Was Panorama’s Presenter right about Corbynomics?

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Panorama’s presenter, John Ware’s negative opinions were hardly hidden in ‘Jeremy Corbyn: Labour’s Earthquake’.  For example, he started by sneering that a Corbyn Town Hall meeting had all the fervour of a revivalist meeting (sub-text = crowd hysteria).  But then, he did a piece to camera, that really betrayed (at best) his ignorance or a deliberate attempt to mislead the public over the anti-austerity policies presented by the Corbyn team.

He said that if Jeremy Corbyn were to become Prime Minister, he would “order the Bank of England to print billions of pounds for a raft of new projects – roads, railways, houses…” and how would Corbyn pay for all this?  By collecting the £120 billion estimated to be uncollected tax receipts.

(at 18.28 mins http://www.bbc.co.uk/iplayer/episode/b06bg6ty/panorama-jeremy-corbyn-labours-earthquake )

Whilst it is perfectly true that Jeremy Corbyn wants to address the tax haven scams (which would include increasing the tax receipts), he has never suggested that this was the substance of his plans to resuscitate the economy.  Apart from a novel solution such as ‘QE for people instead of the banks’ Jeremy Corbyn’s fiscal stimulus is totally consistent with the sort of keynesian economic policies that were mainstream prior to New Labour’s capitulation to the economics of Margaret Thatcher.

I will leave it in the capable hands of the Renegade Economist, Ross Ashcroft to explain how politicians bailed out the wrong industry after the Great Banking Crisis in 2007/8 and what should be done now i.e. adopt policies that run counter to austerity and conventional mainstream economics.  In fact, precisely the sort of policies that Jeremy Corbyn is proposing.

Another economic crash is coming. How did this happen? Renegade Economist | Comment is Free

George Osborne failed to mention private debt in either of his budgets which is strange because his economic policies are dependent on increased household debt to sustain demand.

As a further treat, I include a one minute interview with Steve Keen in which he explains what’s wrong with mainstream economics.

What’s wrong with Economics? Professor Steve Keen explains – 16 Nov 2011

Uploaded on Nov 16, 2011

Steve Keen is Associate Professor of Economics & Finance at the University of Western Sydney. His main academic research interest is in developing mathematical models of Hyman Minsky’s Financial Instability Hypothesis. Prof. Keen’s best-selling book, Debunking Economics, delivers a powerful critique of modern neoclassical macroeconomics. He maintains a website dedicated to ‘analysing the global debt bubble’ at http://www.debtdeflation.com.

So was the Panorama programme a fair representation of Jeremy Corbyn’s economic policies?  The  conclusion has to be no…. The case for anti-austerity policies, as presented by Ross Ashcroft and Steve Keen, is overwhelming and long over-due, given the likelihood of another economic crisis.

Jeremy Corbyn speaks against TTIP at Durham Miners Gala

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In an inspiring and comprehensive speech, Jeremy Corbyn spelt out the aspirations [sic] that the left should have for any future Labour government.. a race to the top, not Osborne’s welfare for the rich and cuts for the poorest and the young.  An end to homelessness, hunger, the selling-off of publicly owned assets, zero hours contracts, food banks – that every child matters (not just the first two), solidarity with the trade unions and above all else, an end to the callous and unnecessary ‘Austerity’.

Jeremy specifically emphasised the threat of the US-EU trade deal TTIP… NAFTA on Steroids. He called for TTIP’s rejection not only in terms of its well publicised threat to the NHS and public services but also because of the international threat that it poses to worker and environmental protection legislation across Europe, the UK and the US.

In this speech, Jeremy Corbyn demonstrates by example, just how far the current Labour Party has lost its way.  In a recent hustings speech, he was more overt:

“We’ve become cowed by powerful commercial interests, frightened of the press, frightened to stand up for what we absolutely believe in.  I want a more equal society, a fairer society, a world at peace not at war.  I want a LP at the heart of the community that is demanding those jobs, homes and hope for everyone, so that they can live in a society that is more equal.  We are moving in the wrong direction at the present time – let’s turn it around and move the other way.”

The answer is obvious – vote for Jeremy Corbyn because he is the real candidate for aspiration and change!

 

 

Jeremy Corbyn speaking at the Durham Miners Gala yesterday, 11th July 2015.

 

 

Recipe for Ruin: TTIP, the Transatlantic Trade and Investment Partnership

 

First Conservative Budget in 18 years declares War on The Young and The Poor

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The first Conservative Budget in 18 Years declares war on the Young and the Poor

From Alex Little: @alittleecon 

First Published here

The most eye-catching announcement in today’s Budget perhaps was the one about the “National Living Wage”, set to be introduced for over 25s next April at £7.20 per hour. This falls below the actual living wage of course, said to be £7.85 an hour outside London, but Osborne announced his intention to raise it to £9ph by 2020, which assuming the OBR’s inflation forecasts are right would actually see wages rise (outside London) to above the living wage by 2020. Iain Duncan Smith in particular seemed delighted: 

With this announcement Osborne also managed to make Labour leadership hopeful Liz Kendall look a bit daft after she announced last week that she would look for ways to get businesses to voluntarily pay the living wage.

What Osborne didn’t say of course, was that the lowest paid won’t actually be any better off (for the most part) as they will lose their entitlement to tax credits at a similar rate to the increase in the minimum wage. Even so, it seems to me better to have employers pay more and have the government pay out less in tax credits.

At the same time though, these changes don’t apply to those under 25 who still have to make do with a minimum wage at a much lower level.

It was Osborne’s announcements on changes to the social security system that are most controversial, and I would say cruel. He is practically ending benefits for young people, making poor students take on even more loans and worst of all cutting by £30 a week the amount new claiments of sickness benefit ESA (WRAG) are entitled to. He’s also freezing working-age benefits for 4 years. They are already at below subsistence levels. To me it sends a clear message about what people like George Osborne think about the poorest.

It’s a very 19th Century attitude to the poor. George Monbiot spelled out this attitude rather well in a recent column, but in summary, here are some of the underlying assumptions that form the basis of the proposed changes:

  • Those who are declared unfit for work will quickly turn into malingerers if they are given too much. Many are outright faking their conditions when they could get a job.
  • If you are unemployed, you must not be trying very hard to get a job
  • If you are young, you are basically lazy and unproductive and will do nothing useful unless forced.
  • Young people all have strong family bonds which they can draw on for support in hard times.
  • The only reason the low paid and poor have children is in order to claim more ‘welfare’. They must be stopped.

If these things are true, there won’t be much hardship suffered as a result of the new changes. People will just pull themselves together and find work. Those that don’t, obviously deserve only contempt. If they in fact turn out to be utter bullshit though…

Related:

Flawed political economics are behind the calls for fiscal conservatism

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Flawed political economics are behind the calls for fiscal conservatism

By Michael Lloyd 

Article previously published here by Class Online, and reproduced by kind permission,

Notwithstanding the social democratic motivation of the writers of the recent essay Moving Labour ‘into the black’, there is a fundamental political economic flaw in their representation of the situation Labour are expected to inherit in 2015.

Their arguments were put forward in their initial leaflet and are starkly illustrated here:

“And third, confronting the reality of limited resources reveals priorities as the true currency of politics. In the coming years, the central distinctions will be about what the political parties choose to spend scarce funds on as much as the total they plan to spend.”

There is a confusion implicit in this description. Clearly in any economy there are going to be limited real resources. The capacity of a national economy in any time period is limited by the productivity of the physical capital and labour available. But in ‘In the Black Labour’ this real constraint is confused with a suggested financial constraint.

It is important to separate the real constraint and the financial constraint. This is particularly the case when we are considering the UK, a monetary sovereign country. The UK issues its own currency and denominates its government bonds in that currency, sterling, and has a flexible exchange rate. This sovereignty means that the UK can never become “bankrupt”, as wrongly suggested by George Osborne. It also means that other myths such as “the national credit card has been maxed out” and “we are mortgaging our grand-children’s future” are also false.

The intelligent implication of the current and medium-term position of the UK is that fiscal stimulation, via, for instance, a VAT cut and increased public expenditure, current as well as capital, are required, until we reach the real constraint of the full employment of resources.

The so-called financial constraint, whether invoked by George Osborne or by Black Labour, is a self-imposed political constraint.

Clearly there may be a constraint emerging in terms of the preferences of the private sector to hold government bonds, at a given price. This will mean a reduction in the price of these bonds and hence an increase in bond rates. However, government bonds increase the wealth of the private sector via a new savings instrument with guaranteed interest income for the pension funds and others who operate in the bond market.

For the current Coalition government an underlying objective is to reduce the size of the state, motivated by a neo-liberal agenda which sees the market as the sole efficient mechanism for providing goods and services. One need not ascribe a similar motive to the authors of Moving Labour ‘into the black‘, but some of the references to the implied failings of an over-large state certainly give a measure of comfort to this view.

Suggestions from their initial paper that the ‘fiscal’ position of the UK in 2015

“may mean very constrained funding for healthcare, pensions and welfare for the foreseeable future. It’s tough, but the alternative is ducking the genuine decisions nearly every government of an advanced economy currently faces.”

is misleading for a number of reasons:

  • The issue of pensions is a political decision about income redistribution involving transfers from one set of taxpayers to another, given the total size of the economy and the tax revenue available for re-distribution.
  • The issue of the health service is a political decision on whether the state provision of heath care (and social care) which is free at the point of delivery is preferable to commercial provision.
  • Welfare funding is a mixture of areas of provision which is best remedied by having economic policies which deliver full employment and therefore reduce welfare expenditure.

‘Fiscal conservatism’ was not the policy chosen by the Labour government in 1945 when there was a massive post-War level of public debt and the damaged economy needed to grow in both a sustainable and equitable manner. Fiscal conservatism, as advocated by Black Labour, is not the policy which the Labour party needs to advocate for the British economy or to present to the people in 2015.

Gordon Brown ‘woke up’ too late to ‘save the world’ from the Tory/LDs.

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After 12 years of New Labour’s Third Way and the start of the global banking crisis, Gordon Brown came to his senses and realised that the policy of light-touch regulation of the City had been disastrous.  In April 2009, at the end of the G20 summit in London, he said:

The old Washington consensus is over. Today we have reached a new consensus that we take global action together to deal with the problems we face, that we will do what is necessary to restore growth and jobs, that we will take essential action to rebuild confidence and trust in our financial system and to prevent a crisis such as this ever happening again.

There are no quick fixes but with the six pledges we make today we can shorten the recession and we can save jobs. First of all for the first time we have come together to set principles to reform the global banking system. This is a comprehensive programme of measures that includes for the first time bringing the shadow banking system, including hedge funds, within the global regulatory net.
We have agreed that international accounting standards will have to be set. We will regulate credit rating agencies in order to remove their conflicts of interest.
We have agreed that there will be an end to tax havens that do not transfer information on request. The banking secrecy of the past must come to an end. The Organization for Economic Cooperation and Development are this afternoon publishing a list of tax havens that are non-compliant and where action must immediately be taken.
And we have agreed tough standards and sanctions for use against those who don’t come into line in the future.
We will create a new Financial Stability Board to ensure cooperation across frontiers and to spot risks to the economy and together with the International Monetary Fund provide the early warning mechanism that this new global economy needs.
We will complete the implementation of international colleges of supervisors of financial institutions and we will implement new rules on pay and bonuses at a global level that reflect actual performance with no more rewards for failure. We want to encourage corporate responsibility.
http://www.pressrun.net/weblog/2009/04/old-washington-consensus-is-over-gordon-brown.html

Unfortunately, it was 12 years too late for the UK.  We are now faced with a Tory/LD government who have no intention of implementing any form of banking regulation before 2019.  The shadow banking sector and hedge funds still flourish.  International accounting is  dominated by the same companies that signed off the failed banks as ‘safe’.  Credit Rating agencies remain unregulated, with their conflicts of interests intact.  There is no transfer of information from tax havens, and banking secrecy persists.

Needless to say “We will implement new rules on pay and bonuses at a global level that reflect actual performance with no more rewards for failure.” is a complete pipe-dream.  And at a point when we are seeing the corporate takeover of the NHS, welfare, public services  and doubtless education in time “We want to encourage corporate responsibility.” is a tragic reminder of what a democratic socialist LP could have done in government.

Gordon Brown’s subsequent two years as PM were characterised by media assassination, undermining from within the LP, an appalling GE campaign and a victory to a more extreme asset-stripping government than Margaret Thatcher’s.  Ed Miliband is also subject to media assassination and undermining from within the LP.  If the UK is to be rid of this ‘wrecking’ government in 2015, or before, the left needs to hang together and Ed Miliband must come out fighting as he has (rather late in the day) on the NHS.  We need some conviction politics from the LP around which the broad left can unite to defeat the corporate policies of the right.  The alternative is to continue with the erosion of wages/pensions; mass unemployment (particularly of the 17-24 year olds); destruction of any vestiges of the welfare state; and the increasing political power of the transnational corporations.  Unfortunately, the old Washington consensus is alive and kicking under the Tory/LD coalition… as we shall see in George Osborne’s budget.