I have already noted that Prof Bill Mitchell of Newcastle University, Australia, my good friend Ann Pettifor and I are having a discussion of Modern Monetary Theory next Thursday evening. I am now pleased to note that the venue has been moved because the 500 seat venue first booked sold out in two hours: the new venue is now fast selling out as well, but there are still tickets available (and when I say ‘sold' they're actually free — but you have to get one).
In the context of this talk it was interesting to read what Bill Mitchell had to say about People's Quantitative Easing on his influential Billy Blog. He reviewed the idea yesterday and concluded:
Conclusion: PQE is an excellent strategy for the British government to introduce. It exploits the currency-issuing capacity of the government directly and uses it to increase the potential of the economy to improve well-being.
I am grateful for that: this is someone who is clearly seeking to understand what I am trying to achieve and has taken the time to review it in depth. The blog is well worth reading.
That's not to say that Bill thinks I have got everything right. He takes issue with the name, because he (correctly) sees PQE as fiscal policy when QE is clearly monetary policy, and therefore thinks the term is confusing. I accept that point. But I also have no regrets, for three reasons.
First, I think it important to break down this divide between fiscal and monetary policy that has fuelled far too much inappropriate economic policy debate and consequent policy over the years. I genuinely do not think in the current economic climate, or the one that I think will persist for some time to come, that the distinction is useful. PQE is a fiscal policy that looks like a monetary policy and crosses some of the artificial boundaries between the two that have to be challenged — included the absurd pretence that central banks are independent or the more dangerous claim that they should actually have that status.
Second, precisely because this name challenges perceptions it has caused controversy and invited debate that has been long overdue on how and what the government should be doing about investment in the economy, and why business is so dismally failing to play its part in meeting so many of the needs that exist in the UK right now. That has to be a success.
Third, this is about reframing the so-called deficit narrative. I am aware that some, like Frances Coppola, have suggested that I have accepted the deficit narrative by, in her opinion, working round the issue by creating a mechanism that does not add to government borrowing but which can fund government investment at a price vastly lower than PFI, which may be its nearest alternative. I do not accept that for one minute. What I am saying is that we have to ask why we have deficit funding, explain it, and identify when and why it is of use to us. The PQE debate, linked as it is to a positive agenda of investment that can be clearly identified and for which the government would have to be accountable, is a part of that. It's my belief that it can help change this whole narrative. And that justifies the ‘crossover' name given to it.
Bill and I may not agree on everything. And that is fine. I am really looking forward to the debate.
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I’m not available for the debate, being out of the country on a holiday planned late last year, for which I’m now moderately disappointed! Do you know if there are any plans to have the debate recorded and available for post-viewing?
I gather that is the plan
So Peoples Quantities Easing is just off balance sheeting borrowing, a bit of massaging the figures, so a Politician can claim they have cut the deficit when they have just shifted the debt under the carpet. Sorry never going to work.
Glaringly obviously it is rather more than that
But feel fee to be trite if you wish
If we optimistically fast forward to the point where we have a government willing to use the PQE approach to investment funding, there will remain the matter of what to invest in and how it should be done. Pet populist projects delivered by the same people, working in the same way as in the past, will miss an opportunity for real change. The big failure of the post war period of a larger state was to not redistribute economic power effectively, making it relatively easy for the right to exploit people’s continued sense of powerlessness and transfer economic power back to private capital. PQE needs to be used to build mutualism as a major component of the economy and the politics of the next few years needs to foster the inclusiveness this would require.
If you really think housing, schools, transport, hospitals and sustainable energy are pet projects then I am sorry for you
And democracy will constrain any such tendency, of course
Thanks for your reply, Richard, and I agree the phrase “pet projects” was not appropriate. To illustrate my meaning: Our local university built student halls using PFI in partnership with a housing association from another part of the country. The resulting buildings are adequate for purpose now, but are ugly, not very energy efficient and were generally built around a narrow specification. The rents paid do nothing to enhance the wealth of the university, the students or the local community. While changing the source of finance would deal with some of these negatives, to get additional value, particularly in the development of social capital would require a different development process and ownership model. I could make similar observations about school and hospital developments. We have been developing infrastructure on a very target based model, but if we are to do anything genuinely transformative, there is a need for workable, democratic and inclusive processes.These are not easy and simply using state ownership as a substitute is not good enough as was found in the days of the corporate state.
Understood now
Good points