Then and now

Two of my latest reads have been Melvyn Bragg’s memoir of growing up in mid-20th century, working class Cumbria, Back in the Day, and Alwyn Turner’s canter through early 21st century British politics, All In It Together. They make quite an instructive contrast. Bragg’s warm perspective on postwar optimism – despite material hardships – complements his own story of academic success through grammar school and Oxford scholarships. Turner’s jolly but fundamentally pessimistic account of a materially far richer country is a contribution to the large and sadly still-growing literature on the UK’s decline. Both good reads, although as a working class kid from the north west who clambered the social ladder via grammar school scholarship and Oxford (albeit 20+ years later) I particularly enjoyed Back in the Day: pick according to your mood.


European elegy

My non-econ reading lately has been Timothy Garton Ash’s Homelands: A Personal History of Europe. I describe it as an elegy because of its melancholy narrative trajectory: from the 2nd world war and ‘never again’, through the ups and downs of the EU project, to today’s brutal invasion of Ukraine, “illiberal democracies” tearing up the hard-won freedoms, and the pressures of mass immigration – which will only get more intense as climate change leads to conflict and destruction.

Like the author, I mourn the way our European citizenship has been stripped from those of us in the UK, by a slender margin, by voters who were lied to by mendacious and greedy politicians and businessmen. And at the same time recognise the challenges the EU itself needs to address. No wonder the book ends by quoting Gramsci on pessimisim/optimism. But also Vaclav Havel: “Hope is not prognostication. It is an orientation of the spirit, an orientation of the heart. …. It is not the conviction that something will turn out well, but the certainty that something makes sense, regardless of how it turns out.”

So, not a cheering read, at least for those likely to pick up a book about Europe. But a compelling read, by someone who had a ringside seat at many of the key meetings and ‘where were you when…’ events (above all the fall of the Berlin Wall) of the past 40 years.


PS For those who haven’t read it, Garton Ash’s The File: A Personal History is a must- read.

Saving liberalism

I liked Thomas Aubrey’s short book, All Roads Lead to Serfdom: Confronting Liberalism’s Fatal Flaw. It could alternatively be called, Confronting the weaknesses of the Anglo-Saxon economic model. But it does this in a thoughtful way, contrasting the utilitarian tradition of UK/US economic policy with (West) Germany and the “underlying ordoliberal principle of power dispersion.” It is quite a philosophical book, which concludes that private and public power must be dispersed across labour markets, product markets and the activities of the state (as well as the liberal market basics of secure property rights and a stable currency). As well as stressing the importance of ideas, though – and I wholeheartedly agree – the book calculates power dispersion indices (“to provide a potential alternative framework to the current utilitarian welfarist approach”) and has a serise of proposals for how to disperse power in the three domains.

The empirics turn out broadly as you might expect. Canada, Switzerland, Denmark and Sweden turn out to have widely dispersed state power, as does the US, and the Scandinavian countries cluster near the top of all three rankings. The UK is near the bottom of all three rankings, while the US is near the top for state power dispersion but not labour or product markets. This seems to me to understate the traction economic power delivers in terms of political power, albeit through sometimes indirect channels.

The book’s compare and contrast with the German model is interesting although Aubrey concludes Germany itself has not delivered on ordoliberal ideals. I rather agree with its final conclusion: “If liberalism is to have a future, it will require those who believe in liberal values to make the case for an alternative ethical foundation; one where freedom and equality can be contsnatly manufactured by the continuous dispersal of public and private power.” Ideas are indeed important for winning hearts and minds. The naive utilitarianism underlying the eocnomic policy playbook of the past 40 or 50 years has lost hearts and minds. But I’m not sure framing what’s needed in terms of ‘ordoliberalism’ with all its free market and Hayekian baggage will be an easy sell, hearts and mind-wise. (And the book has been priced only for libraries by its publisher, Bristol University Press, so it won’t even get much chance to influence people.)A1e0JCBaNuL._AC_UY436_QL65_


The Treasury View?

Former prime minister (briefly) Liz Truss might not have been the biggest economic brain, but was she right to argue that there is such as thing as ‘the Treasury View’ and further that it hasn’t served the country well? Many people across the political spectrum would agree. I briefly worked in the Treasury many years ago and was certainly quickly socialized into certain rule-of-thumb beliefs – free trade is good, hypothecating taxes is bad, etc. I have some thoughts about how to test the Treasury View hypothesis, particularly the claim about the short-termism it imposes on economic policy. Meanwhile I’ve been reading a few books. One was Sam Beer’s old overview of how the Treasury operated in the 1950s. Another is a new book, Bankruptcy, Bubbles and Bailouts: the inside history of the Treasury since 1976, by Aeron Davis.

It was both an interesting and an incredibly frustrating read. The book draws on a series of over 50 interviews which included some absolutely key insiders – ministers and officials – and a few experienced external commentators. It would be hard to draw up a better list. However, the author has his own strong views and does not distinguish clearly between his commentary and his interviewees’ perspectives. Indeed, some of his commentary on interviewees I know strikes me as just wrong, failing to distinguish between their actions as principled civil servants serving the government of the day and their personal views about privatization or deregulation. I found myself wishing I could just read the interview transcripts instead.

It isn’t that there are no good authorial observations; on the contrary, he points out the inconsistency of globalising and deregulating the financial markets at the same time as trying to control the growth of the money supply (that was happening in my era); or that the hit to manufacturing from exchange rate appreciation in the early 80s coincided with deliberate policy actions that harmed industry and helped finance. Indeed, the main theme of the book is the financialization of the economy – although it seems to me this had as much to do with political choices as Treasury dogma. There is a particularly interesting chapter about the financial crisis and the reorganisation of financial supervision.

However, former Perm Sec Nick Macpherson is one believer in the idea of a Treasury view, setting out its key elements in a speech he gave in 2014, all centred around the asserted limits to what government can accomplish in economic policy. I think there’s still something to pursue in documenting not so much what it is as why it is, and how it lasts despite the huge changes in the economy and rapid turnover in personnel, and what the implications are for better economic management. The book is well worth reading but it is a view through a particular lens.



UK policy co-ordination: saying no and having lunch

I’ve been reading up about His Majesty’s Treasury, with a view to a piece of research, and this week finished Samuel Beer’s short 1956 book, Treasury Control. There’s much in it for those who believe in the existence of an age-old ‘Treasury View’. Gladstone is quoted as saying ‘the saving of candle ends’ was “very much the measure of a good Secretary of the Treasury.” Winston Churchill’s view in 1929 was that the State can as a general rule never creat additional employment was a ‘steadfast’ “orthodox Treasury view.” Beer argues the Treasury’s role is not to co-ordinate across departments, but simply to say No, and comments, “Is it not a little odd that so Gladstonian an institution as the Treasury should become the agency for guiding and controlling state intervention in the economy?” Economic policy co-ordination at that time, he reckoned, came about through Oxbridge networks and “lunch tables of the clubs of Pall Mall.”