Alas, here Mr. Burnham appears to have the wrong instincts. He supports greater state control over utilities, wants the government to take the lead on housing construction, and is on the prowl for other taxes to raise. It’s hard to tell where he stands on the economy-suffocating net-zero climate policies Labour has championed. He emphatically rebuffed a plea by former Prime Minister Tony Blair to revisit the more market-friendly version of Labour that worked in the late 1990s.
All that plays well with Labour’s noisy progressive flank and assuages members who are nervous about growing support for the Green Party to Labour’s left. But it won’t deliver the economic results voters demand. Mr. Burnham has a limited chance after he takes office to pivot, especially on matters such as welfare reform. It’s a good sign that he seems not to want to appoint Ed Miliband, a popular left-winger and net-zero true believer, as Chancellor of the Exchequer, in charge of economic policy.
Also critical of the apparent ignorance of Andy Burnham is Allister Heath. (HT Andy Morriss) A slice:
Even given the low bar set by recent prime ministers, this was a shockingly poor speech from our Prime Minister-designate, a farrago of nonsense, historical revisionism, blatant contradictions, economic illiteracy and character assassination.
Given Burnham’s demonisation of the 1980s – and thus of its principal architect, Margaret Thatcher, one of the just two truly great British PMs of the past 85 years – the Kumbaya politics was especially hypocritical, as was the nonsensical claim that he will be “pro-business” while renationalising all that moves.
Burnham claims to believe that he will end factional politics, a delusion born of his ludicrous appointment by acclamation. Following a colour-by-numbers approach to speech-giving, the new Labour Party leader believes his arrival will usher in “a new politics”, that he will govern on behalf of “forgotten places everywhere”, that he “will be a leader for all places”.
If that sounds like drivel, that’s because it is. Does Burnham really believe that a jaded, disillusioned public that has heard all of this before will be swayed by his remix of all of the old tunes? Or is his Messiah complex so pronounced that he believes that simply willing a revolution will automatically see it enacted?
If so, we are truly in trouble as a nation, though not as much as Burnham himself when he realises that there are no levers to be pulled to fix any of Britain’s pathologies.
He is the seventh PM in a decade and evidently has no clue what to do. We are living beyond our means, an ever larger welfare state sucking the lifeblood from a quasi-stagnant private sector economy that is now too small, too constrained by red tape and taxes and command-and-control policies to fund our ruling class’s socialistic ambitions.
“California’s billionaire tax is backfiring before it begins,” as reported by by Mohamed Moutii.
The White House’s executive order on frontier AI supposedly set up a voluntary evaluation process for frontier AI models that, according to the text, should not be interpreted as a pre-release vetting or licensing regime. However, once Anthropic decided to expand access to its Fable and Mythos models, the White House responded by invoking export control powers that would prevent foreign nationals from accessing these models, even if they resided in the US. As Anthropic itself admitted, enforcing this mandate was so complex that there was no choice but to shut down the models. Before this incident, there was no indication that these export controls could be invoked, and Anthropic and the AI industry at large were caught off guard.
This episode clearly draws out the issues with the current evaluation regime: It is seemingly arbitrary; the industry has no clear and public standard over what would make a model “safe” or “dangerous”; and there is no clarity over what the executive can and cannot do to models it deems to be too dangerous to release. This uncertainty, as seen in recent examples, can disrupt not only AI companies but also businesses worldwide that rely on these products.
Let’s put all this in some perspective. The US GDP is about $30 trillion in 2026 (actually a little higher, but round numbers are useful here). Thus, the thought experiment of spending $30 billion more per year involves a spending increase of about 0.1% of GDP per year–and sure enough, after about 10 years, it raises per capita GDP by about 0.1% using either approach. This may look like a wash. But notice that the estimates here are based on increasing R&D for only a 10-year period, while the benefits are projected out over 30 years. To put this another way, the current costs of an overall boost in R&D spending–like long-term investments in physical infrastructure–are more than repaid over an extended period of time. But to get the long-run payoff, you need to pay the short-term costs.
[DBx: This finding runs counter to my priors, but a quick perusal of the paper reveals that the research appears to be solid. Question for advanced econ students: When public-choice realities are taken into account, what does this paper’s finding – assuming it to be sound – imply about additional federally funded R&D? The answer isn’t obvious (at least not now to me). Public-choice realities suggest, on one hand, that, because the positive payoff is long-run while the costs are paid in the short-run, too little of this funding is now occurring and, hence, additional funding would yield positive results. On the other hand, public-choice realities warn against trusting government officials to extend such funding in economically justified ways.]
Recent work on multidimensional inequality suggests that the world has not been drifting toward ever greater gaps, but that the rich and the poor have been converging in material comfort. Calls for global wealth taxes or massive new aid programs often rest on the assumption that international trade and economic freedom have failed to deliver broadly shared gains. Yet the long-term evidence suggests the opposite.
J.K. Lundblad tweets: (HT Scott Lincicome)
There is a misconception that protectionism will make the supply chain more robust by reshoring it.
Often, historical evidence suggests the opposite: protecting domestic production leads to more fragility by restricting the supply chains ability to adapt.
I also discussed this in my big tariff/trade essay:
“In 2022, for example, the US faced an extreme shortage of baby formula. The immediate cause was a suspected bacterial contamination at a major producer, which forced a temporary plant closure. The true cause, however, was a protected supply chain; imported baby formula faced high tariffs and red tape, which allowed the US formula market to be controlled by just three suppliers. When panic buying set in, the domestic supply chain couldn’t adapt, and store shelves emptied. The shortages were only resolved by importing formula en masse from Europe aboard military cargo jets.
To witness firsthand the effects of protectionism, we could look at the state of two industries that are perhaps the most protected under the guise of “national security” in the US: steel and shipbuilding. For decades, the government peppered these sectors with protective tariffs, subsidies, “buy American” requirements, etc. As a consequence, however, their inefficiency has become so severe that the United States now fears that it cannot produce the wares it needs in the event of a war. So, it is looking to outsource shipbuilding and steel-making to Korean and Japanese companies instead. In other words, efforts to ensure supply-chain independence have bred a desperate dependence on allies instead.
