Three to Read

Three short paragraphs to explain the Brexit vote:

“The British people have suffered tremendously since the financial crisis. The real wages of the average person fell by about 10 per cent between 2007 and 2015. This is not about inequality –poor, middle and rich have all lost out. It has been the longest sustained fall in average pay since the Great Depression and it has made people very angry with the establishment – and rightly so. As LSE’s Professor Stephen Machin, the new Director of the Centre for Economic Performance has shown, the areas with the biggest falls in average wages were the places most likely to vote for Brexit.

These wage falls and poor job prospects have nothing to do with immigration and everything to do with the financial crisis and slow recovery. But because immigration tripled since 2004, lots of people know of a friend or family member going for a job and a European migrant getting it. So it is easy to point a finger at foreigners as the cause of labour market problems. This is the ‘lump of labour fallacy’ in action – the false idea that there is only a fixed number of jobs to go around.

We have also been living through a period of sustained austerity with public services under severe pressure. People often find it hard to get a place in a good school for their kids or a doctor’s appointment. Since immigrants are also using public services, it is tempting to blame them for being ahead in the queue. Again, this is completely wrong as immigrants pay more in taxes than they take out in welfare, so they are on net subsidising public services for the UK-born. The fact that the government has chosen to use the fiscal benefits from immigration to pay down the budget deficit is hardly the fault of immigrants. But it is difficult for people to see this benefit. What is visible is competition for constrained public services, just like competition for jobs.”

From a great post by Josh Van Reenan as he leaves his post at the LSE.

H/t to Steph Tilden, this is a fascinating NY Times piece about whether Hillary might turn away from corporate centrism and be influenced by economists and think tanks who see the urgency of making the economy work for average people. We need these think tanks, newspaper columnists, bloggers, and purveyors of ideas to reset the “new normal” of gaping inequality and low growth. Here’s hoping that new dawns at IPPR and the Resolution Foundation turn into similarly bright sunshine.

But should we problematize capitalism itself and start dreaming- not of simply Keynesian fixing- but moving beyond a dying system of production? Owen Hatherley in the LRB reviews two recent books on the subject.

BONUS: Inside the failed Remain campaign.

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