I spoke at a meeting of the Green Party in Norwich last night. I make the usual caveat that I am not a member of any party and so what I said could have, as easily, be said to others.
What was interesting was how lively the debate was, but I'm going to concentrate on two questions raised. One was on the council funding crisis: the Greens are big players in Norwich local politics. The other was on what we could do now because of Brexit that we could not do before.
Dealing with the second question first I explored three issues. The first was capital controls. We can post Brexit use these to sanction flows to tax havens if we want to do so unilaterally, and I think we should. It's simple economics to say that if we reduce flows of people but not capital post Brexit the return to capital will rise and that to labour could fall still further. So we need to consider this capital control option in that case, from takeover controls to tax withholding on payments of interest and other returns on capital to tax haven locations. This will rebalance the equation and may be essential.
Second, we could really transform our economic policy post Brexit. We would not need to go through the pretences of QE any more; the government could simply print new money to fund the investment this country desperately needs. £50 billion (at least) a year could be injected into a new infrastructure fund in this way. The risk of inflation is minimal. But we could insulate every building in the UK, add solar panels to all that could take it, build battery banks, invest in tidal energy, crate jobs in every constituency and reduce dependence on imported oil and gas, so defending the pound and raising its value. This is what Brexit could make possible, but no one is saying it.
Likewise post Brexit the government could direct that pension funds should invest one quarter of all contributions they receive in new investments creating jobs in the UK as a condition of getting the near £50 billion of tax relief they enjoy each year. Much of this woukd be housing as a result. This is an ideal pension investment. It provides steady long term returns, is inter-generational in nature and provides a real social gain whikst earning a financial surplus. We could transform housing in this way and the prospects for millions as a result. We cannot do this inside the EU because we cannot direct that funds invest in the UK.
With these moves the UK could have a restored economy and tax justice.
But what of councils? The answer here is that they need to enjoy a share of QE. This year the givernment will enjoy the benefit of maybe £60 billion of QE debt repurchases and yet only borrow £56 billion. Net government debt will fall as a result: the truth is that if debt is the measure then we will have a balanced budget. But we still have massive austerity, which is madness, and much of this deliberately falls on councils. Suppose that some of QE went to councils instead to support their budgets and not central government? If half was split between the devolved governments and English councils there would be no social care funding crisis. It is as blunt as that.
And this could be done. We could all benefit. But it requires a progressive alliance of councils and governments of many perspectives and hues to gang up on Westminster to demand local financial liberation when Westminster already enjoys it because of its power to control the money supply that has injected £435 billion into the banking system in the last eight years, mainly to fuel the stock exchange and house price inflation rather than to create jobs and build the care system we need. Whether councils will join together to do this is a choice by and for them. But if a progressive alliance is to happen this is where it needs to start, and it could. I urge action.
What all this made clear was that if Brxit is going to happen, and I think it is, then we need to plan to make best use of it. This is a plan for that best use. It's not a complete plan. It could be improved. But it's a start. We have to work on it.
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Regarding your point on pension funds and housing development, to deliver this we need to start encouraging large numbers of people to train or retrain in trades that relate to the construction industry. And we need to do that urgently. Currently many of the people who work in construction and related trades come from the EU. Even in a best case scenario many of these peole will leave and/or be resticted from entry post Brexit (regardless of what David Davis says, because if they are allowed to continue working here as now the May’s entire rationale for leavign the single market – controlling immigration – falls apart). So we need a growing pool of home grown talent in construction and related trades.
That said, there’ll be labour shortages in many areas. Given we have such a large prison population I wonder if this might provide us with the necessary reserve army of labour. I seem to recall a number of authoritarian states – which we’re well on the way to becoming – using prisoners in such a way.
I agree re skill shortages – which are absurd
The prison idea is interesting – adding a whole new dimension of social policy
And incidentally – I do n ot think houses need to be built in the traditional way: why not print them? Is that mad now? I doubt it
It isn’t a mad idea, Richard. In fact we include a case study of the printing of building material in one of our technology and innovation management modules. I also had a student who wrote his final Master’s project about this last year. It was in fact an attempt to get his employer – a major construction company – to get ahead of the curve on this. If I remember correctly he saw major advances in the printing of building materials within a decade.
Incidentally, wooden framed, part built, houses that are then assembled on site are now catching on here. Sadly, some people have been quick to label this type of build (which is common in the US and elsewhere) as a ‘prefab’ conjuring up all the negative images this term carries for many of us – though not I suspect for anyone under 35. But I’ve no doubt they will catch on.
I think this is the future
I simply cannot see why conventional brick etc should continue
Very pleased to see this here, the fact is that whilst being in the EU produces benefits there were significant restraints, the time now is to fight for the best post-Brexit world, to draw up a blueprint for a fair and just economy and these ideas are a very good start.
Well done, Richard, for recognising and promoting potentially positive benefits from Brexit. Makes a refreshing change, and will be essential if the UK is to avoid a neo-liberal hell in the years to follow.
Before the left’s infatuation with identity politics above all else, there was an honourable tradition of left-wing euroscepticism, from Tony Benn, Peter Shore, Bryan Gould among others – none of whom could remotely be considered as racist little-Englanders.
Far from simply making the best of it, as you correctly point out, there will be policies that can be introduced for the genuine benefit of the population at large, that would not be possible under current EU treaties and legislation. It is good that these get discussed and promoted.
Re: employing prisoners; although training inmates in post-release skills is indeed a very good policy, there is still a massive pool of unemployment and under-employment to be be soaked up in the UK, before we need to start thinking about chain gangs!
It’s alrady possible to construct apartments – https://www.techinasia.com/china-3d-printed-mansion-and-tower-block.
You don’t read much in the British press about 3-D printing but it will revolutionise everyday lives – from the manufacture of ordinary domestic products to … well, the sky’s the limit (https://hbr.org/2013/03/3-d-printing-will-change-the-world).
It’s a practical technology the government should invest in. Maybe it does but, as I said, you don’t hear much about it in the MSM, do you? It’s yet another area of development, with robotics and AI, that could help liberate people from the drudgery of work. Hence, it’s unlikely a neo-liberal government will take a strong proactive, progressive approach to it.
Which is why we need an alternative
Like hemp, for example http://www.ewao.com/a/scotland-village-houses-being-built-with-hemp/ I believe it can be 3D printed with too. There’s no point trying to build houses the conventional way, we don’t have the people to do it. We’re going to have to do loads of training, so why not train people in these new methods and become world leaders while we’re about it?
Agreed
Maybe losing Copeland and a close call in Stoke will spark some positive action (http://uk.businessinsider.com/conservatives-labour-ukip-stoke-copeland-by-election-betting-odds-2017-2)? The UK political situation really is very worrying, with no viable solution on the horizon. There must be a great deal of closed-door plotting going on. What are your contacts saying?
Richard
Like you I realise that money is not the constraint but rather political will (and knowledge of the way the economy really works.) However the question remains do we have the people with the skills required? Surely part of the solution has to be an employment guarantee programme which ensures that we make the best use of all available resources.
I think a Green New Deal would implicitly include such a guarantee
Richard, just to be clear, does this mean that you are in favour of the MMT-style Job Guarantee?
No
But de facto I think it could be delivered
Related to your blog, Richard, Fintan O’Toole has a superb piece on the likely outcome for the boder between Eire and NI in The Guardian. Also including a possible – though unlikely solution. Importantly, he highlight that this new border may well be between two worldviews, and not simply about trade.
https://www.theguardian.com/commentisfree/2017/feb/23/ireland-border-brexit-trump-eu
Great article
On the face of it, the use of prisoners for work on building sites and community work seems a good idea. But I suppose I have seen too many movies like “I was a Fugitive from a Chain Gang”, “Shawchank Redemption”, or “Cool Hand Luke” to feel an instant revulsion against what is effectively the use of slave labour with all its brutality and exploitation. My understanding is that the quality of workmanship from involuntary labour is poor, and the productivity and output levels are low. On farms in the east Midlands and Fenland,the farmers are adamant that foreign workers such as Poles and Lithuanians are far harder working, more careful in cutting asparagus or sprouts, and plain quicker, than local native English folk who are unwilling to do the hard work harvesting in the fields; prisoners would surely be even less willing to do the hard and careful work. There is a scene in Shawshank Redemption where the Prison Governor has work brigades out mending roads and clearing land, but a local builder has lost the contract to do the work and so bribes the Governor to take his work brigades away. There is a definite risk, surely, in local wages being reduced and lacal contractors losing work if prison labour is used.
The exchange rate between the UK and those other countries means the foreign workers are effectively, once they’ve taken their savings home and converted them, far better rewarded for their labours than domestic workers would be. No wonder they’re “far harder working, more careful in cutting asparagus or sprouts, and plain quicker, than local native English folk who are unwilling to do the hard work harvesting in the fields” then. There’s no comparison between the two levels of reward. All this will end though when the pound’s value goes down and stays down, as it’s bound to the closer we get to Brexit. The foreign workers simply won’t bother coming over, and who could blame them??
This is exactly the sort of ‘outside the box’ thinking that is required if the UK is to thrive after BREXIT. I have actually discussed the vast untapped potential of prison labour with a number of influential people in the past, and in return for a commitment to acting for the good of the country, we could offer not only rehabilitation, but also lesser sentences, so that essentially work could set them free.
“..work could set them free.”
Oh really?
‘Arbeit Macht Frei’?
Now, where have I heard that before…?
Surely with the changes ahead huge amounts of office space will be available for conversion to housing.
Can the Treasury not create Bradbury pounds (for example) direct into the economy at present?
No
Not permitted by EU law to the best of my knowledge
This would benefit all the countries of Europe. If only the progressive parties of Europe could press for this change. It could help to create a Europe of the People.
Am I dreaming? “‘In the last days, God says, I will pour out my Spirit on all people. Your sons and daughters will prophesy, your young men will see visions, your old men will dream dreams.’
I am now officially old -70- so I claim the right to do so. Visions I will leave to youngsters like you, Richard.
Interesting set of ideas.
Just one thought – if Thatcher or Howard had suggested setting prisoners to work, what would the reaction of the left have been?
They do work now
Spot on Richard. Glad you are prepared to look at the positives.
Using prisoners as cheap labour is an excellent idea in theory but if they are low skilled and lazy the benefit would be lessened. Since we currently target certain sections of the population for tax investigation it occurs to me that by simply increasing the penalties for tax dodging we could solve all sorts of problems. If we targeted, say, bricklayers for tax enquiries and introduced custodial sentences for offences which are currently dealt with by fines then we would either benefit by increased compliance or by a ready source of the correct sort of skilled Labour required. Say 6 months for late filing of a tax return or failure to register in time. There would be majority support in the public public, I am sure, as these people are after all breaking the law. Then plumbers and electricians could be targeted as needed.
Keep up the good flow of ideas Richard.
You’re full of ideas – maybe your laser mind would be more effective targeted at the non trivial end of tax evasion.
As for the proposals you present for tackling tax evasion by tradesmen and as a by product upskilling the prison population, your plan is incomplete in that it doesn’t allow for the honest tradespeople undercut by the chain gang. Perhaps you should add a workhouse system alongside the prison system, and over time we should be able to get all our building work done for next to nothing!
When you say that if we leave the EU we will no longer need to go through the pretences of QE anymore and can simply print money to fund investment are you saying that if we somehow do end up staying in the EU and if a government does want to do PQE then they would be prevented by EU law from doing so?
Or are you saying that we could still legally do PQE in the EU but it would be a more convoluted method such as borrowing to spend on investment and then instantly using conventional QE to effectively cancel the borrowing?
PQE is an EU compliant convoluted way of achieving the goal
Outside Lisbon Article 123, the Bank of England could simply directly monetise new government bonds or alternatively grant the government an overdraft facility.
With the overdraft facility, the monetary system could operate exactly as Modern Monetary Theory proponents claim it operates presently.