David Blanchflower castigates economists for being divorced from realityby Howard Reed / June 11, 2019 / Leave a comment
David Blanchflower, originally from Britain but based at Dartmouth College in the US, is a former member of the Monetary Policy Committee (MPC), and an expert on the US and UK labour markets. He has a prestigious publication record as well as a razor-sharp Twitter feed. His latest book analyses the decline in well-paid employment on both sides of the Atlantic, particularly since the 2008 financial crash, with weak-to-non-existent wage growth even as headline employment rates have grown strongly.
Blanchflower combines two strengths as an economist: innovative and convincing analysis of both macro and micro labour market data; and an approach that advises academics to talk to the masses. While this approach tends to involve Blanchflower recounting conversations with limo drivers on the way to and from airports, the style is nonetheless welcome compared to so much dry-as-dust economics.
Most people knew something was going very wrong in the economy in early 2008, when Blanchflower was a lone voice on the MPC arguing for rate cuts. Chapters six and seven of Not Working are especially great, as Blanchflower castigates macro-economic modellers for being divorced from reality.
Blanchflower’s main thesis is that the UK and US are both a long way from full employment, based on high levels of underemployment in both labour markets—workers who would like to increase their hours but can’t. His recommendation is that governments “put the pedal to the metal” and combine fiscal expansion (through infrastructure building) with low interest rates to spark a high-wage recovery. He makes a strong case; I doubt that anyone in the current UK government will listen, but should Jeremy Corbyn reach 10 Downing Street, he should ring Dartmouth. I can’t think of a better choice for Bank of England Governor than David Blanchflower.
Not Working: Where Have All the Good Jobs Gone? by David Blanchflower (Princeton University Press, £24)