The need for caution about economic sanctions

Someone made the point on Twitter that all the experts on Covid-19 are now posing as military experts.  I commented very little on Covid, although I had been involved as deputy PI in a substantial epidemiological project with a prominent member of SAGE.

What I can recommend is anything by my former teaching colleague Professor Mark Harrison who is an expert both on Russia and economic sanctions.  He warns that we should not rely on them too much: https://warwick.ac.uk/newsandevents/expertcomment/ukraine_invasion_university?

Elsewhere he has made the point that the Japanese attack on Pearl Harbour was prompted by the US cutting off their oil supply in 1940.  They decided to go for broke.

Ever since I served with the now dismantled United Kingdom Warning and Monitoring Organisation I have retained an interest in nuclear strategy, including President Putin's notions about credible escalation.  However, rather than offering amateur expertise, I recommend the excellent podcasts on the subject by Julie A McDowall.

She has a book on Nuclear Britain coming out with Bodley Head - there was actually an auction between three publishers!

What does it mean to be a 'political economist'?

Over the years at Warwick I had the privilege of teaching with many distinguished economists, among them Nick Crafts, Mark Harrison and Ben Lockwood. I also taught with Professor Lord Skidelsky and I attended an 'in conversation' event involving him in London yesterday to celebrate the publication of his latest book. I have a signed copy, but I am yet to read it.

The economists I have taught with over the years have always been polite about political science, but I suspect they were rather sceptical about it. I did once give a presentation at the Agricultural Economics Society (of which I am a member) on what political science had done for the study of agricultural economics which at least historically has been a policy oriented branch of the discipline. One distinguished agricultural economist got up and said 'Nothing!' and one had to admire his honesty (the paper has subsequently been published).

One of my economics colleagues was generous enough to say that I thought that I was literate in economics in the sense that I understood the terminology and had a basic grasp of theory. I would admit that I probably learnt more from them than they did from me.

When I started doing work with life scientists, the impression I got was that at least some of them thought that political science had something new to offer, primarily in terms of how issues are 'framed'. For example, in our work on cattle diseases, they could see how the myth of the 'rogue badger', a deviant badger that was supposedly terrorising the countryside, had influenced policy.

I was able to ask the first question at Lord Skidelsky's presentation yesterday, and he was gracious enough to acknowledge my book on 'the politics of economic policy'. In fact there were three books. The first was written with Shiv Nath which I think was the one that Robert read and he said to me at the time that he wondered how we had managed to write a book together as it was evident that we disagreed so much.

I then wrote a short book on 'The Politics of Economic Policy' which was reliant on a ruthless intellectual pillage of the work of Nick Crafts. Finally, I wrote a book on 'Economic Policy in Britain' which was my attempt at a more mature reflection on the subject matter. It has been overtaken by events such as the crash and Brexit, but still sells some copies and hopefully still has some insights to offer.'

I try to make some claim to be a 'political economist', most recently in some work I have been doing on football (Nick Crafts has actually written about the turf). In essence what I think I am doing is examining the interaction between the market and the state within the context of globalisation, although that has been encountering increasing resistance with the resurgence of nationalism as in 'America First'.

But what theoretical perspective can be deployed to assist this task? Robert Skidelsky would still advance the claims of Keynes, although his reflections on political matters in the General Theory were largely confined to an admittedly interesting appendix. Keynes wrote very extensively, e.g., on football and the shortcomings of Ramsgate (the editor of the Charlton fanzine lives in Ramsgate so I often draw his attention to what Keynes had to say). However, it is possible to read what you want into Keynes and we have been reliant on those who chosen to interpret him, in very different ways over time since his untimely death. This has allowed commentators to present themselves as Keynes's representative on Earth.

Another claim is for Marxist economics. Although I am no Marxist, there are some valuable insights to be derived. I think that crisis is endemic to capitalism, but it can also have valuable purgative effects, admittedly at great cost to individuals (which is where effective government comes in).

There is then public choice which I taught about with Ben Lockwood. This has become indelibly associated with neo-liberalism, but that was really the Virginia School. Ben and I took the view (as did Patrick Dunleavy) that it could be deployed as a neutral toolkit that enabled you to ask some challenging questions. Colin Hay sees it as highly politicised and having a harmful effect.

One would also have to acknowledge the work of Polanyi, which at the very least has been marketed very well in recent years, but also contains some important insights about different types of capital. Last but not least, I would mention the work of Elinor Ostrom which won her a share of a Nobel prize in economics, a rare accolade for a political scientist (Herbert Simon, whose work influenced me, was another example). I think that Ostrom's work is flawed, particularly methodologically, but in an interesting way that allows us to look at problems in a fresh light.

Where this ends up is with an eclecticism that is both a strength and a weakness of political science. One area in which I have attempted to work is the development of a political theory of a firm which I explore with David Coen and Graham Wilson in our Oxford Handbook of Business and Government. I have to admit we didn't get very far beyond sketching out the challenge.

So perhaps what I have been doing is examining the politics of economic policy, although that is something that needs to be done. I will write subsequently about what Robert Skidelksy had to say.

This is why we need experts

I am very grateful to the doctors and nurses at Warwick Hospital (and the ambulance crew who arrived in three minutes) who intervened effectively to save my life when I contracted sepsis recently. After three weeks in hospital, and a spell in intensive care, I am now being treated at home each day by the hospital's dedicated SWAT team.

Michael Gove insists that what he particularly had in mind when he castigated experts were economists and political scientists, and I am doubly guilty as I work on the cusp of both subjects, having been tolerated over the years by the distinguished economists with whom I taught such as Nick Crafts, Mark Harrison, Ben Lockwood and Professor Lord Skidelsky.

On Radio 5 this morning I heard Professor Jon Tonge discussing Britain, Brexit and Ireland. There are few people who know more about Ireland, and I was delighted that he agreed to contribute two essays on the subject to Political Quarterly. He is a martyr to the cause, sitting through the conventions of various political parties. What he provided was a forensic and balanced analysis with one (to me) new idea. Jon is a former chair of the Political Studies Association and he shows why we need well-informed political scientists.

I wasn't able to take notes (it may be possible to track the clip down) but here are some highlights as I heard them:

• Theresa May's did clarify some issues. In particular, it was a wake up call for those who think that Brexit will be costless for the economy. (In my view the main function of the speech was to keep the two wings of the Conservative Party on board and singing from a similar hymn sheet and in this it succeeded. This was needed after Jeremy Corbyn's intervention).
• Jon was (in my view) rather sceptical about the technological solutions that are being advanced as a light/smart border. We are still very short on detail about how they would work and time is running out.
• Jon put forward the ingenious idea of making the common travel area between Britain and Ireland a common trade area. This was a new idea to me, but it certainly deserves further discussion.

I have worked on agriculture and food in Ireland since the 1990s and I would emphasise that the economy of the island of Ireland is highly integrated as far as these key industries are concerned.

The EU reaction to the May speech

Inevitably there were charges of 'cakeism' and the speech certainly lacked detail on some key points, deliberately so. The EU thinks that all they can offer is a Canada style free trade agreement. I think that a bespoke customs arrangement could be possible.

I think that the EU was too dismissive of the idea of the UK being an associate member of some specialised agencies. Take the chemicals agency which the prime minister mentioned. I have worked on the chemicals industry since the 1980s and have some unpublished material on the REACH agreement. It is in the interests of producers, consumers and the environment to have common standards for chemicals across Europe. Just because non-member states have not had associate membership in the past does not mean that they could not in the future (there are a lot more agencies than the three mentioned). The UK would, of course, have to pay a subscription.

I have a message for Guy Verhofstadt: stop talking like a political weight machine and try and engage constructively in the negotiations: Gives it large

Michael Heseltine has slammed the speech as 'platitudes and generalisations', but he is an incorrigible and Dominic Grieve gave a much more favourable response on Sky: Hezza

Economists disagree shock

This should come as no great surprise, indeed it could apply to any group of experts. However, I was interested to see that my colleague Mark Harrison (with whom I taught Making of Economic Policy last academic year) was one of the signatories of the letter from 20 economists in the Financial Times yesterday arguing that the 50 per cent tax rate was damaging to the economy. Today there is a reply from Andrew Oswald also in the Economics department at Warwick, although currently based in Bonn and best known as a happiness guru.

Oswald points out that the signatories produce no evidence to support their case and states that what evidence there is points in the opposite direction. The evidence that Oswald cites seems a bit limited as it is based on a case study of a tax hike in New Jersey.

In another letter, Alan Manning of LSE points out that a study of footballers, plausibly the most mobile of professions, did find that tax rates influenced location decisions, but the effect was not large and the research concluded that the revenue-maximising tax rate was well in excess of 50 per cent.

Of course one could argue that the 50 per cent rate sends out a signal about whether Britain is 'open for business'. Its main effect may not be inducing relocation, but dissuading location in the first place.

In any case the tax has not been in place long enough for its effects to be properly studied, although the Treasury is trying to make some calculations. One of the considerations has to be whether it encourages the use of tax avoidance devices.

Of course in many respects what the tax is about is political symbolism. It is a seen as a gesture towards 'fairness', although whether it does promote fairness is another matter. But withdrawing it would be politically costly when median incomes are being squeezed.

If the goal is revenue maximisation, then it is arguable that property taxes are more efficient and less distortive. A 'mansion tax', a 1 per cent levy on the amount by which a property's value exceeds £2m, would generate enough revenue to replace the mansion tax. But it might be politically difficult for many Conservatives.