Blanchflower aiming to counter ‘disastrous’ austerity economics

Economist David Blanchflower is joining the University of Glasgow to do some “apolitical” thinking on how an independent Scotland might resolve huge economic questions such as a future currency. But that’s just one area of focus for one of the most prominent economists in public debate, who sees “the economics of walking about” – an emphasis on jobs and the experience of ordinary people – as the antidote to the “disastrous economics” that fed the UK’s “lunatic” austerity and helped to pave the way to “crazed” Brexit.

Professor Blanchflower, a former Bank of England Monetary Policy Committee member (widely known as Danny rather than David), will continue in his role as Bruce V. Rauner professor of economics at Dartmouth College. After being “let go” in November from his University of Stirling post, he has been rapidly recruited by Glasgow principal Sir Anton Muscatelli to another second role, at its Adam Smith Business School.

“The idea is to go and be a thinker” on issues around “well-being in Scotland”, Professor Blanchflower told Times Higher Education.

He added that if Scotland was “going to look at independence, you have to at least work out whether you’re going to have a [different] currency: what the consequences of having one or not having one are…We’re going to think about: should you get a central bank? Should you be a member of the euro?”

This work will not be “coming from some pro-independence or anti-independence thinktank”, he said. “It’s trying to be really independent: all suggestions on the table.”

Professor Blanchflower saw growing Scottish support for independence from the UK in the context of “crazed Brexit”, as being “about Scotland wanting to remain in the European Union”.

“I think I said on Bloomberg [the business TV channel] I thought Brexit was the worst decision made by any advanced country in the last thousand years,” he continued. “And I only said a thousand because I’m not very good on the thousand before that.”

Professor Blanchflower’s book Not Working: where have all the good jobs gone?, coming out in paperback in March 2021, continues his emphasis on what he calls “the economics of walking about” – focused on what is happening for workers and firms rather than theories about what should be happening.

Here, he admiringly highlights the backgrounds of incoming Biden administration economic appointments – Janet Yellen as Treasury secretary and Cecilia Rouse as chair of the Council of Economic Advisers – “both of whom are labour economists, both of whom care about wages and equity and how ordinary people are doing”.

Such a change in focus at the top was needed “because economics has been disastrous” in its failure to see the Great Recession coming and in lending perceived credibility to austerity, Professor Blanchflower said.

The “justification” for austerity used by former UK chancellor George Osborne was driven by work by US economists Carmen Reinhart and Kenneth Rogoff, he said. “That nonsense about 90 per cent debt-to-GDP ratio being what slowed growth…they got that completely wrong,” he said, referencing infamous errors in the pair’s research.

“Austerity produced the slowest recovery in a recession for 300 years,” Professor Blanchflower continued. “Brexit and many of the things that have happened [since] – vulnerability to pandemics – entirely rests at the door of Osborne, who in a completely lunatic way imposed what I call reckless, evil, failed austerity, whose only purpose was to make the poor poorer and was essentially saying that [public spending on services like] libraries [was] what caused the Great Recession.”

On the resulting politics, he said that “you can transfer austerity to people hurting to…‘We’ll blame the European Union,’” with the Brexit vote really being about “the failure of austerity”.

Recent research by Professor Blanchflower includes that stimulated by the work of Princeton University economists Anne Case and Sir Angus Deaton on “deaths of despair” – deaths from suicide, alcoholic liver disease and drug overdoses, which have risen among US whites without college degrees in the past 20 years.

Professor Blanchflower’s paper, co-authored with University of Warwick economist Andrew Oswald, uses the US Behavioral Risk Factor Surveillance System survey to create a measure of “extreme” mental distress, finding what he calls an “unbelievable rise for whites who have not been to college” since 1993.

In terms of remedies, Professor Blanchflower highlighted the loss of secure manufacturing jobs in the US and UK, adding: “We’ve got to do something about trying to restore decent-paying jobs lower down [the pay scale].”

On that score, he has written recent papers on trade unions and well-being, noting a rise in union membership in the UK in the past three years as workers think, as Professor Blanchflower put it, “I need some help here.”

He observed: “If you look in February 2020, real wages in the UK are 2.5 per cent below what they were in February 2008. Do we need to say anything else?”

john.morgan@timeshighereducation.com