Posts Tagged ‘Samuel Brittan’

fear of quantitative easing

Friday, November 1st, 2013

FT columnist Samuel Brittan today examines “the arcane dispute about so-called quantitative easing”. (more…)

the science of happiness

Friday, September 6th, 2013

FT columnist Samuel Brittan is not happy to see governments embrace this new science.

We are on particularly slippery ground when it is suggested that governments should promote happiness. If this simply means letting people satisfy their preferences to the maximum feasible extent, it should be uncontentious. But promoters of “the new science of happiness” mean something different. They want to promote activities they believe will make us truly happy, and discourage others. …. Happiness may be subject to ordinal rather than cardinal measurement. But happiness promoters, which include the current British government, go beyond this and have whole lists of activities they wish to promote or discourage.

Happiness policy either refers to preference satisfaction that allows people to promote their interests as they see them or to promoting activities that various politicians and writers believe promote true happiness. Fortunately, these writers disagree among themselves, which gives us a little space to promote our happiness in our own way as implied by the American Declaration of Independence.

Samuel Brittan, “Politics echoes with the sound of quack policies“, Financial Times, 6 September 2013.

Mr Brittan is reviewing Quack Policy – Abusing Science in the Cause of Paternalism, by Jamie Whyte (Institute of Economic Affairs, 21 August 2013).

the future of the euro

Friday, August 9th, 2013

FT columnist Samuel Brittan thinks that the eurozone will eventually break up, but “the timescale of euro disintegration is anyone’s guess”.

The Holy Roman Empire – which was proverbially neither holy nor Roman nor an empire – was founded by Charlemagne in 800 and lasted until it was dissolved by Napoleon in 1806. The German Confederation was inaugurated after the Napoleonic wars and had no real powers over member states. It was reinforced by a customs union (Zollverein) in 1834 and the whole rickety structure lasted until it was dissolved into the German Reich by Bismarck in 1871.

History may have since sped up, but we do not know by how much ….

Samuel Brittan, “Why the eurozone will come apart sooner or later“, Financial Times, 9 August 2013.

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Brittan on Blyth on austerity

Friday, January 18th, 2013

FT columnist Samuel Brittan reviews (favourably) a forthcoming book by Mark Blyth, a political scientist of British origin who is a professor at Brown University in Rhode Island. The book, Austerity: The History of a Dangerous Idea, will be published by Oxford University Press in March, 2013.

Ignore the political bile and partisanship – the author succeeds in demonstrating that austerity policies have mainly succeeded in making depressions and unemployment worse, both now and in the interwar period. Indeed, they have often failed in their own terms, as by reducing growth or inducing recessions they have made budget deficits even worse.

Prof Blyth’s ire is directed at public spending cuts – tax increases seem to be all right. He would also have preferred leaving ailing banks to their fate, as in Iceland. Whatever one thinks of this, it is difficult to rebut his critique of budget cuts as a cure for all woes.

It is easy to forget that the original advocate of expansionist demand management, John Maynard Keynes, saw his mission as saving capitalism rather than destroying it. Then, as would be the case today, he was up against the self-destructive instincts of political leaders, who transferred home truths about family budgets to wrong-headed principles for running national economies.

Samuel Brittan,”A funny way of firing up the locomotive“, Financial Times, 18 January 2013.

Samuel Brittan’s column is gated, but will be posted in a few days to www.samuelbrittan.co.uk

You can watch Prof Blyth deliver the main thesis of his book, in just five and a half minutes, here.

recovery from the 2008 recession

Friday, November 9th, 2012

FT columnist Samuel Brittan looks at the numbers, and finds that Canada and the US lead the major developed countries in recovery from the Great Recession of 2008.

I have a table of the behaviour of the main industrial economies since their pre-recession peak of 2007-08. Taking both that recession and the recovery from it, Canada heads the list with a net gain of real gross domestic product of 4.1 per cent. The US comes next with 2.2 per cent, followed by Germany with 1.7 per cent. France is still 0.8 per cent behind its earlier peak and Japan is 1.9 per cent short. The UK is almost bottom of the class with a net fall of 3.1 per cent, a drop exceeded only by Italy among the G7 countries. ….

Because of Congressional Republican opposition, the economic stimulus has not been as large as Mr Obama would have liked. Even so, it is a pity he has not had a Treasury secretary who would have proclaimed the relative superiority of US policy from the rooftops, as Larry Summers, an earlier Democrat incumbent of this post, would have.

Samuel Brittan, “America must be doing something right“, Financial Times, 9 November 2012.

The Conservative government’s austerity measures so far have failed to restore investor confidence in Britain. Be forewarned. Austerity will continue until confidence returns!

Samuel Brittan’s past columns are posted here.

‘the price of inequality’

Friday, July 13th, 2012

Samuel Brittan reviews The Price of Inequality: How Today’s Divided Society Endangers Our Future, by Columbia University economist Joseph Stiglitz (Allen Lane/WW Norton, 2012). The review is not very positive, even though Brittan shares Stigliz’s concern that the share of personal incomes going to the top 1 per cent more than doubled (to 18%) while “the real income of the median US family fell 7 per cent”.

[Stiglitz’s] thesis is that through a mixture of lobbying, misuse of regulation, business capture of politics and much else, [economic] “rents” have been pushed to higher and higher levels.

Moreover, the “top 1 per cent” are hardening into a hereditary elite. Interestingly, this is almost identical to the thesis put forward recently by Luigi Zingales, a free-market economist who left his native Italy for Chicago Business School to escape “crony capitalism”, only to find it gathering force in the US.

When it comes to remedies, Stiglitz is unsurprising. His initial ideas, such as curbing excessive financial risk-taking, making banks more competitive and transparent, and curbing the powers of chief executives, might well appeal to many Conservative members of the UK’s Commons Treasury Committee. But when he goes on to advocate top tax rates above 70 per cent, active steps to manage the trade balance, curbs on globalisation, and restoring union powers, my sympathy begins to wane. There is an argument to be had on all these issues. But … I find more refreshing Zingales’s proposals in A Capitalism for the People for a “pro-market but not pro-business agenda”.

Samuel Brittan, “The Price of Inequality“, Financial Times, 14 July 2012.

Samuel Brittan on Paul Krugman

Friday, June 8th, 2012

FT columnist Samuel Brittan reviews Krugman’s latest book, and – with two reservations – likes the message.

The remedy for too little spending is more spending. Everything else is commentary.

This is the moral I draw from Paul Krugman’s End This Depression Now!  ….

It is difficult to imagine Mr Krugman cheering for the Republicans. Nevertheless I cannot sufficiently emphasise that there is nothing essentially “leftwing” about his analysis.  ….

There is nothing new about the hostility of conventional opinion to the Krugman message. Keynes faced similar hostility when he tried to rescue capitalism from the Depression. He regarded his General Theory as “moderately conservative in its implications” and consistent with an economy run on private enterprise principles. ….

Mr Krugman’s thesis … should be read on the basis of its evidence, not on its alleged ideological baggage.

Samuel Brittan, “You don’t need to be a lefty to support Krugman“, Financial Times, 8 June 2012.

Sir Samuel, one of Margaret Thatcher’s favourite economists, is definitely not a ‘lefty’. His reservations are in the full column, available ungated at the link above.

 

capitalism as freedom

Friday, January 13th, 2012

Samuel Brittan weighs in on “Capitalism in Crisis”.

My central case for competitive capitalism is that it promotes personal and political freedom. A businessman outside the financial sector will prosper by providing what adults wish to have – even if that is pop records, candyfloss or nude shows rather than what their supposed elders and betters think is good for them. Above all, the individual is free to use his abilities in line with his own choices. He or she can concentrate on personal pleasure, social service at home, the relief of poverty abroad or any combination of these and other activities.

Samuel Brittan, “The market still has no rivals“, Financial Times, 13 January 2012.

Isn’t Brittan defending the market economy, not capitalism, as John Kay explained in these pages on Wednesday?

Note that Brittan qualifies his remarks by referring to “a businessman outside the financial sector”. Sir Samuel Brittan’s column will eventually be posted, ungated, here.

Samuel Brittan on the Greek crisis

Saturday, November 5th, 2011

FT columnist Samuel Brittan explains why he would have voted no in a Greek referendum. (The bailout package does not address the need to restore competitiveness by reducing the country’s high domestic prices and wages.)

What is missing from the discussion is the role of adjustment. By adjustment, I mean correcting what is fundamentally wrong in a country’s international position. If a country is not paying its way internationally, it needs to sell more and/or buy less from its trading partners – or to attract more long-term physical investment from them. For a country in the happy position of being outside a misconceived arrangement such as the eurozone, adjustment might be helped by devaluation. Exchange rate changes often need to be backed by domestic retrenchment. But to rely on that alone is a form of sadomasochism.

…. The Greeks are being told by international institutions and creditor countries to squeeze, squeeze and squeeze again. I know how I would have voted in a Greek referendum on the package, were it to have gone ahead. ….

Financing has its place in a reasonable economic policy. The Bretton Woods agreement of 1944 provided for international financing for a country in payments difficulties. But if the difficulties proved long-lasting an exchange rate adjustment was not merely permitted, but required. John Maynard Keynes, in commending this agreement, said that never again would deflationary policies be forced on such countries. How wrong he was. Now such policies are insisted upon as the main adjustment mechanism. Yet they may even fail in their own terms, because negative economic growth will adversely affect national budgets.

Samuel Brittan, “Why I would have voted no in a Greek referendum“, Financial Times, 4 November 2011.

An ungated version will eventually be archived here.

basic income grants

Friday, September 9th, 2011

Sometimes comments on blog posts and newspaper columns are more interesting than the original posts, even when they are off-topic. “Itzman”, commenting on Samuel Brittan’s column “Where an Augustinian fiscal policy falls short”, in the Financial Times (9 September 2011) provides an example of this by cogently making the case for a universal income grant.

[W]e must stop preferential subsidies to the out of work: we should subsidise work at all levels instead of enforcing working time directives and minimum wage policies.

That is, welfare should be universal, and not removed when work is taken up. And it effectively defines minimum income.

Social policy moves from attempting to legislate for equality, and towards underwriting poverty solely.

An ungated copy of this column (without comments) will be posted in a week or so to Samuel Brittan’s webpage.

A universal government transfer goes by various names, most often “basic income grant”. It is a sum of money, enough to keep everyone out of poverty, given to every man, women and child in a country. The grant is not taken away from those who earn wages, save and invest. The grant might be taxed, but only to the same degree as earned income. Economists of all political views favour such a scheme. Milton Friedman was a famous proponent, and called it a “negative income tax”. There is even an academic organisation – Basic Income Earth Network (BIEN) – that organises conferences and publishes papers on the subject. BIEN has an international board, and seventeen national affiliates. Its 14th Congress will take place in Munich (Germany), 14-16 September 2012.

Itzman does get one detail wrong. A basic income grant subsidises life, not work. What a basic income does is eliminate high rates of taxation of work (and saving) implicit in means tests. Kudos to Itzman, however, for correctly noting that there is no need to legislate minimum wages when a basic income is available to everyone, workers and non-workers alike.

Itzman also is somewhat off-topic, since Brittan is writing about stabilisation policies, not about poverty traps. Basic income grants, although they remove high implicit taxes on labour, have no obvious effect on cycles of unemployment and inflation. If anything, universal grants might make cycles worse. Unemployment insurance payments, after all, increase automatically when unemployment rises, and decrease when workers find jobs. Basic income grants remain the same, regardless of the number of unemployed workers.