Tag Archives: economy

The social market – a big Lib Dem idea

What people often struggle with when it comes to Lib Dem economics is not the detail of our specific policies – which voters frequently don’t have the time to dig into, in any case – but our economic vision. Labour has a Big Idea, nationalisation, which dominates its economic agenda. The focus on Corbyn’s renationalisation plans was out of proportion to their potential impact, because it fits with how people see Labour’s economics, putting more of the economy under state control in the hope that permanently benevolent governments will somehow manage to run it all for the public good. The Tories likewise have their Big Idea in privatisation, moving more and more of the economy toward shareholder-driven corporations, deregulation, and the profit motive, in the apparent belief that this will placate the magic efficiency fairies. What’s our Big Idea?

The answer, in my view, is the social market, the core of which is that businesses should be owned and run by and for people across society, as independent bodies working to do good things in their own way. Taken to its conclusions it’s a truly radical vision, requiring the transformation of how we hold and invest capital to make cooperative, mutual, and social businesses the new normal. Even taken over the short course of a parliament, it’s a vision that can provide deliverable goals, improving working conditions and pay as we democratise workplaces and help new social businesses enter the market.

The social market is far from the misconception of Lib Dem economics as blandly toeing the middle line between the two other parties. It’s what happens when we logically put our principles into practice, decentralising economic power directly to people in a way that’s sustainable, democratic, and socially just. So how do we get there?

Firstly, we have to make it clear what we’re leaving behind, and secondly, we have to put policies in place that make it clear that what are now considered ‘alternative’ business styles should be standard norms in a liberal future, and ones that we’re prepared to act to help people build and grow. That’s why at Brighton Conference I’m bringing forward Amendment One to F28, the motion on business policy.

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Brighton debate: Good Jobs, Better Businesses, Stronger Communities

Roll up, roll up – take your seats.  Monday afternoon of conference week in Brighton brings a debate on proposals for creating a new economy, one that really works for everyone in Britain.  As the party “demands better”, this forward-looking plan shows how we can tackle the root causes of our current dysfunctional economy and to provide real content to our campaigning on that central political issue of “the economy, stupid” (as Bill Clinton’s campaign strategist inelegantly put it).

The debate on Motion F28 – Good Jobs, Better Businesses, Stronger Communities – is your chance to accept, reject, amend or better still improve upon the ideas contained in the FPC’s paper of the same name, available to download here.  Do have a good read in advance, there’s a lot of great content to digest.  

On this site, Katharine Pindar has already helpfully examined it  through the lens of how Labour voters might see us, as an alternative to Corbynomics.

Developed over two years through our deliberative policy-making process, the package of proposals had a longer gestation period even than an African bush elephant: the working group (which I co-chaired with Julia Goldsworthy until she was appointed to a politically restricted job) took evidence and consulted widely, and then had to pause for Theresa May’s ill-fated snap general election. 

Our original consultation paper back in 2017 set out the challenges we had identified in creating a more prosperous and sustainable economic future for Britain in the 21st century – low productivity, new technologies, changing demographics, the folly of Brexit, resource depletion, rising inequalities, a trends towards ever bigger companies and reduced competition, and much more.  Despite this depressing back-drop, we said Liberal Democrats are inherently optimistic and should embrace the potential of change and of the big economic shifts that we saw coming.  We should not retreat, we argued, either to the little Britain ‘drawbridge economy’ envisaged by post-Brexit Conservatives or to Labour’s ‘big government knows best’ 1970s style siege economy.

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Financialization, Manufacturing and Public Services

To most of us who are not economists or in government, it is regarded as common sense that we need manufacturing and other producing businesses to pay for public services.

The financial sector, which includes insurance, pensions, accountancy and retail banking is a valuable part of the UK economy.

However, there are serious concerns that the casino banking sector is extracting rather than producing wealth, and that it is harming rather than benefiting the economy.

One of the concerns relates to the huge level of merger and acquisition (M&A) activity, which means that UK companies can easily be taken over by foreign companies. There is a theory that it does not matter who owns UK companies, only how they are run. This is wrong. Inevitably, and this may take decades, manufacturing is moved abroad.

The other, just as serious, the problem with the open market in UK companies is that the continual threat of hostile takeovers deters long-term investment.

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Inequality – it’s getting worse

The Office for National Statistics published data yesterday on economic well being. One of the main points from the ONS report was on household property wealth. This data shows that we now have even more inequality between generations. The report reads

The gap in net household property wealth between those aged 30 to 32 and 60 to 62 years has widened in the last 10 years; the net household property wealth of those aged 60 to 62 years was six times that of those aged 30 to 32 years during July 2006 to June 2008, however, this difference increased to 17 times by July 2014 to June 2016.

Also, research showed that consumers’ perceptions of their own financial situation has worsened for three consecutive quarters.

In Quarter 4 2017, the average aggregate balance was negative 1.6 – a decrease from positive 0.7 recorded in Quarter 4 2016. The chart shows a steady drop over the last two years.

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Why the Liberal Democrats must adopt Universal Basic Income

To be quite blunt, I’ve been spending a lot of time lately thinking about where it’s all gone wrong for the Liberal Democrats. I’ve been a member of the party for seven years now, three-quarters of a decade no less, and in that time we have scarcely polled into the double digits.

Amongst the young, the people who you may think would be the natural supporters of an anti-Brexit, progressive party, the outlook is especially bleak. In the latest Times tracker conducted by YouGov, a mere 4% of 18-24-year-olds plan to vote Liberal Democrat at the next election. The number shoots up to a comparatively lofty 7% of 25-49-year-olds but it’s still nowhere near good enough for a party such as ours.

It’s time to face a stomach-churning truth. The Liberal Democrats are not a party that speaks to modern Britain, and we most certainly do not represent Britain’s future. Not the way things stand, anyway.

As someone who is (just about) inside that 18-24 bracket, I think I’ve got a decent idea about why the party has haemorrhaged youth support so drastically (and no, it’s not just about tuition fees – although that is a huge factor as I wrote for the New Statesman in 2015.)

In my view, it comes down to this. When my generation was growing up, we were all sold a story, the same story our parents were sold. Specifically, the story that if you work hard, apply yourself and ‘get on’, then you’ll do well. Our parents bought into that story because it was broadly true for them. But we aren’t buying into it because it’s a lie for us. Millennials are the first generation set to earn less than our parents, so I think we can be forgiven for thinking that the system has not worked.

And it is this broken system that, to me, explains my generation’s disinterest in the Liberal Democrats and our collective adoration for Jeremy Corbyn. The Liberal Democrats want to make the system fairer. But Corbyn wants to tear the system down. That is his appeal, and it’s why we are falling by the wayside.

But we can beat Jeremy Corbyn at his own game. Liberals can remake the system too, and liberalism can provide a much more empowering and inspiring future than socialism ever can.

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An economic policy for 2022 and beyond.

There are many reasons why our vote collapsed after five years of government but perhaps the most important was our ditching the economic policy of our 2010 manifesto, which included an economic stimulus in the first year of government, a promise to create jobs for those who needed them and implied that we would only reduce the deficit when the economic recovery was secured. What we actually did was reduce government spending straight away and took money out of the economy with a 2.5% increase in VAT. During the Coalition government the news reported that there was a double-dip recession (later upgraded). On our watch unemployment increased from 2.5 million in May 2010 to 2.71 million in November 2011. The highest percentage since November 1995 and the greatest number since August 1994. Even in May 2015 with 1.85 million unemployed we failed to provide a job for everyone who needed one.

The current economic consensus has given up on trying to achieve full employment and sees the NAIRU (non-accelerating inflation rate of unemployment) as the lowest level possible. This is often seen as in the region of 5%. The last Labour government and the Conservative party accept the NAIRU but also want to make it difficult for those unemployed to claim their benefit as a means of saving money. As Liberals we value each and every person equally and don’t think less of a person because they have difficulties in finding work or meeting the bureaucratic conditions required for those wishing to receive out of work benefits. As Liberals we must have an economic policy to achieve full employment. We know from history that economic inequalities reduced the most between 1945 and 1979 when UK governments tried to achieve full employment. No Liberal Democrat should find it acceptable for there to be more than 1 million people unemployed in the UK.

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The Brexit nightmare continues


Embed from Getty Images

This week, we’ve had our biggest warning yet about what the post Brexit world holds for us. We knew already that prices were going up because of the fall in the pound, that EU nationals were swapping our hospitals and surgeries for somewhere they felt more welcome and businesses are growing increasingly worried about the Government’s diplomatic faffing.

This week, we learned courtesy of the OBR that our economy is barely going to grow, that investment growth is scarily low at 0.2% and …

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Autumn Budget – what our Spokespeople say

The Lib Dems have been hot off the mark with what this Autumn Budget doesn’t do.  Here are 7 failures.

And leading Lib Dems have been speaking out about what the budget really means:

Leader of the Lib Dems Vince Cable MP says

Each person in Britain is set to be £687 worse off per year compared to forecasts before the election.

And as living standards are squeezed, the Government is setting aside £3.7bn to cover the cost of a ‘no deal’ Brexit.

The Chancellor found more money in the Budget to plan for Brexit than he did for our struggling NHS, schools and police.

Liberal

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Economic Implications of Autumn Budget

Liberal Democrat Brexit Spokesperson Tom Brake commented:

“Instead of a bright future for Britain, Conservative plans will see a £65bn hit to tax receipts, slashed wages and higher borrowing.

The Government found £3bn to spend on Brexit, but nothing for our police or social care.

The Chancellor has completely failed to show the ambition needed to tackle the housing crisis, build the infrastructure the country needs or fix Universal Credit.”

And here is the breakdown of the economic costs:

1. £65bn hit to tax receipts: Tax receipts have been downgraded by £65.4 billion over the five-year period compare to …

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In full: Jo Swinson’s response to the Budget – with a cheeky intervention from Tom Brake

It was Jo Swinson who led the Lib Dem speeches in the Commons today in response to Philip Hammond’s insipid budget. Here is her speech in full. Note the cheeky intervention from Tom Brake, reminding of us of some words on the side of a bus.

The British economy today faces three key challenges. First, we have low productivity, with the associated wage stagnation that comes with it, and of course the reduced tax receipts. Secondly, we have high public sector debt. We must recognise the constraints that that places on what is possible economically, and be honest about some of the hard choices that need to be made. Thirdly, there is Brexit, which has already been described as the elephant in the room. We see the uncertainty it is creating for businesses and investment in the country, its impact on our economy, and the opportunity cost of all the energy and money being spent on preparing for it that could otherwise be directed elsewhere.

The Chancellor is a serious man. We had significant differences in coalition but in recent months he has appeared to be one of the few voices of reason in the Cabinet on Brexit. He had an unenviable task coming to the House today, given the picture of higher inflation, lower growth, lower productivity and high levels of debt. It really is bleak. The economy will be £45 billion smaller in 2021 than had been projected just in March this year, so his attempts to paint a cheerful vision of the future were rather less successful than his jokes. The truth is, as the Chancellor knows, that this Budget, the next one, the Budget after that and all future Budgets are made all the more difficult because of Brexit and the extreme approach to it that this Government are pursuing. Making it clear that an exit from the single market and the customs union is a red line for the Government—this is aided and abetted by the Labour Front-Bench team—imperils the future of the UK economy, and the Chancellor knows it.

The right hon. Member for Loughborough (Nicky Morgan) rightly said that there is no pot of gold at the end of the Brexit rainbow, although the more appropriate metaphor is that of a thunderstorm. We learned today that the cost of Brexit preparations is not just the £700 million already allocated but a further £3 billion, which is more than the extra money that could be found for the NHS, and that tells its own story. We need to add to that the exit bill, and who knows what that will be—£20 billion, £30 billion, £40 billion? In addition, there is the overall hit to the economy, which the OECD has suggested could be £40 billion. It is no surprise that these figures were not stuck on the side of a bus in the referendum campaign.

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ICYMI: Vince’s pre-budget speech

A couple of weeks ago, Vince got his retaliation in first by delivering a statesmanlike Budget speech.

Two weeks ahead of the Budget, tomorrow Vince gets his retaliation in first. Of course, as a former business secretary and the man who predicted the financial crash, he has a whole load of economic credibility. In comparison, when the Chancellor delivers his speech on 22 November, he’s going to look pretty amateurish compared to Vince.

He will outline the major challenges facing Phillip Hammond in light of the expected downgrades in Britain’s projected future growth, the threat posed by Brexit to any attempt to fix our economy, and what needs to be done in the budget to begin to solve these problems. He will include the Liberal Democrat long-term vision for the economy. And I’ll be very surprised if the Paradise Papers didn’t get a mention.

He will emphasise the need for a Government with economic competence and how important it is to have a fair deal for young people.

I’m kind of hoping that the main speech is slightly less heavy than the extracts released tonight. It will definitely be a credible, authoritative speech and not a wild oration, though.

Below is the whole thing. I’d be lying if I said it was sparkling, but it was full of detail and substance and you can judge it against Philip Hammond’s effort. .

As Leader of the Liberal Democrats, it is one of my responsibilities to give a serious Lib Dem analysis of the economics around the Budget, and to present an alternative.

I have recently been returned to Parliament from exile.

One of my regrets, however, is that the previous competition between the parties on economic competence no longer exists.

The likes of Gordon Brown, George Osborne, Ed Balls and Oliver Letwin were all serious players and thinkers even if I often disagreed with them.

Now, the economy – pivotal still to people’s lives – has been relegated to the margins of political debate.

The June election produced minimal discussion of economic policy.

The Conservatives didn’t produce any economic numbers in their manifesto.

Labour did, but as the IFS caustically pointed out at the time, there was a strong element of fantasy.

My Party did much better than our rivals at the hands of the IFS and serious commentators at the FT and The Economist but few noticed. And, now, economic debate is drowned out by the politics of Brexit and an unstable government.

Yet this is an unusually important and difficult budget.

The Chancellor has foresworn the use of a second budget, traditionally used to correct the mistakes in the first.

And the potential for a massive, if unquantifiable, economic shock from an unsatisfactory deal – or, even, ‘no deal’ is palpable.

Brexit hangs over the forecasts.

The environment of radical uncertainty is already spooking business investment and depressing growth, including the growth in government revenue.

I want, then, to set out some analysis of where we are and some ideas for where the Liberal Democrats think Britain could and should go.

Our focus is on freeing up capital spending to build the homes and infrastructure the country needs, on reviving the NHS with a targeted injection of cash, and on giving a leg up to young people with a learning account as they begin their working lives.

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Vince: Only Lib Dems offer strategy for growth and prosperity

Earlier, we brought you a flavour of Vince’s big pre-Budget speech.  Here is the speech in full:

As Leader of the Liberal Democrats, it is one of my responsibilities to give a serious Lib Dem analysis of the economics around the Budget, and to present an alternative.

I have recently been returned to Parliament from exile.

One of my regrets, however, is that the previous competition between the parties on economic competence no longer exists.

The likes of Gordon Brown, George Osborne, Ed Balls and Oliver Letwin were all serious players and thinkers even if I often disagreed with them.

Now, the economy – pivotal still to people’s lives – has been relegated to the margins of political debate.

The June election produced minimal discussion of economic policy.

The Conservatives didn’t produce any economic numbers in their manifesto.

Labour did, but as the IFS caustically pointed out at the time, there was a strong element of fantasy.

My Party did much better than our rivals at the hands of the IFS and serious commentators at the FT and The Economist but few noticed. And, now, economic debate is drowned out by the politics of Brexit and an unstable government.

Yet this is an unusually important and difficult budget.

The Chancellor has foresworn the use of a second budget, traditionally used to correct the mistakes in the first.

And the potential for a massive, if unquantifiable, economic shock from an unsatisfactory deal – or, even, ‘no deal’ is palpable.

Brexit hangs over the forecasts.

The environment of radical uncertainty is already spooking business investment and depressing growth, including the growth in government revenue.

I want, then, to set out some analysis of where we are and some ideas for where the Liberal Democrats think Britain could and should go.

Our focus is on freeing up capital spending to build the homes and infrastructure the country needs, on reviving the NHS with a targeted injection of cash, and on giving a leg up to young people with a learning account as they begin their working lives.

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Vince: Lib Dems want a fair deal for young people

Two weeks ahead of the Budget, tomorrow Vince gets his retaliation in first. Of course, as a former business secretary and the man who predicted the financial crash, he has a whole load of economic credibility. In comparison, when the Chancellor delivers his speech on 22 November, he’s going to look pretty amateurish compared to Vince.

He will outline the major challenges facing Phillip Hammond in  light of the expected downgrades in Britain’s projected future growth, the threat posed by Brexit to any attempt to fix our economy, and what needs to be done in the budget to begin to solve these problems. He will include the Liberal Democrat long-term vision for the economy. And I’ll be very surprised if the Paradise Papers didn’t get a mention.

He will emphasise the need for a Government with economic competence and how important it is to have a fair deal for young people.

I’m kind of hoping that the main speech is slightly less heavy than the extracts released tonight.  It will definitely be a credible, authoritative speech and not a wild oration, though.

 

The Liberal Democrat focus is on freeing up capital spending to build the homes and infrastructure the country needs; on reviving the NHS with a targeted injection of cash; and on giving a leg up to young people with an endowment in the form of a learning account as they begin their working lives.

To do all this, we need a Government which prioritises economic competence over political dogma.

A ‘no deal’ Brexit hangs over forecasts. An environment of radical uncertainty is already spooking business investment and depressing growth in government revenue.

Neither the ‘no deal’ Brexit extremism of the Conservative Party nor the ‘socialism in one country’ dreamed of by Labour will deliver a successful economy.

He will look at solving the inequality facing young people in more detail:

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Lessons from Finland on Universal Basic Income

Piles of money. Photo credit: czbalazs - http://www.sxc.hu/photo/1236662Aditya Chakrabortty, a Guardian Columnist, recently travelled to Finland to interview a man who’s been part of a Universal Basic Income trial. The scheme gives 2,000 randomly chosen people, who were already receiving unemployment benefits, £493 a month unconditionally. The scheme will finish properly at the end of 2018 and no official results will be published until then, but there is anecdotal evidence from a number of interviews conducted with people chosen to take part.

One such person is Juha Jarvinen. When asked by …

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Why Basic Income Should Be Lib Dem Policy

Over the last 70 years, an inexorable long-term structural change has taken place in the economy.

Source: ONS, defining ‘labour income’= wages + self-employed earnings

 

It’s very clear that aggregate ‘labour income’ (=wages + self-employed earnings) has declined compared to consumer expenditure, with a turning point in 1995, such that

  1. From 1948 to 1995, labour income exceeded consumer expenditure.
  2. From 1995 to 2016, consumer expenditure now increasingly exceeds labour income.

By 2016, labour income only funded 86% of consumer expenditure. 14% of consumer expenditure was funded by unearned income. This trend is structural, …

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The Love of Learning

What are we doing to our young people? Testing them until the joy is out of learning and school is just one tick box after another. The head of Ofsted, Amanda Spielman, said

The regular taking of test papers does little to increase a child’s ability to comprehend.

We have completely the wrong approach to learning. We need holistic education for our young people, encompassing the widest range of subjects, building character and instilling the love of learning.

This includes the arts. When I was 11, we moved to Missouri. I started at a new junior high school (years 6-7 in the English system) which had a school band. Up to that stage I had played a bit of piano and sung in the church choir. The music teacher asked if I’d like to learn the clarinet as he needed more players in his band. Within three months I was sitting 2nd chair in the clarinet section. I would never have learned an instrument if it hadn’t been for the opportunity at this state school. I remember my parents, who were on a tight budget, scraping money together for some private lessons later that year, costing $4 a lesson.

Years later, I’m a professional musician, wondering where the next generation of musicians is coming from. We need music, and all the arts, as an integral part of our schools. The economic argument is obvious – the creative industries contribute £87.4 billion per year to the economy. We would be denuded as a society without the undergirding of the arts which permeate and enrich our lives.

But I wish to make the moral argument, bringing me back to the opening point of school being too much about testing. Having an arts-inclusive curriculum builds a well-rounded intellect. The brain, when it has to marry the left and right halves in analysing and performing a piece of music, develops physiologically. Attention spans are lengthened when one learns to concentrate on playing your part in a band. Aesthetic awareness is broadened, that life is not about ticking boxes but about beauty, relationships and creativity. Learning to sing together builds community and teaches young people to work together. We learn that coming together produces something more wonderful than striving alone.

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Homeowners as Currency Counterfeiters: a Parable

In the UK, gains on domestic property values are virtually untaxed. This put renters at a huge disadvantage. But far worse is the damage this does to our competitiveness. Failing to tax gains in property value means that our economy in effect hosts a currency counterfeiting operation with a £50bn turnover. This can be illustrated with a very short story.

Once upon a time a newly crowned king wished to prove his military prowess, and decided to raise a navy to conquer lands overseas. His councillors protested that the royal coffers were empty, but he hit on a brilliant idea. He would licence his councillors to print banknotes, in exchange for them providing sailors and ships. The councillors readily agreed. He ordered royal printing presses to be built, and handed them over to the councillors each with a licence to print money. The councillors set their presses in motion and provided the necessary sailors and ships. The king went to war and returned victorious.

Fortunately the king had wisely limited the speed of the printing presses so the currency would not collapse. Merchants and labourers still worked and traded, but were poorer because the newly printed banknotes meant their money were worth less than before. But the same banknotes made the printing press owners richer.

As time went by a market developed for the printing presses. Some of the king’s councillors had a great fondness for expensive claret, or lost money at cards, so had to sell their presses to repay debts. Successful merchants found the purchase of a printing press was an excellent and safe investment. Unfortunately skilled labourers found they could earn more abroad and started to emigrate. After the king had ruled for many years, there were few skilled shipwrights left in the kingdom and the navy fell into disrepair. Sensing their chance, the neighbouring kingdoms sent an invasion fleet, sank the king’s ships and the kingdom fell.

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What you see and what you don’t see. Time to ditch GDP and measure our progress differently

The yardstick for the success of an economy is the measure of its Gross Domestic Product or GDP. It is essentially the sum of all goods and services that a country produces, corrected for seasonal fluctuations and inflation.

The modern concept of GDP was developed by Simon Kuznets for a U.S congress report in 1934. President Herbert Hoover had the challenge of tackling the Great Depression with only a mixed bag of numbers that were extremely ineffectual when trying to answer the question, “how is the economy doing?”

Over the next 80 years the GDP not only became the way in which politicians, journalists and the public measure the economy, it actually defined what the modern economy is.

So what’s the problem?

The problem with the GDP is that it pretty good at measuring the things that you can see but is terrible at measuring things that you can’t see. Therefore things that are easily measured like manufacturing and monetary transactions push the number up whilst advancement of knowledge, community service, clean air, are all pretty much ignored. Even worse, the social damage caused by an activity is not factored in negatively, in fact the transactions that relate to poor health, depression, pollution, societal breakdown like divorce lawyers etc. actually push the GDP up.

In his book Utopia For Realists, Rutger Bregman highlights this point humourously but with a large dose of dark truth.

“If you were the GDP, your ideal citizen would be a compulsive gambler with cancer who’s going through a drawn-out divorce that he copes with by popping fistfuls of Prozac and going berserk on Black Friday.”

The fact that a huge chunk of government policy is formed on the drive for growth at all costs based on a measure that rewards things like carbon polluting manufacturing, deforestation, over-fishing etc. goes a long way to explaining why we live in such an unequal society.

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LibLink: Vince Cable: It’s time to tackle the UK’s dangerous addiction to debt

One of Vince Cable’s claim to fame is that he accurately predicted the 2007 financial crash. Ten years on, he recently wrote an article for City AM in which he said that our economy was again at risk because of high debt levels.

Debt, in itself, isn’t bad. He talks about his own experience:

Indeed, my own youthful borrowing included buying my late wife a grand piano on an overdraft, a decision that underpinned 33 years of happy marriage. (And I paid off the debt after a struggle.)

The issue with debt is one of limits and sustainability, for both the individual and the wider financial system. The same, clearly, applies to government debt and corporate and financial sector leverage.

What the 2008 financial crisis and its aftershocks have taught us is that those limits may be closer than we think – and, once crossed, can lead to rapid and painful corrections.

He looks at the current situation in which we are seeing high levels of personal debt again:

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WATCH: Vince talking about the financial crash

Here’s Vince on Good Morning Britain talking about the 10th anniversary of the financial crash. Could it all happen again? What does he think about the current state of our economy?

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A new economic vision for the Lib Dems

The Liberal Democrats need new thought on how we view the economy and the role of the state and this idea could influence what we choose to support. We often struggle to find an economic system we can get behind.

Unrestricted capitalism leads to unacceptable inequality. The Conservatives stand for a small rich elite, while everyone else struggle to make ends meet. The Corbynite vision of socialism would leave us all worse off. The Liberal Democrats must form a new vision of how our economy should work and what role the state should play in it.

I would propose the Enabling State as our vision.

The state has a duty of promoting liberty in all its forms, and to ensure everyone has the chance to make the best of themselves. This would include freeing people from poverty, through a basic income, to ensure everyone has the money for basic needs.

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New thinking on job creation

 

One of the big challenges of our time is to provide work for all those who need it, work which is useful, fulfilling and which pays enough to live on. And although the British economy is creating around half a million jobs (net) a year, many of them do not satisfy those simple criterion.

The need for good quality jobs will increase as the population increases and working careers get longer, yet hardly anyone is thinking about where these jobs are to come from.  Government departments, unions and think-tanks tend to concentrate on where jobs have been created in the past or predicting where they may come in the future, or on skills training or how to improve conditions for those already in work. The private sector seems to regard jobs as a by-product, a necessary evil in the process of making a profit, and in the public sector the government wants to cut as many jobs as possible to save tax-payers’ money.  No one is actively looking at areas where new and worthwhile jobs can be created and how to do it.

Let me be bold and suggest six sectors where this might be done, in what I call the “infinite industries” ie where there is no limit to the amount of production that can be done: education, health, energy, environment, sport and the arts.

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Cable: Tories and Labour have turned their backs on the economy and business

Vince Cable makes a major intervention in the election campaign today with a speech on the economy and Brexit. He is not going to mince his words.

He will

  • Accuse both Labour and the Conservatives of adopting a Brexit strategy almost designed to inflict maximum economic damage by rejecting membership of the single market and customs union, as well as other benefits of the EU
  • Warn that the economic storm clouds are already gathering once more from rising inflation, falling real wages and rising personal debt to slowing spending and growth
  • Highlight the Liberal Democrats’ positive economic plan, including boosting spending while still achieving a surplus on the current budget
  • State that “under Jeremy Corbyn, the Labour leadership’s model for economic management is the bankrupt, hyper-inflationary Venezuela.”

Here’s a flavour of what he’s going to say.

If we crash out of the single market and customs union and revert to World Trade Organisation terms, respected independent estimates suggest that our trade will slump by almost a third by 2030. Far from turning Britain into a centre for exports, the main thing we would export under Theresa May would be jobs.

Labour’s plans for a spending spree funded by taxing the rich and corporations have been described by the IFS as wholly unrealistic, and will certainly scare off the investment and talent that are fundamental to our global economy. The May-Farage extreme Brexit that Labour voted for will drive out high-earners and leading international companies, leaving lower tax receipts for public spending.

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We need to tell people about our economic policy

As an Orange Book adhering Lib Dem, a big highlight of the reign of Clegg & Cable was a very simple, yet very effective thing – that our economic policy was clear, empathised, and well known. We knew where we stood, we knew where we were going, and quite frankly, the economic policy that we pushed in the coalition, reflected that fact. The Liberal Democrats were a party that knew how to manage an economy.

So, looking back at that highlight, I fear that, something may have been rather overlooked this campaign; our economic plan. Indeed, more importantly, what exactly it is. I mean, obviously we have one. In fact, according to Oxford Economics, we have the best one. So, for me, the question is simple – why aren’t we making a big deal out of it?

It is very clear to me, and to many people up and down the country, that the Liberal plan for our economy is worlds ahead of the Labour or Conservative ones. We have a plan for proper growth, for sustainable development environmentally, for treating small businesses with the high regard they deserve, and for ensuring that our spending plans are sensible, and above all else, fair. Yet, when we are covered in the media, very little focus is put upon this. It seems insane to me that we aren’t inundating the whole nation with the fact that when push comes to shove, we could, will, and can, make people better off. In fact, those in the whole bottom half of our income demography would be faring far better if we were the government.

Posted in Op-eds | Also tagged | 78 Comments

Inflation sign of Brexit squeeze – Lib Dems

Inflation has gone up to 2.7% today.

This confirms long-held Liberal Democrat warnings about the impact of Brexit, with businesses struggling to contain rising costs and consumer demand being squeezed.

Susan Kramer said:

These worrying levels of inflation show the Brexit squeeze is hitting shopping baskets across the country.

This is the reality of Theresa May and Nigel Farage’s extreme Brexit agenda: higher prices in the shops, the cost of holidays going up and less money for our schools and NHS.

A brighter future is possible. We will give people a choice over their future through a referendum, so they can reject a bad Brexit deal and choose to remain in Europe.

Willie Rennie underlined this point:

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Vince Cable predicts second economic storm

Remember back in 2003, when Vince Cable was saying that at some point the economy would collapse because of the amount of consumer credit?

Well, he was right then and he’s now saying that we could be up for another Brexit fuelled crash.

The former Business Secretary, who hopes to win back his former seat of Twickenham, says that a combination of declining consumer confidence, job losses and inflation has the potential to outstrip the economic storm of the previous decade. That, if you remember, was the direst economic crash since the Depression in the 30s.

Vince said:

For Britain, the economic weather is arguably worse than it was before the credit crunch. The pound has plummeted, which is driving up prices and trapping consumers in a vicious Brexit squeeze.

Consumer confidence was all that kept the storm clouds away. But with job losses at everywhere from Deutsche Bank to Nestlé, that confidence is going to drain away further.

The Chancellor clearly has no confidence in the economic strategy of the government, because he knows that leaving the single market and customs union has the potential to devastate the UK economy.

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Talk about economics, or we’ll be back to the party of the 8%    

 

I was delighted by Tim Farron’s performance at Spring Conference this year; his eloquence and passionate words show a good leader moulding into a great one. Yet, there is one thing that Tim’s speech missed: a distinct view upon the economy. The need for a Liberal Democrat policy on the economy is clear, with Tim himself saying in the speech ‘Britain needs a progressive party… a plan for an economy that makes the most of the opportunities in front of us’.

To put it short the Liberal Democrats need a clear economic policy so that when we get back into government (whether that’s in 2020 or 40 years away) that our voters know what they voted for. To my mind, we must focus upon investment. That investment starts with taking money creation away from high street banks and making it a government-influenced mechanism, as I called for in a previous article. Only then can we invest in our economy without extending the web of debt Britons and Britain find themselves in.

Posted in Op-eds | Also tagged | 54 Comments

Why politicians should tread carefully before using Quantitative Easing to build infrastructure

At a time when politicians grapple with how to use the tools at their disposal to reduce inequality of opportunity and outcome, quantitative easing {QE) can seem like an easy option.

To those blessedly unversed in the intricacies of the monetary policy tool that has dominated more than anything else the economy of the UK since the financial crisis, QE sounds like, ‘printing money and spending it on infrastructure.’

If only it were that simple. QE is a policy of central banks to buy the bonds  issued by their own governments, the aim being to push interest rates down and drive capital into assets more likely to make the economy grow.

So the first problem with any idea of using QE to increase government spending is that, well, the government doesn’t have the power to do it, Politicians can issue the bonds, the Bank of England can choose not to buy them, and the Bank of England is independent of government. 

Posted in News | 16 Comments

Lib Dems: Inflation rise hits the poorest

Senior Liberal Democrats have been commenting on the inflation rise today. I have to say that although  0.5% in a month is a lot, it feels like so much more. The prices of so much of my supermarket shop seems to have gone up by a lot more.

In Scorland, our Economy spokesperson Carolyn Caddick said:

Rising inflation shows that the British public are paying the price for Theresa May’s decision to take Britain out of the Single Market. With the pound falling in value by 18% since the referendum, the price of imports have shot up and broken the official target. Every Scot going on holiday abroad is seeing that their pounds do not buy what they used to.

Worst of all, the dramatic leap in food prices is hitting the poorest the most.

The fragile UK economy has been kept on life support by consumer spending, but with prices rising, that is now threatened. If Theresa May should change course immediately, and recognise that you can’t have a hard Brexit and affordable prices.

Our Shadow Chancellor Susan Kramer also blamed Brexit, saying that “You can’t have a hard brexit and affordable prices.”

Posted in News | Also tagged , and | 23 Comments

LibLInk: Nick Clegg: This is the future – the unstoppable march of machines

Nick Clegg’s latest Standard column starts off by setting out a number of current problems. One is very different from the others:

There’s a lot to worry about these days: hard Brexit, Trump’s protectionism, Diego Costa’s future at Chelsea, Putin’s manoeuvres, conflict in the South China Sea, Boris Johnson’s next gaffe, climate change.

It’s another that he focuses on, though. What happens to people as their jobs are replaced by machines. He uses the self-driving truck as an example:

According to one recent report, truck driving and related jobs employ more people than any other job in 29 out of America’s 50 states. It is estimated that there are 8.7 million trucking-related jobs in the US. It is one of the few jobs that still attracts a fairly decent income — about $40,000 (£32,000) a year — without requiring higher academic qualifications. In other words, it’s a precious ingredient in the American Dream: a dependable job, accessible to everyone.

It is a question of when, not if, American highways will be crisscrossed by thousands of similar self-driving trucks. And what then for the millions of truck drivers, their families and their communities? An economic earthquake, that’s what, which could leave millions of people out of work.

Posted in LibLink | Also tagged , , and | 16 Comments
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