Andrew Mountford's picture
Affiliation: 
Royal Holloway
Credentials: 
Professor of economics

Voting history

Devolving Income Tax Powers within the UK

Question 2: Do you agree that that there is a clear economic case for establishing "English votes for English laws" with the same tax and spending powers as the Scottish Parliament?

Answer:
Agree
Confidence level:
Confident
Comment:
Yes but as in question 1 there needs to be safeguards

Question 1: Do you agree that the economic benefits of devolving full income tax powers to the Scottish Parliament and Welsh Assembly outweigh the possible costs?

Answer:
Agree
Confidence level:
Extremely confident
Comment:
Yes but.....there needs to be safeguards against a race to the bottom competition in income tax rates which -- as we have seen with corporate taxes -- will leave each economy worse off

Secular Stagnation

Question 2: Do you think that current structural and fiscal policies should place a considerably greater emphasis on pushing the natural rate into positive territory?

Answer:
Strongly Agree
Confidence level:
Extremely confident
Comment:
In my view the UK economy is suffering from underinvestment - both private and public. Our R&D is below average for the OECD let alone world leading economies. See http://www.oecd-ilibrary.org/science-and-technology/gross-domestic-expenditure-on-r-d_2075843x-table1 Increased public investment can be complementary to private investment. Efficient transport, cheaper energy supplies, faster mobile communications, better educated workforce should all make private investment more productive and so raise the private rate of return and so the equilibrium interest rate. As I said in answer to the first question the equilibrium interest rate will also not be independent of the income distribution. A permanent increase in taxes on the wealthy (e.g land) to redistribute permanently to poor pensioners would increase the rate of return to industries that serve them. I would therefore expect increased private investment in e.g. the health care sector at the expense of, I would think, only a small reduction in investment in land.

Question 1: Do you agree- making your own definition of secular stagnation clear if you disagree with that offered here- that it is more likely than not that the advanced Western economies have entered into a period of secular stagnation?

Answer:
Neither agree nor disagree
Confidence level:
Extremely confident
Comment:
Again the phrasing of the question makes the results histogram meaningless. Nevertheless, to answer the question, as the preamble suggests the issue of secular stagnation seems a bit confused and ill-defined. One doesn't need new concept to understand why equilibrium growth levels may be falling. We have known for some time that an unequal income distribution can negatively affect long run growth ( see e.g. Galor and Zeira (1993)) . The recent empirical work of Piketty and the World Top Incomes database team http://topincomes.g-mond.parisschoolofeconomics.eu/ shows that the income distribution has been becoming significantly more unequal recently. If you want a demand side story then again you need look no further than income redistribution for an answer. According to AgeUK almost 25% of pensioners are in or on the brink of poverty. ( http://www.ageuk.org.uk/money-matters/income-and-tax/living-on-a-low-income-in-later-life/ ) If you want to raise demand then permanently increasing taxes on the wealthy (e.g. land) to redistribute permanently to this group would definitely raise demand. Their MPC would be near 1.

Migration and the UK economy August 2014

Question 2: Do you agree that current government policies with respect to non-EU migration (including policies on students, skilled workers, and family migration) are effective in maximizing the gains to the economy from migration while minimizing any possible negative impact to specific groups?

Answer:
Neither agree nor disagree
Confidence level:
Extremely confident
Comment:
The only answer to this question is "it depends". If high skilled immigration is a result of under-investment in human capital in the destination country then this immigration will be playing its part in a process with adverse long run implications for economic wellbeing in the destination economy. On the other hand, if instead, high skilled immigration is a complement to investment in human capital by the destination country then it will be playing a part in a healthy process which will be of long run benefit to the destination economy. This is very straightforward. For illustration, suppose, for the sake of argument that becoming a medical doctor is a good thing for individuals and society- it increases people’s human capital and trains them for a socially useful job with high job satisfaction and significant externalities at the individual and societal level , so that its social and private marginal products significantly dominate the costs of training. Now if an economy is importing doctors and not spending the saving by investing in other equivalent socially beneficial sectors then the original inhabitants of the economy will not be trained and so will not benefit from investment in them and so will end up ultimately in a worse position. If on the other hand an economy is importing doctors to create a vibrant world class heath care sector which creates new jobs and thereby increases the demand and opportunities for its original inhabitants to become medical doctors then ultimately they will end up in a better position. Beyond this example about medical doctors, the general point, which I think it is well recognised by academic economists, is that one needs to look at the underlying dynamic process behind a phenomenon if one is to fully understand its implications. From my reading of the immigration policy debate this has not been done anything like sufficiently .

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