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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.

Why we are wrong

Eric Lonergan asked a good question yesterday: "why does it take so long for economic beliefs which are repeatedly falsified to change?" I can think of several reasons. A failure to appreciate that the institutional background has changed. Take, for example, big bonuses paid to bankers and CEOs. The idea that we need these to incentivize people is (mostly*) wrong. Instead, they crowd out other motives (pdf) such as professional ethics and can encourage excessive risk-taking. In truth,...

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Financialization as symptom

“To understand the person you have to know what was happening in the world when they were twenty.” I was reminded of this (correct) line from Napoleon Bonaparte by reading Grace Blakeley’s Stolen. To an intelligent person of Grace’s generation, the defining event of one’s formative years was the financial crisis of 2007-09, which highlighted the fact that capitalism had indeed become financialized, in the sense that financial institutions play a much bigger role in driving booms and...

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On commodification

It’s a sign of our times that one of the more insightful comments this week should come not from our debased media but from a minor royal. Prince Harry’s complaint that his mother and wife have been “commoditised to the point that they are no longer treated or seen as a real person” hints at an important aspect of capitalism – commodification. This is the process whereby people and social relations are marketized and turned into goods and services to be bought and sold. Capitalism “has...

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The trouble with capitalism

Are the faults of capitalism curable, or are they instead symptoms of a chronic disease? This is the question posed by Martin Wolf: What we increasingly seem to have…is an unstable rentier capitalism, weakened competition, feeble productivity growth, high inequality and, not coincidentally, an increasingly degraded democracy. There is much to admire in this piece. But I fear it understates the problem with capitalism. The Bank of England has given us a big clue here. It points...

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A start, or an end?

Sometimes, the simplest questions get overlooked. Just as we must always ask of any statistic “is that a big number or not?” so we must ask of any policy: is it the end or the start? I ask because of a recent ComRes poll which found that 48% of voters agree with the statement “I “don’t really care whether or not or how the UK leaves the EU, I just want the uncertainty to be over.” But of course, it is nonsensical to think a no-deal Brexit will end the uncertainty. Instead, as Tom Kibasi...

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Doubting disaster capitalism

A report from Byline Media has prompted talk that Brexit is an example of disaster capitalism: it is supported by vulture investors who hope to profit from economic turmoil. I’m sceptical of this. For one thing, I’m not sure the data supports this claim. Take, for example, the publicly-declared short positions taken by Crispin Odey’s firm, Mr Odey being one of Brexit’s biggest backers. These are not so much in firms that’ll be hard hit by Brexit but instead in those that are troubled...

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On Tory paradoxes

There are two great paradoxes about the Tory party. Paradox one is that whilst neoliberalism has triumphed, the Tories have lost their intellectual hegemony. Matthew Parris says Johnson is a symptom not a cause of the Tory meltdown. That echoes James Butler’s claim that “the Conservative Party is in a process of ideological decline” and Stian Westlake’s that the Tories “have stopped talking and thinking about economics.” This week, 82 academics wrote to the FT defending Labour’s economic...

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Capitalists for Corbyn

The Telegraph says some (a few) investment bankers would prefer a Corbyn government to a no-deal Brexit. There are good reasons for this. This sounds a strange thing to say, given some of Labour’s rhetoric and their proposals for higher corporate and top income taxes; the nationalization of utilities; the dilution of current shareholders’ ownership; and strict restrictions (pdf) on property speculation. It’s also the case that finance has been very happy with the post-2010 mix of fiscal...

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What theft?

There’s some hyperventilating about Labour economic plans. At CapX Tim Worstall says that John McDonnell’s proposal to give private tenants a right to buy their home at a discount is “straight out theft.” And the FT says Labour plans to confiscate £300bn of shares*. Such claims are, I think, an exaggeration. Let’s take private tenants first. The problem here is that house prices are high in large part because of policy mistakes. We can disagree upon what the precise failure is –...

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The theatre of politics

In the latest episode of Great Lives, Shaun Ley says he likes the “theatre” of politics. This helps explain many of the failings of political reporting. Mr Ley is not, I suspect, unusual here. When ITV’s Paul Brand said that Johnson’s “press conferences are 100 times more engaging than Theresa May's”, he was praising Johnson’s theatrical skills, as was Robert Peston is his fawning report. And a lot of you were unhappy with coverage of last week’s G7 conference because it focused upon the...

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