This is pretty much what I said on the subject of Corbynomics last night:
Less than three weeks ago the world had not heard of Corbynomics. Me included. And then Chris Leslie, a man known to many of you here, attacked it in newspapers and on Radio 4. And the world noticed as a consequence that what Jeremy Corbyn was saying about economic policy was quite new and radical.
They more than noticed, in fact: they've dedicated acres of newsprint to it, including big chunks of the Financial Times. When was the last time a Labour party candidate achieved that?
And I'll summarise what they've said. Robert Peston of the BBC called it ‘radical new thinking'. But what they almost all, the FT included, agreed upon is that what Jeremy is proposing will work. And then they have said, almost without exception, that they really don't like it. So let me tell you what it is, why it works and why you should like it.
Jeremy's message on the economy is as unambiguous as is his message on other issues.
First he is saying that when you plan an economy you put the needs of the people of the country you're presenting first.
In case of doubt let me be clear what that means.
It means people have priority over bankers.
Employees have priority over shareholders.
Tax paid has priority over top executive bonuses.
And housing, schools, and transport have priority over bailing out the financial system.
This is not just rhetoric: this is really important. And saying it is, in itself, radical if we're comparing what Jeremy Corbyn is saying with what George Osborne is doing and what too many politicians are now copying.
Osborne's approach is that of the accountant. I can say that: I am one.
All he's interested in is balancing the books. How, or why, he doesn't care. That's his number one aim.
Well I have a message for George based on my experience of running real businesses, which is something he's never done: it is that if all you aim to do is balance the books you fail the customer and you fail your employees, and because you do that you end up going bust, even if the books do balance. And that's what Osbornomics will do for the UK.
Corbynomics is different. It focuses on meeting need. It says that unless people come first nothing good will happen in this economy. And by doing that Corbynomics will deliver three things. It will deliver growth. It will deliver increased tax revenues and it will as a result — I stress, as a result, but inevitably nonetheless - balance the budget. This is economics from a politician who cares. Not about balancing the books, but about you.
Business only succeeds when it cares about its customers, and it balances the books as a result.
Corbynomics will succeed for exactly the same reasons.
But let's be clear, Jeremy will inherit a mess from George Osborne in 2020.
There will be a deficit. There will be a massive lack of investment. There will be little or no wages growth. There will still be unemployment.
And because Osborne's plans are wholly dependent upon ordinary people and businesses getting more deeply into debt than they have ever done before we could have had another 2008 style crash by then.
So Jeremy is developing plans to tackle these issues. That's what responsible leaders of opposition parties do. They don't sign up to their opponent's policies and say they'll deliver a bit more of the same, even if they've failed. They oppose by saying there is a better plan in town, and they've got it.
So in 2020 thee are going to be some real, big issues to tackle.
The first will be the need to boost the economy. After more than a decade of the lowest growth in the UK's history there will by then be a desperate need to invest. In transport, in schools and hospitals and energy systems fit for the twenty first century.
And there will be need for new and secure jobs in every constituency of the UK paying decent wages, with training, where union membership is recognised and equal rights are really respected.
That's precisely why I think Jeremy is proposing the creation of a new National Investment Bank to invest in the future we need.
That's why he's borrowed my ideas on quantitative easing, renamed them as People's Quantitative Easing, which is just fine by me, and has said, as I have done, that this mechanism could be used to fund our future.
How radical is this? Let me put it like this. It's the equivalent of the much-hated public finance initiative. That might dismay you until I remind you of the similarities and differences.
Like PFI People's Quantitative Easing funds essential public investment. Like PFI it does so without increasing the deficit. Like PFI it does so without increasing government debt.
And then there's the key difference. It's at least ten times cheaper than PFI. And it's wholly under state control. And not a single banker gets richer as a result of it.
Some people have said People's Quantitative Easing is just a trick. Maybe it is. But it's a vastly better trick than the PFI one that's been used by Conservative and Labour governments for the last twenty years. What I've done is improve the trick. Now it works. Now it's affordable. And this time there is no rich banker in the middle of. No wonder the FT and all who read it do not like it. This isn't named People's Quantitative Easing for nothing. You are the winners.
But for suggesting it I've been told that I am dangerous. Well I'll ask you some questions and you decide.
Is it dangerous to want to build schools?
Is it dangerous to want to build hospitals?
Is it dangerous to want to limit the role of bankers in the economy?
Is it dangerous to want to fund public investment at the lowest possible cost?
So let me move on, as I know you're really here to listen to Jeremy, to the other key bit of Corbynomics that the press have lined up to criticize. That is Jeremy's tax policy.
What don't they like? The first thing they are really unhappy about is the fact that Jeremy is committed to a progressive tax system. That's one where the best off pay a bigger part of their income in tax than everyone else does. That, I can tell you, is not what happens now. But it should be. And for good reason. The reason why Corbynomics says that the richest must pay most in tax is that they have the most money. It's not rocket science, is it?
And the reason why they have the most money is not because they're oh so clever. I know they think they are, but the reason why the chief executives of the UK's top 100 companies are paid 183 times the average rate of pay in the UK is not because “they're worth it” or “it's because they have delivered full employment, long term growth, fair wages for their employees that are growing year on year and investment that is transforming the UK and leaving the world in its wake”. No, it's because they can put their hands in the till and take whatever they want.
That's one of the very good reasons why Jeremy has said we need to look at the way UK companies are regulated and governed.
It's why we need workers on boards.
It's why we need pension reforms so that pension funds act in the interest of their members and stop this sort of abuse.
And it's because the resulting massive income and wealth inequalities that result from such activities by the 1% are threatening economic growth, well-being and the chances of the 99% that both the International Monetary Fund and the Organisation for Economic Cooperation and Development — hotbeds of socialism the pair of them — are demanding that governments around the world take action to tackle income and wealth inequalities.
Uniquely in this leadership campaign, as far as I can see, Jeremy has taken note of that reasonable demand. And he is saying that he will deliver a progressive tax system for the UK. Which I can tell you is exactly what we need.
Jeremy's doing something else as well. He's saying that at long last he will commit the money that HM Revenue & Customs needs to really start closing the tax gap. I have estimated that tax gap — which is the total tax cheated each year - at £120 billion — and have laid out all my calculations for anyone to read. I have also explained in depth how I think at least £20 billion of that lost tax can be recovered for an investment of a billion pounds, or thereabouts.
I stress, no one has said anyone can get it all — only fevered minds that can't read statements made in pain English have suggested anything else. But just to get this change will demand real changes and real reform at our tax authority — including a new Board that is not made up solely of people representing big business, as it is right now.
And that brings me to the point of all I have said. For thirty or more years we have been told about TINA — that There Is No Alternative. Corbynomics, and Jeremy's whole campaign is saying something else. You came tonight for a rally. Well actually I want to tell you that you came for a funeral. Tonight I want you to bury TINA. The time of their being no alternative is done. TINA Is dead. Tonight I tell you There Is An Alternative. Jeremy Corbyn is offering you that alternative. Let's welcome a new era, new ideas and a politics that for the first time in many of our lifetimes is about you, and what you want. Which is what Jeremy Corbyn wants. Which is what Corbynomics can deliver.
This is our chance for change. Please grab it, with both hands.
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“Business only succeeds when it cares about its customers, and it balances the books as a result.
Corbynomics will succeed for exactly the same reasons.”
The language may be different but the message is the same. So much for reframing the deficit narrative.
That’s politics I suppose.
You chose the wrong bit, I suspect deliberately
I made clear that the deficit may be cleared as a consequence of the policies, but not as the goal
That’s what Keynes said. It is right
But making it the goal is wrong. And if that is not reframing the deficit narrative I am not sure what is
You can’t really clear the budget in the UK with the rest of the world on its backside as it is.
The UK becomes a safe haven for foreign saving, as it has done, and the government has to offset that leakage. You can’t boost exports because that depends upon Growth in World Income – all you can do is smash imports which makes no sense. Either in quality of life terms, or in helping our neighbours across the world to stay alive.
The problem is the narrative. For something to be ‘balanced’ it has to be ‘unbalanced’ in the first place. That *never* happens in a free floating sovereign currency. The system is always balanced because the money can’t go anywhere else.
We have to get beyond this ‘balancing’ narrative. It is politically toxic and it stops us dealing with the excess private debt issue and it requires us to clobber our neighbours in the world for no good reason whatsoever.
Government is in deficit because *by accounting identity* others are saving more than they are borrowing.
To eliminate deficits – even current budget deficits – you have to have others saving *less* financially and borrowing *more*. Do we really want to go back to a world where financial savings are getting run down and private borrowing is going up?
We need a world with more equity and less debt, and that requires government to run very large deficits for a very long time to run off what the private banks have already created.
Need to change the narrative. And we need to do it soon.
This sounds like it was rousing stuff. Be aware though that your speech contained so much rhetoric it sounds like that of a politician, not an economist.
The content is economics
And I prefaced it with that
And two things: first I stuck to what I have done. That was why I was there
Second, all economics is politics, but not necessarily party politics. I have made clear my willingness to work for ideas and not party politics for a long time
I am doing an event for the NHA Party next week, for example
Mr Havenstein/Andy
The people who attended this rally turned up to hear a rally; they were not attending a dry economics lecture. Maybe they turned up to get hope? The latter form of presentation would not deliver that!
When addressing a meeting such as this, it is surely OK for a speaker to use the language of vision and also to relate the principles of the subject matter to people’s real lives in order to get the message over?
That is all Richard has done.
I also believe that unlike many of the Labour leadership candidates and the Tory party, his rhetoric is based on principles that are honest and real. That in itself is very refreshing don’t you think? The same goes for Corbyn himself (but it also gives the Greens more kudos too).
It is a sad reflection of our times that even genuinely helpful ideas in politics such as those being put forward by Corbyn and Richard are treated with disdain because many people just simply don’t trust politics any more.
A lot of people said afterwards that they quite simply understood what I said and how refreshing that was
That justifies the style, in my view
You are missing our point.
We fully support PQE and hope you succeed.See my previous comments
This narrative however allows the opposition in both parties to clobber you as soon as there is any setback in the economy even if it has nothing to do with you.
In other words it’s all your fault because you didn’t balance the books like you promised even though it was impossible anyway. That is the point we are trying to make. Is that allowed?
Well I for one think you have said all that I feel Richard …. I have read so many reports from economists on “Tina” and austerity theories . IT doesn’t has never will never work and Corbyn seems,with his still small voice of calm,to be the man that can make that point resonate with the people or even enough of them . Thank you for the words .
That still small voice of calm
Whittier speaks to my condition
I’d have to admit that although I thought I was pretty well informed about Labour Party matters I had never heard of Chris Leslie until he attacked you. I hope we never hear of him again.
And a lot of people never heard of Richard before Chris Leslie attacked him. Chris Leslie inadvertently provided a service of sorts. So he’s good for that if nothing else.
Well argued Richard.
I do wish that there was an easy way to get this message over to the general public.
Here is hoping Jeremy is not silenced by the establishment machine.
I hope the charities commission is noting that you are taking an active role in politics when your income from the charity precludes that.
I am not taking an active role in party politics
I have been invited to defend my ideas that right now are not the policy of any political party
I have been very clear that if others adopted these policies I would be just as happy to support them
Engagement with politics is explicitly permitted on this basis
So what is this if it isn’t political ?
“Tonight I tell you There Is An Alternative. Jeremy Corbyn is offering you that alternative. Let’s welcome a new era, new ideas and a politics that for the first time in many of our lifetimes is about you, and what you want. Which is what Jeremy Corbyn wants. Which is what Corbynomics can deliver.”
I plan to write to the Charities Commission about you.
But Corbynomics is by me
Developed charitably
And what I was there to talk about
And of course it is seeking change for the relief of poverty: just exactly what a charitable objective should be
Also the venue was a political rally. Not a debate or seminar. How can that not be political ?
And I started by saying “and now for the economics bit”
Not in what I put on the blog
But what I said
But to reiterate: politics is allowed if in pursuit of a charitable objective and not party politics. I cannot have made it clearer I am there for ideas, not party politics. I have been reported saying so in the press several times
“A charity cannot be established for a political purpose, but a charity may engage in political activity or campaigning to achieve its purposes”
https://www.charitycommissionni.org.uk/charity-essentials/charities-and-politics/
Precisely
And I continually make clear I support the idea, not the party
I am well aware of my responsibilities
As clear indication, I am not voting in this election. It would be inappropriate for me to do so
Good post John; which makes it all the more astonishing that the Commission refused to register the Tax Justice Network as a charity, since its purpose is clearly the relief of poverty by the promotion of fair taxes.
Richard – if you ever have any trouble on this, give me a shout as, alongside my private client practice, I am an experienced charities lawyer.
Note for Archibald Smith: you are a lovely illustration of just why a little knowledge can be a dangerous thing. Perhaps you’d like to report Oxfam to the Charity Commission while you’re about it?
http://www.electoralcommission.org.uk/__data/assets/pdf_file/0010/165961/intro-campaigning-charities-npc.pdf
“Under charity law, charities must not support or oppose a political party or a candidate”
Speaking at a political rally for Jeremy Corbyn is a clear violation of this rule.
There is an interesting point to be made here
I am not a charity
Just thought I should say it
The obvious may have passed you by
As is the fact that I have worked for some organisations that are very obviously not charities, like unions, for a long time
Maybe you should take that into account
You work is funded by a charity.
Some is, I agree
The relevant word is some
The whole of my life is not charitable
Archibald:
To the extent that Richard has been funded by a charity, he will have had to sign up to a grant agreement that sets out clearly what he can and cannot do. That grant will have been made by the trustees of the relevant charity, who will have agreed that funding this research is an appropriate way of pursuing their charitable aims. Since the charity in question focuses very largely on the relief of poverty, research into ways that tax policy might be changed to find sufficient resources to do that is an entirely appropriate use of that charity’s funds.
In case you hadn’t noticed, Richard is an ideas man. As he’s repeatedly said, he does not support or subscribe to any one political party. On this occasion, he’s been asked to explain a form of economic policy that one politician happens to like. On other occasions, he’s done that for other politicians, to say nothing of writing to whoever happens to be in government at the time pointing out alternative ways that things might be done.
I’ve been practising charity law for more than a decade, and there is nothing remotely exceptional about this. One of the very few things that the Charity Commission do regulate properly these days is political activity – and you can be guaranteed that they would have been all over this if the rules on political activity had been infringed.
If you want blatant political activity, may I direct you to the Atlantic Bridge charity (established by Liam Fox among others) that existed solely to promote a neoconservative agenda on both sides of the Atlantic? Goodness knows why it was ever registered in the first place, but it was eventually removed from the register.
Now for goodness’ sake, stop wasting Richard’s time.
Thanks Tom
Have you cooperated at all with your fellow economist Keith Farnworth of York University, who is I believe also making a contribution to Corbynomics?
We are talking
So, yes is the answer
And do you know the folks at the Dept of Economics at University of Missouri, Kansas City, who have for years been developing what has been dubbed Modern Monetary Theory. – L Randall Wayne, Warren Mosler, Stephanie Kelton,
It sounds to have a lot in common with Corbynomics.
All solidly founded on Keynes, Minsky, Wynne Godley, and other well-established economists.
There is a great deal in common
I am in regular contact with Stephanie Kelton and am debating with Bill Mitchell later this week
*self indulgent sigh* now you are becoming well known for the right reasons and everyone will start saying they knew this all along – I will have to revert to smugly saying I read his blog and recommended him to all and sundry esp young trainee accountants and university grads way before this went mainstream…
Great and important work – when you are feeling a bit down or slightly pressured – plse remember that there are many, many people behind you and wishing you and your eminently sensible ideas for social justice well.
Kindest regards
Thank you
Richard
Richard
I’ve just spoken to a colleague (in his late twenties) who attended the rally last night. He is still buzzing about it.
I asked him about you and he said that you came across as funny, clearly spoken and as a real human being which made a refreshing change given that you were a chartered accountant!!! He and his partner were impressed and got the points you made.
Well done.
As for the detractors who have turned up today, all I can say is that you must be really scared eh?
To attempt separate charitable work from politics is pure bunkum since most charitable work seems to be created in order to fill gaps created by poor politics in the first place. How can the two not be linked in some way?
Really………
Thanks!
Politics and charity work may be linked
BUT not party politics
Last night – the whole Labour leadership campaign – is a policy debate not a party political campaign
I am engaging in that policy debate
Richard
I’m looking forward to hearing the audio being posted on Think Left blog later today. Pam says you were brilliant! Well done Richard.
Thank you
I just explained what this is all about
I’m not talking about party politics above but politics per se Richard – in the broader sense. By definition, existing politics is affected and influenced by ideas from all parts of life outside politics – economics, finance, philosophy, industry, life in general.
The process you are involved in is surely (hopefully) informing the politics of tomorrow – politics that puts people at the centre rather than corporations, big business etc., as you say elsewhere.
Yes, you are engaging but you are also helping (with others) to mould alternatives to what we have whether you like that or not.
And making a good job of it too by all accounts.
When you consider the unaccountable reach that corporations and the rich have into Government, the rules about charitable status and politics are nothing but draconian hypocrisy. It’s so unfair.
Neil, you write that “The problem is the narrative. For something to be ‘balanced’ it has to be ‘unbalanced’ in the first place”.
It may not be academically appropriate to refer to balancing, or even PQE (another description that has been proscribed elsewhere) but to not engage with the prevailing, equally problem narrative based on household budgetting and maxing out the credit cards because, to not engage with it leaves false ideas in the minds of most of the electorate. PQE can become acceptable to a majority of the electorate only if those promoting it use words they understand – as Richard very clearly seems to have done. I would suggest, with respect, that making it happen is significantly more important than preserving academic pure nomenclature.
Richard, Anna said what I would have liked to have said but so much better than I could have done. Brilliant performance!
The system is always balanced because the money can’t go anywhere else. – See more at: http://www.taxresearch.org.uk/Blog/2015/08/21/on-corbynomics-last-night/#comment-area
Thanks Nick
Appreciated
“to not engage with it leaves false ideas in the minds of most of the electorate”
I agree that it needs to be met head on. I usually use the following, and most understand: –
Credit card? This is the credit card’s T&C’s – http://www.3spoken.co.uk/2011/01/how-governments-super-platinum-credit.html
Household budget? Does the Bank in a game of Monopoly’s budget look anything like or in any way similar to the player’s? Nope. Narrative broken.
Brilliant speech, skillfully delivered. Very inspiring. Thankyou.
Thanks
Having been at the rally and read all the comments above, it strikes me that this is very much a sign of things to come if JC becomes leader of the Labour Party. Achieving that will be the easiest part – he will immediately be viciously attacked and briefed against by right wingers inside the party and Tories and their friends in business outside it.
It was refreshing to hear some alternative economics for a change and i’m sure you (Richard) will appreciate that it is really JC that is being attacked via you. Anyone who shows any degree of support for him will also be placed in “the enemy within” category at every opportunity – I take it as a compliment, but it can be very uncomfortable if you’re not used to it!
There is a wholly unexpected chance for the Labour Party to once again become the force envisaged by its founders and I hope everyone reading this will do their bit to make it happen. I might even rejoin!
I am, thankfully, used to this whole environment
More than a decade of tax justice has been good preparation for this moment
And I am pretty thick skinned
Any chance we could get the BBC to interview you instead of the bloody Taxpayers’ Alliance?!
Monday morning
Today programme
6.15 and 7.15