I have been sitting in an economics seminar. Such things are part of my life. Don't feel sorry for me: I enjoy such them.
The question arose as to what the Left's narrative on growth might be. It's clear what the Right's is: their model of growth is an increase in profits and asset values, which can by definition be seen as policies biased towards a few by fuelling inequality.
But, what does the Left think growth might be when the subject is itself debatable from a green perspective? I want to suggest there are very real goals for growth for the Left.
The first is growth in real wages for those on lower and middle income. It should seem obvious, and yet it has not really happened for decades.
Second, there is growth in employment: all those who want work should be able to access it.
Third, there is a growth in employment security. That means there should be more people on long term contracts, subject to employment protection and the right to collective bargaining to represent their interests.
Fourth, there should be growth in the number of people living in secure accommodation. That is those who are owner occupiers with at least 20% equity in their property to ensure they are not too vulnerable to properly price changes and those enjoying long term secure tenancies on affordable rents.
Fifth, there is growth in energy efficiency linked to lower energy use: this, surely, is beyond dispute?
Sixth, there is growth in the supply of those fundamental services that make a decent life possible for anyone, whether that be education, health, care, social and other services or the availability of transport, IT and utilities at prices that can be afforded, and the supply of a social safety net for those in need of it whatever their age and for whatever reason.
And yes, seventh, sure as heck we want an increase in access to all those things in life that make it fun as well, but that will require growth in equality, so make that eighth on the list.
Finally, there is another growth we need, and that is growth in opportunity. We have an economy that does not let most of us achieve our potential right now because access to education is unequal; university is an option bound up with debt for some but not all, with inverse relationship to the need for social mobility; capital to create a small business or buy a home is not available to many whilst health and care is a lottery seemingly stacked against most and so opportunity is denied far too often.
In that case we do need growth, but not in the form that thinks we must extract the world's scarce resources whilst minimising the return to labour whilst maximising the return on capital for the benefit of a few but instead that thinks we want a growth in income, opportunity, security and well-being for all.
If that is not what economics is really about what is it for?
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Yes, I agree with all that, but that effectively means you have to stop talking about GDP growth and hence (because they’ve come to the same thing, at least in economist-speak) “economic growth”.
The point is that in a finite world the economy (which is material with its resources, flows and “sinks”) cannot continue to increase in size.
So there is a need for both caution and precision in the way we describe the goals of macro-economic policy – no longer can it be justified in terms of “economic growth” – look under the bonnet, as you have in this post.
Indeed
I think that the Left is hobbled by the housing asset bubble-without shrinking this monster inequality and wealth transference will be ‘baked’ into the system. The housing bubble has about a 35 year history now.
people of my age will remember inflation of 22% yet housing being readily affordable, now with 0.7% inflation it isn’t-something is wrong with our metrics.
Excellent summary and I have long thought the Conservatives have to answer the question what is economics for? Because if they think it is just to increase corporate profits and asset values then I cannot see that response being too popular at election time. So it is a question that needs asking frequently I’d say!
So you want people to have more stuff without using more resources to make that stuff.
No: you will note that much of what I talked about is people having more services, and they use little stuff and much of it is local
A service economy then.
If services are what we want and need what is wrong with that?
Could it be that it is just so much harder to extract rents from services?
This is what I think. Have you considered how the taxation system could encourage this? I’m thinking of a consumption tax to replace VAT (oh dear, VAT is an EU imposition). Services should not be subject to the tax, but every non renewable they consume should.
I have suggested a progressive consumption tax
Variable rates could be charged on businesses depending on carbon use
I’m sorry, Richard, I have ‘Joy of Tax’ but not at home. Is the consumption (of non renewable resources) tax in addition to the carbon tax? I guess you mean the Fee & Dividend type of carbon tax, not Cap & Trade.
I have not proposed an additional carbon tax
They are regressive
What if people want more consumption goods? Bigger houses requiring more energy, long haul holidays? US levels of consumption globally? What then? I suggest you want to make people richer according to your measure but poorer according to their own.
The evidence is that they don’t
Why not deal with reality?
Have recently watched the documentary based on the work of Dan Ariely (Behavioural Economics) called ‘Real Value’-I’d recommend watching this as it gets the function of money in perspective and focuses on resources and relationships.
See it here: https://www.youtube.com/watch?v=ez3CWXQrgVo
Unfortunately, whilst talking about consumer choice they fail to point out that most people’s wage is now so low after years of stagnation that they can’t afford the non-polluting, social benefit options when consuming-so they fall down there, describing it as a real ‘choice,’
You’ve cracked it Richard.
If I wanted to write a Christmas pressie list to Santa for the people of this country (and many others), I couldn’t write a better one than this. Honest.
Looking forward to seeing this magical marginal utility theory delivering the means to have fun. Like, for example, wage rates and house prices that enable the majority to be able to buy fun products like e-bikes.
Its difficult to have fun when one is struggling to find employment that enables one to live beyond bare survival, or where one cannot even afford a roof over their heads.
Still, I suppose its worth the price to see the happy smiling faces of all the hip people who can afford their little toys.
Today I feel qualified to comment on point 7 – a growth in fun. The left-wing view as you say is that reducing inequality increases fun. The right-wing view is that a free market economy and competition for customers’ money increases fun.
Take the growth of e-bikes for example where in the last four years the price has come down from two month’s salary at NMW to around one month’s salary. Realistically it’s rare to want more than one of these green marvels ( marginal utility being what it is ), so producers have to tailor their product and pricing to those who still have no e-bike.
You can take your choice as to which approach is best, but I’d rather take my chances on the second one, thanks.
If you honestly think like that you need to get a life
Baxter basics-your comments always have a ‘piss-taking’ ring about them, which seems to define your function on this site. If everything is a joke for you why don’t you clear off and watch 24-hour Clarkson which should satisfy you for the rest of your life?
All of the things you list require economic growth to achieve. And that means an increase in profits and asset values, whether you like it or not.
Wrong
Absolutely not true
Go and learn what growth is I suggest, and what makes it up, even in current macro economics
I’d certainly tick all of those boxes
The big gap for me, and its on the Right as well the Left (though I find that simplistic frame for politics and policy unhelpful and outdated), is how that growth in jobs, with decent wages and secure employment will be achieved. In a way that provides the ‘surpluses’, which through proper taxation will enable the provision of those fundamental services to a decent standard, for all.
Energy, infrastructure and housing is part of the story (along with PQE) but we need a serious attempt to develop what used to be called industrial policy. Which in turn is highly dependent on a radically different financial system. As you point out elsewhere Richard, we also need this to tackle the balance of payments deficit.
Will Hutton has had a good try – and others? I’m still waiting to see a comprehensive story from any of the political parties