I've just written about how Labour has to free itself from fear if it is to deliver for the people of the UK. That fear is of the powerful elites of the City, of the media and of the right-wing economic ideologues who say 'there is no alternative'.
I note Martin Wolf says the same thing, albeit in a somewhat different way in the FT today. The email headline for this article was:
Spot on.
John Kay, also writing in the FT today, has another lesson for Labour:
His point is that the conventions of much of economics can be ignored because they are merely conventions and judgement has to be used as to when they apply, or not. The mess we're in is the result of failing to use that judgement. The logic of micro-economics has been used when it has been wholly inappropriate to do so.
Labour has to offer credible economic policies. That means it must apply judgment and not seek to pander to conventional economic thinking.
My concern is that it may not use that judgement.
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Freedom from fear allows the exercise of sound economic judgement, perhaps?
I’m expecting diddley squat from Labour -there isn’t even a homeopathic hint of courage! The march of the neo-libs is onward.
I saw that Osborne is going to lecture Europe on economics.He is going to say that Europe spends 50% of the world’s welfare spending and it has to come down. I wonder if he thinks we have to have Chinese or Indian standards of social care. Instead of a bedroom tax perhaps a pavement tax on those living on the pavement as is, sadly often the case, in Indian cities.
Of course, he doesn’t say what percentage of the world’s profit goes to the 1% or that he is using absolute figures Ten dollars goes further in countries outside Europe and the US.
Economics is supposed to be a description of how the real world works. The existing model is deficient and there are alternatives. The Queen asked the LSE why the economic experts didn’t predict the credit crunch. They were unable to reply without a period of reflection. Ann Pettifor whose book you recommended, Richard, was one of those who did.
But today’s great BluLooLabour news is that Miliband is thinking of applying limiting the size of the nation’s banks to stop any one bank holding more than a quarter to a fifth of the domestic banking market. Which will surely ensure that the domestic banking market can only be carved up between a maximum of 4 or 5 Big Banks. Oh, hang on…
It means people on lower incomes will be left without a bank. THe banks aren’t going to keep the lowest earners if they need to reduce in size. I also am worried that this will reduce the number of basic bank accounts.
What are your thoughts on Carney’s warnings that such a ‘limit’ would lead to increased risk of wholesale funding as happened in the US before the 2008 crash? I’m at a point now where I think that ‘reform’ and ‘control’ of the market is impossible. Thousands of years of human history have shown that the concept of money and ‘the market’ is, ultimately, uncontrollable and will always be open to abuse from an elite who control it. It’s like to trying to regulate smallpox; you can’t. The only way to free ourselves from its effects is to eradicate it.
It’s a curious defence on his part – don’t regulate, because you can’t
I don’t agree: we can. We have to. Partly because I cannot see a world without banks
The banks don’t need the money of the poor anymore -banks need to help communities into prosperity and keep money circulating in a healthy way. If millions of poor people took their money out I doubt it would make a blind bit of difference to these dodgy hedge funds that only know about debt restructuring and asset stripping and the murderous manipulation of commodities to the detriment of about everyone except oligarchs.
With Labour about to preserve the Middle Class and demanding more free competition in banking, my head is in spin. Whatever next? Tax breaks for high earners? Oh, but they have already done that.
Richard,
Even if you forget about morality, your economics still make more sense than Osborne’s (or Milliband/Balls).
As an ex-biologist, I would love to label my tax payments with green fluorescent protein and see where they ended up. If the government directs the money to helping the poorest in society, the money is instantly spent. It immediately creates employment and tax revenues. Those employed spend again and create more employment and more tax revenue.
When the government borrows money and spends it wisely it gains in tax revenue and needs to borrow less. There would be a faint green glow as money flowed through the system.
When largesse is directed to the richest members of society, the money will end up in brightly glowing trusts in tax havens, and asset bubbles. Money will stop moving and will never come back as tax.
Even if you believe it is the natural order of things that the poor should starve, it still is bad economics. The great lie is that government starves the economy by competing against the private sector for scarce resources. In reality, money the government receives goes straight back into the economy. It may not always spend wisely (large aircraft carriers with no planes?), but it is a conduit not a sink. It is the super rich and the financial sector that pull money out of the economy.
If only we could persuade Labour to apply a Green Fluorescent Protein test to their policies.
You have perceived a truth widely unrecognised: that government spending is not equivalent to waste, and yet that is what is usually argued as if a piund of tax paid is a pound lost to the economy altogether
The point they always appear to miss is the vast majority of government spending ends up one way or another in the private sector!