Thursday, 8 September 2011

The Guardian publishes my letter calling for Citizens' Quantitative Easing

The Guardian today publishes my letter calling for Citizens' Quantitative Easing. The letter was in response to Simon Jenkins' column.

The idea of Citizens' QE will be the idea I present (in 2 mins) at the Pragmatic Radicalism Labour Party fringe event on Monday 26 September.



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Sir,

Simon Jenkins says correctly that the objective should be "people spending, shops ordering, factories reopening and services employing"; and a voucher scheme for leisure spending, as tried in the Far East, warrants support. In addition to huge bank bailouts, the Bank of Englandhas printed £200bn through quantitative easing. This was done, we are told, to encourage the banks to lend to the real economy. They are not doing so.


What is required now is not more of the same, but citizens' quantitative easing, which would directly benefit ordinary people doing ordinary jobs, creating real and socially productive economic activity. Citizens' QE could comprise the issuing of a £200 voucher to everyone over the age of 18 which would be time-limited, non-transferable, non-cashable by the recipient and limited to the purchase of certain goods and services from small- and medium-sized enterprises, rather than large corporations. The money used to back the vouchers would be printed by the government and would not require further borrowing. Such a system would cost £9.6bn – small change compared with the hundreds of billions of taxpayers' money already spent propping up the banks. State intervention done in an instant for the City can be replicated on behalf of ordinary citizens. 

6 comments:

  1. Bang on! Why is the QE money being given to bankers? Being very, very old, I believe Gesell and Major Douglas still have something to contribute to getting money to the ordinary people and Henry George and JS Mill to stopping so much of that money disappearing into land values before it gets to the shops

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  2. Yes absolutely, this is what they did in Japan. The fact that new money printed has effectively just gone into bankers pockets has to make us all suspicious that this government (and the last) as well as the bank of England are on the side of the elite and not the side of voters.

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  3. I would also like to see some of the QE money being used to start a massive house building programme across England. There is a severe shortage of affordable and social housing. Building housing on a large scale would stimulate the economy, reduce unemployment because it would create construction jobs, tackle rising homelessness, reduce tensions in communities and reduce the housing benefit bill because a large amount currently goes to private Landlords.

    Is there any chance the Labour party will adopt this policy?

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  4. I would also like to see some of the QE money being used to start a massive house building programme across England. There is a severe shortage of affordable and social housing. Building housing on a large scale would stimulate the economy, reduce unemployment because it would create construction jobs, tackle rising homelessness, reduce tensions in communities and reduce the housing benefit bill because a large amount currently goes to private Landlords.

    Is there any chance the Labour party will adopt this policy?

    ReplyDelete
    Replies
    1. Thanks for this. I agree on housing. No economist I've ever spoken to has convincingly explained to me why the government couldn't print money and use it to build more houses. The multiplier effect would be huge in terms of additional economic activity, employment, etc. But more importantly, a socially useful outcome would occur - more affordable private and social housing.
      I wrote about housing and the need to consider building new cities (even on the Green Belt if necessary) for Huffington Post UK here http://slingerblog.blogspot.co.uk/2012/04/my-huffongton-post-uk-blog-on-housing.html

      You may also be interested that far greater minds than mine, who are established (and not left of centre) economists and commentators, have advocated something along the lines of Citizens' QE. See:


      Simon Jenkins (Guardian)
      26 Jan 2012 http://tinyurl.com/7crswtd
      6 Sept 2011 http://tinyurl.com/3ekojfc

      Martin Wolf (FT)
      29 Sept 2011 http://tinyurl.com/7mzx9jy

      Sushil Wadhwani
      18 October http://tinyurl.com/82v63n3

      Sir Samuel Brittan (FT) (not explicitly re printing money)
      December 2011 http://tinyurl.com/84xp2zj

      Delete
  5. Pragmatic Radicalism is that the one where Labour sells out at during the the struggle or at the end?

    ReplyDelete

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