[Applause] good evening ladies and gentlemen my
good evening ladies and gentlemen my
good evening ladies and gentlemen my talk tonight is entitled what can we
talk tonight is entitled what can we
talk tonight is entitled what can we learn from economic experts so
learn from economic experts so
learn from economic experts so somebody’s already kind of pinched my
somebody’s already kind of pinched my
somebody’s already kind of pinched my first line really as you know as you
first line really as you know as you
first line really as you know as you know now at least the queen meeting was
know now at least the queen meeting was
know now at least the queen meeting was famously asked at the London School of
famously asked at the London School of
famously asked at the London School of Economics after the financial crisis why
Economics after the financial crisis why
Economics after the financial crisis why didn’t anybody see this coming and the
didn’t anybody see this coming and the
didn’t anybody see this coming and the truth is actually some people did but no
truth is actually some people did but no
truth is actually some people did but no matter the point was clearly made and
matter the point was clearly made and
matter the point was clearly made and last year as you will remember very
last year as you will remember very
last year as you will remember very clearly during the referendum that we
clearly during the referendum that we
clearly during the referendum that we had in this country a lively debate
had in this country a lively debate
had in this country a lively debate erupted about economic experts and
erupted about economic experts and
erupted about economic experts and whether we could actually learn anything
whether we could actually learn anything
whether we could actually learn anything from them at all and this debate has
from them at all and this debate has
from them at all and this debate has continued to this day now there’s no
continued to this day now there’s no
continued to this day now there’s no question in my view that economics and
question in my view that economics and
question in my view that economics and economists have issues we teach our
economists have issues we teach our
economists have issues we teach our undergraduates much too much about maths
undergraduates much too much about maths
undergraduates much too much about maths and modelling and not enough about
and modelling and not enough about
and modelling and not enough about economic history and about economic
economic history and about economic
economic history and about economic thinkers and why they change their views
thinkers and why they change their views
thinkers and why they change their views obviously in the context of their time
obviously in the context of their time
obviously in the context of their time but economists don’t actually make only
but economists don’t actually make only
but economists don’t actually make only make predictions we also do quite a lot
make predictions we also do quite a lot
make predictions we also do quite a lot of work actually trying to explain the
of work actually trying to explain the
of work actually trying to explain the consequences of doing making choices and
consequences of doing making choices and
consequences of doing making choices and what the consequences of those choices
what the consequences of those choices
what the consequences of those choices are so as you know politicians will do
are so as you know politicians will do
are so as you know politicians will do anything and say anything and promise
anything and say anything and promise
anything and say anything and promise anything to be popular and to win your
anything to be popular and to win your
anything to be popular and to win your votes at elections it’s the sad job
votes at elections it’s the sad job
votes at elections it’s the sad job unfortunately of economists to be able
unfortunately of economists to be able
unfortunately of economists to be able to have to tell you why some of these
to have to tell you why some of these
to have to tell you why some of these choices are not always possible or why
choices are not always possible or why
choices are not always possible or why they might be incompatible or if they
they might be incompatible or if they
they might be incompatible or if they are compatible the conditions under
are compatible the conditions under
are compatible the conditions under which that might be so in these days and
which that might be so in these days and
which that might be so in these days and times economic experts I think face very
times economic experts I think face very
times economic experts I think face very very big challenges perhaps no more no
very big challenges perhaps no more no
very big challenges perhaps no more no less than other experts in different
less than other experts in different
less than other experts in different fields but as you know there are many
fields but as you know there are many
fields but as you know there are many things that describe uncertain times
things that describe uncertain times
things that describe uncertain times that we live in we’re going through what
that we live in we’re going through what
that we live in we’re going through what some people call the fourth Industrial
some people call the fourth Industrial
some people call the fourth Industrial Revolution we have just come away from
Revolution we have just come away from
Revolution we have just come away from 25 years of the most rapid globe
25 years of the most rapid globe
25 years of the most rapid globe réalisation that’s happened in the
réalisation that’s happened in the
réalisation that’s happened in the world since the 98 19th century and
world since the 98 19th century and
world since the 98 19th century and we’re still trying to come to terms with
we’re still trying to come to terms with
we’re still trying to come to terms with the rise of China and many emerging
the rise of China and many emerging
the rise of China and many emerging markets in the global system and this
markets in the global system and this
markets in the global system and this has given rise to many social economic
has given rise to many social economic
has given rise to many social economic Geographic tensions which have exposed
Geographic tensions which have exposed
Geographic tensions which have exposed our institutions both at home and
our institutions both at home and
our institutions both at home and internationally as being somewhat
internationally as being somewhat
internationally as being somewhat fragile giving us a big headache and
fragile giving us a big headache and
fragile giving us a big headache and many questions about how we cope with
many questions about how we cope with
many questions about how we cope with unpredictability and lots of a radical
unpredictability and lots of a radical
unpredictability and lots of a radical change so what can we learn from
change so what can we learn from
change so what can we learn from economic experts I’d like to propose
economic experts I’d like to propose
economic experts I’d like to propose tonight six things that you may like to
tonight six things that you may like to
tonight six things that you may like to think about the first is that financial
think about the first is that financial
think about the first is that financial crises really do matter and they matter
crises really do matter and they matter
crises really do matter and they matter much more than we even thought they did
much more than we even thought they did
much more than we even thought they did seven or eight years ago and they have
seven or eight years ago and they have
seven or eight years ago and they have long-lasting effects if we hadn’t had
long-lasting effects if we hadn’t had
long-lasting effects if we hadn’t had Lehman Brothers collapse in 2008 the
Lehman Brothers collapse in 2008 the
Lehman Brothers collapse in 2008 the last eight years would have been
last eight years would have been
last eight years would have been completely different from the way that
completely different from the way that
completely different from the way that we have experienced it and remember it
we have experienced it and remember it
we have experienced it and remember it now for many of the problems that we now
now for many of the problems that we now
now for many of the problems that we now discuss about globalization about income
discuss about globalization about income
discuss about globalization about income inequality about the quality of jobs and
inequality about the quality of jobs and
inequality about the quality of jobs and the amount of jobs these things predated
the amount of jobs these things predated
the amount of jobs these things predated the financial crisis by quite some time
the financial crisis by quite some time
the financial crisis by quite some time but the crisis itself I think was the
but the crisis itself I think was the
but the crisis itself I think was the last straw it gave rise to a very
last straw it gave rise to a very
last straw it gave rise to a very ubiquitous political backlash not just
ubiquitous political backlash not just
ubiquitous political backlash not just amongst our steel workers and car
amongst our steel workers and car
amongst our steel workers and car workers and public sector workers but
workers and public sector workers but
workers and public sector workers but amongst the middle class and even
amongst the middle class and even
amongst the middle class and even amongst some of the one percent a
amongst some of the one percent a
amongst some of the one percent a backlash against what they perceive to
backlash against what they perceive to
backlash against what they perceive to be the collusion of vested interests in
be the collusion of vested interests in
be the collusion of vested interests in finance politics and big business the
finance politics and big business the
finance politics and big business the phrase we’re all in it together just
phrase we’re all in it together just
phrase we’re all in it together just rang really hollow for a lot of people
rang really hollow for a lot of people
rang really hollow for a lot of people as you know and as we’re all conscious
as you know and as we’re all conscious
as you know and as we’re all conscious now so the lesson is we have to
now so the lesson is we have to
now so the lesson is we have to understand the systemic causes of crises
understand the systemic causes of crises
understand the systemic causes of crises like we’ve experienced and also the need
like we’ve experienced and also the need
like we’ve experienced and also the need not only to preach fairness but also to
not only to preach fairness but also to
not only to preach fairness but also to dem
dem
dem straight fairness in our economic and
straight fairness in our economic and
straight fairness in our economic and social policies the second lesson is
social policies the second lesson is
social policies the second lesson is really a kind of a variation of a phrase
really a kind of a variation of a phrase
really a kind of a variation of a phrase that was made famous by Bill Clinton’s
that was made famous by Bill Clinton’s
that was made famous by Bill Clinton’s political strategist James Carville 25
political strategist James Carville 25
political strategist James Carville 25 years ago he coined the phrase it’s the
years ago he coined the phrase it’s the
years ago he coined the phrase it’s the economy stupid and we have to rebrand
economy stupid and we have to rebrand
economy stupid and we have to rebrand that now as it’s the political economy
that now as it’s the political economy
that now as it’s the political economy stupid because what we’ve seen in 2016
stupid because what we’ve seen in 2016
stupid because what we’ve seen in 2016 was people vote not necessarily in there
was people vote not necessarily in there
was people vote not necessarily in there what we might strictly define as their
what we might strictly define as their
what we might strictly define as their economic interests long term so a lot of
economic interests long term so a lot of
economic interests long term so a lot of people voted to leave the EU despite the
people voted to leave the EU despite the
people voted to leave the EU despite the fact that the overwhelming amount of
fact that the overwhelming amount of
fact that the overwhelming amount of evidence about leaving the EU from an
evidence about leaving the EU from an
evidence about leaving the EU from an economic point of view was negative
economic point of view was negative
economic point of view was negative unless it could be mitigated and a lot
unless it could be mitigated and a lot
unless it could be mitigated and a lot of people voted for Donald Trump despite
of people voted for Donald Trump despite
of people voted for Donald Trump despite the fact that he campaigned on policies
the fact that he campaigned on policies
the fact that he campaigned on policies to cut taxes for the rich and for
to cut taxes for the rich and for
to cut taxes for the rich and for companies and on trade policies which
companies and on trade policies which
companies and on trade policies which will harm American workers so sometimes
will harm American workers so sometimes
will harm American workers so sometimes people vote for things that have nothing
people vote for things that have nothing
people vote for things that have nothing to do really with pocketbook economics
to do really with pocketbook economics
to do really with pocketbook economics and we have to understand that economic
and we have to understand that economic
and we have to understand that economic policies have consequences that
policies have consequences that
policies have consequences that sometimes result in feedback that we
sometimes result in feedback that we
sometimes result in feedback that we will find surprising or negative the
will find surprising or negative the
will find surprising or negative the third thing that we can learn i think is
third thing that we can learn i think is
third thing that we can learn i think is something that I call the fallacy of
something that I call the fallacy of
something that I call the fallacy of disaggregation now don’t faint I’m going
disaggregation now don’t faint I’m going
disaggregation now don’t faint I’m going to it’s a very very simple concept so in
to it’s a very very simple concept so in
to it’s a very very simple concept so in a more conventional concept which is the
a more conventional concept which is the
a more conventional concept which is the fallacy of aggregation what’s good for
fallacy of aggregation what’s good for
fallacy of aggregation what’s good for one person doesn’t necessarily mean it’s
one person doesn’t necessarily mean it’s
one person doesn’t necessarily mean it’s good for everybody so if you think about
good for everybody so if you think about
good for everybody so if you think about saving for example if I save more that’s
saving for example if I save more that’s
saving for example if I save more that’s good for me and you may congratulate me
good for me and you may congratulate me
good for me and you may congratulate me for being prudent and you know a good
for being prudent and you know a good
for being prudent and you know a good economic citizen but if we all save more
economic citizen but if we all save more
economic citizen but if we all save more together the economy will tip into a
together the economy will tip into a
together the economy will tip into a recession because nobody will spend if I
recession because nobody will spend if I
recession because nobody will spend if I had drive my car down seven oaks high
had drive my car down seven oaks high
had drive my car down seven oaks high street it’s great for me because I’m
street it’s great for me because I’m
street it’s great for me because I’m comfortable and you know I’m going to
comfortable and you know I’m going to
comfortable and you know I’m going to have a good time and i’ll get more
have a good time and i’ll get more
have a good time and i’ll get more quickly to where I want to get to maybe
quickly to where I want to get to maybe
quickly to where I want to get to maybe but of course if we all drive our
but of course if we all drive our
but of course if we all drive our cars down seven oaks high street
cars down seven oaks high street
cars down seven oaks high street together we’re just going to end up with
together we’re just going to end up with
together we’re just going to end up with congestion and pollution so the fallacy
congestion and pollution so the fallacy
congestion and pollution so the fallacy of disaggregation is the mirror image of
of disaggregation is the mirror image of
of disaggregation is the mirror image of that where what’s good for everybody
that where what’s good for everybody
that where what’s good for everybody doesn’t necessarily resonate for each
doesn’t necessarily resonate for each
doesn’t necessarily resonate for each individual so if you think about jobs
individual so if you think about jobs
individual so if you think about jobs and unemployment so in this country and
and unemployment so in this country and
and unemployment so in this country and in the United States for example we have
in the United States for example we have
in the United States for example we have record levels of employment and low
record levels of employment and low
record levels of employment and low levels of unemployment so in the
levels of unemployment so in the
levels of unemployment so in the aggregate it looks fantastic but if I
aggregate it looks fantastic but if I
aggregate it looks fantastic but if I give you one example in America white
give you one example in America white
give you one example in America white people account for seventy eight percent
people account for seventy eight percent
people account for seventy eight percent of the labor force and about seventy
of the labor force and about seventy
of the labor force and about seventy percent of the population in smaller
percent of the population in smaller
percent of the population in smaller cities outside of New York and Los
cities outside of New York and Los
cities outside of New York and Los Angeles and so on and so forth and if
Angeles and so on and so forth and if
Angeles and so on and so forth and if you look at American employment since
you look at American employment since
you look at American employment since 2007 it has grown almost more rapidly
2007 it has grown almost more rapidly
2007 it has grown almost more rapidly than in any recovery that America has
than in any recovery that America has
than in any recovery that America has had since 1945 but white people have
had since 1945 but white people have
had since 1945 but white people have 700,000 jobs fewer today that they had
700,000 jobs fewer today that they had
700,000 jobs fewer today that they had in 2007 compared with other ethnic
in 2007 compared with other ethnic
in 2007 compared with other ethnic groups so we have to look more carefully
groups so we have to look more carefully
groups so we have to look more carefully beyond the bland and a kind of broad
beyond the bland and a kind of broad
beyond the bland and a kind of broad statistics which supposedly define
statistics which supposedly define
statistics which supposedly define whether we’re doing well or not there
whether we’re doing well or not there
whether we’re doing well or not there are individual stories and group stories
are individual stories and group stories
are individual stories and group stories that matter the fourth lesson that I
that matter the fourth lesson that I
that matter the fourth lesson that I think we’re starting to learn is that we
think we’re starting to learn is that we
think we’re starting to learn is that we can walk on two legs and what I mean by
can walk on two legs and what I mean by
can walk on two legs and what I mean by that is that for many years during the
that is that for many years during the
that is that for many years during the last few what since 2008 we were told
last few what since 2008 we were told
last few what since 2008 we were told that there’s only one game in town which
that there’s only one game in town which
that there’s only one game in town which is monetary policy you’ve all heard now
is monetary policy you’ve all heard now
is monetary policy you’ve all heard now of quantitative easing which is the
of quantitative easing which is the
of quantitative easing which is the unusual method that was adopted by
unusual method that was adopted by
unusual method that was adopted by central banks to try to keep the
central banks to try to keep the
central banks to try to keep the financial system alive and then the
financial system alive and then the
financial system alive and then the economy alive over the last seven or
economy alive over the last seven or
economy alive over the last seven or eight years but we always knew that
eight years but we always knew that
eight years but we always knew that there were limits to what central banks
there were limits to what central banks
there were limits to what central banks Bank of England could do so the Bank of
Bank of England could do so the Bank of
Bank of England could do so the Bank of England and Mark Carney just because
England and Mark Carney just because
England and Mark Carney just because he’s the governor they have no remit
he’s the governor they have no remit
he’s the governor they have no remit when it comes to the provision of
when it comes to the provision of
when it comes to the provision of ubiquitous broadband they have no
ubiquitous broadband they have no
ubiquitous broadband they have no remit when it comes to hospital beds or
remit when it comes to hospital beds or
remit when it comes to hospital beds or health education educational attainment
health education educational attainment
health education educational attainment or even for you know ways of increasing
or even for you know ways of increasing
or even for you know ways of increasing productivity this is not the job of
productivity this is not the job of
productivity this is not the job of monetary policymakers it’s the job of
monetary policymakers it’s the job of
monetary policymakers it’s the job of governments and governments are starting
governments and governments are starting
governments and governments are starting to fortunately and finally learn that
to fortunately and finally learn that
to fortunately and finally learn that they do have a role to play in trying to
they do have a role to play in trying to
they do have a role to play in trying to nurture us out of this kind of funk that
nurture us out of this kind of funk that
nurture us out of this kind of funk that we’ve been in for some time it’s
we’ve been in for some time it’s
we’ve been in for some time it’s happening in Japan Donald Trump says
happening in Japan Donald Trump says
happening in Japan Donald Trump says he’s going to spend a lot of money on
he’s going to spend a lot of money on
he’s going to spend a lot of money on infrastructure Theresa May today
infrastructure Theresa May today
infrastructure Theresa May today launched an industrial strategy green
launched an industrial strategy green
launched an industrial strategy green paper which will have in government
paper which will have in government
paper which will have in government intervention is a very very prominent
intervention is a very very prominent
intervention is a very very prominent phenomenon so things are beginning to
phenomenon so things are beginning to
phenomenon so things are beginning to change fifthly we’re beginning to learn
change fifthly we’re beginning to learn
change fifthly we’re beginning to learn also something else which is a little
also something else which is a little
also something else which is a little bit more alarming which is to bid
bit more alarming which is to bid
bit more alarming which is to bid farewell to freer trade so we have
farewell to freer trade so we have
farewell to freer trade so we have widely propagated discussion about jobs
widely propagated discussion about jobs
widely propagated discussion about jobs unfair competition migration and so on
unfair competition migration and so on
unfair competition migration and so on and trade is widely seen as the culprit
and trade is widely seen as the culprit
and trade is widely seen as the culprit in some respects or the agent of some of
in some respects or the agent of some of
in some respects or the agent of some of our problems but now instead of having
our problems but now instead of having
our problems but now instead of having kind of some of the tensions that we’ve
kind of some of the tensions that we’ve
kind of some of the tensions that we’ve grown used to with trade we now have a
grown used to with trade we now have a
grown used to with trade we now have a completely new phenomenon which is the
completely new phenomenon which is the
completely new phenomenon which is the fact that anti free-trade policies may
fact that anti free-trade policies may
fact that anti free-trade policies may be propagated by the United States under
be propagated by the United States under
be propagated by the United States under the new presidency that’s just taking
the new presidency that’s just taking
the new presidency that’s just taking its position so the the rather kind of
its position so the the rather kind of
its position so the the rather kind of chilling prospect actually is of losing
chilling prospect actually is of losing
chilling prospect actually is of losing the United States as the champion of
the United States as the champion of
the United States as the champion of this kind of liberal rules-based system
this kind of liberal rules-based system
this kind of liberal rules-based system which has underpinned the global economy
which has underpinned the global economy
which has underpinned the global economy since 1945 the danger is that trade
since 1945 the danger is that trade
since 1945 the danger is that trade outcomes now become the result of power
outcomes now become the result of power
outcomes now become the result of power and leverage exercised by the biggest
and leverage exercised by the biggest
and leverage exercised by the biggest economies that we might get into or the
economies that we might get into or the
economies that we might get into or the Americans might get into a trade war
Americans might get into a trade war
Americans might get into a trade war with China that could spill over seas to
with China that could spill over seas to
with China that could spill over seas to other countries and regions and of
other countries and regions and of
other countries and regions and of course as you know this is particularly
course as you know this is particularly
course as you know this is particularly important to this country which is in
important to this country which is in
important to this country which is in the process of leaving
the process of leaving
the process of leaving EU and is in desperate need to build
EU and is in desperate need to build
EU and is in desperate need to build trade agreements with others in time so
trade agreements with others in time so
trade agreements with others in time so in conclusion and I think I’d like to
in conclusion and I think I’d like to
in conclusion and I think I’d like to say that the world economy is not doing
say that the world economy is not doing
say that the world economy is not doing too bad actually I just think I’ve left
too bad actually I just think I’ve left
too bad actually I just think I’ve left out my sixth factor and which was yes no
out my sixth factor and which was yes no
out my sixth factor and which was yes no that is my conclusion actually the
that is my conclusion actually the
that is my conclusion actually the conclusion that the world economy is not
conclusion that the world economy is not
conclusion that the world economy is not doing too bad at the moment but there
doing too bad at the moment but there
doing too bad at the moment but there are a significant number of what I would
are a significant number of what I would
are a significant number of what I would call what we call tail risks so tail
call what we call tail risks so tail
call what we call tail risks so tail risks are things like food poisoning and
risks are things like food poisoning and
risks are things like food poisoning and serious sports injuries these are things
serious sports injuries these are things
serious sports injuries these are things that don’t happen all the time
that don’t happen all the time
that don’t happen all the time especially not to us individually but
especially not to us individually but
especially not to us individually but they do happen and they happen
they do happen and they happen
they do happen and they happen unexpectedly and with rather unpleasant
unexpectedly and with rather unpleasant
unexpectedly and with rather unpleasant consequences as you may know so we
consequences as you may know so we
consequences as you may know so we should be aware of the adverse
should be aware of the adverse
should be aware of the adverse consequences of the pursuit of
consequences of the pursuit of
consequences of the pursuit of nationalism the abandonment of rules
nationalism the abandonment of rules
nationalism the abandonment of rules based systems the risks inherent in
based systems the risks inherent in
based systems the risks inherent in perhaps Donald Trump’s economic programs
perhaps Donald Trump’s economic programs
perhaps Donald Trump’s economic programs and also the political and economic
and also the political and economic
and also the political and economic dangers which are inherent in the
dangers which are inherent in the
dangers which are inherent in the current situation in the EU and also i
current situation in the EU and also i
current situation in the EU and also i would say in china so ladies and
would say in china so ladies and
would say in china so ladies and gentlemen I economists and economics I
gentlemen I economists and economics I
gentlemen I economists and economics I mean there’s no pretending about it they
mean there’s no pretending about it they
mean there’s no pretending about it they can’t substitute for profits and they
can’t substitute for profits and they
can’t substitute for profits and they certainly tend to lean more towards the
certainly tend to lean more towards the
certainly tend to lean more towards the idea of probabilities and uncertainty
idea of probabilities and uncertainty
idea of probabilities and uncertainty than to belief and conviction in in that
than to belief and conviction in in that
than to belief and conviction in in that particular regard but by focusing on how
particular regard but by focusing on how
particular regard but by focusing on how economic systems work and why they’re
economic systems work and why they’re
economic systems work and why they’re prone to dysfunction or to change we can
prone to dysfunction or to change we can
prone to dysfunction or to change we can help i think understand better the way
help i think understand better the way
help i think understand better the way the world works and by understanding
the world works and by understanding
the world works and by understanding that certainly the first route towards
that certainly the first route towards
that certainly the first route towards trying to learn how to cope and adapt in
trying to learn how to cope and adapt in
trying to learn how to cope and adapt in uncertain times so those of you in this
uncertain times so those of you in this
uncertain times so those of you in this audience who are thinking possibly are
audience who are thinking possibly are
audience who are thinking possibly are going to study economics in future I
going to study economics in future I
going to study economics in future I would certainly urge you strongly to do
would certainly urge you strongly to do
would certainly urge you strongly to do so and university courses and university
so and university courses and university
so and university courses and university syllabuses are gradually changing
syllabuses are gradually changing
syllabuses are gradually changing to take on board some of the information
to take on board some of the information
to take on board some of the information i mentioned right at the beginning and
i mentioned right at the beginning and
i mentioned right at the beginning and for those of you in the audience who are
for those of you in the audience who are
for those of you in the audience who are past studying i hope that some of the
past studying i hope that some of the
past studying i hope that some of the things that economic experts will say to
things that economic experts will say to
things that economic experts will say to you in the future will resonate in some
you in the future will resonate in some
you in the future will resonate in some way and help you understand a little bit
way and help you understand a little bit
way and help you understand a little bit about our complicated world thank you
about our complicated world thank you
about our complicated world thank you very much indeed
very much indeed
very much indeed [Applause]
”
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