Thought du Jour

FT columnist Martin Wolf writes that, contrary to a claim of Brexit supporters, there is no reason to expect scrapping EU regulations to change the relatively poor performance of the UK economy.

The UK … has low unemployment. But it also has high inequality, mediocre real incomes, at least by the standards of its European peers, and poor external competitiveness. Above all, recent productivity growth has been truly awful.

Moreover, such failings, relative to the UK’s EU-15 peers, cannot plausibly be due to the burden of regulation since, as the OECD rightly stated in its pre-referendum report on Brexit, “regulations are low relative to those in other EU member states”. If that made the difference, the UK would be more productive and dynamic than its peers, not less so. Given this, scrapping remaining regulations would not be transformative.

What, then, might account for the poor performance of the UK economy? According to Mr Wolf,

the list includes: low investment, particularly in infrastructure; inadequate basic education of much of the population and the innumeracy of much of its elite; a grossly distorted housing market; over-centralisation of government; and a corporate sector whose leaders are motivated more by the share price than by the long-term health of the business.

Martin Wolf “Make no mistake, Britain is not a world-beating economy“, Financial Times, 30 September 2016 (metered paywall).

For details, read the full column at the link above.

The editors of the Financial Times watched last night’s presidential debate and, predictably, are disturbed. Here is a brief excerpt from an editorial that will appear in tomorrow’s newspaper.

Anyone watching the first presidential debate would be forgiven for thinking the US was on the brink of collapse. The Republican candidate, Donald Trump, insisted the US was a third-world country suffering an almost biblical flight of jobs to China and beyond. Violence was out of control and parts of the country were now in open warfare.

Hillary Clinton’s language may have been rather less melodramatic. But she shared Mr Trump’s premise about the threat posed to the US by an open global economy. ….  Contrary to Mr Trump’s depiction of a jobless America, the US unemployment rate is just 4.9 per cent, which is less than half that of parts of Europe. ….

Both Mr Trump and Mrs Clinton pander to the idea that comfortable mid-20th century factory-floor jobs can simply be willed back into existence. It is a myth. The blame for America’s labour force woes and the increasingly skewed distribution of the fruits of growth are to be found at home. It is Washington, not Beijing, which sets US tax rates. The answer to most of America’s challenges are to be found in the booming cities and technological hubs of 21st century America. Blaming it on foreigners may be good tactics. But it could result in terrible policies that will only deepen the malaise.

“America’s dystopian presidential debate”, Financial Times editorial, 28 September 2016 (metered paywall).

Here is an excerpt and link to another op-ed from yesterday’s New York Times. It is a call to reform Fox News, written by a Reagan Republican.

When it began in 1996, Fox News did not advertise itself as conservative, but rather as being in the center. I, like many conservatives, thought the mainstream media was liberal, so being in the center meant Fox was relatively to the right of most media.

But after the terrorist attacks on Sept. 11, 2001, Fox began shifting to the right of center ….

Ten years ago I stopped watching Fox because I found that it distorted my worldview ….

Could Fox News be that outlet that a broader coalition of conservatives wants? The recent ouster of Mr. Ailes and the inevitable takeover of the company by the sons of 85-year-old Rupert Murdoch mean that some change will come. Opening Fox to broader political views could be a plus for both it and the conservative movement. If Fox News remains an entrenched part of the conservative extreme, the result will be more Republican candidates like Mr. Trump and more defeats at the polls.

Bruce Bartlett, “It’s Not Too Late to Fix Fox News“, New York Times, 19 September 2016.

HT Mark Thoma.

Bruce Bartlett (born 1951) studied American diplomatic history (BA Rutgers; MA Georgetown). He then worked as a staff economist for members of Congress and occupied senior policy positions in the governments of Ronald Reagan and George H.W. Bush. He is author of numerous books and articles, including the book Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy (Doubleday, 2006), and the article “How Fox News Changed American Media and Political Dynamics” (3 June 2015).

Further to yesterday’s post, Paul Krugman pleas for young voters to vote for Hillary Clinton, rather than waste their vote on a third party candidate, as so many did 16 years ago.

Does it make sense to vote for Gary Johnson, the Libertarian candidate for president? Sure, as long as you believe two things. First, you have to believe that it makes no difference at all whether Hillary Clinton or Donald Trump moves into the White House — because one of them will. Second, you have to believe that America will be better off in the long run if we eliminate environmental regulation, abolish the income tax, do away with public schools, and dismantle Social Security and Medicare — which is what the Libertarian platform calls for.

But do 29 percent of Americans between 18 and 34 believe these things? I doubt it. Yet that, according to a recent Quinnipiac poll, is the share of millennial voters who say that they would vote for Mr. Johnson if the election took place now. …

So I’d like to make a plea to young Americans: your vote matters, so please take it seriously. ….

Remember, George W. Bush lost the popular vote in 2000, but somehow ended up in the White House anyway in part thanks to the Nader vote — and nonetheless proceeded to govern as if he had won a landslide. Can you really imagine a triumphant Mr. Trump showing restraint out of respect for all those libertarian votes?

Paul Krugman, “Vote as if It Matters“, New York Times, 19 September 2016 (metered paywall).

Thanks to Mark Thoma’s ungated extract for the pointer.

FT columnist Edward Luce writes that Hillary Clinton is perfectly capable of losing the November election to Donald Trump. If this is a prediction, we will soon find out.

It is often said that the Republican Party, by accepting Donald Trump as its nominee, made the election of Hillary Clinton possible. I now realise that it is equally true that the Democratic Party, by accepting Hillary Clinton as its nominee, has made a Trump victory possible. Each candidate is disliked, not without reason, by a majority of voters.

In 50 days we will know whether Donald Trump has pulled off the biggest upset in American history. …. Hillary Clinton is all that stands between the world and the Trumpian abyss. ….

Voters will have to make do with her campaign themes of building bridges rather than walls, and being stronger together. Laudable though such sentiments are, they are dangerously anodyne. They tell voters what Mrs Clinton is not — Donald Trump. They tell us next to nothing about what she would do. ….

If this is a contest over who is least unpopular, Mrs Clinton is capable of losing it. All Mr Trump has to do is control his nastiness for seven weeks. For most people this would pose few difficulties. But he is capable of falling off the wagon. …..

Make no mistake: the US could be about to elect a proudly ignorant xenophobe as president. [Emphasis added.]

Edward Luce, “Fifty Trumpian days that will shake the world“, Financial Times, 19 September 2016 (metered paywall).