But at heart, the rise in the real cost of energy means we are all poorer. That is inescapable. The question is how that pain should be divided. Clearly it should not be borne by families at the edge of poverty. But then it *is* going to be borne by middle class families and inevitably some of those will be public sector workers such as teachers, doctors, etc, and the way the pain will be transmitted is higher interest rates and higher prices.
I hate Brexit but I’ve also posted links on here showing that it’s not a huge factor in the current bout of inflation.
I’m also completely unconvinced by his chunterings about New Keynesian central banks and the money supply. If you want to believe a journalist with a history degree has a better handle on how monetary policy works than institutions stuffed full of people who have PhDs in the subject, then be my guest. And yes, that is a blatant appeal to authority as I simply can’t be bothered to write any more. But I should perhaps point out 30 years of price stability under this regime.
..but the point the Telegraph article is making is about whether monetary conditions are the entire driver of inflation. This is basically an argument between two different schools of macroeconomics that was particularly prevalent in the 70s and 80s. The Telegraph writer is just grumpy that modern academics and central bankers tend towards a different view than the one he holds.
Britain is indeed in a horrible mess but for reasons that mostly have little to do with Brexit
Germany in particular has manoeuvred itself into an economic and political crisis of Zeitwende proportions by outsourcing everything: its energy supply to Putin’s Russia, its aggregate demand to Xi Jinping’s China, its military defence to America, and its monetary policy to the ECB – in the lapidary words of Deutsche Bank board member Paul Achleitner.
And the theoretical background that you picked up on probably goes over the head of 99% of readers (including me, beyond knowing very roughly what Keynesianism is).
One of his main arguments (which I posted here) is he clearly believes current inflation has little to do with brexit. Quote from: article authorBritain is indeed in a horrible mess but for reasons that mostly have little to do with BrexitHe also believes Europe's currency union is going to contribute to difficulty in combatting the effects of inflation; while the issues behind the UK's problems are different - as you've mentioned before productivity being one issue among many that hamstrings UK plc.
I long ago - around 2016 or 2017 - accepted the economic consensus that brexit would lower GDP by a small amount over the short and medium term. But am of the view that this would have close to fuck-all noticeable economic impact on everyday life for the average person, seeing as we all agree that small changes either +ve or-ve in GDP are virtually meaningless to the average person. There are many valid reasons to 'hate brexit' but 'GDP' doesn't seem one.
Quote from: petejh on August 04, 2022, 12:44:02 pmAnd the theoretical background that you picked up on probably goes over the head of 99% of readers (including me, beyond knowing very roughly what Keynesianism is).For sure the exact details of the issue go over most people's heads but I suspect a reasonable number of readers of the Telegraph will have vague memories of the early 1980s arguments over monetarism, and it's a popular enough topic in undergrad economics so even PPE-ers will have heard of it. But the point is not to really engage with a theoretical background and complex question, rather it is to make the following argument: "Those pointy heads in central banks are all into an updated version of this thing that we know doesn't work from the last time around, what we need is not this nonsense but a good dose of the Thatcher/Reagan policies which we know worked. We know the boffins will never accept this so it's time to stop this central bank independence malarkey and bring it back under political control."That may be a subtext but I'm fairly sure that's the train of thought that's gaining strength in conservative circles right now. Quote from: petejh on August 04, 2022, 12:44:02 pmOne of his main arguments (which I posted here) is he clearly believes current inflation has little to do with brexit. Quote from: article authorBritain is indeed in a horrible mess but for reasons that mostly have little to do with BrexitHe also believes Europe's currency union is going to contribute to difficulty in combatting the effects of inflation; while the issues behind the UK's problems are different - as you've mentioned before productivity being one issue among many that hamstrings UK plc.I don't think Brexit has a great deal to do with the current inflation. That's not to say Brexit hasn't had an inflationary effect, it has, but that was earlier. A paper from Warwick estimates it as adding about 2.9% onto inflation in 2018, roughly costing households £870 in the couple of years after the referendum (source).As for the issues that the UK faces, productivity is indeed one. And one way that Brexit is thought to hamper the UK in the long run is through decreasing productivity... Quote from: petejh on August 04, 2022, 11:03:15 amI long ago - around 2016 or 2017 - accepted the economic consensus that brexit would lower GDP by a small amount over the short and medium term. But am of the view that this would have close to fuck-all noticeable economic impact on everyday life for the average person, seeing as we all agree that small changes either +ve or-ve in GDP are virtually meaningless to the average person. There are many valid reasons to 'hate brexit' but 'GDP' doesn't seem one.Yes, I mean the consensus was more certain over the medium to long term as to GDP loss (the short run was too messy to say accurately, needless to say we did not cover ourselves with glory) but to describe the amount lost as "small" is to misunderstand growth in modern developed countries. If a genie jumped out of a bottle in No 10 and offered the PM an economy almost instantly 4% bigger, every PM would jump at the chance, because that kind of free lunch is just about impossible for us to get. It would be hard even for the US which is economically much stronger than us. The reverse is as bad for us as the free lunch would be good. Over the last couple of weeks various UK economics commentators have been shooting the shit about an article on the possibility of UK economic growth. Its author, Sam Bowman, is pretty right wing, worked for the Adam Smith Institute, wrote:"I think the one policy choice that the Doomsters do think made a big difference was Brexit, which is certainly within our power to reverse in principle, but practically isn't really because of the politics of it. On this point I entirely agree – it was a bad decision that is already visibly making us poorer, with very limited benefits."I strongly disagree that "small changes in GDP are virtually meaningless to the average person". There's a big difference between an economy growing at 2.5% and one that's hardly growing, as actual life experience of anyone who's been an adult since the 1990s shows. Whilst GDP is an imperfect measure of what we produce, it nevertheless reflects real activity undertaken. Less output means fewer goods and services and lower wages and living standards. Most of our public services are predicated on a trend rate of growth that is considerably higher than the one we actually have post-2008 and a long-term, low growth economy has real consequences in terms of health care, social care, education, etc. I'm aware of some research that suggests that periods of economic growth correspond to periods of political liberalism, whereas stagnation tends to lead to more authoritarian politics. I know you've said in the past that you believe that other events that occur post-Brexit will make it impossible to ever assess the impact of leaving the EU. Whilst we can never be entirely sure, I don't think that's correct. There are ways to assess the damage of this policy and to blithely wave away the economic impact as "close to fuck-all" isn't - in my view - a particularly empirical way to approach the issue. Indeed, one could point to the Guardian article as a qualitative way of examining that impact.
Readers have long been urged not to judge a book by its cover. They would also do well, as one author has implored, not to judge them by their biggest fans.Philip Tetlock, the Canadian-American political scientist who wrote Superforecasting, has asked people not to form superficial opinions about his work after Dominic Cummings, the prime minister’s senior adviser, told his colleagues to read it before an away day next month.
Only just seen this.That Warwick study you quote doesn't show what you say it shows. The 2.9% above average inflation you quoted is a localised outlier and is not representative of the UK. If you read the text - or just scroll down to 'fig 8' - it actually only shows CPI increased significantly above average in Northern Ireland, and to a much lesser extent in Wales. CPI for London, South East, South West and Yorkshire was actually below average... Other parts of the country show a negligibly +ve figure. It looks to me that they've taken an outlier (NI) which skews the average, and come up with the headline '2.9% above average inflation'. Surely I'm wrong, and this isn't as misleading as it appears to be?
Also I don't need to point out to you that economic growth is often accompanied by inflation. When you look at Northern Ireland's economic growth (GDP) for the period you'll see that, since 2018, its economy outperformed the rest of the UK by far and in 2022 remains with by far the strongest GDP growth of any region of the UK. (It has been suggested by many commentators to be due to the much maligned NI protocol, flawed as this no doubt is). So in this context the 2.9% above average inflation for 2018 in a strongly-growing Northern Irish economy would hardly be a surprise. It's pretty much exactly what you'd expect to see in NI isn't it? (It's also hardly today's 10% inflation in a shrinking global economy).
For the rest of your discussion about GDP a great deal seems to depend on who 'us' refers to and I remain of the view that - much like in personal finance everyone has a 'personal inflation rate' depending on their lifestyle - one person's GDP experience is not another person's. The discussions around the relevance of GDP risk being biased by who's discussing it and the 'us' in the context of your points might mean 'not us' to a great many people in the UK. Unless a belief underlying your point is that GDP is representative of joe average and isn't massively skewed by the outlier of financial services and London, and trickle-down capitalism is in great health. Perhaps it is (especially in Northern Ireland...).
On forecasting in general, while I agree with you on the rough direction of the GDP trend post brexit, I don't put much faith in the accuracy of forecasts. There's a wealth of studies into the accuracy of economic forecasting that anyone can find without me needing to link them here. Added to that are various discussions that anyone can find without me needing to link them here - although I'd recommend anyone interested researches 'Tetlock, forecasting' - on the purpose and accuracy of forecasts and the role of forecasters. Precise accuracy being a secondary consideration to knowing rough direction and being tools to set policy etc.
Unless you want to stoke populist anger and expose the country to your rapacious political funders who will make money out of the reducing regulatory efforts. I look to the what is happening to the Republican party in the US and it terrifies me. Liz is pals with the same political thinkers and financial backers.
Liz is going to struggle She's woefully unprepared for this winter. Genuinely I give her less than six months