A couple of thoughtful pieces to throw into the melee post-referendum. First Tim Harford in today’s FT…
Here are four tenets of the trendy centre-left of British politics: first, soaring inequality means that ordinary people haven’t shared in the benefits of economic growth; second, rich people and big companies don’t pay taxes; third, gross domestic product (GDP) is a statistic that misses what really counts; and finally, economists are reliably wrong.
It’s really interesting to look at how these tenets skewed the debate not in favour of the centrist Remain camp, but away from it. In each case Harford presents facts which challenge the veracity of each one of those articles of faith.
In the case of income equality he argues that eaten bread has too quickly been forgotten:
…the gap between people at the 10th percentile and the 90th percentile actually fell between 1990 and 2013-14. Broadly, income inequality is a problem that emerged in the 1980s and has not worsened since.
He argues instead that poor growth is what’s really hitting pockets of those lower down. He goes on to argue that the denigration of GDP as a measure obscures the fact that a sudden hit to GDP will impact people on the ground.
And to the idea that economists don’t know what they are talking about (a new broadly held myth scaled up by the fact no one saw the crash coming), he has this to note:
The Institute for Fiscal Studies is full of experts on tax and household income; the Centre for Economic Performance studies globalisation, technology and education. Blaming these people for not foreseeing the collapse of Lehman Brothers is like blaming a brain surgeon for the spread of obesity.
This disappearance of the reliable expert is something connived at by both Leavers and Remainers intolerance of anyone who challenged their world view, presumably in the belief that as HL Mencken once wrote:
“No one ever lost money by underestimating the intelligence of the great masses of the plain people.”