Sorry about this but there is no “new economics” to be had
True, it’s The Guardian headline writers who are wrong here but for all that it’s a common enough demand:
Britain cries out for new economics. Labour has given it repackaged Tory ideas
David Edgerton
Sorry about this and all that but there is no new economics to be had.
Sure, sure, there are new economic policies to be had, new, or at least different, political goals to try to reach. But that’s not a new economics.
Economics, as is continually pointed out, a positive, not normative, science. That is, it doesn’t say “it should be like this” it says “it is like this”. So, if we do this here then that over there is going to happen. Or, alternatively, if you desire that over there to happen then you’ve got to do this ‘ere to make it do so. We’d not claim it’s as accurate as the physics of a tennis racket but the idea is the same. If you want the ball to go there then you’ve got to hit it this way here.
That’s also all that economics does. It doesn’t tell you where the ball should go, it doesn’t say where you should want the ball to go either. That’s tennis - or, to haul this back across the net, that’s politics, morals, perhaps even ethics. Economics can tell us the results of what we do, economics can tell us how to gain a goal that we desire - or of course that it’s not possible to gain that goal - but it cannot tell us what we should be wanting; that’s that morals, ethics, politics and all the rest.
The actual claim here:
We now need change rather than growth. Some things should grow, while others should shrink, such as oil production and aviation. We need innovation, but creative imitation more. We need some investments, but not those that will make us less equal and less decarbonised. We need state investment, but we need to stop corporate losers lobbying governments to invest in carbon capture and storage, HS2 and overpriced nuclear power. We do not need “investable” water services, but rather decent water supplies. We should stop thinking of business as being all about entrepreneurship and “wealth creation”, given that many are neither entrepreneurial nor creating shared wealth.
If we want a more equal, more effective, more efficient and happier Britain, we can have it – even with no growth or lower GDP. But we need to want it, and to have a party that is committed to achieving this and fighting those who stand in its way. Most importantly, any form of national renewal needs new thinking, not doubling down on the failed nostrums of the last 40 years.
Maybe those things are good goals, maybe they’re not. But none of them are about changing economics. They’re about changing the goals we pursue informed by that same old economics.
We’d note that Edgerton does not make the mistake the headline writer does. He’s arguing for different goals not a different science.
As to the goals, well, we disagree but then you knew that. Greater equality for example. Wealth inequality is pretty much unchanged this psat 15 years or so. Income inequality - as we delight in pointing out - is lower than it was in 2008. We’ve not noted any great enthusiasm for how the economy has been working this past 15 years so we do tend to think that equality isn’t it - absolute levels of income are more interesting to people. But that, again, is not economics, that’s politics - or morals, ethics, whatever.
Economics is, therefore we can’t have a new one. Sorry and all that but it’s true.
Tim Worstall