Andrew Baker is a political economist at Queen's University, Belfast. I should mention straightaway that he and I have co-authored on the subject of corporation tax in Northern Ireland for the Sheffield University Political Economy Research Institute (SPERI). What concerns me today is an article he has had published by that same Institute entitled The political difficulties of ‘Corbynomics'.
As Andrew notes:
A month ago nobody had heard of ‘Corbynomics'. Today Google records 174,000 search results. It is becoming difficult to escape the term in any form of media. If Jeremy Corbyn wins the Labour leadership election, its contents and claims will shape political debate in the UK for some time.
And as he then, correctly comments:
Corbynomics is not yet a fully-fledged and coherent programme or philosophy. It is a collection of ideas about how money and the economy works and the appropriate role of government that sets out to challenge conventional thinking as the beginning of an evolving process.
I agree with that. As I do with this:
In the UK fiscal policy has been immobilised by a highly political ‘deficit reduction narrative', conventional monetary stimulus is exhausted, and deficit reduction and low inflation targets have ceased to act as a reliable guide for policy. The government needs alternative policy levers.
Andrew has stated the obvious: it seems to have passed 55 economists in the FT by.
Andrew is also spot on in saying:
[T]he fiscal deficit has been elevated as the primary economic problem the UK faces, suffocating proper debate about a strategy for the UK economy and the role of government policy.
Why has it been so hard, I wonder, for others to see that this is the context within which I have been working?
Andrew than notes the nature of PQE, I think pretty accurately, whilst noting that:
An alternative form of PQE based on helicopter money has also been suggested by economist Simon Wren-Lewis and former chair of the Financial Services Authority Adair Turner. Here the central bank creates money and distributes it directly to households. Both variations of PQE, as Wren-Lewis acknowledges, are a form of money-financed fiscal stimulus. The Wren-Lewis version is a temporary monetary stimulus, when interest rates have been immobilised.
And adding:
Both [Wren-Lewis], and for that matter the LSE Growth Growth Commission, also acknowledge there is a compelling macroeconomic case for creating a UK public investment bank to support infrastructure and encourage private-sector investment. The Wren-Lewis view, as well as that of others, is that this can be financed by conventional government borrowing when interest rates are low. In other words, Wren-Lewis and the Corbyn PQE approach share a diagnosis of the UK economy and the general remedies required, but differ on the details of precise instruments and their execution. They are nevertheless a lot closer to one another on the orientation of policy than they are to the current UK political consensus.
This Andrew contrasts with the 'mainstream view':
The substantive basis of the current complaints against Corbyn PQE from the mainstream economics fraternity has two elements. First, it is suggested that using PQE as a means of financing infrastructure is conceding too much to deficit fetishism by not borrowing. Second, PQE has uncertain institutional implications for central bank independence and will subject the BoE to excessive political direction.
Before asking:
On the first point, is it possible that economists are as committed to unpicking the deficit narrative as their opponents are to defending it that they are missing alternative ways of opening this up for the public at large? To an extent PQE is already doing this and changing the public conversation about the nature of UK economic challenges.
And:
On the second point, the true extent of BoE independence in recent times is very questionable. What's more, if inflation targeting has been redundant as a true guide for monetary policy for over seven years, then maybe the terms of central bank independence and the nature of the most appropriate institutional design should be the subject of public debate again?
Before saying:
Unfortunately, even that part of the economist fraternity which is sympathetic to the kind of debates Corbyn wants to provoke tends to regard central bank independence as a sacred cow. The BoE establishment is also unlikely to be passive if it perceives a challenge. In short, the substance of complaint about PQE in particular and Corbynomics in general is primarily political, institutional and sociological in nature.
Spot on.
So, how to resolve this? Andrew says:
And it is here that the real difficulty lies. Corbyn's political label as an extreme far left candidate is preventing a mutually beneficial dialogue with broadly compatible intellectual voices.
Wren-Lewis and his associates should recognise that, if they want their undoubtedly many good ideas to receive political take-up, Corbyn is probably their best bet.
For their part, the Corbyn team could go beyond PQE and MMT, broaden their policy base and further grow their political appeal through such an engagement. They are certainly open to ideas and accept further debate and refinement is required.
However, for reasons of professional esteem and incentives, at least one side of that engagement is likely to be unwilling. For those wishing to shake the current political consensus on the deficit, that is a great shame.
So, let me rise to the challenge (as I am also doing, I hope, behind the scenes).
First, let me reiterate that Jeremy Corbyn has said he thinks that my ideas are nothing more than proposals. They are not acst in stone.
Next, I have made, I thought, three things clear. Firstly, PQE is about reframing when the narrative has been against all spending that might create deficits. I am bemused as to why so many have ignored this political reality when commenting on the supposed economics of this. I do not think economics exists in a void independent of politics: in fact, it can only exist in my opinion in political space and that is a major factor in PQE's design. I have not bowed to neoliberalism. No have I in anyway said government spending crowds out the market (funding mechanisms can't do this anyway: only the investment I am supporting can, so that argument makes no sense). I am simply suggesting ways to change the narrative.
Secondly, I have made clear that PQE is not an instrument for all occasions: it would not be at a time of full employment, for example. But, we are a long way from there. What I have also made clear is that I think the demand for infrastructure investment far exceeds current government estimates. And I have also made very clear that I think deficits on current government spending are going to continue for some time - and will certainly be significant in 2020 given the scale of what I think is a developing emerging market driven next financial crisis.
So, in that case, I think there is likely to be a need for significant bond borrowing for some time to come, and potential new financial instruments to counter the risk to the economy from continuing market failure, and in that case I see no risk in suggesting both the use of bonds and PQE and that doing so will not, I think, leave the market short of the high quality debt it may crave.
But, if it does, as Jeremy Corbyn said the other evening on Channel 4 News, and it was necessary to issue debt (and not use QE to cancel it as effectively happened to almost all new debt issued from 2009 to 2012) then issue debt the government must.
In other words. what I am seeking to do is add to flexibility to the armoury of tools that I think will be needed to keep the UK and other economies going over coming years, which is most especially important when monetary policy has effectively ceased to have any role in this process and the Bank of England has lost its prime macroeconomic function as a result.
I am willing, of course, to discuss, these issues. I am willing to change my mind on what will be the right tool at the right time: a wise person does change their minds when the facts change. But I remain bemused at the refusal of so many to engage with thinking on what we must do next if we are, asI think likely, to face another crisis with an armoury that is almost bare of tools, based on current thinking, to tackle it.
Isn't this just prudent?
And isn't it, in that case, imprudent not to proceed on this basis?
Comments of the quality received on this issue of late are most welcome.
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The perceived wisdom of the austerity lobby is that you can’t print money to pay off your debts and the BoE must remain independent. But it is interesting that the “rolling” £375 billion of QE used to buy government bonds has given the exchequer a nice boost of £50 billion in interest (so far). This is the interest that would have been paid to bond holders if they were not held by the Bank of England. So the deficit of £90bn last financial year would have been £102bn if these interest payments had been made to BoE. The rational behind the withholding of the interest is that the Treasury and the BoE are two parts of the same government. So independence is tenuous and we are already using money creation to pay off debt.
Precisely
As I have often argued
But good you are too
Interesting quote from FT (Dec 19 2013 quoted by Bill Mitchell):
“Quantitative easing has demonstrated to politicians everywhere that it is possible to finance government deficits simply by printing money, a fact which had become obscure in the developed economies in previous decades. The umbilical link, previously unchallenged, between running a budget deficit and the requirement to sell bonds has been broken in the mind of the political system. Who knows what the long-term effects might be”.
According to MMT bonds don’t finance deficits anyway. Can the Corbyn campaign really reframe (mot du jour) this-if it can it would be a sea-change!
I clearly have not succeeded in doing so as yet
But let’s see
“Secondly, I have made clear that PQE is not an instrument for all occasions: it would not be at a time of full employment”
How are you proposing dealing with the leakage to the foreign sector then?
You have to offset that. If you’re not doing it via the capital budget, where are you doing it?
You will always need to be operating PQE, and running the main economy overly tight tax wise, otherwise you cannot close the current budget which will tend towards deficit without the tax from PQE spending to balance it up.
The overly tight taxation creates the real space into which PQE will spend.
The ‘High Quality Debt’ the market craves is called Bank Reserves and they are held by Banks. Everybody else gets to leave their money on deposit if they are not prepared to invest it productively. Smaller operations are protected by the deposit protection scheme. Larger operation need to distribute their cash or spend it.
Or you can stop all this messing around and accept Lerner’s Law. That this ‘middle road’ is just muddying the waters and actually making things worse.
One of Jeremy’s great strengths has been that he has been honest with people. What’s so bad about pointing out that government deficits represent pounds in people’s pockets?
I thought I had
I will have to do so again
One of the biggest advantages of PQE though is that it moves the debate away from talking about deficits. The framing will no longer be about household budgets, it will be about *money creation*.
The Conservatives and neoliberals do not want to talk about the reality of where money comes from – they want to talk about households and living within our means. Once the conversation turns to money creation they are on dangerous ground and they know it. The reaction to PQE illustrates this. They are now fighting on territory they are not familiar with.
The best analogy i can think of is Foreman/Ali – you can’t win slugging it out in the centre of the ring, you have to move your opponent over to where you want him to be. Rope-a-dope style.
https://www.youtube.com/watch?v=dpfZYqDgkQ4
I don’t know if Jeremy Corbyn will have the wherewithal to explain it (or possibly the political will or support from the PLP). He needs a good team around him, and especially a confident, articulate and clever Chancellor to fight his corner – i’m not sure he or anybody in the PLP are capable. Assuming he does win i hope he’s got the guts to see it through regardless, whether its full blown MMT with a JG or the slightly gentler slope up the mountain via PQE.
On the subject of having the right tools for the job something you wrote the other day about inflation and self employed wage rates raises some additional observations.
Those wage rates, as with the general level of wage levels cannot be viewed in isolation of a wider context. The question as to what might be driving them in that direction might well be provided by a stock and standard answer which includes observations about economic power relations, the drive for greater profits, and so on.
However, it would seem reasonable, in general terms, to observe that ultimately what is actually being considered here is not just the levels and rates but the value. The standard tool box suggests, on the basis of supply and demand, that one of the key drivers of value is the presence or absence of scarcity. One example being that a shortage of skilled labour should increase the value of labour through the price mechanism, as happened say after the plague hit Europe.
And it does seem reasonable for any standard model to use this past observable phenomenon as a policy tool. Yet, on the basis that the future, and even the present, is not necessarily going to operate in the same way as the past it would seem prudent to look for other possible drivers and variables operating today which were not present in the past.
One argument along these lines is that certain current modes of technological innovation are driving economic activity towards zero marginal production costs in which the “normal” (ie previous observable operation of the system) price and pricing mechanism to determine value is no longer operating. In a reality in which information is becoming the key driver of value within a product or service this is hardly surprising given that information, embodied within a product or service, is unlike any previous driver of value in that it is not scarce but is actually abundant to the point that it is free. Which is why the film and music entertainment industries have been getting their knickers in a twist since the onset of the Internet age as their operating model no longer fits a reality in which it is possible to reproduce and replicate for free as many times as you like a product based on information.
Once 3D printing becomes more mature, along with nano fabrication technologies and techniques, the fuss over “pirating” will look like a small skirmish as it becomes possible to replicate pharmaceuticals and other products/artefacts in the same way based on the abundance of zero cost information embedded in the production process of the product/service. The traditional pricing mechanism to determine value, upon which standard models have been constructed will no longer operate as it has done in the observable past, if at all.
The point being this is not some far into the future scenario because the process is already under way, we are actually living through it and have been doing so since IT became a key feature of developed economies.
This being the case it would, following the very pertinent point made about having the right tools in the box at any one time, to also be thinking about what tools will probably be required in the not too distant future.
The legal profession is already planning for patent and copyright infringement due to 3D printing. They reckon it could be a hundred-billion-dollar goldmine!
There is already protocol design taking place where the electronics involved will have disabling coding built-in the the firmware so that specific infringement just won’t happen.
All good fun.
In relation to full employment, Richard Murphy claims “..we are a long way from there”. In fact unemployment stands at just over 5% which is where it was in 2008 at the start of the crisis. Plus the BoE seems to agree with that. That is, they’re talking about raising interest rates in the next 12 months, and why? Because they think the economy is almost at capacity.
So anyone who thinks there is a huge amount of scope for printing money and spending it on infrastructure is out of touch with reality.
I think you entirely misunderstand employment and under employment data
To out it another way, you are just wrong
“You entirely misunderstand X” and “you are just plain wrong” are not desperately intelligent arguments. Any chance of quoting some quality studies which actually demonstrate that there is far more spare capacity in the economy than is commonly thought? The BoE will I assume be looking at such studies before deciding exactly how much spare capacity there is. And if they’re not, the entire BoE MPC should be sacked.
Maybe you misunderstand what I spend my day doing
For the sake of doubt I do not sit and wait for comments to come in on the blog and then go scurrying off to prove them wrong
I blog very early in the morning usually before the da’s work is to be done
I moderate comments as I can
I comment on occasion
I draw attention to flaws in arguments
I do not, rare exceptions apart, do endless work to prove generally known and supported hypotheses right
That is called a waste of my time
I tend to delete persistent comments from time wasters
Sanjay, which set of rigged stats are you using? The ones that include the self employed, most of whom are earning a pittance (probably less than you’d get for being unemployed), or the ones that ignore them (meaning you can probably double your 5% straight away)?
Also, there is a shortage of EXACTLY the skills needed for infrastructure projects – engineers, bricklayers, etc. See:
http://www.theguardian.com/business/2015/feb/10/uk-plumbers-builders-engineers-skill-crisis-economy
So, we will need to hire from elsewhere some critical skills whilst we train enough people who want to live here permanently
Is that such a big deal?
As objections go this one is ridiculous
Not to mention, of course, the increase in zero hours contracts; the number of people shifted off the official records through bogus workfare projects and forced voluntary work in places like Poundland et al; people who have given up trying to jump through the increasingly ridicules hoops for non existent jobs, living with parents or relatives with no possibility of independence outside of the system, off the stats.; the number of unnecessary bullshit jobs.
Yeah. The systems working great. The official corporate state statistics say it is so therefore it must be so.
Sanjay
A couple of questions
5 per cent of what ?
How can you be at capacity with even 5 per cent of the labour force producing nothing?
What about underemployment? Work one hour a week and you’re classed as employed.
Massive Output /GDP potential lost forever.
Output GDP includes Govt spending. Once you get the money mechanics you start to appreciate the waste.
I think it is you who are out of touch with reality my friend.
Andy, Your claim that the economy is not at capacity because there are 5% unemployed, plus various underemployed people, is not a claim that would be made by anyone who has worked their way thru an introductory economics text book. As it explains in the introductory text books, an economy can indeed be at capacity even when there are X% unemployed, and for the simple reason that demand and supply of different skills in different areas is constantly changing. It is therefor impossible to match 100% of the workforce to suitable jobs, or even 99%.
Put another way, inflation getting excessive is a sign that the economy is at capacity, and inflation invariably gets excessive long before unemployment has dropped to anywhere near zero
Sanjay
With respect one or two here have read a little more economucs than that
And what I can tell you is that almost everything in introductory economucs text books is wrong
But let’s leave that aside. Let’s instead note the world has spent $6 trillion or more trying to create inflation and has failed
How much is needed?
Richard
Sanjay, yes there are skiils supply/demand mismatches. So let’s address those through a National Education Service or measures to stimulate in-house training. Public investment (however funded) is not just about things. It’s also about people and the skills they need to build both our economy and a future for themselves and those they love.
What – we’re suffering from debt deflation-there’s plenty of scope fro printing money the so-called ‘full employment’ is mostly crap jobs and/ or spurious ‘self-employment’ (often a euphemism for being hounded of benefit) so, in effect the so-called employment is just ‘displaced’ unemployment – you are clearly an ivory tower philosopher Sanjay.
I’m not disputing that a bit more aggregate demand would be in order. But as the BoE seems to suggest, demand can keep rising for about another 12 months before it has to be reined in with an interest rate increase. But we’ll see what inflation is doing in 12 months time.
As distinct from the economy as a whole, there’s the construction industry.
Re Richard’s claim that we should import skills that are in short supply, employers are already free to import skilled labour. Unfortunately the numbers coming in are not enough to deal with construction industry skill shortages. Thus your idea about importing skilled labour being a panacea is dodgy.
Re your idea that we train more people to deal with skill shortages, do you think education and training establishments hadn’t thought of that one? For the last century or more, those involved try impart skills which are actually needed, but that’s an objective that will never be accomplished with anything near perfection.
Moreover, one of the purposes of PQE according to your Gurdian article is to reduce unemployment. To the extent that that’s the objective it doesn’t make much sense to boost sectors of the economy where there are skill shortages. I.e. if you want a quick reduction in unemployment, boost sectors where there is a good availability of skills. However, the idea that it’s possible to do that or that governments are actually capable of doing that is optimistic.
Noted
And I have also noted you have not answered other’s questions
Respectfully you appear to be providing TelePrompTer answers
Or the ones that ignore the increasing quantity of people on zero-hours contracts.
The large, but falling slightly, amount on part-time work.
Then we move onto working tax credit reductions, which the low-paid depend upon because of low wages.
Meanwhile, the country is suffering from a massive skills shortage, while employers steal workers from other companies and fail to train new workers themselves.
Shall I mention the theft, effectively, of trained health workers to parasite tax-haven-based private health [parasites] companies.
Meanwhile, stacks of money lie in [foreign] banks….
Oh well:…. http://www.truthdig.com/report/item/quantitative_easing_for_people_the_uk_labour_frontrunners_20150903#.Veh1WB-fnFQ.twitter
Far from being interested in business, the banks are more interested in lobbying [bribing] the government to relax money-laundering regulation…..crooks looking to fill their pockets with other crooks money…
Let us just assume that Corbyn will win the Labour Leadership election. This will be due to a large part because he will have had the best economic ideas, of which no doubt the PQE idea is key.
It he wins he will have confounded everybody who said he is unelectable for the Labour leadership. Arguably BECAUSE of his radical ideas.
If that analysis is correct, Corbyn will need more radical ideas, not less, to keep the momentum up. That momentum changes the debate, now we have 51 economists saying we should be ignoring the deficit and borrowing more to finance government investment, without Corbynomics that would not have happened.
But now come the suggestions what to do next, as set out above, or Owen Jones suggesting a Council of Economic advisers. You will gain respectability and credibility, but at the expense of radicalism. That is the problem, committee decisions will be bland, or blander. As soon as you bring in traditional economists, even the most left wing, they will say it is the wrong time for PQE, it endangers central bank independence, only for emergencies, etc.
Completely ignoring the welfare and re-distributional benefits of using PQE which is debt-free financing.
With traditional economists who are more progressive and for a stronger state, the Tories will have a field day – same old “tax and spend” Labour.
Maybe Corbyn should see how the Bernie Sanders Democratic nomination in the US is working out for him, and learn from that campaign. Because that already brings MMT ideas to a more general public, and if a progressive Sanders is potentially electable, so will a progressive Corbyn.
I’ve already told you which stats I’m using: the unemployment figures. If you want to claim that those figures underestimate labour market spare capacity because of alleged large number of self-employed working for a pittance, do you have evidence that there are more of those people now that in 2008?
Yes
Danny Blanchflower and I have documented it
The figures, and related productivity data, are readily available
http://www.ons.gov.uk/ons/rel/lmac/self-employed-workers-in-the-uk/2014/rep-self-employed-workers-in-the-uk-2014.html
https://flipchartfairytales.wordpress.com/2013/12/17/the-rise-of-the-hardworking-poor/
https://flipchartfairytales.wordpress.com/2014/04/10/more-freelancers-than-public-employees-is-that-really-a-good-thing/
Food for thought. A veritable feast of information.
“There were 9.02 million people aged from 16 to 64 who were out of work and not seeking or available to work (known as economically inactive), 30,000 more than for the 3 months to February 2015 and 104,000 more than for a year earlier”
http://www.ons.gov.uk/ons/rel/lms/labour-market-statistics/july-2015/statistical-bulletin.html
“Take the figures from Eurostat. New data show the rate of underemployment in the UK in 2014 was worse than in the rest of the EU other than in five high-unemployment countries”
http://www.independent.co.uk/news/business/analysis-and-features/our-hidden-army-of-underemployed-10211368.html
“Moreover, one of the purposes of PQE according to your Gurdian article is to reduce unemployment. To the extent that that’s the objective it doesn’t make much sense to boost sectors of the economy where there are skill shortages. I.e. if you want a quick reduction in unemployment, boost sectors where there is a good availability of skills. However, the idea that it’s possible to do that or that governments are actually capable of doing that is optimistic.”
Not too optimistic if you consider that pensions investment are also part of the National Investment Bank. One of the reasons there is a skill shortage is because people find it so difficult to build a career on the stop go cycles of the supposedly ‘stable’ neoliberal economy. If the infrastructure investment were ongoing (with sometimes PQE, sometimes not) then there is a much better chance of building livelihoods in the UK. We already train engineers but (anecdotedly admittedly) I know some who couldn’t get employment in the UK and emigrated. So the ‘UK investment’ in their education was lost, at least temporarily, and probably for ever.
While I agree that successive govts have tweaked employment figures and their definition to suit themselves I would also like to know what you mean by full employment in this instance as I seem to recall there are a number of definitions for that.
Those seeking work can secure it within a reasonable time period
Productivity rates are increasing
Real wage rates are rising
Job security is increasing
It’s judgement
Has there ever been a time in your view when the UK has had full unemployment, Richard, and, if so, when?
We did pretty well for 25 or more years post war
MMT makes clear that unemployment is an ideologically based CHOICE not some sort of natural occurrence created by the deity of the market. Full employment in a literal sense has been abandonded in favour of NAIRU (Non accelerating inflationary rate of unemployment?) whcih as it says uses unemployment as a monetary tool – all unemployment is deliberate policy despite the foul neo-liberal explanation that its because the poor are somehow feckless and lazy. I think this is one of Milt’s great creations.
“We did pretty well for 25 or more years post war”
Full employment, if it did exist between 1945 and 1970, was largely attributable to most women being housewives. If they wanted to look for work, they would not have been very successful.
Fuell employment is always related to those who want work
Try again, I suggest
My late uncle, Sir Harry later Lord Pilkington, was a Director of the Bank of England from 1955 until 1972. He also attended, representing British industry, the first ever Bilderberg Group meeting at the Hotel Bilderberg in Holland. Through him I learnt a lot about how powerful the City of London really was. Another fellow Director of the Bank of England, who wants the truth out about how the world’s money creation and money supply is controlled by the Bank for International Settlements, told me about the 1914 Treasury-issued, debt-free and interest-free Bradbury Pound and how this is the Achilles Heel that the City of London fears most.
As a result I have written this open letter to Jeremy Corbyn who is on record supporting the restoration of the Bradbury Pound. I have also pointed out that the People’s Quantitative Easing idea is unfortunately completely flawed as it does not take into account the machinations of the Bank for International Settlements and its central banking system. It is also unnecessarily complicated.
http://www.britishconstitutiongroup.com/article/open-letter-jeremy-corbyn
http://www.telegraph.co.uk/news/politics/georgeosborne/11835501/Councils-to-be-told-to-tap-into-reserves-in-George-Osbornes-Spending-Review.html
George Osbourne calls for money printing.
Perhaps we can “refill” those reserves after. 😉
There is a slightly different version of this with marginally more MMT content if anyone is remotely interested
http://qpol.qub.ac.uk/corbynomics-its-the-politics-not-the-economics/
Thanks Andrew
The New Economics foundation have an article about Strategic Quantitative Easing which I think may be worth investigating as it has some evidence that the policy worked well in Canada and New Zealand for a few decades between the 40s and 70s.
Surely if evidence can be shown that it is a good policy that would add credence to Jeremy’s argument especially when the neoliberal Yvette Cooper and Chris Leslie are spouting the hyperinflation myth?
Simon Wren Lewis’s idea of sending cheques to households may not be the best way to use the money, even if the creation is the same mechanism as PQE. It may encourage people to spend on imports which will not create British jobs and would worsen the trade deficit. The money should create investment that would continue to create jobs.
The NEF link is here. http://www.neweconomics.org/publications/entry/strategic-quantitative-easing
The NEF version is, unfortunately, linked to the Positive Money view, which I cannot share
Well said. NEF are barking up the wrong tree.
I noticed on the NEF “fellows” page that Anne Pettifor is one of their fellows. She disagrees with Positive Money. The policy itself is what I believe, identical to PQE, which is my reason for recommending here. I am more in line with MMT than Positive Money, myself.
The article in the NEF page states:
“Central bank support for national infrastructure investment has worked before. The Industrial Development Bank of Canada, which supported Canadian SMEs from 1946-1972, was capitalised entirely by the Central Bank with not a single penny of taxpayers’ money required. In New Zealand in 1936, the central bank extended credit for the building of new homes, helping the country out of the Great Depression. Moreover, the majority of the UK’s major international competitors, including emerging market economies, have public investment banks or equivalent funds supporting infrastructure or SME financing.”
I just thought that if this was evidence of the policy having worked in the past, it should be used?
Knowing all parties I think it safe to say Ann and NEF are not at one on this
Funny.
Where will we buy the new televisions/computers/washing-machines/dryers/tablets/mobile-phones if we do not import them?
We don’t make them because costs are too high for that.
Helicopter money would be ok, largely because the banks wouldn’t get it [directly]
Helicopter cheques is a bankers version of helicopter money!
This country has, in the main, a poorly trained workforce. Training in industry is blighted by the knowledge that, after training is completed, the trained person may well depart for better pay.
Plus, we have a small base of large employers, with the larger majority of businesses being small or medium. Training costs are not inconsiderable, and it is in the interest of the employer to do a basic sort of training to deter employees from departing. That isn’t going to change rapidly, if at all. Even if it did, we would be (and are) playing catch-up with other countries.
The large conglomeration of financial crooks is an impediment to this country as far as industry is concerned.
In my opinion!
We can’t just dismiss concerns such as that raised by Sanjay on a shortage of building workers. There are serious bottlenecks in the UK’s productive capacity, resulting from decades of underinvestment in skills as much as physical infrastructure, worsened by privatisation (utilities now take on far fewer apprentices than when nationalised) and austerity. Land is another concern. Attracting more skilled workers to the UK could help in the short run but is no panacea – the UK construction is struggling to fill some roles today, even though there is free movement within a EU that has skill surpluses.
Unlike Sanjay, I do not see this as a blocker to public investment (PQE funded or otherwise) but we need to recognise that investment in inputs such as skills will be one of the first calls on resources. Similarly we will need to tackle legal, planning and cost obstacles to land availability. All this will demand time, effort and commitment.
I am strongly supportive of Jeremy Corbyn’s challenge to austerity policies and want to ensure we deliver real benefits. If I feel some frustration around the PQE discussion, it’s that we’re spending so much time debating the merits of money creation. That’s the easy part.
I accept all those issues are real
I do not think they need stop insulation, double glazing, solar panels, broadband, technology investment and much more
They are real issues
But this is not just a building exercise by a long way
Nor does it prevent building new trains
Built by foreign companies.
Same problem….minimal training.
http://www.theguardian.com/commentisfree/2011/jul/11/decline-britains-train-manufacturing-industry
A story of general decline.
Not helped by an education system that is 20-years behind the times, at least.
As for double glazing, do not get me started on that. Just had the windows replaced….the company doing so was under the mistaken impression they were going to do the job from the inside….they don’t price for things like scaffold etc.
I agree there are many areas that are not bottleneck constrained and which we shall be able to deliver on almost immediately, although money is certainly not the only constraint on technology. Skills investment will be a priority: Jeremy’s proposal for a National Education Service has not received the attention it deserves. Some items on your list might also hit another constraint, in that the decline of UK manufacturing leaves us very dependent on imports, for which we shall need dollars or euros and the BoE’s money creation powers do not extend to those.
My comments address the ‘you haven’t thought it through’ objection that I’ve read so many times in the past few weeks. We don’t yet have a comprehensive economic policy but as two months ago nobody thought we would now need to give serious thought to how we might actually govern ‘the economy in 2020’ that’s hardly surprising. We’ve made remarkable progress in the past month and I’m impressed by the maturity of the discussion. Now we need to work through more of the detail.
We are not short of euros and dollars
The world does and will want sterling
And I am sure there will be more to come, whoever does economucs for Jeremy Corbyn