Kelvin MacKenzie isn't a good macroeconomist

Transfers from rich areas to poor ones are really very useful for not screwing up the economy.

Former Sun editor Kelvin MacKenzie wrote a silly column yesterday. In it, he argued that "the middle class of London and the South East" are underserved by politicians, and called for a new political party which "believes that the striving classes in the South are overtaxed and overburdened".

It was, clearly, bunk. Charlie Hallam took most of it apart yesterday, pointing out that high pay is not the same as a large contribution to society, and that much of the boost London and the South East gets is merely entrenched advantage:

A start-up will find loans easier to obtain with a London address. Contacts are easier to make. Lobbying is easier. And there's that whole prejudice thing you don't have to deal with if you're based in the south.

The Economist's Daniel Knowles also points out that:

Every example he offers of London and the south being attacked takes the form of taxes on the rich—stamp duty for example—which also apply in the north. Meanwhile, the subsidy he says that the north gets is in the form of public spending: welfare benefits or social housing for example, which also apply in the south.

That is, far from wanting to fight for the South, MacKenzie is arguing for the rich of Britain and against the poor, wherever they actually are.

But there's a far simpler reason why MacKenzie is talking crap. The Telegraph's Ed West touched upon it in an otherwise faintly patronising post, writing:

Different parts of the economy require different economic policies, which is why the convergence of interest rates made the euro such a fundamentally bad idea for those countries on the fringe, such as Greece and Spain, since monetary policy would be set by people in Frankfurt and Brussels and therefore would be suited towards Frankfurt and Brussels. That’s a model that will work fine so long as the Greeks are prepared to live in perpetual poverty in the name of European solidarity, and that Germans are happy to pay the Greeks’ welfare bills.

The north and south of Britain are, by virtue of sharing the same currency, yoked to the same monetary policy. Short of some extraordinarily unorthodox economics – banknotes which catch fire south of Watford Gap? – that policy will be suboptimal for one or both areas of the country. Aggregate demand shocks rarely affect the nation uniformly, and so the Bank of England has to decide whether (say) inflation in the south is worth preventing a recession in the north.

But one way of lessening that impact is with common fiscal policy. That way, shocks in part of the country can be dealt with more quickly by transferring revenue from the healthy part to the struggling part. Which is, of course, exactly what MacKenzie was complaining about.

(It is worth noting that this analysis is roughly that which was relied on by every anti-Euro economist ever, who all feel very smug these days as Greece needs continual fiscal transfers just to stay in the economic bloc.)

The alternative – giving the north its own currency and monetary policy – may, I suppose, be what MacKenzie was angling for all along. It would certainly get those pesky Scousers out of his hair.

The North. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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How the Standing Rock fight will continue

Bureaucratic ability to hold corporate interest account will be more necessary now than ever.

Fireworks lit up the sky in rural North Dakota on Sunday night, as protestors celebrated at what is being widely hailed as a major victory for rights activism.

After months spent encamped in tee-pees and tents on the banks of the Canonball river, supporters of the Standing Rock Sioux Tribe finally received the news they’d been waiting for: the US Army Corps has not issued the Dakota Access pipeline with the permit it requires to drill under Lake Oahe.

“We […] commend with the utmost gratitude the courage it took on the part of President Obama, the Army Corps, the Department of Justice and the Department of the Interior to take steps to correct the course of history and to do the right thing" said a statement released by the Standing Rock Sioux tribe’s chairman, Dave Archambault II.

With the camp’s epic setting, social-media fame, and echoes of wider injustice towards Native Americans, the movement has already earned a place in the history books. You can almost hear the Hollywood scriptwriters tapping away.

But as the smoke settles and the snow thickens around the thinning campsite, what will be Standing Rock’s lasting legacy?

I’ve written before about the solidarity, social justice and environmental awareness that I think make this anti-pipeline movement such an important symbol for the world today.

But perhaps its most influential consequence may also be its least glamorous: an insistence on a fully-functioning and accountable bureaucratic process.

According to a statement from the US Army’s Assistant Secretary of Civil Words, the Dakota Access project must “explore alternate routes”, through the aid of “an Environmental Impact Statement with full public input and analysis”.

This emphasis on consultation and review is not big-statement politics from the Obama administration. In fact it is a far cry from his outright rejection of the Keystone Pipeline project in 2015. Yet it may set an even more enduring example.

The use of presidential power to reject Keystone, was justified on the grounds that America needed to maintain its reputation as a “global leader” on climate change. This certainly sent a clear message to the world that support from Canadian tar-sands oil deposits was environmentally unacceptable.

But it also failed to close the issue. TransCanada, the company behind Keystone, has remained “committed” to the project and has embroiled the government in a lengthy legal challenge. Unsurprisingly, they now hope to “convince” Donald Trump to overturn Obama’s position.

In contrast, the apparently modest nature of the government’s response to Dakota Access Pipeline may yet prove environmental justice’s biggest boon. It may even help Trump-proof the environment.

“Although we have had continuing discussion and exchanges of new information with the Standing Rock Sioux and Dakota Access, it’s clear that there’s more work to do”, said the Jo-Ellen Darcy, the Army’s Assistant Secretary for Civil Works.

Back in July, the same Army Corps of Engineers (which has jurisdiction over domestic pipelines crossing major waterways) waved through an environmental assessment prepared by the pipeline’s developer and approved the project. The Standing Rock Sioux Tribe subsequently complained that the threat to its water supply and cultural heritage had not been duly considered. This month’s about-turn is thus vital recognition of the importance of careful and extensive public consultation. And if ever such recognition was needed it is now.

Not only does Donald Trump have a financial tie to the Energy Transfer Partners but the wider oil and gas industry also invested millions into other Republican candidate nominees. On top of this, Trump has already announced that Myron Ebell, a well known climate sceptic, will be in charge of leading the transition team for the Environmental Protection Agency.

Maintaining the level of scrutiny finally granted for Standing Rock may not be easy under the new administration. Jennifer Baker, an attorney who has worked with tribes in South Dakota on pipeline issues for several years, fears that the ground gained may not last long. But while the camp at Standing Rock may be disbanding, the movement is not.

This Friday, the three tribes who have sued the Corps (the Yankont, Cheyenne River, and Standing Rock Sioux Tribes) will head to a hearing before the Inter-American Commission on Human Rights, seeking to increase pressure on the government to comply with both domestic and international law as it pertains to human rights and indigenous soveriegnty. 

What the anti-pipeline struggle has shown - and will continue to show - is that a fully accountable and transparent bureaucratic process could yet become the environment's best line of defence. That – and hope.

India Bourke is an environment writer and editorial assistant at the New Statesman.