We’re all economists now. Let’s rescue economics from Brexit mudslinging

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  • Economics and Finance

Brexit has marked a new low in the abuse of economics in political debate. From politicians playing fast and loose with statistics to policymakers peddling opinions as ‘facts’ we are not just confused; we are disillusioned. More than ever, we need to explore new ways to engage the public in meaningful debate about the economy.

In politics, the economy matters. Ever since Bill Clinton’s campaign chief coined the phrase ‘The economy, stupid’, politicians have been ever more keen to assert their economic competence.

No surprise that the Brexit camps have chosen to fight much of their battles on the grounds of the economy. But in doing so they have managed to generate much heat whilst putting us further in the dark.

Only one in five of us feel well informed about the referendum, and perhaps even more damaging we simply do not trust our senior political figures to tell the truth about the EU. Even the Bank of England’s reputation has been diminished, with only 35% trusting Governor Mark Carney against 38% saying they did not.

In a scathing 83 page report on the Brexit debate, the Treasury Selected Committee concluded that the “arms race of ever more lurid claims and counter-claims” on the economy was impoverishing political debate.

Nowhere is this more evident than in the use of the ridiculous phrase ‘economically illiterate’ levelled against political opponents. Mastering a huge and diverse academic discipline, with at least nine different schools of thought, can hardly be equated with the ability to read. More importantly, who says you have to be a trained economist to have a valid view on the economy?

Economists generally behave better than politicians, but still project confusing and conflicting certainty. While Paul Johnson of the Institute for Fiscal studies argues that economists are almost unanimous in their view that Brexit would shrink the economy, former senior IMF economist Ashoka Mody attacks this apparent consensus as crossing the line into groupthink. In reality, economic predictions depend heavily on the assumptions made by their authors but these are rarely discussed or made transparent to the reader.

So when you hear a statement such as:

“Leaving the EU will make every household £4300 worse off”

You should interpret it as follows:

“To be honest we cannot tell what will happen in the future, but we have tried really hard to have a good guess. To make this guess we have made some assumptions that you may or may not agree with, and you should know that if we made different assumptions we might get a completely different result. We have also relied on some theories about the way the economy works that are contestable, and if you applied different theories you might also get different results. Good luck with all of that.”

You can see the appeal of the former.

At least Paul Johnson, a speaker at our forthcoming launch event for the Citizens Economic Council, injects a rare moment of humility into the debate when he recognises that ultimately this is a political decision. A smaller economy might be a trade-off some people are willing to make for more sovereignty and, as an economist, he says “I can’t tell you how to trade these things off, how to make this choice.”

In other words, if Brexit is the question, economics cannot give you the answer.

So what?

You might reasonably wish a plague on everyone’s economic statistics and just ignore arguments about the economy.

We claim the opposite. We should aim to demystify economics, make economic debate more meaningful and accessible, and find ways to engage more people in active deliberations on economic decisions.

And this is an urgent task. The need for greater democratic engagement on economic issues has become more pressing over time for at least three reasons

1. Erosion of public trust

Recent economic crises - banking, sovereign debt, Eurozone, scandals about tax havens, corporate asset stripping and persistent poverty even in rich nations, have damaged public trust in economic and political institutions. Doing better economic policy to citizens might help, but how about doing economic policy better with citizens

2. The rise of pluralism in economics

Apparent economic stability during the period of the Great Moderation was taken as proof of the validity of a package of policies to liberalise markets, trade and finance, reduce taxation and increase labour market flexibility while controlling inflation. These ‘unquestionable’ policies were themselves supported by an equally strong orthodoxy within academic economics.

However, the crisis challenged the idea of a singular, certain and infallible body of economic theory and many have now called for a more pluralistic approach to economic research and policymaking. Recognising this lack of certainty in economic theory magnifies the importance of being open and transparent about the methods and assumptions that have been used to make economic policy choices.

3. Coping with rapid economic transformation in the 21st Century

Even where economic theory and evidence is well established, the future is highly uncertain.

Disruptive new technologies such as genomics, data analytics, robotics and artificial intelligence may change the world of work and the nature of production and consumption in dramatic ways. Degradation of eco-systems and climate change may create increasingly severe and unpredictable impacts. A growing population may see rising migration resulting from conflict, climate change and the search for a better life.

To maintain social stability and allow communities to flourish in the face of such uncertainty and rapid change will require broad based support for economic decision making that has no guarantee of successful results. It will also arguably require more creative and innovative ideas about how to successfully organise and manage market economies.

The key to achieving this is to explore how deliberation and participatory methods can help bring clarity to our collective economic goals, generate better policies to achieve them, and bring more cohesion to our societal choices about the economy.

Too often we feel disempowered to express strong views about how to run the economy because we are not economists.  But if we define economics in its broadest sense it is about how society allocates its collective resources to fulfil our needs and aspirations.

Surely everyone can have a legitimate view about that. What we lack are good processes for negotiating the sometimes difficult trade-offs involved – or in politician-speak the ‘hard choices’.

Well it does not seem that the referendum is providing a good process for this, so we will be exploring through the Citizens Economic Council, and a series of coming blog posts, how we can create better processes for economic debate and decisionmaking.

It is time for everyone to be an economist.


Book your free ticket for the launch event of the Citizens Economic Council on Wednesday 29 June from 6pm.

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  • I don't think I would dissent from anything of substance on what Tony sets out here with the exception of one point. It all, however, just begs the question of how are we ever get progressive change through a Westminster based political system that seems incapable of championing and leading on progressive change. Is not, moreover, the Westminster political class as a whole a major obstacle to change? Meantime, the there is an increasingly alienated and increasingly angered population outwith the Westminster 'bubble'.

    My one point of departure from Tony is where he states 'Brexit has marked a new low in the abuse of economics in political debate'. I have to say that in the referendum campaign on Scottish Independence the low was already well and truly established. Many of us in Scotland have by turns been bemused, astonished and dismayed by how the Westminster class  (and the incestuous London-centric mainstream media) learned nothing from that campaign - Indeed, the premise of 'Project Fear' so readily adhered to by both both sides in the Brexit referendum was actually established by the Unionist side in the Scottish referendum campaign.

    The lesson and warning from the Scottish campaign was that the Unionist side came close to losing a campaign that ought to have been a complete walk-over. I and many others would argue that that was due to the low base politics and 'Project Fear' utilised by the Unionist side.

    To quote Jon Snow of Channel 4 News on his Scottish odyssey during the Scottish Referendum campaign, 'What I've found is a visceral hatred of Westminster'. Please note carefully the word 'Westminster' - not 'England' or 'the English'. I judge we are seeing that same inarticulate 'visceral hatred' of the Westminster system erupting in the Brexit campaign. I also judge that an unlearning, unheeding, Westmister caste remains illiterate, and anyway disinterested, in the really big matters of fundamental economic drivers and trends at national, cross-national or global scales

    • Edward I fear you have been proved right by the result, that can credibly be interpreted as a howl of rage against 'Westminster' and other 'elites'.

      • But of course, no danger of a sanctimonious 'I told you so'  from me. I'd so prefer to have been proven wrong. My experience of the fall-out from the Scottish referendum renders me pessimistic as to where the UK goes now - because that fall-out IMO demonstrated the Westminster political caste's seemingly inveterate inability (or unwillingness?) to learn, adapt and respond constructively. Hence the deepening constitutional, as well as economic, crisis we have embarked on.

  • There is a pattern here of politicians (central and local) stepping back from decisions by drawing 'experts' into their territory.  What we would like to see is experts and advisors advising but what we see consistently is a political presentation that 'we have to do this because the experts say it is right' or 'we can't do that because the experts say we can't'.  It is understandable how this happens but it enables the politicians to either collect the credit if it works or criticise the experts if it doesn't.  Eventually the expert advice becomes apparently worthless.  

    I came across this approach when dealing with local authorities and local infrastructure where council officers were being drawn into telling council members how a new road/rail/public realm scheme should work and exactly what scheme should be chosen etc.  I have regularly pointed out to both parties that this is not their job.  The technical team should provide technical and independent advice and the political team should make decisions.  In almost all circumstances what we are presented with as citizens is a decision formed behind closed doors, made by a small group of experts and passed on by politicians.

    The economic example above is a perfect illustration of this and is why it will be virtually impossible for any individual (non-expert) to make a considered judgement.  The current process has experts reporting to politicians who then tell the electorate the decision.  The Citizens Council approach suggested above would presumably restructure this so that the experts advised the citizens who would then direct their politicians?

    • Thanks Martin, and very interesting to hear your experience of how this plays out at local level. One of the aims of deliberative discussions is that it allows proper engagement with expert advice, but also allows non-experts (ie the public) to interrogate the advice to test what different assumptions and values may lie behind it, but also that it allows citizens to discuss the expert advice among themselves without being put in the position of feeling disempowered to challenge the experts.

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