Nicholas Oulton's picture
Affiliation: 
London School of Economics
Credentials: 
Senior Visiting Research Fellow

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:
Strongly Agree
Confidence level:
Extremely confident
Comment:
If devolving more power to Scotland and Wales is a good idea, the same must be true a fortiori for England. In addition there cannot be any argument in equity for giving Scottish and Welsh MPs power over English affairs while denying the same powers to English MPs. However the real debate in England may be over what powers to devolve from a putative English parliament to English regional assemblies or metropolitan regions. Should a north eastern authority have the power to build a new bypass around Newcastle, using borrowed funds if necessary, or should this always be the responsibilty as now of the Highways Agency funded by the UK Treasury?

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:
Disagree
Confidence level:
Not confident
Comment:
The referendum debate in Scotland featured a lot of fantasy economics. Many Yes voters seemed to think (and the SNP encouraged this) that independence would mean a juster and fairer society in which welfare spending would be higher. Devolving full income tax powers to Scotland (and Wales) has the advantage that this belief could be tested. We will then be able to see whether the Scots are in fact willing to pay the bill for this vision. However, devolving full tax income tax powers may be going too far since it may lead to undesirable tax competition within the UK.

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:
Disagree
Confidence level:
Confident
Comment:
For the reasons given in my comment on question 1, I think framing the problem in terms of secular stagnation is wrong, so I disagree. But if “pushing the natural rate into positive territory” is just code for more expansionary fiscal policy by the Eurozone countries in current account surplus like Germany and the Netherlands, and more expansionary monetary policy by the ECB, then I would agree. However, since this hasn’t happened in the seven years since the crisis began, I am not sure it will ever happen. The big danger at the moment is another recession in the Eurozone but even this is less likely to lead to a change in German policy than to the breakup of the Eurozone.

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:
Disagree
Confidence level:
Confident
Comment:
The term “secular stagnation” is used for two quite different hypotheses: (1) the natural rate of interest needs to be negative to secure full employment or (2) long term growth in advanced economies will be slower due to various “headwinds”. I am not convinced by either. First, in both the US and the UK the unemployment rate is only a bit above its equilibrium level and still falling, without the need for negative real rates (as actually paid by typical borrowers). Second, the cited headwinds, such as declining educational attainments, apply to the US but not to the UK. And personally I am optimistic about the future rate of technical progress, including a large and continuing contribution from ICT. Having said that, my own research suggests that the advanced countries have suffered a permanent hit to GDP per head due to the financial crisis of the order of 5%. So though growth will resume it will be from a lower base than prior to the crisis. On top of that there are the continuing problems in the Eurozone but these are due to the way that monetary union has operated in practice --- principally Germany's refusal to guarantee the debts of the countries in trouble, not to secular stagnation.

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:
Confident
Comment:
It is difficult to see how these policies could be effective, at least in the short term, given the constraints under which they have to operate. We should have adopted the Australian system many years ago but we didn't. (Their policy on family migration is much tougher than ours for example). But over a long enough period and if carried through consistently they should have an impact in what I argue is the right direction, namely reducing unskilled migration from non-EU countries. Of course it would be better if we could control unskilled EU migration as well.

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