“Let’s not indulge the vogueish view that domestic policy is somehow impotent in the light of global forces”by Gavin Kelly / September 29, 2016 / Leave a comment
Years ago, while working as an advisor in government, I was asked to think afresh about what policy could do to improve the plight of those on low incomes. I went to see one of the UK’s most respected economists who specialised in issues like wages and productivity. After a long, fascinating discussion he concluded by saying: “I’m afraid there’s only so much that can be achieved by thinking about pay. You really need to go and see an expert on poverty and the tax-benefit system—that’s where the action is.” This I did and, after another scholarly exploration of the issues, I was told that actually the tax and benefit system was pretty limited in what it could achieve. I should talk to a leading labour economist about the drivers of low-pay and employment—that’s what really mattered. Indeed, he knew just the economist I should talk to.
I’ve been reminded of this exercise in pass-the-policy-parcel by the sprawling post-Brexit vote debate on how better to help those who feel threatened by globalisation, as well as the so-called “left behind.” No big speech on globalisation is complete without lofty words about nations needing to “do more” to ensure people can “adjust to economic change” with “help for the losers.” But when it’s argued—rightly—that nation states have considerable power to ensure societies can “adjust” to the faceless force of globalisation, what policy areas do we actually mean? Or to put it another way: if an imaginary advisor to Theresa May’s government wanted to move beyond the usual bromides and look for policy insight where might they turn; and would they, too, be passed from pillar to post?
These issues are hardly new: people, places and sectors affected by shifts in trade or technology tend to adjust slowly and painfully, even in economies that are thought to be successful and flexible. But they are certainly being debated with fresh vigour not least in Whitehall, where it’s a good bet that the Autumn Statement will contain new announcements on this theme. You can see why. As Britain embarks on determining its future stance on trade and migration, choices will inevitably be made that greatly advantage some…