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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.

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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What’s the mechanism?

The late great Andrew Glyn always asked: “what’s the mechanism?” The west’s abject failure in Afghanistan highlights both the importance of this question and the fact that too many policy-makers and influencers fail to give it sufficient attention. President Biden says “we did not go to Afghanistan to nation-build.” Which poses Andrew’s question: what, then, was the mechanism through which the Taliban would be defeated? We know for certain that it was not the ones actually operating:...

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Ambition in capitalist society

Ambition, writes Lucy Kellaway, is both necessary and corrosive. She omits an important aspect here, which adds to its corrosiveness – class. Class influences the level of ambition through two channels. One is that it distorts your awareness of opportunity. In Michael Apted’s superb TV series Up, the privately-educated Andrew knew (16'21" in) at the age of seven that he would go to Cambridge and become a lawyer. For the rest of us, our path to even modest success is not so pre-determined....

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Embracing Blair’s legacy

Sir Keir Starmer wants Labour to “embrace Tony Blair’s political legacy.” Which poses the question: what is that legacy? The usual response is merely an exchange of tribal grunts: “Iraq” versus “won three elections”. The truth is more interesting. Blair’s (and Brown’s) great genius was to see that social democracy had to adapt to new times. So, for example, his expansion of universities was a response to the increased wage inequality between graduates and non-graduates; tax credits were...

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The social mobility con

Strange as it might seem, we owe some thanks to Digby Jones – because he has reminded us that social mobility is a con. Over the weekend he tweeted: Enough! I can’t stand it anymore! Alex Scott spoils a good presentational job on the BBC Olympics Team with her very noticeable inability to pronounce her ‘g’s at the end of a word. Competitors are NOT taking part, Alex, in the fencin, rowin, boxin, kayakin, weightliftin & swimmin. Now, Ms Scott epitomizes the meritocratic...

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