Are we content with recovery requiring households to get deeper into debt?
As he puts it, the:
2015 election should not just be about living standards but how to create a lasting, high-productivity, knowledge-based economy
Now I should at this point make clear, as Larry does, that he is writing about the new Green New Deal report, and the he and I are both members of the Green New Deal team that wrote it. But that doesn't, for a moment, change the relevance of what he has to say and that can be summarised in the paradox he notes:
There will be those who say that [current growth] is all an illusion – they are both wrong and right. Wrong, because it is clear from the data that the pickup is for real. Right, because growth is only meaningful if real living standards are rising, which requires wages and salaries to be going up more rapidly than prices.
It's a point that's critical: growth is by itself a meaningless measure if it ha no relevance to most people, as seems likely. Karel Williams makes the same point in the Guardian today, as if to reinforce the message. This is why, according to Larry:
Ed Miliband intends to make the question Ronald Reagan asked Americans in 1980 (Are you better off than you were four years ago?) a pivotal part of his campaign.
That is an excellent question - to which most will unambiguously answer "no".
And that's why the Green New Deal is relevant because once the Reagan question has been asked the follow up is "what can be done about it?". And this is where the Green New Deal comes in because we have offered one of the few coherent alternative narratives to austerity. As Larry says:
The GND project began when a few of us – including the economist Ann Pettifor, the tax expert Richard Murphy and Caroline Lucas, now a Green MP – got together. The sense was that the financial crisis had been long in the making and would be the most profound shock to the global economy since the great depression of the 1930s. In some ways, the situation was even worse because the banking meltdown was the first manifestation of an economy-energy-environment triple crunch that was going to confront policymakers in the coming years. The free-market right had spent years preparing for the collapse of the Keynesian social democratic model in the mid-1970s and was ready with a slate of new policy ideas: cutting taxes, taming the trade unions, controlling the money supply and so on. The left in 2007 was bereft of big ideas.
The GND was an attempt to fill the vacuum. Its basic premise was simple: rein in the financial sector, invest in those part of the economy such as making homes more energy efficient that would provide jobs for construction workers and reduce CO2 emissions.
There was a brief flurry of interest, both domestically and internationally when the global economy cratered in the winter of 2008-09. Gordon Brown called for a global green new deal, as did the United Nations Environment Programme. But the interventionist mood soon passed, to be replaced by deficit reduction and austerity.
But the need for that alternative narrative has not gone away, as events have proved. And as events have also provided - austerity has not worked - despite Osborne's claims. All we have for it is a new housing bubble in London, 2.5 million people unemployed, many more underemployed and millions on zero hour contracts whilst those on benefits face destitution. And we're nearer global warming. We intended to, and did, tackle all those issues. Of course, as Larry notes:
The GND had its critics on both left and right. That was only to be expected because there were many interpretations – from the Marxists to the Austrian school – of what had gone wrong and what needed to be done to put it right. Marxists thought any attempt to repair a broken system was forlorn; social democrats were nervous about the cost; the right disliked meddling with the market and said the GND would end up burdening consumers with higher prices.
And he's fair:
In their various ways, these are all valid points. But the GND was never envisaged as a flawless blueprint. It was intended to stimulate debate about how to make the transition towards a low-carbon economy and as an alternative to austerity. To those involved, the question was not whether it embodied policy perfection (it doesn't) but how it stacked up against the alternatives.
Which brings us to what we're saying now:
The updated 2013 version of the GND has six themes: the need for a green infrastructure programme providing jobs with living wages in every constituency in the UK; tackling tax evasion and avoidance; a programme of green quantitative easing (QE) to ensure that money created by the Bank of England benefits the environment; controls to ensure that the banks bailed out by the taxpayer invest in green projects at low rates of interest; encouragement for pension funds and other institutions to invest in the GND; and buying out the private finance initiative (PFI) debt using green QE and diverting some of the huge repayments into investment in tackling climate change.
Is this relevant still? Larry says:
In one sense, the timing could hardly have been worse for the new GND report. The economy is growing again. Memories are short. But ask the following questions. Do you think a recovery that currently requires households to get deeper into debt is for real? If it isn't, how long before the age-old problems of the UK economy reassert themselves? Are we any closer to grappling with the triple crunch than we were five years ago? If the solution is not a GND then what is it?
Answers please. Discussion is open.