In 1929, Lloyd George launched We Can Conquer Unemployment, the policy document that was to form the basis of the Liberals’ election campaign.
This week, George Osborne said “I am committed to securing the “fullest” possible level of employment by helping business to create new jobs and cutting taxes.”
Nick Clegg has said “… many people had accepted real terms pay cuts in recent years to safeguard their jobs and the government must continue to support them as well as creating the climate for new jobs. All I want is the maximum number of people to be employed in the economy and the minimum number to be jobless.”
Just as the productivity gains of the decades prior to the financial crash, were largely captured by the wealthiest in society, so too has the benefit of the asset price inflation generated by monetary policy accrued to the holders of capital at the expense of wage earners and savers.
We need to relearn the principles established by Adam Smith – that the Wealth of Nations lies not in rent-seeking mercantilism and its stock of gold and silver bullion but in the productive capacity and consumption of its people.
It is not the accumulation of financial assets or the illusion of housing wealth that builds the wealth and well-being of a nation, but the extent to which the population is both engaged in productive employment and can enjoy the fruits of its own labour.
As Liberal Democrats, we are not tied to the Tories’ ideology of tax reductions and ‘trickle down’ economics or Labour’s statist approach of a bloated public sector.
The fairest and most efficient way of injecting new money into the economy is to get it to the people who need it most and will spend it. The obvious target are the unemployed, just as it was in Lloyd George’s day.
A combination of apprenticeship programs and a Job Guarantee scheme for the long term unemployed is the optimum approach. In a Job Guarantee scheme, participants would voluntarily apply for a minimum wage guaranteed job. But these jobs must not ‘compete’ with ‘normal’ jobs, or ‘substitution’ will occur. So they are not ‘normal’ jobs. Rather, they are a ‘buffer stock’ of employees doing useful work in the community, charity, & voluntary sectors, pending return to the higher waged work in the ‘normal’ economy.
Participants get a greater income than unemployment benefits. Society gets a lot of useful things done that normally are not because the voluntary sectors are otherwise always short handed. The ‘real’ economy gets the benefit of increased spending that will stimulate the growth of ‘normal’ jobs as employers hire to meet increased demand.
Monetary and fiscal policy based on targeting full employment up to the level consistent with stable inflation is a superior method of managing economic policy than either the flexible inflation targeting currently in vogue, or the constantly moving target of deficit reduction by the end of a particular parliamentary session,
* Joe Bourke is an accountant and university lecturer, Chair of ALTER, and Chair of Hounslow Liberal Democrats.
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27 Comments
@Joe thank you for the reminder of the true economic objective of Liberals.
@Nick Clegg, Joe tells us you have said recently, “… many people had accepted real terms pay cuts in recent years to safeguard their jobs and the government must continue to support them as well as creating the climate for new jobs. All I want is the maximum number of people to be employed in the economy and the minimum number to be jobless.”
If you are serious you must come out strongly in favour of changing the Bank of England’s mandate.
In a recent speech, the Grand Inflation Hawk on the Bank’s Monetary Policy Committee, Martin Weale, reminded his listeners that “The MPC’s goal is … first and foremost achieving the Government’s inflation target, which it aims to do over a two to three year horizon … (and) …Our *subsidiary goal* (is) supporting the economic policy of Her Majesty’s Government, including its objectives for growth and employment.
In the speech he appears to limit the ambitions on unemployment to getting it down to 6.5%, or just 0.6% from where we are .
He admits that inflation is falling and is below the target referred to above.
So, dear Leader, tonight declare in favour of reversing the goals so that the inflation target is subsidiary to getting unemployment down in order that the main goal is ‘the maximum number of people (to) be employed in the economy and the minimum number (to) be jobless.
For Keynes the thing that had to be changed was Britain’s commitment to the Gold Standard. For Liberal Democrats its that misguided and illiberal Mandate – they do just the same thing – they make people unemployed and underemployed.
We know that in the 1930s in the 1980s and now in the Twenty-Tens the Tories use unemployment as their principle economic tool. Don’ t allow it to be the Liberal Democrat’s economic strategy too.
The idea of “voluntary” jobs that don’t compete with the “normal” economy sounds like bunkum. Would the volunteers in those areas then expect to get paid minimum wage? Why not? Suppose the unemployed people you’re targeting weren’t suitable? Citizen’s income would solve the problem much more expeditiously. Then people wouldn’t be forced into unsuitable/dangerous jobs or starve. And they could volunteer to do things in the charity sector if that fitted them best. Driverless vehicles are coming soon – are we ready for the numbers of taxi/psv/hgv drivers who will lose their jobs?
I believe that 1929 policy document grew partly out of what has been called the original “Orange Book” – the report of the Liberal Industrial Inquiry (“Britain’s Industrial Future”, 1928). It’s a fascinating read.
Jenny,
I am an ardent supporter of the former Libdem policy of a basic citizens income equivalent to the current level of JSA. However, a basic income policy does not of itself, gets us to a point where there is useful work available at a minimum wage for anyone seeking it – or provide the level of demand underpinning the economy and national finances that a full employment economic policy delivers.
Social Enterprise UK’s Chief Executive Peter Holbrook offers this example of social enterprises that successfully used prior guarantee schemes to find the long-term unemployed work:
“Hill Holt Wood worked in partnership with West Lindsey District Council on the jobs initiative … launched in 2010 to provide six month work placements to the long term unemployed, supporting them back into employment. Hill Holt Wood favours a whole person approach, tailoring its work to suit the needs and abilities of each individual. It has a strong track record delivering successful outcomes and through the FJF partnership, 45% of those involved went on to secure permanent employment. Impressed by the results, the Council now seeks support programmes for the unemployed that use a whole person approach.”
Something I can agree with. The primary effect of BoE monetary policy has been to boost the nominal value of the assets of the rich. Whoda thunk it. A shift to a policy of employment and production would be welcome news.
However today’s news shows how Dr. Cable was played like a Stradivarius by his “advisers” over the Royal Mail IPO . Goldman told him that the price should be 330p while at the same time sending out analyst reports to clients predicting a price of 610p (“fill yer boots” was one comment I heard) – makes me think it unlikely that such a policy will see the light of day. Vested interest will always protect itself and the rest of us can go hang.
The idea of a difference between “normal” and “buffer” jobs might seem like good socialist policy, but it’s surely very socially divisive – “oh, you did a silly job did you, so how does that qualify you for the serious job now?” If the work in the social, voluntary, or charity sectors is “useful”, then its value should be acknowledged properly.
Richard,
when William Beveridge designed the Welfare State it was based on two key assumptions – the ‘contributory’ principle and a government economic policy based on maintaining full employment which he defined as under 3%. Unemployment insurance was a safety net – principally for workers in industries that were prone to casual layoffs – contruction workers, dockers etc. By 1955 , the unemployment rate was 1% and still at 1.3% in 1965, as it was then measured. By 1985 we had reached 11.3% and the rate was still 8.6% in 1995. We saw unemployment drop to 4.7% by 2005 only to rise again to 8.1% in 2011 and today’s rate of 7.2%
The policy of ‘unemployment is a price worth paying’ to maintain financial asset values referred to as the non-accelerating inflation rate of unemployment (Nairu) is inconsistent with the maintenance of a welfare state for a rapidly ageing population.
Bill Le Breton has referred to a speech by Martin Weale in his comments above. This MPC member reminds us that a long period of unemployment constitutes a serious impediment to returning to work and that the hiring of this element of the potential workforce can be discounted insofar as creating any inflationary pressures/wage competition in the economy might be concerned.
Job guarantees for the long-term unemployed restore the two basic principals of Beveridge’s welfare state – the ‘contributory’ principle and a policy of full employment in place of an increasingly unaffordable welfare system.
What is actually seen in some less affluent parts of the country is local and central government reducing spending on things that are pretty essential, ranging from repairs to potholes in the road to social amenities and hospitals. Rather than pay people to do “non-normal” jobs that will undoubtedly be regarded as relatively valueless by prospective employers in the “normal” economy, wouldn’t it be better to train and pay people to do these real, necessary tasks?
Surely, ‘job guarantees’, on a visceral, intuitive level, just don’t make any sense.? Of course I could give shovels to 10 men to dig a hole, and then another 10 men to fill that hole and pay the 20 men a living wage for doing so. And such pointless employment is of course a Keynesian wet dream, because it creates work, creates GDP, and engenders velocity of money in the economy.
But,… it doesn’t make any real world sense. Paying 20 men to do an activity for no real purpose other than keep them active makes no sense. Why not just pay the 20 men to go down to the Gym, and run on a treadmill? If there is a task that needs doing, then employ people to do that task, and pay then accordingly.
Richard,
I see no reason why local authorities cannot be participants as providers of community work. ‘Essential’ services by definition have to be delivered and staff recruited by the public sector at the going market rate to deliver such services.. However, during temporary periods of severe budget restrictions, access to staff from a job guarantee pool would make sense. As more normal economic conditions of full employment are re-established, local authorities would have to compete with the private sector to retain the permanent staff they require to deliver council services.
I wouldn’t disparage the work of the voluntary and social enterprise sector. Many of these organisations provide a lifeline to disadvantaged communities up and down the country and can furnish not only training and experience in productive jobs as a springboard to permanent employment, but a rewarding and satisfying work environment.
Joe, it is you who seem to be doing the disparaging – creating this division between “normal” and not “normal” jobs. And it just doesn’t seem a good way to go.
Why pay someone to dig and fill a useless hole when there are plenty of potholes that actually do need repairing?
Why create two different classes of job, with the one that is not “normal” is already being done, by a charity for example, while there are “normal” jobs, like repairing potholes, that are not being done but do need doing?
This “solution” looks like a way of hiding a problem, a way of imagining that the problem doesn’t exist any more, rather that a way of actually solving it.
Richard,
With all due respect, my interest is in evidence based policy and germane debate on that evidence. DWP reports appear to indicate that the youth contract that replaced the job guarantee program at the start of this parliament has proved less effective then expected in addressing the issue of long-term youth unemployment. That being the case, it would behove us to rethink the assumptions on which our policy is based in developing a program of government for the next parliament.
With respect to the rationale for focusing job-guarantees in the non-profit sector there is short paper from a labour economist in the USA discussing the subject http://www.levyinstitute.org/pubs/pn_12_02.pdf
Joe Burke said
“I see no reason why local authorities cannot be participants as providers of community work. ‘Essential’ services by definition have to be delivered and staff recruited by the public sector at the going market rate to deliver such services.. However, during temporary periods of severe budget restrictions, access to staff from a job guarantee pool would make sense. As more normal economic conditions of full employment are re-established, local authorities would have to compete with the private sector to retain the permanent staff they require to deliver council services.”
Am I right in understanding that you are recommending that councils should make staff unemployed (due to budget restrictions) and replace them from the pool of workers for a very basic wage.
I thought we were against that sort of thing.
Joe, Ok on your personal interest, but your answer doesn’t address the issues I raised.
Why pay people to do work that is already done by charities if there is other necessary work that they could be doing and which is not being done by anyone? Does your scheme introduce social division? Will employers in what you might call the “normal” economy value the experience gained by people on a job guarantee scheme in the not-“normal” economy – where amongst other things the incentives and work-disciplines are quite different?
References to papers in the literature or internet aren’t always answers, they are often ways to practice the magical art of mis-direction! Particularly where they are written by Americans about the different conditions in the US. But, being a mug, and curious too, I’ll read it anyway, many thanks.
Richard,
Lloyd George’s 1929 proposals advocated a self-funding spending program to undertake major infrastructure works – roads, railways, bridges, telecommunications, electricity generation plants etc to rebuild the country’s competitive position and employ the wasted resources of manpower throughout the country. This was in contrast to the balanced budget proposals of the then conservative government that led to the doubling of unemployment in the following two years.
The level of spending on infrastructure, maintenance projects, social amenities and hospitals are determined as part of the government’s overall budget process. Unlike 1929, the current coalition government has not pursued a balanced budget – the deficit is currently around £100 billion per year. This does not mean that all work required is done, but this is the limit of resources that the treasury has determined can be made available to the respective government departments and local authorities at this point in time.
The job guarantee scheme acts as buffer for the long-term unemployed that find themselves surplus to the current staffing needs of the public and private sectors. Valuable training and employment experience can be delivered by the non-profit sector that is always resource constrained in meeting the demands put on it – particularly so in straightened times.
Long periods of unemployment and lack of basic work experience have been frequently identified as major impediments to tackling youth unemployment and have long lasting effects throughout the lifetime of people that find themselves in this situation at the start of their working lives. Subsidised work in the voluntary and social enterprise sectors addresses both of these issues directly without any adverse impact on the private sector job market or developing excess public sector staffing levels.
While any type of work experience is beneficial, I would regard work in this sector of particular value and offering considerable scope for personal development and acquiring team-working skills.
Joe,
Now I am totally confused. You seem to be saying that government cannot spend any more than it does already. So where is the money coming from to fund your scheme? By contrast, Lloyd George was proposing to increase the government spend. On the other hand, if you are indeed recommending that government should spend extra on this scheme. then why not spend it on “normal” jobs, like repairing potholes or improving hospitals?
The American paper is a bit too messianic for my taste. “Hey, guys, I’ve found the solution to everything, it’s so simple, and no, I’m not on acid”. Real life tends to have realities and complexities and hidden interests that many economists seem to often overlook!
It is noteworthy that Joe Bourke is an accountant, needs must; however, I, as an aged retiree, have been drawn to Jenny Barnes comment:
Why create two different classes of job, with the one that is not “normal” is already being done, by a charity for example, while there are “normal” jobs, like repairing potholes, that are not being done but do need doing?
Furthermore, Richard Dean’s comments are worthy of consideration:
Why pay people to do work that is already done by charities if there is other necessary work that they could be doing and which is not being done by anyone?
Local councils typically deliver services such as road maintenance, social services etc., through private sector contractors. Central funding is allocated to local authorities and councils determine there priorities for spending based on that level of funding.
Job guarantees programs should not compete with either the private sector labour market or public sector staffing. There have been something in the order of 350,000 of staffing reductions in the public sector during this recession. Decisions on whether that has gone too far and are making it impossible to deliver essential services are a matter for determination within the annual budget process. Either way it is the private contractors delivering these services that will make decisions on their hiring needs based on their service agreements with local councils.
Social Liberal – No you are not right in understanding that I am recommending that councils should make staff unemployed (due to budget restrictions) and replace them from the pool of workers for a very basic wage. I believe that with the redundancies of the last four years, we are approaching the limit of what can be achieved in terms of staff cutbacks in the public sector – absent technological displacement of personnel.
It would be appropriate, however, to allow local authorities to participate in submitting special projects for temporary funding – whether they be the establishment of food banks, environmental clean-up projects, flood defences, additional support for the elderly in their homes or other such discretionary projects that would not otherwise be done at all – due to budget restrictions during this recessionary period.
The purpose of job guarantees is twofold – firstly to ensure that long-term unemployed young people can participate in the workforce and secondly to inject wage demand into the economy that acts to the benefit of all.
The article recommends direction of government economic policy towards full employment – Monetary policy along the lines Bill Le Breton has argued for above ” reversing the goals so that the inflation target is subsidiary to getting unemployment down in order that the main goal is ‘the maximum number of people (to) be employed in the economy and the minimum number (to) be jobless.”
Fiscal policy by managing the public finances (and therefore government spending on essential services) with a view to maintaining full employment. This would require a slowdown in the level of public sector staffing cutbacks we have seen in recent years and more focus on generating wage demand to grow tax receipts in the economy.
Structural changes to apprenticeship and job support programs of the kind outlined to address the persistent issue of long-term youth unemployment.
In terms of funding – Labour party proposals for a similar scheme of private sector guarantees indicate that they can be financed by restricting tax relief on pension contribution deductions from incomes over £150,000 to 20% instead of 50% and a bankers bonus tax.
The restriction of tax relief to basic rate for 45% tax payers is in line with the policy advocated by Libdems in our 2010 manifesto. Personally, I would not rely on or advocate a bankers bonus tax, I would look to the mansion tax proposals as an alternative source of funding..
Shirley, the purpose of focusing on the non-profit sector is to employ people in work that is not now being done and will not be done because the voluntary and social enterprise sectors do not have access to adequate resources. What makes these jobs not ‘normal’ is that they would not be done at all in this economy without a job guarantee program being put in place.
If more work needs doing in local councils that is paid for from our council taxes and central government finance of local authorities.
When George Osborne commits to the “fullest” possible level of employment” we should be very careful remembering that, however good it may sound, he is intensely political and will only change his spots about the same time that hell freezes over. So, what’s going on?
When Lamont made his infamous comment that “unemployment was a price worth paying” it was in a context where one of the Conservatives main objectives was to break the power of the unions – in which aim they were almost totally successful, creating what has been described as “a reserve army of unemployed” depressing wages so that ordinary people have been largely excluded from sharing in subsequent economic gains.
But with that battle won and no meaningful pushback from Labour or Lib Dems, unemployment stops looking like a useful way of disciplining the workforce and starts looking like a drag on the economy from the perspective of those that OWN the economy. Hence, by “full employment” he means a higher participation rate. That’s fine for those who want to work but that is not what he is saying. Pensioners, women with young families and others who may NOT want to work will be caught in his net. Back in the 1950s and 1960s when the country was much poorer many chose not to work, many working man (and not just top professionals) could afford to support a wife and children and buy or rent a decent house. In short, they had choices that no longer exist and Osborne is NOT proposing to get back to that position.
His plan is to create extra employment, “… by helping business to create new jobs and cutting taxes.” That sounds traditional Tory to me. Helping businesses could be good or bad but on past form is likely to mean surrender to vested interests while less taxes is supposed to create trickle down despite lack of evidence that it works; it’s just lipstick to make greed look good. What we should argue for is the highest possible real wages (net of essentials like, housing, heat and food) commensurate with sustainable economic development. That would give people choices; they might decide to work more but then again, they might not.
John Dunn raises an important point when he says, “Of course I could give shovels to 10 men to dig a hole, and then another 10 men to fill that hole and pay the 20 men a living wage for doing so. And such pointless employment is of course a Keynesian wet dream, because it creates work, creates GDP, and engenders velocity of money in the economy.”
The way I understand it, the economy is rather like a glider where the pilot aims to trade height for speed at the slowest possible rate. A risk is that an inexperienced pilot flies too slowly causing a stall and then special rules apply – shove the stick forward to get the nose down FAST and pick up flying speed again or fall out of the sky. This is a complete inversion of the normal rules and applies only in an emergency.
That, I think, is what Keynes meant when he talked of digging holes and filling them. If an economy stalls as the US did in the Great Depression causing cascading business and bank failures, then the priority is getting money circulating again and stopping the domino collapse in its tracks. This is a strictly short-term measure that takes precedence over the normal rule that resources should be gainfully employed.
Unfortunately, many on the left/liberal end of the spectrum seem to think that endless stimulus can be a long-term solution as well as an emergency response although as, John Dunn says, this makes no sense and I would put money on Keynes not thinking that either. He was much too bright and understood how economies actually work.
To extend the glider metaphor to almost breaking point the way to fly further for a given starting height is to get a better, higher performance plane. In the economy the way to sort out unemployment is not endless unmerited stimulus spending or financial wheezes like QE that the Treasury so loves which strike me as like trying to catch a bigger fish by getting a new ruler to measure your catch. It can only be done by reshaping the economy to make it work better. That means pushing back against rent-seeking behaviour and, very often, simply doing things better. Apprenticeships come to mind; they may be newly fashionable but the government is still just throwing money at the problem and praying some of it sticks. It needs to be done a lot more strategically but on present evidence don’t hold your breath waiting for that.
In The General Theory of Employment, Interest and Money, Keynes wrote:
“If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory),there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.”
The modern version of this ‘exaggerating for emphasis’ is recent US Federal reserve chairman, Ben Bernanke’s speculation on how a helicopter drop of dollars could stimulate spending in the economy.
I would wholly agree with Keynes that It would, indeed, be more sensible to build houses and the like. However, there are today, as then, political and practical difficulties in the way of this.
We can be sure that inflation is here to stay. Successive governments have been stoking inflation since the end of WW2, http://www.iea.org.uk/blog/inflation-is-still-a-major-problem.
There is no other way of managing the accumulated private and public debt that has accumulated in recent years and we can no longer tolerate permanently high levels of unemployment as a means of managing inflation while trying to maintain a welfare state capable of supporting an ageing population.
Wage subsidies to private sector employers for apprenticeships and the like have the difficulty of not knowing whether these employees would have been hired anyway as economic activity expanded. Similarly, the core services of the public sector need to be efficiently managed within annual and longer-term budgets and not over-manned.
In my view, work programs aimed at equipping the long-term unemployed with work experience and practical skills that will enable them to gain employment in the private or public sectors are best focused on the social enterprise and voluntary sector. Having improved their employment prospects after a period of six months or so of assistance and training in work skills they can be left to pursue a career path of their own choosing in their own way.
The problem of long-term youth unemployment is not a temporary cyclical issue – it is structural, arising from a deficit of the skills and education needed to participate in the modern workplace. We could build a million houses (as we did prior to the financial crisis) and a significant hardcore element of these unemployed youth, would remain unemployable.
In response to a question, JoeBourke write “even great thinkers like Keynes can be wrong ”
https://www.libdemvoice.org/opinion-mind-the-gap-38840.html#comment-286449
The proposed scheme creates two classes of employment, “normal” and not “normal”. There is no reason to suppose that employment in the not-normal voluntary sector gives a great benefit as regards employability in the normal sector. Indeed, I know people who would be happy to work for free for a charity they support, but would be very unhappy at doing identical work for a profit-making business. I expect the proposed scheme will also damage the voluntary sector by turning into a sometimes-voluntary-sometimes-not sector, and possibly by stealing away the cream of the voluntary jobs, which many are happy to do free, leaving only the drudgery that many now avoid.
I am again getting the impression that this is a ploy to sweep a problem under a carpet, rather than a solution. The way forward is not to create a division between two classes of employment, and not to use the voluntary sector as a buffer zone. You might be interested in a recent article in Economic Affairs, which offers some rather cogent reasoning about why inflation has been stoked since WW2.
http://onlinelibrary.wiley.com/doi/10.1111/ecaf.12049/abstract
Richard,
The voluntary and social enterprise sectors are and have been for decades closely engaged as participants in and promoters of government job training schemes. The Hill Holt Wood partnership with West Lindsey District Council (referred to above) on the jobs initiative launched in 2010 to provide six month work placements to the long term unemployed, supporting them back into employment is just one small example of many such voluntary initiatives throughout the country that can be expanded if the political will is there.
None of these organisations would regard their work in supporting young people back into employment as “a ploy to sweep a problem under a carpet.” or “a scheme to create two classes of employment.” Rather, I expect they may endorse the words of William Beveridge in introducing his proposals for the Welfare State:
“Most men who have once gained the habit of work would rather work – in ways to which they are used – than be idle … But getting work … may involve a change of habits, doing something that is unfamiliar or leaving one’s friends
or making a painful effort of some other kind.”
Joe,
It appears from the publicity that the Hill Holt Wood is an architectural partnership in the normal economy, which has a particular commercial focus on community projects. It nominated West Lindsey District Council for an award for the council’s efforts in helping young people find jobs in the normal economy.
http://www.designhhw.com/
http://gilesmcneill.blogspot.com/2011/04/west-lindsey-council-helped-130-young.html
More generally the social enterprise concept involves using government funds to help people get back into the normal economy, either through winning normal jobs, or through developing new normal enterprises that are focussed on community service.
http://www.theguardian.com/social-enterprise-network/2012/apr/27/social-enterprises-local-authories-together
All of which seems quite different from what you seem to have been proposing about a voluntary sector.
Richard,
it is precisely this kind of non-profit ‘third sector’ social enterprise organisations that reinvest their earnings in the community services they provide that the article focuses on as the target for government programs that enable “employees doing useful work in the community, charity, & voluntary sectors, pending return to the higher waged work in the ‘normal’ economy”.
The attached Guardian article gives an example of similar type organisations http://www.theguardian.com/social-enterprise-network/2013/apr/29/social-enterprise-job-creation
Joe – Keynes’ General theory was published in 1936 (coincidentally just about as long after the start of the Great Depression as we are after the start of the Great Recession) so its gestation was informed by that emergency and the need for better answers than previously existed. So I don’t think he meant the passage you quote to apply to normal times although right wingers often use it to rubbish his thinking.
I agree about inflation which is why I have long believed that the government (irrespective of party) talks tough on inflation but is actually trying to stoke it hoping that they can keep it contained if it takes off. Of course this plan won’t work if the banks aren’t reined in but instead to continue creating credit without limit. Meanwhile, Steve Keen has proposed an alternative solution which is to bail out the people, not the banks and this makes a lot of sense especially since it would work fast and not drag on for years.
On apprenticeships etc. I don’t support wage subsidies which is what tends to happen (with variations from scheme to scheme) at present. I see a big part of the problem is the lack of a coherent system, parallel to but very different from, university for those that wish to pursue a les academic route. The need therefore is for a system that addresses and fixes the market failures and vested interests that plague the current approach. That is not impossible and would not necessarily cost much.
GF,
You are quite right about Keynes intending his advice be applied only in the circumstances of an economy stuck in a long slump and going nowhere without a big push.
I have read about Steve Keen’s debt jubilee. A novel idea, apparently used in ancient times and one that may yet have to be considered if, as I fear is all too possible, we experience another serious housing crash.
I understand the point you make about the need for joined-up thinking from school to work. The University technical college initiative looks like a good step along this path http://www.utcolleges.org/about/about.
My reading of the problems make me more supportive of employment incentive programs than you, and I tend to think along the lines of the Economist Edmund Phelps in the attached link: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/12/11/nobel-winner-edmund-phelps-on-his-plan-to-help-low-wage-workers-without-raising-the-minimum-wage/