Personal annotations on our statement

Writing group statements, like writing joint letters, is never easy, particularly when it is done under the pressure of time and events. Good writing also never comes from committees. But I am happy that the statementthat five of us released yesterday about Labour’s Economic Advisory Committee (EAC) expresses what I wanted to say. But from interchanges on twitter it is clear that people read things in different ways, so I thought it might be useful if I explain why I am happy with it. Needless to say what follows are my own views and may not be those of my colleagues who signed it.

I want to start with the beginning of the statement, which the media predictably ignored. In particular:

“Our collective view is that the EAC, and its various policy review groups, has indeed had a positive influence on the development of Labour’s economic policy, and we hope it continues whatever the result of current divisions.”

There were some who, when the EAC was set up, said it was just for show and would have no impact. In my own area of fiscal policy rules that proved to be completely unfounded. The EAC was importantin creating Labour’s new fiscal credibility rule, which brings fiscal rules in line with mainstream monetary and fiscal policy in an age where liquidity traps can easily occur.

What the media did pick up on, as you would expect in the current situation, is this:

“We have always seen this body as providing advice to the Labour party as a whole, and not as an endorsement of particular individuals within it. For example we all share the view that the EU referendum result is a major disaster for the UK, and we have felt unhappy that the Labour leadership has not campaigned more strongly to avoid this outcome.”

When I accepted an invitation to be part of the committee I was heavily criticised by some for ‘providing legitimacy’ to particular politicians they did not like. I repliedat the time that no endorsement of individuals was requested or given (the first sentence above), but also that any legitimacy that may have been obtained was more than offset by a vulnerability that comes from the freedom of EAC members to criticise decisions if we wished. That is of course what the second sentence does.

How do I justify this criticism? Again I must stress this is just my personal view. I have writtenright from the early stages of the Brexit campaign that I saw this as about the benefits that many people saw in being able to control EU migration, and weighing this against the economic cost in doing so by losing access to the single market. It was vital therefore to take seriously the warnings of economists that these costs could well be large. Jeremy Corbyn however seemed to suggestthat when these warnings were repeated by the Chancellor they should not be believed because he could not be trusted. I doubt that was critical to the result, but it was nevertheless a serious economic, tactical and political error.

The final point I want to make is what was not said. We did not resign from the EAC, as Danny Blanchflower has done. [1] Again speaking personally I have always stressedthat it should be possible, and indeed it is vital, for economists to give economic advice to politicians without having to endorse all their policies or capabilities, just as a medic or climate scientist might do. Resigning in this case would have been inconsistent with that view, which is why I did not take that step. I am also happy to remain part of the independent Kerslake review of the Treasury, which will report later this year. 

[1] Despite misleading reports suggesting otherwise, Thomas Piketty resigned over two weeks ago because of the pressure of other commitments.