Scottish academics among global critics of FT series on Corbyn agenda
Dozens of global economists, academics and civil society leaders, including two Scottish university professors, have written to the Financial Times to criticise its recent series on the Labour Party’s economic agenda.
Christine Cooper, professor of accounting at the University of Edinburgh, and Felix FitzRoy, emeritus professor of economics at the University of St Andrews, are among the 82 signatories to the letter, which says that the series “fails to appreciate the severity of the UK’s current economic condition, and reproduces a number of misconceptions”.
The other signatories include senior economists such as David Blanchflower, professor of economics at Dartmouth College, who previously sat on the Monetary Policy Committee of the Bank of England, and Thomas Piketty, professor at the Paris School of Economics and EHESS, who authored the 2013 best-seller Capital in the Twenty-First Century.
In The Corbyn Revolution, FT examined how what impact a Labour government under Jeremy Corbyn would have on the British economy, particularly through proposals to transform company ownership and the tax system – some of which were developed since the party’s last manifesto.
In their letter, the global critics said the piece on spending “implies that Labour’s proposals are unaffordable”, but that it was based on analysis from the Office for Budget Responsibility (OBR) which “ignores the impact of public spending on growth, and thus on tax receipts”.
They wrote: “As senior IMF economists have noted in their critique of austerity, this relationship is critical. Today the government can borrow at negative real interest rates: many pressing infrastructure, education and environment projects offer returns well above zero and can therefore generate higher future tax receipts, supporting not detracting from fiscal sustainability. Taxation levels in the UK remain lower than in most European countries.”
In another piece, FT said a Labour government would “confiscate about £300bn of shares in 7,000 large companies and hand them to workers in one of the biggest state raids on the private sector to take place in a western democracy”.
However, the critics said it is “a category error” to suggest that the government would confiscate shares, as the proposal “neither reduces the book value of corporate entities, nor requires them to pay cash out”. The plan to require companies to issue new shares and give them to a mutual fund would mirror “the accepted practice of issuing shares for executive compensation”, they said.
The letter concludes: “The UK’s economic model has failed before. In both the 1940s and 1980s, major policy changes were made in response. At first seen as overly radical, they were later accepted across the political spectrum.
“Since 2008 the UK economy has again been failing, with today’s political crisis one of the consequences. This is precisely the time when bold ideas are needed from all political parties.”