Tag Archives: economy

Is austerity working? And do all debts have to be paid?

 

These questions invite binary “Yes” or “No” responses. More considered approaches exist. We need to consider the economic consequences of debt repayment, structural and attitudinal causes and contributions, responsibility for debts both particular and general, beneficiaries and losers, and, how they may be prevented in the future. Also, can such enormous debts be paid?

This requires analysis and accurate, accessible language. In Economics and Finance, that which has different labels is sometimes not significantly different and that which is under one label has significant differences. For example, money consists mainly of credit creation since loans create deposits and loans are debts.

Debt is a form of relationship: financial activity connects and affects people.

Posted in Op-eds | Also tagged | 35 Comments

What is monetarism and what happened to it?

In the late 70s and early 80s economic monetarism was espoused by Margaret Thatcher and Sir Keith Joseph  who wanted a radical alternative to the prevailing Keynesianism of previous governments. The theory seemed to be simple enough. The idea was that the money supply was a key parameter of our economy. Therefore, if we wanted to control inflation, and it did need to be controlled at the time, all Government needed to do was control the supply of money. Inflation would then fall and all would be well. Very quickly the Government and Treasury economists learned that they could not actually do that. It was difficult enough to define what money actually was let alone control the amount of it. Is it base money M0, which is just the amount of notes and coins in circulation? Or is it M1 which includes travellers’ cheques and demand deposits? Or, maybe M2 which includes savings deposits? Or M3 or M4?  For anyone who cares to look it up they can find out what MZM means. There are lots of ways we can create money and lots of ways to try to define it. If I write out an IOU that is a form of money. As Minsky famously said, anyone can create money. It is getting it accepted which may be the problem.

But if we think about it, we can see that the money supply, no matter how we define it, does not tell us anything much at all. If the Bank of England were to, say,  create £10 trillion of banknotes and keep them securely in their vaults they would have absolutely no effect at on the economy. But if they were stolen and scattered around the country by dropping them from a proverbial helicopter then they certainly would have an effect. They would be spent. So it is not so much the amount of money that exists that matters. It is the amount of money that is spent.

Posted in Op-eds | Also tagged and | 36 Comments

Workers’ Councils – one way to take back control of our economy

When Theresa May suggested that businesses ought to set up workers’ councils, she was said by many commentators to be moving to the centre ground, perhaps to hoover up centrist voters put off by Labour’s leftwards drift. Whatever the political motivations, it is an extremely interesting idea. Is it one that liberals should support? Absolutely, because it can help people take back control — in a meaningful way.

A lesson from the EU referendum was that many people are dissatisfied with the economic system. The slogan “Take Back Control” was vague to the point of meaninglessness, but psychologically potent for people …

Posted in News | Also tagged and | 17 Comments

Tim and Vince write for the Times on the need for ministers to provide leadership on Brexit strategy

Tim Farron and Vince Cable have written for the Times’ Red Box website setting out what they think should happen in negotiations with the EU and in economic strategy as we face a self-induced Brexit recession.

As Nick Clegg said before the referendum, so called Project Fear was understating the impact Brexit would have. We are also suffering a void of leadership and some very unrealistic thinking from the Brexit camp who, as we discovered, didn’t really have a plan.

We can’t hang about, they say:

Business and investors won’t wait around forever to see leadership.  Many first tier organisations will simply pack their bags and go unless they see a path ahead.  Meanwhile our smaller businesses, and particularly those in high risk/ high innovation sectors will feel the squeeze as bank lending dries up as it did in 2008.

Two things need to be done. You get the feeling this was filed before yesterday’s extraordinary events:

The first can only be done by leaders of Leave – those who wish to lead us into the new unknown – and in particular, Boris Johnson and Michael Gove.  They must now show his vision for the UK and provide a clear plan for Britain’s relationship with the EU.  To reassure the market they, and other potential prime ministers, need to make clear that membership of the single market is the priority ask for any negotiations.  Businesses need to know that, whatever else, their key relationships will not have to fundamentally change.

It will require real leadership, rather than populist platitudes.  It may mean securing a deal which pleases no one and does not address many of the concerns raised by leave voters about immigration and freedom of movement.  Leading is about making choices, it’s now time for Boris and Gove to tell us theirs.

The second urgent priority must be the responsibility of the current government.  There is now every likelihood of a Brexit recession.  If the government acts now, by abandoning its already unnecessary financial straitjacket and allowing capital investment and stimulus support to flow into precarious parts of our economy, we might avoid the worst impacts on jobs and livelihoods. The economy could be stimulated through the Network Rail Capital Project and local authorities being allowed to borrow to build houses. The £250bn the governor of the Bank of England has put aside could be put into the Funding for Lending and the Regional Growth Fund.

Of primary concern must be our most innovative industries.  Those businesses on the cutting edge are likely to see funding from traditional financial institutions dry up as banks revert to their core business model.  Giving serious financial help and stability to these industries is vital to ensure their long term future in the UK.

The British Business Bank, set up by the Lib Dems in Government, is a crucial part of the support for business that’s needed:

Posted in LibLink | Also tagged , , , , and | 14 Comments

Rennie: We need to keep access to EU markets easy for business

Willie Rennie argues today that we need to make sure that we keep access to EU markets easy for business. We don’t want to be putting borders up, creating more red tape, which could cause problems and cut jobs. He says:

At the heart of the argument for remaining in Europe is a single market, making trade easier, and allowing businesses based on innovation and excellence to thrive is going to underpin our future success.

That was the argument that won the independence referendum and is just as powerful now.

Three million jobs in Britain depend on Europe. We need to make Europe easy for business.

As part of Europe we are part of an economic market worth trillions. There are 500 million customers.

It means that a Scottish company that is good and efficient at its job can expand across the continent.

Easy access to 500 million customers is worth millions of jobs in Britain.

Posted in News | Also tagged , and | 2 Comments

Can the Liberal Democrats provide a vision for Britain that the disaffected can support?

A few weeks ago Liberal Democrat Voice published an article by Lord William Wallace entitled Could Trumpland reach Britain in which William Wallace argued that we need to firstly “pay more attention to ‘the bottom third’ of society.” He identified that “what used to be called ‘the white working-class’ has deserted the Democrats in the USA” and spoke of the rise of Marine le Pen in France and UKIP in Britain.

Lots of liberals talk of the rise of inequality over the last 30 or so years. However few if any talk of the major causes of this – firstly the rejection of managing the economy to provide full employment where everyone will have a job. Some people talk of their experience in the 1960’s and 70’s by saying you could hand in your notice on a Friday and within a week you would have a new job and some would say by Monday or Tuesday they would have started their new job.

Secondly the increase in the mobility of labour. In Britain we have seen this most clearly from the 2004 EU enlargement, but in worked in favour of British building workers in the 1980’s who went to West Germany as in “Auf Wiedersehen, Pet

Posted in News | Also tagged | 25 Comments

Cakeonomics and Free Trade

 

Crumbs!

Not heard of Cakeonomics?

Cakeonomics is a simplified, quick and sometimes fun approach to economics and its connections with everyday life. It uses the metaphor of cake in an effort to make Economics more accessible and attractive, so that more of us can ask better questions about it and be sharper at assessing any answers. We need stronger, more confident knowledge to better analyse and help address the problems of our times, which are also likely to be the problems of our children and theirs.

Your piece of cake depends on various factors. Two crucial factors are the size of your slice and the size of the cake from which your slice comes.

Here’s some data and information about the global economic cake:

The richest 1 per cent increased its income by 60 per cent in the last 20 years (1992-2012) with the financial crisis accelerating rather than slowing the process.

Posted in Op-eds | Also tagged and | 10 Comments
Advert



Recent Comments

  • User AvatarDJ 24th Sep - 9:45pm
    I worry about Lib Dem intentions if they are reaching out to those who have involved themselves in such a challenge and have previously been...
  • User AvatarCaracatus 24th Sep - 9:04pm
    "and since the 2015 General Election followed an economic policy we disagree with " For many of us that should read since 2010. Add in...
  • User AvatarGlenn 24th Sep - 8:12pm
    The choice was Remain or Leave and Remain certainly fought on the principle that the choice was a stark uncompromising one. Osborne even went so...
  • User Avatarbob sayer 24th Sep - 8:11pm
    I dont know why people like Dave Orbison continue to get up tight when anyone criticizes Corbyn and his crowd.Dave has got what he wanted...we...
  • User Avatargavin grant 24th Sep - 8:04pm
    I canvassed for Liz for 3 hours in the sunshine in Woodstock today with North Wilts candidate Dr Brian Mathew. Lots of support and many...
  • User AvatarSteve Way 24th Sep - 8:02pm
    @Dave Orbison People had more choice last time so any comparisons on share should be tempered as comparing apples and pears.