On not apologising for supporting British industry
The Financial Times 29/12/06
Mr Blair does not realise that support for competitive market
capitalism is not the same as the pro-business agenda with which he
feels most at home. The virtues of capitalism arise not from the
virtues of specific companies or their leaders, but from the fact that
these are forced to compete with each other in the marketplace. The
heart of the matter is the belief among the business and political
establishments that exports are worthwhile for their own sake,
irrespective of how much they have to be subsidised - or in this case
how many principles of law and good government have to be cast aside...more |
Happiness comes as a by-product
The Financial Times 15/12/06
With the demise of full-blooded socialism, the opponents of market
capitalism have fallen back on three remaining policy pillars: tax and
spend, the promotion of "equality", and controls and intervention - the
"nanny state" as some like to call it. Two of these pillars are looking
shaky...But when it comes to state intervention the collectivists are
still improving their position...more |
Why money is making a comeback
The Financial Times 01/12/06
The drive to put money back has clearly come from the top - for
instance from Mervyn King in the UK. The head of the European Central
Bank, Jean-Claude Trichet, has reaffirmed the role of money as a check
on the forecasts of the technicians, thereby disregarding the advice of
all the many short term commentators who have campaigned for the ECB to
jettison the money supply, even as one of the two "pillars" in the
ECB's analysis. If the welcome decline in the dollar goes much further
we may also see a return of US interest in the subject...more |
Iconoclastic economist who put freedom first
The Financial Times 17/11/06
Milton Friedman, who has died aged 94, was the last of the great
economists to combine the possession of a household name with the
highest professional credentials. In this respect he was often compared
to John Maynard Keynes, whose work he always respected, even though he
to some extent supplanted it. Moreover, in contrast to many leading
economists, Friedman maintained a continuity between his Nobel
Prize-winning academic contributions and his journalism. The columns he
contributed to Newsweek every third week between 1966 and 1984 were a
model of how to use economic analysis to illuminate events...more |
Home truths on immigration
The Financial Times 17/11/06
The parrot cry is that economic migrants and asylum seekers should
be strictly separated. No such hard and fast distinction is possible.
My own parents came to the UK between the two world wars. They came, as
the saying goes, in search of a better life. But they also felt that
the outlook for Jews in their part of the world in central and eastern
Europe was distinctly gloomy...On today's criteria [they] would have
been rejected as an asylum [seekers] because Hitler was not yet in
power...more |
Two cheers for eurozone's spurt
The Financial Times 03/11/06
The simultaneous acceleration of eurozone growth and retardation of
that of America should be beneficial in reducing the world imbalances
on which so much is said. There is too much fuss made about European
public sector deficits and low saving rates which are helpful in
offsetting the very high saving rates in east Asia and thus preventing
a world slump. Why not stop pulling long faces and leave eurozone
countries to their own devices?..more |
If economic policies could talk
The Financial Times 30/10/06
Review of The Chancellors' Tales: Managing the British Economy
All the contributors, except Kenneth Clarke, have published their
official memoirs and have thus felt free to let their hair down.
Indeed, they are so different in the topics they pick out that it is
hard to believe they occupied the same office of state...more |
Globalisation and pay in the west
The Financial Times 20/10/06
There is a long standing US debate on whether the middle income US
employee has suffered a fall in living standards or merely achieved
modest gains. But at best he has had a very meagre share of the rise in
US output not merely under the George Bush Administration but since
1966. On February 10 I summarised a paper by a leading US authority,
Robert J Gordon, who concluded that the pressures on the ordinary
citizen came from a vast increase in the share of the top 10pc of
earners in the national pay bill. I would hesitate to take issue with
Prof. Gordon's numbers... But there is surely a case for a more
speculative analysis of what may lie ahead...more |
The uphill road to free information
The Financial Times 09/10/06
Review of Transparency: The Key to Better Governance?
[Books such as this] assume that there is some ideal legislation
which will give us the right amount of open government. True progress
depends on revelations and leaks going beyond what governments, courts
and parliaments will ever voluntarily offer up, whether it is the
investigations into Watergate or the media inquiries that revealed the
deceptions about weapons of mass destruction in Iraq. An open society
emerges from competition and conflict and not from any once-for-all
constitutional settlement...more |
The Bank is the migration ministry
The Financial Times 06/10/06
In my article two weeks ago, I mentioned that excess demand was more
likely to stimulate inward migration than domestic prices; and so it
has happened, at least in the UK, which has extended an open door to
the new members of the European Union. Bank monetary policy may have
more influence on immigration than John Reid, the home secretary. The
dominating factor of the British economic scene has been the arrival
since the spring of 2004 of more than 450,000 people from the new
members of the EU - about 20 times the official forecast...more |
It's not the labour market, stupid
The Financial Times 22/09/06
Bill Clinton fought the 1992 US presidential election on the slogan
"It's the economy, stupid". This slogan, misguided though it was, has
prompted me to think of another: "It's not the labour market, stupid"...more |
A better way to tax
The Financial Times 13/09/06
The Liberal Democrats have brought out comprehensive tax proposals.
While that party's main attraction still lies in its greater commitment
to personal freedom and due process than the Labour or Conservative
megaliths, there is now at least a chance one might be able to vote for
the party because of, rather than despite, its economic policies...more |
Consequences of a dollar collapse
International Economy 09/06
Instead of hopeless crystal gazing we can ask what such an event would
mean and what kind of policy should be adopted in response. Such a
hypothetical exercise has something in common with the hypothetical
narratives in which speculative historians have indulged. Suppose that
the assassin's bullet had missed the Austrian Archduke in Sarajevo in
1914. Or, to take a narrower but, more promising, question: suppose
that Britain had stayed out of World War One, which it came nearer to
doing than popularly imagined... more |
There is no such thing as a neutral Whitehall
The Financial Times 25/08/06
There have been numerous reports on the British civil service. Nearly
all of them have been marred by two basic faults. The first is that
they have had very little to say about the politicians who are meant to
give the policy lead. Second, they have spoken in a vacuum about the
formation of policies, without specifying examples of what these
policies are and whether they could be different. In other words, they
fail to investigate what Keynes called the agenda and non-agenda of
government. A report just published by the Institute of Public Policy
Research (Whitehall's Black Box by Guy Lodge and Ben Rogers) marks an improvement in one respect... more |
Two views of foreign policy morality
The Financial Times 14/08/06
The London-based Social Affairs Unit has issued two short books conveying opposing views on foreign policy. The British Moment
is a compilation by "young Cambridge academics" in support of the Henry
Jackson Society, whose statement of principles has attracted some
cross-party support... As a devotee of Richard Cobden, the 19th-century
English statesman, who was on the side of liberty and human rights but
who cautioned against intervening in distant parts on the basis of
little real knowledge, I came to the other book, What's Wrong with Liberal Interventionism, with a bias in its favour. I was disappointed... more |
The curse of the parochial few
The Financial Times 11/08/06
The Bank of England increase in its official rate paid on commercial
bank reserves to 4.75 per cent was regarded as a surprise and treated
as hot news. So, however, was the decision of the US Federal Reserve
not to change rates, even though that was expected. The increase in
rates announced by the European Central Bank was equally expected but
was written off as something in the pipeline...more |
Central banks need not divine bubbles
The Financial Times 28/07/06
There are certain issues the mention of which acts as a conversation
stopper for most people. An example is: "Should central bankers target
asset prices?" But the problem will not go away. What is at stake is
the long-run credibility of central banks. Even more important are the
questions that it raises about the duration of the present happy
combination of world economic growth and low inflation, which the
National Institute of Economic and Social Research sees as the
"strongest since the early 1970s"...more |
Explosive issue of right versus left
The Financial Times 14/07/06
More years ago than I like to remember I wrote a book entitled Left or Right: the Bogus Dilemma.
It did not have many readers as most commentators thought that the
message was sufficiently conveyed by the title. In fact, the book did
not argue, as some thought, for the banning of the terms left and
right. Attempts at linguistic prohibition are rarely sensible and
seldom successful; indeed these concepts have a limited use in some
areas. But their employment as a universal yardstick for assessing
politics and politicians is harmful...more |
Capitalism hard or soft
The Financial Times 04/07/06
The real rivalries in political economy, as in other subjects, are
often between writers on the same side. This is illustrated by these
two very different defences of global capitalism. The authors never
mention each other. But they overlap in presenting data on the
widespread growth of wealth associated with the historical and
geographical spread of open competitive markets... more |
Were the dollar really to collapse...
The Financial Times 16/06/06
According to the Bank for International Settlements, share prices have
been falling and commodity prices have been volatile, not because of a
deteriorating outlook for companies or worries over inflation, interest
rates or growth, but because of greater nervousness about holding risky
assets, particularly in emerging market equities and bonds. On the
other hand, the European Central Bank, in its June Financial Stability
Review, still puts the main sources of risk and vulnerability as
?global financial imbalances?, which is code for the risk of a plunge
in the dollar... more |
Benign volatility masks vulnerability
The Financial Times 02/06/06
World financial markets have recently shown increased volatility. What
is less often noticed is that beneath the day-to-day tremors the
corrections of the last few weeks have, on the whole, been benign... more |
In politics, the less beef the better
The Financial Times 19/05/06
The recently elected British Conservative leader David Cameron has
attracted attention both by his jettisoning of many traditional
Conservative policies and by trying to project a different lifestyle.
So far he has had at least some success. But can anything be said in
more general terms about the nature of his operation?... more |
Free radical
The Financial Times 13/05/06
[The] sentiments of the political philosopher John Stuart Mill, born
200 years ago next Saturday, were published in 1859 but they ring with
all too much contemporary relevance. They are a stinging rebuke, for
instance, to New Labour's attempts to make "religious hatred" or
"glorification of terrorism" into crimes and hold up to ridicule its
attempts to force people to combat obesity or show more "respect" in
public places... more |
Not such an unhealthy free lunch
The Financial Times 05/05/06
Andrew Smithers, the respected London economist, has just published an
analysis, "The End of the UK's Free Lunch?". If you take away the
question mark you have his answer... more |
Pound and pence
The Financial Times 29/04/06
Economists have usually been terrified of sticking their necks out on
literary matters and literary figures have in their turn often despised
the whole activity of getting and spending or analysing money. One
great exception was the modernist poet Ezra Pound (1885-1972), a
flamboyant American, who came to England in 1908 after several personal
and career snubs in his native land... more |
Surprising case for basic income
The Financial Times 21/04/06
Many people who have struggled with the complexities of income tax and
state social services must have wondered whether there might be a
simpler way: net off the benefits against the tax bill and have a
single financial transaction. Properly designed, this reform could
combine redistribution with greater freedom for both rich and poor to
spend their resources in their own way... more |
On J.S. Mill, liberty and choice
The Financial Times 07/04/06
A commonsense view is that personal choice is desirable, so long as it
does not inflict harm on other people. Nevertheless, there are periodic
attacks on the idea. This is an appropriate time to consider the
subject as May 20 is the 200th anniversary of the birth of John Stuart
Mill, the philosopher whose classic book On Liberty is still the best
treatment... more |
Benefits of uninteresting times
The Financial Times 24/03/06
The Budget that Gordon Brown presented on Wednesday was his 10th since
taking office in 1997. It was foreshadowed by much media gossip on
whether it would be his last before he takes over from Tony Blair, who
has said that he will not go on as prime minister in the next
parliament... more |
Oil prices need to stay up
The Financial Times 10/03/06
If anything about the world economy could keep me awake at night, it
would be neither the danger of another recession nor the alternative
danger of fresh inflation arising from excess "liquidity". It would be
the possibility of a temporary fall in the price of oil...more |
Time to put away the league tables
The Financial Times 24/02/06
May I end with a modest proposal? This is to concentrate more on
absolute levels rather than rates of change. This will make life more
difficult for the statisticians who find it harder to compare, say, the
Portuguese and Norwegian national income than to agree on their
comparative growth rates. But making life easier for statisticians
should not be the main goal of policy. We should occasionally let the
vehicle slow down and ask where we are rather than how fast we are
traveling...more |
Superstars snap up US growth
The Financial Times 10/02/06
Today, the most interesting analysis of income distribution is coming
from the US. Many Americans say that the national dream was that each
generation would lead a better life than its predecessor; but they are
afraid that this will no longer be true of their own children and
grandchildren. US left-of-centre journals are full of calculations
showing how a middle-income earner would have to work more hours today
than five, 10 or even 25 years ago to obtain basic modern necessities...more |
Long life and low interest rates
The Financial Times 27/01/06
Around the middle of the 20th century there was nothing that
policymakers, pundits and medical scientists wanted more than
sustainable low interest rates and medical advances which would prolong
life. Now both have been achieved, the perversity of the human race is
making them seem a tragedy rather than a triumph...more |
UK economy could continue to flag
The Financial Times 13/01/06
Despite unexpectedly good Christmas sales, there has been a marked
slowdown in UK growth in the year just ended - to 1¾ per cent
according to Treasury estimates, compared with a trend of 2½ per cent
or more. This is far from being a disaster, but it does amount to what
American economists call a growth recession..more |
