Writing in the Guardian, Lord (Matthew) Oakeshott is typically forthright in his assessment of the chancellor’s performance and the changes he would like to see:
What we need instead is a far bolder plan for economic recovery. I call it plan C for construction and capital investment rather than plan B but we can all agree at least, on this side of the debate, that Osborne isn’t working. We must be mad to treat our record low long-term interest rates as some sort of virility symbol, instead of an unrepeatable opportunity to finance desperately needed investment.
The pension funds and insurance companies I act for, and know well, are desperate to find alternative secure long-term investments to meet their liabilities when returns are so paltry. Housing is the key, where building 100,000 more houses a year would create half a million more jobs. The infrastructure initiative George Osborne announced for pension funds a year ago has commitments of only £700m – that’s the pace of a lame snail. The Treasury must be much more imaginative in helping facilitate new investment vehicles – which could easily raise £100bn or more of secure long-term funds – and ease the revenue squeeze on councils and housing associations for a massive social house building programme. Scrapping building regulations and planning permission isn’t the answer – it’s all about money.
You can read the full piece here.
* Nick Thornsby is a day editor at Lib Dem Voice.
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8 Comments
Capital investment I can enthusiastically back. The key is discerning investment from spending. The money used must provide a substantial return to avoid it suppressing private enterprise or adding to the debt.
Matthew Oakshott’s brave intentions are built on the assumption that the Bank of England wants commercial banks to lend to firms or pension funds to invest in them. But does it? The answer is ‘no – not to all of them’ if you read the Banks Deputy Governor, Charlie Bean – link to his speech provided here: http://uneconomical.wordpress.com/2012/11/01/charlie-bean-the-beatings-are-necessary-to-improve-morale/ by the excellent Britmouse.
In another Age, Bean would be on his way to the Tower appropriately through Traitor’s Gate. He advocates creative destruction so as to more speedily rebalance the UK economy – that’s giving firms that are struggling to survive by supplying to the domestic economy a revolver and asking them to do the decent thing so that their ‘space’ can be taken by exporters.
Have we no spare capacity? Are we beyond salvaging the knowledge, skills and potential of firms struggling only because of the insufficient aggregate demand that a Central Bank should be providing whilst at the same time also assisting budding exporters to join the national effort? What poverty of spirit, what failure of confidence!
In the same speech the Deputy Governor echoed the Governor in saying that ‘monetary policy *could* bring forward spending from the future’ – i.e. stimulating aggregate demand, but the danger of doing so in the Bank’s opinion is that firms that *should*’ in their Olympian view go under and skilled people they presently employ who ‘should’ lose their jobs won’t.
Now we know from their own lips that The Bank of England can (and should) provide the necessary stimulation to aggregate demand (forget all that nonsense about ‘pushing on a string’). It is deliberately refusing to do so, because it has another game plan. It is promoting its share of austerity to change the structure of the UK economy during the worst recession for 80 years. That is treachery. And the four members of the Quad either know this and are complicit or are too ill-qualified to see it.
“Send them to the Tower, the lot of them!”
Bill,
production capacity and consumption capacity should not remain artificially inflated indefinitely, as bubbles can exist on both sides, nor should politicians base their political decisions on their ability to continuously reinflate their hot air balloon.
Eternal economic stimulus inverts the relationship between the state and the individual into one where the masses feel like we’re working for the benefit of the government rather than the other way round.
I’m not rich, and I’m highly irritated by the implication that I should enslave myself so that massive tax avoiding corporations can bail out the obese officials to continue bribing floating voters to keep things just as they’ve always been. Are we citizens or zombies?
What feels like a struggle to keep the hot air balloon of government above the clouds is mirrored by millions of individuals who’re furiously struggling to keep their family dinghy afloat as the storm drags it away from the shore. I think everyone needs better weather forecasting.
Oranjepan – given our last exchange over the definition of a structural deficit, I think you owe me one. Find some time this weekend, put the protean stuff aside for ten minutes and read this: http://uneconomical.wordpress.com/2012/02/10/apocalypse-then/
Protean! Funny that, I’d suggest your excessive insistence actually indicates your own inability to make up your mind, and that choice of insult all but confirms it.
My argument is clear, and contrary to Hezza’s proposals earlier this week, that the implicit Whitehall dogma of centralised dirigism went past it’s sell-by date as globalisation took hold.
Globalisation liberalised economies across the world, and the rules of economic management have gone through a new transitional phase as a result. The crisis is partly a consequence of governments and bureaucracies being too slow to keep up with the new environment, so many of the attacks on government economic policy should therefore be seen as comment upon the limit of liberalism.
Should skilled workers be subject to the whims of the market and potentially lose their jobs? If government supports the process of liberalisation and thereby massively democratises the market, then yes. Should we be concerned about the likelihood and security of re-employment in more productive, higher-value sectors? By all means.
But I don’t support the endless, meaningless and pointless paper exercises of jobsworthery simply to justify the social traps inherent in wage slavery. I’ve done them and it’s a cruel, depressing and hateful existence. I don’t wish them on anybody, and I challenge you to explain how new interventions by government will remove the stranglehold on individuals preventing society from making more mature decisions for ourselves.
In the previous thread I stated that I’m open to your idea of a new stimulus, with the condition that it is tied to a firm plan laying out exactly how government can reduce it’s unhealthy control. However for me it is the social impact that is the greater part of the bargain, as the universalised economic measures of progress have lost their gloss in the wash of cultural relativism exposed by the same process of globalisation.
And from a party political perspective I’m very favorable towards Oakeshott’s preference for tangible results, though again I’m interested in the specifics. Will it be wasted unnecessarily on a few large-scale vanity projects, or will the benefits be spread proportionately in conjunction with fairer social policy? I’m not wholly convinced by his response.
Protean was a complement – I believe it was you who alludes to it as a zen type way of grasping truth. I never knowingly insult anyone especially not top apes swing through the jungle.
oo-be-do, not quite the king of the swingers though!
But if you say so, it sounds like we may be able to have slightly more of a technical discussion…
I think in rebuilding the economy, we need to understand where we began to go wrong. It’s fair to say that Britain was the birthplace of the industrial revolution, and the centre of engineering excellence at that time. But today, whereas in Germany, an engineer has kudos, here in the UK an engineer is seen as blue collar, greasy, hands dirty, and not something for our children to aspire to.
Of the students who take on the sciences, engineering and maths in the UK, they are often seduced into insurance, financial products, and software design for such ethereal nonsense such as High Frequency Trading.
We do, of course, have a great deal of high quality engineering still going on and recent developments in 3D printing, and such new products as Graphene (developed in Manchester), will be huge earners in the future. But I fear that these new technologies, once they come out of the development labs of our Universities, will go abroad, to places where engineering and ‘making things’, are taken more seriously.
The Coalition government is doing good work here in creating apprenticeships, but I think this training and apprenticeships, need to go into overdrive.
Whereas we made the mistake of migrating our economy from engineering to ‘mouse click profits’, Germany stuck with quality engineering and ‘making things’. It appears to be working for them, and their economic resilience