The argument that public investment invariably “crowds out” private capital is wrong both theoretically and empirically. States have always played a leading role in allocating capital, either through direct investments, or by deliberately encouraging certain types of private investment.LONDON – Three economic effects of COVID-19 seem to be generally agreed upon. First, the developed world is on the brink of a severe recession. Second, there will be no automatic V-shaped recovery. And third, governments will therefore need to “support” national economies for an indefinite period. But, despite this consensus, little thought has been given to what private firms’ prolonged dependence on government support will mean for the relationship between the state and the capitalist economy.SŁAWOMIR

The COVID-19 virus, as frightening as it now seems, may ultimately fail to jolt humanity out of its profligate habits. But instead of regarding the pandemic as merely another problem requiring a technical fix, the world should see it as an opportunity to rethink humanity’s relationship with the planet.LONDON – One of the few things not in short supply in the COVID-19 era is commentary on the pandemic. Understandably enough, the virus has generated a non-stop flow of news about its spread, instructions on how to avoid and survive it, analysis of its causes and treatment, and conjecture about its impact on work habits, mental health, the economy, geopolitics, and much else.My own period of home detention has produced the following reflections, which I add with some diffidence to the

Feb 17, 2020 ROBERT SKIDELSKYUK Prime Minister Boris Johnson, determined to overcome Treasury resistance to his vast spending ambitions, has ousted Chancellor of the Exchequer Sajid Javid. But Johnson’s latest coup also is indicative of a global shift from monetary to fiscal policy.LONDON – The forced resignation of the United Kingdom’s Chancellor of the Exchequer, Sajid Javid, is the latest sign that macroeconomic policy is being upended, and not only in the UK. In addition to completing the ritual burial of the austerity policies pursued by UK governments since 2010, Javid’s departure on February 13 has broader significance.Prime Minister Boris Johnson is determined to overcome Treasury resistance to his vast spending ambitions. The last time a UK prime minister tried to open the

There was, all too predictably, no shortage of political profiteering in the wake of November’s London Bridge terror attack, in which Usman Khan fatally stabbed two people before being shot dead by police. In particular, the United Kingdom’s prime minister, Boris Johnson, swiftly called for longer prison sentences and an end to “automatic early release” for convicted terrorists.
In the two decades since the September 11, 2001, terror attacks in the United States, terrorism has become the archetypal moral panic in the Western world. The fear that terrorists lurk behind every corner, plotting the wholesale destruction of Western civilization, has been used by successive British and US governments to introduce stricter sentencing laws and much broader surveillance powers – and, of course,

My Lords, I think I am the only macroeconomist contributing to this debate, which is perhaps rather odd as it is a debate on economic affairs. As instructive and important as the other contributions have been, I want to talk about economic policy, because unless the economy works a lot better than it has in the last 10 years, none of the spending pledges, to be quite honest, will be worth the paper that they are written on, and how well it works will largely depend on economic policy.
The good news is that fiscal policy is back. The gracious Speech said: “My Government will invest in the country’s public services … My Government will prioritise investment in infrastructure and world-leading science research and skills”.
That is good. Governments everywhere have started to inch back to

The most depressing feature of the current explosion in robot-apocalypse literature is that it rarely transcends the world of work. Almost every day, news articles appear detailing some new round of layoffs. In the broader debate, there are apparently only two camps: those who believe that automation will usher in a world of enriched jobs for all, and those who fear it will make most of the workforce redundant.
This bifurcation reflects the fact that “working for a living” has been the main occupation of humankind throughout history. The thought of a cessation of work fills people with dread, for which the only antidote seems to be the promise of better work. Few have been willing to take the cheerful view of Bertrand Russell’s provocative 1932 essay In Praise of Idleness. Why is it so

Leaving the European Union on January 31, 2020, will be UK Prime Minister Boris Johnson’s repayment of the debt he owes to the many Labour supporters who “lent” his Conservatives their votes. But “getting Brexit done” won’t be enough for the Tories to hold on to their parliamentary seats.LONDON – Speaking outside No. 10 Downing Street following his emphatic election victory, British Prime Minister Boris Johnson thanked long-time Labour supporters for having “lent” his Conservative Party their votes. It was a curious phrase, whose meaning depended entirely on context. The Tories had breached Labour’s strongholds in the Midlands and North East England on the promise of “getting Brexit done.” Leaving the European Union, as Britain will on January 31, 2020, will be Johnson’s repayment of

December 3, 2019
The conventional Western view is that China faces the alternatives of integrating with the West, trying to destroy it, or succumbing to domestic violence and chaos. But the Chinese scholar Lanxin Xiang instead proposes a constitutional regime based on a modernized Confucianism.LONDON – Liberal democracy faces a legitimacy crisis, or so we are repeatedly told. People distrust government by liberal elites, and increasingly believe that the democracy on offer is a sham. This sentiment is reflected in the success of populists in Europe and the United States, and in the authoritarian tilt of governments in Turkey, Brazil, the Philippines, and elsewhere. In fact, liberal democracy is not only being challenged in its European and American heartlands, but also has failed to

‘People who do really good stuff have flaws’ said Barack Obama in a recent talk.  About the same time I read: ‘Placido Domingo has withdrawn from all future engagements at New York’s Metropolittan Opera [after 51 consecutive years] following allegations of sexual harrassment made by several women, including a soprano who said he reached down her robe and grabbed her bare breast’.[The Week,5 October 2019] Domingo’s burnished tenor and acting ability has thrilled generations of opera lovers.  At 78 it was probably  time he hung up his boots. But should he be driven  off stage by allegations of sexual impropriety?

I reproduce below two comments I received from friends, the first a man, the second a woman,  both of whom share my love of opera.
First,‘In my view, the primary dilemma is

I have great pleasure in presenting this report on shorter working hours, which John McDonnell asked me to prepare, and which I have written with the valuable assistance of Rachel Kay.
I accepted John’s invitation because shorter working hours is something I believe in.
In fact, I wrote a book with my son, How Much is Enough?, which made the case for reducing the burden of work as part of the good life.
The philosophy of this Report is quite simple. The advance of technology – the replacement of human effort by machine effort – should enable hours of socially necessary work – work needed to earn a living – to fall. Quite simply, machines will do more and more of that work.
This has been happening ever since the Industrial Revolution got going. In 1870 people in Britain worked on

Below is the text of a letter to the editor of the Financial Times, signed by Lord Skidelsky alongside 81 other signatories, and published on 6th September 2019.
Your series of articles exploring the Labour party’s economic agenda fails to appreciate the severity of the UK’s current economic condition, and reproduces a number of misconceptions.

There is growing political consensus that the UK’s economic model is failing. The economy has been performing badly for more than a decade. Household debt has fuelled the meagre recovery from the crash of 2007-08. Earnings have stagnated, with many families borrowing to cover basic expenses; an estimated 8.3m people cannot keep up with debts or bills. The housing market is in crisis, with young people set to be poorer than their parents. Since

Recently I watched The Man Who Was Too Free, a moving documentary about the Russian dissident politician Boris Nemtsov, who was gunned down in front of the Kremlin in 2015. A young, handsome rising political star in the 1990s, Nemtsov later refused to bend to Russian President Vladimir Putin’s authoritarianism and went into opposition, where he was harassed, imprisoned, and finally killed. The film left me thinking about the diminished role of heroism and courage in modern life, and also about the fate of Russia.

Heroism is a product of extreme situations – classically, involving war and violence. Because today’s Western way of life is non-extreme, the value of heroism has fallen. But its stock is rising in most of the rest of the world, including Russia.
The hero is both noble and

“Any government,” writes the economist and hedge fund manager Warren Mosler, “can achieve full employment by offering a public service job to anyone who wants one at a fixed wage.” Versions of this idea have received powerful endorsements from prominent Democratic politicians in the US, including presidential candidate Bernie Sanders and Rep. Alexandria Ocasio-Cortez, who has linked a government job guarantee to a Green New Deal. Moreover, versions of a job-guarantee program (JGP), more or less connected to green economics, have been implemented in Argentina, India, South Africa, and – whisper it quietly – Hungary under its illiberal populist leader, Viktor Orbán.
In the United States in December 2017, 6.6 million people were deemed to be officially unemployed, 4.9 million were working

This month marks the centenary of the Treaty of Versailles, one of the agreements that brought World War I to a close. In a sense, the tables have turned. Whereas the treaty imposed huge reparations on Germany, today’s Germany has taken the lead in imposing a large debt obligation on its fellow eurozone member Greece.

Although the creditor-debtor cards have been reshuffled since 1919, the game remains the same. Creditors want their pound of flesh, and debtors want to avoid giving it. Debtors want their debts forgiven, while creditors fret about “moral hazard” and ignore the destabilizing, contagious effects of making debtor countries poorer. Sadly, the eurozone has not learned the debt lessons of Versailles, or heeded the warnings of John Maynard Keynes.
When World War I ended, the

The funeral of Norman Stone took place on Friday 28 June in the Deak Lutheran Church in Budapest. His son Rupert asked me to be a pall bearer and I followed the coffin up the aisle behind the prime minister Viktor Orban. Historians Niall Ferguson and Harold James, among others, eulogised him. My presence was in a sense accidental. I happened to be spending a month in Vienna and I had come over from to Budapest to see him the previous week: on the day, in fact, he died.

I had known Norman intermittently, but intensely, since Cambridge in 1982: he was a Fellow in history at Jesus College, and finishing his book, Europe Transformed; I was on sabbatical from Warwick University finishing the first volume of my biography of Keynes. I can’t remember how and why we met. I do remember him

This month marks the centenary of the Treaty of Versailles, one of the agreements that brought World War I to a close. In a sense, the tables have turned. Whereas the treaty imposed huge reparations on Germany, today’s Germany has taken the lead in imposing a large debt obligation on its fellow eurozone member Greece.

Although the creditor-debtor cards have been reshuffled since 1919, the game remains the same. Creditors want their pound of flesh, and debtors want to avoid giving it. Debtors want their debts forgiven, while creditors fret about “moral hazard” and ignore the destabilizing, contagious effects of making debtor countries poorer. Sadly, the eurozone has not learned the debt lessons of Versailles, or heeded the warnings of John Maynard Keynes.
When World War I ended, the

By Geoffrey Lyons
In a 2015 article for Project Syndicate, historian Niall Ferguson accused Lord Robert Skidelsky of being “un-Keynesian” for refusing to admit that George Osborne’s austerity policies worked. Skidelsky’s position, Ferguson argued, wasn’t true to the great economist-statesman’s view that one ought to adjust their beliefs in the face of changing facts.
Ferguson must have known this was a critical hit. It’s not that Skidelsky has come to identify his views with those of “the Master” that makes “un-Keynesian” such a biting characterization, but rather that he is arguably the greatest living authority on the twentieth-century economist. Besides being a prolific writer and lecturer on economic issues, Skidelsky is perhaps best known for his acclaimed three-volume biography of

Harvard University Professor Alberto Alesina has returned to the debate on budget deficits, austerity, and growth. Back in 2010, Alesina told European finance ministers that “many even sharp reductions of budget deficits have been accompanied and immediately followed by sustained growth rather than recessions even in the very short run” (my italics). Now, with fellow economists Carlo Favero and Francesco Giavazzi, Alesina has written a new book entitled Austerity: When It Works and When It Doesn’t, which recently received a favorable review from his Harvard colleague Kenneth Rogoff.

New book, old tune. The authors’ conclusion, in a nutshell, is that “in certain cases the direct output cost of spending cuts is more than compensated for by increases in other components of aggregate

Almost all “robots are coming” stories follow a tried-and-true pattern. “Shop Direct puts 2,000 UK jobs at risk,” screams a typical headline. Then, quoting from authoritative reports from prestigious institutes and think tanks, the article in question usually alarms audiences with extravagant estimates of “jobs at risk” – that is, percentages of workers whose livelihoods are threatened by high-tech automation. To quote another representative example: “A new report suggests that the marriage of [artificial intelligence] and robotics could replace so many jobs that the era of mass employment could come to an end.”

Sometimes, this bleak outlook is softened by distinguishing between “jobs” and “tasks.” Only the routine parts of jobs, it is said, will be replaced. In these more upbeat

The United Kingdom’s protracted attempt to leave the European Union has upended the two illusions by which the world has lived since the end of the Cold War: national sovereignty and economic integration, the twin end points of history, according to Francis Fukuyama’s celebrated 1989 essay.

Juridically, the world consists of 191 sovereign states, which freely enter into treaties, agreements, and associations to order their relations with one another. The UK is one of them. Its failure to make a meaningful exit from the EU would be the first time in modern history that a major sovereign state was forced to remain in a voluntary union because, while legally free to leave, doing so would be too costly.
Coercion must be understood as a continuum of pressure, ranging from the use of

LONDON – Surveys from round the world show that people want secure jobs. At the same time, they have always dreamed of a life free from toil. The “rise of the robots” has made the tension between these impulses palpable.

Estimates of job losses in the near future due to automation range from 9% to 47%, and jobs themselves are becoming ever more precarious. Yet automation also promises relief from most forms of enforced work, bringing closer to reality Aristotle’s extraordinary prediction that all needed work would one day be carried out by “mechanical slaves,” leaving humans free to live the “good life.” So the age-old question arises again: are machines a threat to humans or a means of emancipating them?
In principle, there need be no contradiction. Automating part of human labor

LONDON – On December 3, 2018, the Central European University announced that from September 2019 it would relocate most of its teaching from Budapest to Vienna. Hungarian Prime Minister Viktor Orbán’s government had, in effect, closed down the CEU, founded by Orbán’s favourite bogeyman, George Soros. “Arbitrary eviction of a reputable university is a flagrant violation of academic freedom,” declared the university’s rector, Michael Ignatieff. “It is a dark day for Europe and a dark day for Hungary.”

But not for Orbán, who, as The New York Times reported, “has long viewed the school as a bastion of liberalism, presenting a threat to his vision of creating an ‘illiberal democracy.’” And Orbán’s “desire to shut it down was only deepened by its association with Mr. Soros,” whom he “has

My Lords, I do not want to add to the volume of speculation about what will happen tomorrow or a day or two after. The noble Lord, Lord Howell of Guildford, expressed clearly my position on what should happen: the withdrawal agreement, or an amended successor to it, should be made subject to a vote of confidence, and if the Government lose it there should be a general election. That is the clean and British way but whether it will happen is in the hands of the gods at the moment.
I hope to add value today as an academic, and in this no doubt Utopian quest I should like to make three quick points. First, it is wrong and misleading to describe people’s behaviour in ways that they would not themselves recognise. We should not label the leave vote as the vote of the left-behinds or the

LONDON – So British Prime Minister Theresa May lives to fight another day. The Conservative Party in the House of Commons reaffirmed its confidence in her leadership by a far-from-resounding 200-117 vote. It is hard to think of another British prime minister whose leadership has been in such continuous crisis. Not so much an iron lady as a stubborn and dogged one, May has begun another round of effort to extract a few further concessions from European leaders to make her divorce agreement more palatable to her party, if not a majority of the public.

The British people decided in June 2016 to leave the European Union, by a slim 51.9%-48.1% margin in a national referendum. After invoking Article 50 of the Treaty of Lisbon, the United Kingdom is due to leave on March 29, 2019. But the

Almost all liberals support globalization and oppose economic nationalism. They ignore the mounting evidence that, in its current form, globalization is dangerously incompatible with democracy.

In his 2011 book The Globalization Paradox, Harvard’s Dani Rodrik says that the nation-state, democracy, and globalization are mutually irreconcilable: we can have any two, but not all three simultaneously (he calls this a “trilemma”). All over the world, the “nation” has been revolting against globalization in the name of democracy.
 
That became clear this year when US President Donald Trump imposed the first of a widening set of tariffs against Chinese goods, with China retaliating in kind. Trump has also torn up two major international trade treaties and threatened to withdraw from the

My Lords, I welcome the general thrust of the Budget. As the OBR says, it represents the “largest fiscal loosening” since 2010. Noble Lords have suggested that the Chancellor is spending his windfall, but I mistrust the language of “windfalls”. Windfalls are only forecasts of revenue based on forecasts of growth; they are not there under the bed, so to speak, and should be given the credence they deserve—which is very little.

Let us put that aside. We are not here to discuss the Budget, over which we have no control. We are here to discuss, as per the terms of the debate, the economy in the light of the Budget Statement—that is, how the Budget will affect the economy. The answer is: very little. The loosening of which the OBR speaks is much too small to repair the damage caused by

Robert Skidelsky talks about his new book with Rob Johnson of the Institute for New Economic Thinking.
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LONDON – The United Kingdom’s “Remainers,” who still hope to reverse Britain’s decision to leave the European Union, have placarded British cities with a simple question: “Brexit – Is It Worth It?” Well, is it?

The answer given by economics is clear: certainly not. In terms of the costs and benefits of leaving, the result of the 2016 Brexit referendum was plainly irrational.
And yet economics also clearly shaped the decision. The Brexit propagandists brilliantly channeled palpable economic resentment, especially against immigration, into hostility toward the EU. But the resentment was against the home-grown damage inflicted on the British economy by its neglectful rulers. As Will Hutton and Andrew Adonis accurately note in their recent book Saving Britain, “Our problems are made in

This essay, published in the New Statesman, is based on a lecture hosted on 19th September by the Progressive Economy Forum, of which Lord Skidelsky is a Council member. 
Labour has always been set a higher standard on the economy than the Conservatives: it had to be more orthodox, more competent, more successful to win equal praise or escape equal blame. The reason is not hard to find: created and financed by the trade unions, and committed to the abolition of capitalism, the Labour Party faced obvious difficulties in guaranteeing what John Maynard Keynes called a “political and social atmosphere congenial to the average business man”. Not that it necessarily wanted to: it was torn between wanting to “manage capitalism” better than the Conservatives and the desire to achieve

LONDON – Bad economics breeds bad politics. The global financial crisis, and the botched recovery thereafter, put wind in the sails of political extremism. Between 2007 and 2016, support for extremist parties in Europe doubled. France’s National Rally (formerly the National Front), Germany’s Alternative für Deutschland (AfD), Italy’s League party, the Freedom Party of Austria (FPÖ), and the Sweden Democrats have all made electoral gains in the past two years. And I haven’t even mentioned Donald Trump or Brexit.

To be sure, this explosion of political extremism cannot be explained by economic distress alone. But the correlation between bad economic events and bad politics is too striking to be ignored.
By bad politics, I mean the xenophobic nationalism and suppression of domestic