt was also there. Here are some notes and links …
The Resolution Foundation’s press release, https://www.resolutionfoundation.org/events/ending-stagnation/ notes that,
Over the past three years, the Resolution Foundation has been collaborating with the Centre for Economic Performance at the LSE on The Economy 2030 Inquiry, funded by the Nuffield Foundation, to investigate, understand and confront these economic challenges. The project is culminating in a major new book and conference – Ending Stagnation – where we will set out and discuss Britain’s path to a fairer and more prosperous future.
The Report is published on the web, https://economy2030.resolutionfoundation.org/reports/ending-stagnation/
The event and speeches created a number of reactions.
Larry Elliot, reports in the Guardian, “Resolution Foundation report underlines lack of progress by Tories but Labour proposals seem woolly”
Freddie Hayward of the New Statesman’s take on Starmer’s speech,
Labour’s fiscal rules dominate its plans for government. Their precise nature remain ambiguous. The £28bn green prosperity fund is still official policy but is mentioned with reluctance, as if it were the brainchild of a vexing coalition partner. Labour’s big fiscal bet remains that cheap, supply-side reforms (such as liberalising planning for houses and infrastructure) will unleash growth, which in turn will provide the revenues that the state can invest – not the other way around. Starmer says growth would be his government’s “obsession”, the mission that shapes every decision.
Freddie Hayward: Starmer’s balancing act. Morning Call
The number of political economists claiming modernity, but Starmer’s supply side strategy is neither New nor old Labour, not is it Modern Supply side which at least addresses the labour & skills supply issues.
Hayward also notes Starmer’s boosting of an Industrial Policy and while the Resolution Foundation identifies that UK investment is comparatively low by international standards, they argue that policy should be oriented towards building on the future which they identify as the service economy. It’s interesting that when Starmer speaks he talks of science and a manufacturing future such as batteries on the infrastructure for renewable energy. It may be that given both these industries are five years after the start line on the UK’s initiatives in these industries have failed and thus moved offshore we are too late. The problem with industrial policy is it’s never worked, so relying on it as an engine for growth might well be a mistake. I am of the view that economics still requires innovation, science and manufacturing. There’s only so much management consultancy needed although if one includes education and health care as services, then there’s a lots the UK has to offer the world although not while it pursues a fortress like immigration policy refusing to allow the best and the able to come here to work and invent.
From the Resolution Foundation report,
Prosperity must be built on an understanding of Britain’s strengths, and a resolve to invest in our future rather than live off our past
The report highlights the bleeding obvious and starts from the 40 year record of low investment.
The report outlined 10 measures to end stagnation, including increasing public investment to 3% of GDP, benefits rising in line with earnings, higher wages for low-paid workers in the hospitality sector, and higher taxes on wealth. It could easily form the basis for Labour’s manifesto at the forthcoming general election. …
… what is the opposition’s economic plan? Starmer said it was all about modern supply-side theory: reforming the planning laws to make it easier to build new homes; an industrial strategy; a national wealth fund; a new direction on skills
Larry Elliot, The Guardian
To me the first step would be to rejoin the EU and reimplement its freedom of movement to live and work and the Erasmus programme of student exchange. This is particularly needed if construction is going to be the domestic engine of growth.
However, Larry took the opportunity to remind us that he argued to leave the EU, and that it’s not as bad remainers claimed. I think he’s wrong, and documented the credible forecasts at the time.
The financial rules, interestingly described as ambiguous by Hayward, that permit investment only and not an increase in public sector wages which is needed, to combat labour shortages, and increase the average propensity to consume as it is a necessary part of eliminating the inequality we see in our society.
I reviewed Starmer and Reeves, #lab23 speeches on my blog.
Meadway also opposes austerity; its not part of the answer,
A further reply from Gomez & Jones, albeit based on MMT is published on Labour Hub. Their article says,
Not only is this wrong, it is dangerous! It is following the same economic framework responsible for the state we are in today. No wonder Martin Wolf Financial Times Chief Economics commentator remarked afterwards that “What will happen under him [Starmer] will make no appreciable difference… The system we run is just not capable. A change in Government without a comprehensive rethink of our economic system is going to get us nowhere.”
Gomez & Jones, Labour Hub
I found this article by Martin Wolf in the FT, I can’t find the quote above, but I did find this,
First, these are strategic, not tactical, problems. The economy is not delivering the prosperity the great majority desires. As the country falls behind, unhappiness will grow. Second, Thatcherism did not, alas, cause an enduring revival of the UK economy. Indeed, the growth prior to 2007 was itself in part an illusion. This must be admitted, at last. Finally, strategic problems need strategic solutions.
Martin Wolf, FT
On the Labour Hub piece, I commented on a whatsapp discussion, “I like it, but you don’t have to believe in ‘Modern Monetary Theory’ to believe in deficit funded expenditure. Making your argument dependent on MMT, excludes important allies and makes our argument that the so called golden rules are wrong easier to attack”.