Tuesday, July 12, 2016

Even Kwasi Kwarteng Agrees with the Sandwichman!

The Conservative Member of Parliament for Spelthorne, Kwasi Kwarteng -- who just happens to also be an economic historian -- spoke with Stuart Reid of Foreign Affairs about the EU referendum result and said a very good thing (meaning, of course, something the Sandwichman agrees with):
A lot of clever people talk about the “lump of labor fallacy” and all the rest of it, but there are lots of different economic theories involved. But the perception was what drove the politics, not the economic theory. In large parts of rural England—a town like Boston, which your own town of Boston is named after—the perception was that things were changing, life wasn't getting better for quote-unquote indigenous people, and they voted against that. 
We have a democracy. Every democracy in the history of the world will have had people losing elections saying, "The people were misinformed, the people were ignorant, the people didn't know about A, B, or C." That always happens. That's what losing an election feels like. No one who ever lost an election said, "The people were totally informed and totally accurate and made a rational choice and didn't vote for me." We have a democratic system. Now, if we didn't like that, we could have teams of experts and economists and smart people with a Ph.D., but we don't.
More or less what I have said, here, here, here and here.


rosserjb@jmu.edu said...


I know, I know, you get all excited when somebody mentions the "lump of labour fallacy." But in this case I think this is a distraction from what is increasingly looking like a correct forecast by all those hated "experts" about at least the short term impact not only on the UK economy more broadly but especially on those poorer parts in England where people voted for Brexit apparently at least partly out of fear that all those immigrants are taking away their jobs, although maybe it is just plain old racism and nationalism.

Anyway, the early warning signals are that the experts are right. Job openings are down to half what they were. Capital investment is apparently collapsing,and several plant closures have been announced, you guessed it, or maybe you didn't in poorer parts of England that voted for Brexit.

Latest projections are that all parts of UK are going down, but the least hard hit one will probably be the London area,despite all the huffing and puffing about its possible losses of some European-connected financial busineses.

In short, it is increasingly looking like UK is heading into a recession, one that will disproportionately hit areas that voted for Brexit against the warnings of the awful experts, although also Scotland, which voted to Remain. Given that the policy uncertainty is likely to extend for several years, this portends several years of lower investment, thus something more than just a short blip recession, unless you believe that uncertainty is good for investment and jot growth.

For the record, I do not think that the relation between uncertainty and investment and job growth has anything at all to do with the question of the lump of labour (labor) fallacy. Higher uncertainty can tank investment and employment irrespective of whether or not the lump of labour fallacy is a fallacy.

rosserjb@jmu.edu said...

Just for the record, the LoL issue may be more relevant for longer run projections when there may be changes in immigration rates and composition, and all that, more then five years down the road or whatever. But for the next several years those will be swamped by these nearer term impacts on aggregated demand, some of which will be positive, most notably some positive effects from the pound depreciation. Indeed, it may still come to pass that when we see numbers in a year or so those will prove to outweigh all the other stuff that seems now to be hitting in a bad way. Guess we shall see, but the early warnings are looking bad, especially for the poorer parts of UK, which, btw, will not get any regional development assistance from the new Tory govt to offset the losses that will come from the ending of EU regional development aid.

Sandwichman said...


You are not even wrong. You are "disagreeing" with things I didn't say. Ignoring what I (and Kwasi Kwarteng) actually said. And offering as "evidence" the experts were right about something else, their predictions, other predictions. "Experts confirm that it is likely experts were right."

I'm going to defer arguing with you until you show that you are replying to things I said rather than engaging in irrelevant argumentative digressions.

Sandwichman said...

sentence needs rearranging:

And offering other predictions as "evidence" the experts were right about something else, their predictions.

rosserjb@jmu.edu said...


I do not disagree that English Bostonians voting for Brexit and in some other areas felt that their lives were not getting better. I also note that the age group most strongly supporting Brexit were the the retired, who do not need to worry about losing their jobs; they do not have any to lose.

This brings up the fact that what was a very hot issue was the National Health Service, which these geezers do care about, aside from nostalgia for a lost Little England, not to mention dislike of all those immigrants who are not English. It is a fact that the Brexiteers presented a lot of phoney stats about what UK is paying to EU and the impact of a likely Brexit would be on the NHS, with at the top of the list the claim that all that money supposedly going to EU would go to NHS instead. That is not about to happen with the new May government, no way, and there is not any money anyway.

As for the claim that nobody who loses an election thinks the voters were fully informed, this is nonsense. I would contend that in 99.9% of elections the losers accept that people were informed but simply did not support them over their opponent for one reason or another, often simply party preferences of the area or known ideologies. I am afraid that the part of his brain that came up with this silly claim might just be a lump of s**t.

Sandwichman said...


I have no quarrel with the notion that people voting for Brexit may have been misled by proponents of Brexit.

As for the contention that 99.9% of elections are accepted with equanimity, I think you are giving to much weight to the sincerity of election-eve concession speeches by the losing candidate. It doesn't add anything to your argument to gratuitously insult the conservative MP I cited.

rosserjb@jmu.edu said...

I did not say the losers are always happy. But most know why they lost and do not blame it on voter ignorance or misinformation.

Oh, and "s**t" stands for "sent,":-). What were you thinking?

Sandwichman said...

"most know why they lost and do not blame it on voter ignorance or misinformation."

Hahaha. I hope the joke was intended. Establishment Dems still blaming Nader for Gore's loss sixteen years ago. Never mind dead weight Joe "Lumberman" (I decided to go with the spellcheck suggestion). Never mind SCrOTUS and hanging chads.

rosserjb@jmu.edu said...

But Sandwichman, blaming Nader for Gore's loss is not a matter of claiming that the voters were ignorant or lied to. It is a matter of counting votes in certain states and making assumptions about what would have happened if Nader were not running, which cannot be determined definitively. This is not the same thing.

Oh, and maybe that lump is "soot," or maybe it is "suit." I think it is that last one, :-).