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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.

Technocrats & class

Are centrists even more utopian than socialists? I’m prompted to ask by a passage at the end of Anne Case and Angus Deaton’s Deaths of Despair. They write: We believe that capitalism is an immensely powerful force for progress and for good, but it needs to serve people and not have people serve it. Capitalism needs to be better monitored and regulated, not to be replaced by some fantastical socialist utopia. This comes after 260 pages in which they document how American...

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Avoidable unemployment

We Marxists are often accused of being ideologues. This is silly. Everybody has an ideology, in the sense of a set of preconceptions about how the world works. The difference between we Marxists and others is that we are sufficiently self-aware to know this. By contrast, some of the most dangerous ideologies are those which their believers take for granted despite being wrong. This, I suspect, helps explain what is otherwise a paradox. The paradox is that most voters approve of the...

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Risk in capitalism

One thing this crisis is demonstrating is that in modern capitalism it is workers and small businesses that bear risk to a greater extent that does larger capital. As Paul Evans points out, some of the biggest losers are freelance workers who are ineligible for furlough schemes. And Charles Gascon at the St Louis Fed adds that it is low-paid workers who are most at risk of losing their jobs: The occupations at the highest risk of unemployment also tend to be lower-paid occupations....

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When rules don’t apply

It’s a cliché that this is a crisis. But what exactly is a crisis? I like Richard Bookstaber’s idea – that it is a time when normal economic rules don’t apply. For example, in normal times investors can reasonably think about valuations and corporate earnings. But in crises what matters instead is risk and liquidity. In normal times, negative feedback loops dominate: cheap assets will rise in price. But in crises, there’s a heightened danger of positive feedback whereby selling begets...

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What centre?

The election of Keir Starmer as Labour leader has caused some leftists to fear that the party will move to the centre. Such fears, though, miss the point – that there is no centre. By this I don’t just mean that there are no votes there, as the LibDems and CUK (or whatever they called themselves) discovered in December. I also mean that there are no ideas there either. One feature of CUK was its utter lack of economic thinking and obliviousness to the fact that the economy has changed a...

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“We’ve established that, madam”

George Bernard Shaw, it is said, once met an actress and asked her: “would you sleep with me for a million pounds?” “I would think about it” she replied. “Would you sleep with me for a pound?” he then asked. “No” she replied. “What sort of woman do you think I am?” He replied: “We’ve established that, madam. Now we are haggling about the price.” We should thing about policies the same way. Sometimes, it is worth establishing the principle, and then haggle about magnitudes and timing. For...

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Inequality, morals & Marxism

One thing this crisis is demonstrating is that there are plenty of bad employers: the Guardian and Labour List both have lists of them. Another is that, as Sarah O’Connor says, “the people we need the most are often the ones we value the least.” As Paulo dos Santos says, society “grossly undervalues” care work and other jobs essential to fighting the pandemic. Both these facts show the need for a Marxian perspective. First, we must ask: why are care workers and others so underpaid? It is...

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The Tories’ dilemma

Matthew Parris in the Times raises a challenge for Tories – but not, perhaps, the one he thinks he does. The government’s willingness to borrow to get through the crisis, he says, undermines the traditional “Conservative case for prudence in public spending.” And if there are not the limits the Tories thought on public spending, then: The Tories had better brace themselves serious questions about how we can do it for a virus but not to save a shipyard, or the planet from climate...

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Another wasted crisis?

In the immediate aftermath of 9/11 there was much talk that the real heroes were firemen rather than hedge fund managers. That talk soon disappeared, and Americans’ indulgence of plutocrats continued as normal. This warns us about clapping for carers: it might prove to be a brief emotional spasm with no lasting social effect. Yes, crises can be turning points. But those of the 1970s and 2008 tell us that, for the left, they can also be wasted opportunities. Here are five uncertainties...

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Against “aggregate demand”

One legacy of the 2008 crisis has been that firms have built up big cash piles. Bank of England data show that non-financial firms now have over £425bn of sterling deposits. That’s equivalent to over two months of GDP and over 12 months of profits. You might think this is a great comfort, as it suggests that companies can respond to their loss of revenues not just by borrowing but by simply running down these cash piles: isn’t that what they are for? But, but, but. There’s a huge problem...

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