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Chris Dillow: Stumbling and Mumbling

Stumbling and Mumbling is a personal blog of Chris Dillow, an economist who spent eight years with one of Japan’s largest banks. He blogs about British politics and provides thoughtful analyses on the British economy and sports.

Productivity in late capitalism

In the debate about how to increase productivity, everybody seems to be making an assumption that I find questionable - that feasible policy changes can make a significant difference. We need some historical context here. My chart shows that big, sustained productivity growth is in fact very rare; growth of over 2.5 per cent a year was only seen over lengthy periods between 1945 and 1990. Our idea that rapid growth is normal and stagnation not  might owe more to the influence of our...

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The house price puzzle

Everybody knows that the housing market has become financialized, as Josh Ryan-Collins among others has documented. But what kind of financial asset is housing? The answer is far from straightforward. In one sense, house prices are like share prices. Both are claims upon future incomes – profits in the case of equities and wages in the case of houses (it’s fair to assume rents are a stable fraction of wages). Both tend to fall in recessions. And both have over the years delivered a risk...

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Skill as a social construct

Imagine we lived in a society scared of germs, which prized cleanliness not only as a way of ensuring good health but also of improving productivity as people avoided the sniffles and minor ailments. In such a society good cleaners, who could get a place really spotless, would be highly valued and paid. This isn’t a wholly fanciful example. In industries that need ultra-clean rooms, such as semi-conductor manufacturing, cleaners are indeed well-paid and valorised. It tells us that the...

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In search of the centre ground

In the FT, Robert Shrimsley writes: Starmer is leading his party back to the centre ground and has positioned it where it needs to be and patently was not under Jeremy Corbyn….The problem in contesting the centre ground is that you do actually have to fight for it and the Tories will not lightly surrender. This poses the question: what is this centre ground, and how can it be said that the Tories occupy it? It’s a puzzle. We could define the centre ground as being what the...

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The minimum wage dilemma

Should the national living wage rise to £15 an hour? For me, it’s a dilemma because there are two competing and powerful perspectives. The economic perspective is sceptical. Econ 101 says a higher price means lower demand, so a higher minimum will lead to job losses or – just as importantly but often overlooked – cuts in hours. Granted, Econ 101 might be wrong. Where employers have monopsony power, a higher minimum wage can lead to employment actually increasing. Which leads us to the...

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What Starmer misses: the C-word

One word is notably absent in Sir Keir Starmer’s recent essay – capitalism. Our most successful politicians have had something to say about this – whether it be Thatcher’s belief that capitalism needed low inflation and weak unions if it were to thrive, or Blair’s belief that governments and people needed to adapt to capitalist forces of globalization. Starmer, however, has no such analysis. For example, he notes that, “entering the 2020s, Britain faced stagnant wages, vast inequality and...

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The death of free market ideology

Free market economics is dead as a political idea. The government’s subsidy to CF Industries to ensure that it supplies a product that is (checks notes) soaring in price is just one of several examples of this. It has also introduced trade barriers within the UK, an almost unprecedent move for any developed nation in modern times. Even before the rise in National Insurance, it was planning on raising the share of taxes in GDP to what the OBR says would be “its highest level since Roy...

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Capitalism and the state

Greg Smith and Dehenna Davison write: For many in left behind parts of the country, the reality is that the private sector is stifled by a bloated public sector that is almost Soviet-sized in some areas of the North. This seems to me to be a case of confusing correlation and causality. The reason why the public sector accounts for such a big share of economic activity in some areas is that the private sector in those places is so weak. In fact, I’d suggest that – for the...

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Cancel culture, & the death of classical liberalism

Most of us by now are bored with rightists complaining about cancel culture. But we shouldn’t be, because they show that the left has won an important battle about the meaning of liberty. What I mean is that such complaints show that the right has abandoned a classical liberal conception of the term. Let’s take Friedrich Hayek’s discussion of liberty. He defined this in negative terms, as the absence of coercion, where coercion is something which “occurs when one man’s actions are made to...

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The politics of abstraction

“Migrants will be turned back to France” cheers the Daily Express – alongside a picture celebrating Emma Raducanu who is herself a migrant, the Canadian-born daughter of Chinese and Romanian parents. Of course, an Express front page should normally be beneath our notice. This one, however, is significant as I suspect it embodies a widespread phenomenon in mainstream politics – the prioritizing of abstractions over real people. The Express’s doublethink has happened because, for much of...

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