The Green New Deal Group launched a new report today on the need for Green Infrastructure Quantitative Easing and the collection of money owed by tax cheats as the way forward for Europe, not a form of QE that is already causing economic nightmares and damage in the impact it has already had on Switzerland. I am a member of the Green New Deal group. In a press release the Group said:
Next week will be a momentous one for Europe. On January 22nd the European Central Bank (ECB) is expected to start the e-printing presses rolling with a massive Quantitative Easing (QE) programme to attempt to tackle stagnation and deflation in the Eurozone. Then on January 25th Greece goes to the polls and if, as expected, the left wing Syriza party gets the majority of votes, a fundamental challenge to the disastrous Europe-wide austerity programme will follow.
The Green New Deal group's paper ‘Europe's Choice - How Green QE and Fairer Taxes Can Replace Austerity' asserts that an ECB QE programme to buy government bonds will, like it's £375 billion UK predecessor, do little to increase economic activity, and will merely boost asset prices rather than generate sustainable jobs throughout the continent. Instead the Green New Deal Group proposes that all EU countries introduce a programme of ‘Green Infrastructure QE' to increase the continent's renewable energy supplies, ensure all buildings are energy efficient and revitalise local and regional transport links. Paying a living wage would help to boost the tax take and overcome the present lack of long-term effective demand in the economy. The paper estimates that a continent wide programme would need funding of the order of 500 billion Euros (£400 billion) per year over the next decade.
The Role of Fairer Taxes
Tax expert and Green New Deal member Richard Murphy said “My research has estimated that tax evasion (illegal non-payment or under-payment of taxes) in the European Union is approximately €860 billion a year. Tax avoidance (seeking to minimise a tax bill without deliberate deception), might be of the order of €150 billion a year. Such non payment of taxes might cost the governments of the European Union €1 trillion a year.[i] Collection not cuts is what is required.” He added “In Greece and the UK, where anti austerity parties are on the rise and elections are imminent, these losses might amount to €19 billion for Greece[ii] and for the UK the tax gap may be as large as £120 billion a year.” [iii]
Green New Deal group member Caroline Lucas MP said: “Next week the UK and the rest of Europe stand at a cross road. They can go down the usual QE path that benefits the banks and the asset rich, or they can ensure a greener future funded by a massive ‘Green Infrastructure QE' programme and the effective collection of at present unpaid taxes. In doing this it could also steer Europe away from continuing down the discredited ‘austerity road to ruin'.”
[i] http://www.taxresearch.org.uk/Documents/EUSocialists.pdf
[ii] ibid
[iii] http://www.taxresearch.org.uk/Blog/2014/09/22/new-report-the-tax-gap-is-119-4-billion-and-rising/
The full report can be read here.
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This is real original thinking and a practical answer to the disasters of classical economic theory.
Would this idea be compatible or similar to the ideas of Modern Monetary Theory?
Totally, in my opinion
“Green New Deal group member Caroline Lucas MP said: “Next week the UK and the rest of Europe stand at a cross road. They can go down the usual QE path that benefits the banks and the asset rich, or they can ensure a greener future funded by a massive ‘Green Infrastructure QE’ programme and the effective collection of at present unpaid taxes. In doing this it could also steer Europe away from continuing down the discredited ‘austerity road to ruin’.” ”
The ideas are great and would surely be supported by the Greens in France (EELV).
But can I ask:
– when was the Discussion paper produced (it appears to be undated)?
– when was it submitted to the ECB (assuming it was)?
– what further contacts, if any, have been made with the ECB and with what reaction, if any?
In other words, what chance, if any, of it being adopted by the ECB? Can we have any hope of that in the near future? Or can we only dream?
The paper was produced this month
It has not gone to the ECB
We are making a political appeal
Good luck with the appeal.
But if Caroline is right and the crossroads is really next week, it sounds like the first round of QE will not be Green. Not that that means all will be lost – just a pity about the timing …
We have tried before….
What would be the inflationary effect of this money printing? And in what areas would supply constraints limit the effectiveness of the programme?
Have you noticed we are heading for deflation?
And that one of the main reasons for QE is to restore inflation?
Yes, of course it will have a mildly inflationary effect but when wealth is so concentrated and real unemployment and underemployment so high and wages are so low the risk is very small indeed – and welcome
This paranoia with inflation is all about you protecting your next egg. I am rather more utilitarian than that
Strange how nobody ever seems to worry about the inflationary effect of bank loans or about asset inflation such as house prices.
Funny that!
Weird, isn’t it
Great article, but Twitter reckons it’s over the 140 character limit. I don’t understand why. I really wanted to share the article, but I can’t.
Sorry!
You may need to knock the link to me off the end
I can survive that!
Excellent piece of work Richard, well done to you and your co-authors.
I truly think there is an appetite Europe wide for this sort of positive economics. The problem will be, of course, getting the message out (the Green Party as we have seen being on a virtual media lockout). Is there an organised campaign to which we the public can subscribe?
Martin,
I just discovered the (European) Green New Deal website:
http://greennewdeal.eu/about-us.html
Under “About us”, it says “The Greens/EFA in the European Parliament set up a dedicated working group to develop Green New Deal policies….”
I’m unclear about the relationship between this group and the one of the same name that Richard belongs to – maybe the UK arm of the European one? Hopefully they are all singing from the same hymn sheet!
The EU group is pretty heavily influenced by us
But not the same
And I am not a member of the Green Party, for the record, or any other party, come to that
Can you share your research on the £860 billion? Thanks
http://europeansforfinancialreform.org/en/system/files/3842_en_richard_murphy_eu_tax_gap_en_120229.pdf
The Green Party “virtual lockout” may be easing since David Cameron said he would not engage in a leaders debate for the 2015 election without the Greens. There do seem to be a few more clips of Natalie Bennett in the last few days – Andrew Marr show for example on 18 Jan. Also UK membership of the Greens has now overtaken Lib Dem and UKIP.
From Jeremy Warner in the Telegraph today:
” What’s more, QE is not, strictly speaking, monetary financing. On the contrary, in some respects it is no more than an extension of a central bank’s normal, short-term “repo” operations, in which liquidity is provided to markets in return for collateral.
QE extends this form of cash for collateral swap up the yield curve into sovereign instruments of much longer maturity and outright purchases. It also tends to be on a much grander scale than normal money-market operations, with the result that the central bank’s balance sheet will grow proportionately. “Helicopter money”, whereby the central bank merely credits bank accounts with money that never has to be repaid, is something quite different, and given experience of hyper-inflation, a taboo for all but the most desperate of central banks and governments. ”
http://www.telegraph.co.uk/finance/comment/jeremy-warner/11357718/QE-is-not-the-long-term-cure-required-for-the-ailing-euro.html
Rather conflicts with your view that QE is new money that never has to be repaid, doesn’t it?
So do we believe The Telegraph or the Bank of England on this
BoE says its money creation