What the panel thought of the Cost of Living Crisis

It’s been a difficult matter deciding how to handle nearly two hours of footage from the Causes of the Cost of Living Crisis debate. I have decided I will publish this in segments, so that there is a better chance of getting it done and more stuff being done sooner.

In this segment I ask the core panelists what they think is causing the cost of living crisis, and what they would do about it. I also strap on my horns and play Devils Advocate.

Ian Dunt, the last minute stand in for James Bloodworth, takes on an interesting diversion into the House of Commons and Prime Ministers Questions. He is critical of Ed Miliband’s delivery in the Commons and the fact that he vacillated away from the Cost of Living issue rather than sticking to it. He seems to credit the Resolution Foundation, not Ed, for coining the term. He also accepts the Foundation’s view that the root cause of the crisis is a structural breakdown in the connection between median wages and productivity (wages have dropped rather than employment). He seemed to see it is natural that productivity rises should go first to the worker. Ian also criticises the coalition for practicing a “reverse robin hood” – taking money from the poor and giving it to the rich.

Kristian Niemietz dismisses this without a moment’s hesitation. He views this problem as a supply side issue. With costs driven up all around the economy by all manner of regulations. He cites land use planning as key and mentions the price of both residential property and (before I hurry him up) prices in the retail sector. Kristian believes that addressing the worst supply side market distortions would save people a typical family of four £750 per month (a massive figure, though one that includes many of the others you will hear in this series).

I ask Yaron Brook whether this is all too complicated, and whether we are simply entitled to a comfortable standard of living. While I retract my devil horns and the audience laughs away this silly idea, Yaron patiently explains that no, we are not entitled to a certain standard of living and certainly not to other peoples stuff. He endorses Kristian’s take that there are interventions across the economy that drive up costs. Adding to the list of causes he agrees with Ian that there is a “reverse Robin Hood” policy: monetary policy. In the US printed money is flowing into the stock market and enriching the already wealthy at the expense of the less wealthy. He also points out that there are so many interventions working in every direction that the net effect can be difficult to understand.

He finishes by saying that what is needed is a society that leaves people free to produce value for each other.

What did you think?


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