Globalisation – the open trading system – is fragmenting

Philip Stephens, an associate editor, in the Financial Times: Globalisation – the open trading system – is fragmenting; it needs an enforcer – a hegemon, a concert of powers or global governance arrangements”.

Evidence: the collapse of the Doha, the demise of global free-trade agreements, and the emergence of regional coalitions and deals. The emerging economies are building south-south relationships and the Brics nations are setting up their own financial institutions.

Colin Hines, co-founder of LWM goes further – and deeper. He advocates the rebuilding and rediversifying of economies by limiting the entry of finance, goods and people from other countries, ensuring local provision of goods, finance and services and weaning themselves off export dependence. Depending on the context, ‘local’ goods would come from the nearest source, the region, the nation state or even a regional grouping of nation states – eg oranges from EU/Spain.

Domestic businesses and funding sources would then meet the needs of the majority in society in all countries. The prospect of such increasing economic security for the majority could gain widespread political support ranging from those on the left, the centre and the greens through to small ‘c’ conservatives.

In 2008, just before the economic collapse, as GND convenor, he presented a mechanism which would have enabled the Green New Deal to prosper. ‘Green Quantitative Easing’ would have made every building in the country energy efficient, and built hundreds of thousands of new, affordable and energy-efficient homes. A massive boost would have been given to economic activity, providing jobs on a living wage in every community in the UK, whilst reducing its environmental impact.

Later this month he will be speaking in Italy at a conference of left economists to float the progressive protectionism agenda and criticise the left, centre and greens for their support of open borders, leaving the extreme right in an ever more powerful position.

If the solution is not a Green New Deal then what is it?

 

Colin Hines, co-founder of Localise West Midlands, sends news of a report advancing a much-needed debate about how to move the UK out of the counterproductive politics of austerity and into the age of the Green New Deal.

GND anniversary cover 13He sees this as a matter of the utmost urgency and thinks that if it isn’t introduced rapidly, we are likely to enter another economic slump, adding:

“A Green New Deal could be implemented now if the political will existed. It calls initially for a £50 billion a year investment programme to boost economic activity, in a way which provides jobs on a living wage in every community in the UK, while reducing our ecological impact”.

The latest Green New Deal Group report published on September 10th proposes funding through the following measures:

  • tackling tax evasion and avoidance;
  • a programme of Green Quantitative Easing (QE), where the Bank of England ‘creates’ tens of billions of pounds to be used in a targeted fashion to fund a Green New Deal, generating jobs and economic activity that also transform the economy for the future. This is very different from any previous round of QE;
  • controls to ensure that banks that were bailed out by the taxpayer also invest in such a programme at low, sustainable rates of interest;
  • encouragement for pension funds and other institutional investors to invest in the Green New Deal;
  • buying out the private finance initiative (PFI) debt using Green QE and redirecting some of the otherwise huge repayments into funding green infrastructure.

This real Green New Deal would create employment, generating wages, salaries, profits and tax revenues – from both the public and private sectors. Tax revenues could then be used eventually to finance the economic deficit and pay down the national debt.

More than that, insulating every home and building in the UK, transforming our transport system for a low carbon future and ensuring maximum efficiency in the use and reuse of raw materials would create jobs across the country.

Investment in renewable energy could be targeted so that it would help to rebalance the economy away from London, while also providing reliable sources of clean energy and enabling the UK to show global leadership on climate change.

Larry Elliott of the Guardian ends his article by addressing the first reaction of many:

“In one sense, the timing could hardly have been worse for the new GND report. The economy is growing again. Memories are short. But ask the following questions. Do you think a recovery that currently requires households to get deeper into debt is for real? If it isn’t, how long before the age-old problems of the UK economy reassert themselves? Are we any closer to grappling with the triple crunch than we were five years ago? If the solution is not a GND then what is it?”

GND summary

An article on the subject by the economics editor of the Guardian may be read here.

 

Turn the economy round: release funding for real projects

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Richard Murphy for Tax Research UK advocates positive action by government

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Points made in January are just as relevant today

30% of all government debt is owned by the Bank of England – which is government owned – so debt is not as high as the Tories claim and the need for debt reduction not as pressing as the Tories say. This debt can be cancelled, releasing funding for real projects.

  • Investing in HMRC is about revenue-raising: closing the tax gap of up to £120bn is an essential part of this agenda.
  • Green quantitative easing involves spending money to create jobs: £200bn went to save banks which are not doing this.
  • Real pension reform is essential. Why give £37bn a year for pension tax reliefs when pension funds refuse to invest in job creation the £80bn a year they get as a result?

Murphy concludes:

If one quarter of pension fund money (£80bn a year) went into job creation, matched by a similar sum from green quantitative easing, investment in the UK could be transformed and gradually turn the economy around.

 

 

Inventor of QE and Green MP call for up to £70bn Green Quantitative Easing to Stabilise Flagging UK Economy

Practical proposals emailed to us by our founder member Colin Hines:

*** NEWS RELEASE ***

EMBARGO: 00.30am, Thursday 9 February 2012

INVENTOR OF QE AND GREEN MP CALL FOR UP TO £70BN GREEN QUANTITATIVE EASING TO STABILISE FLAGGING UK ECONOMY

Economist Professor Richard Werner, who proposed the term “quantitative easing” in Japan in the 1990s, and Caroline Lucas MP, of the Green New Deal Group, are calling for a £70 billion programme of “Green Quantitative Easing”in order to create hundreds of thousands of jobs, and set the country on course for a transition to a genuinely green economy.

In a report launched today, Professor Werner, Director of the Centre for Banking, Finance and Sustainable Development at the University of Southampton, makes the case that Green QE can reach parts of the economy that traditional QE has failed to do, making a real difference in terms of jobs and the environment.

Prof. Werner said:

“The Bank of England is expected to announce today a further round of Quantitative Easing to follow the £200 billion of QE1 announced in 2009 and the £75B of QE2 announced last year.

“This staggering £275 billion largely ended up with the banks in the futile hope that it would result in a substantial increase in UK lending to business. Instead it was used to rebuild their balance sheets and invest in commodity speculation.

“To ensure that this does not happen again, we need a different kind of QE, to help the wider economy directly and to implement some badly needed green projects that would enhance the sustainability of the economy and improve the environment—as well as creating thousands of new jobs.”

Green MP Caroline Lucas (Brighton Pavilion), who has welcomed the report, said:

“It is understandably difficult for people to get their head around the idea that the Bank of England could magic out of nothing up to £70 Billion of Green Quantitative Easing. Yet it has already e-printed £27 billion (around £4,000 for every man woman and child in the UK) in an effort to get increased borrowing to British business via giving the money to the banks. But this money has completely failed to reach small businesses in the real economy which urgently need support.

“The bankers have had their £275 billion chance.  Now it’s time for the Bank of England to help create jobs, stabilize the economy, and support the environment through a package of Green Quantitative Easing. I will be calling upon MPs of all parties to support these proposals, and urging my Parliamentary colleagues on the Treasury Select Committee to raise the issue of Green QE when they next question Sir Mervyn King.”

The Green New Deal group has called for Green QE to initially spend up to £20 billion on fitting free solar PV for the occupants of the roughly 3 million south facing roofs, best suited to capture the maximum amount of energy. Based on last year’s figures when around 20,000 installation jobs were created putting PV on 150,000 dwellings, a million home a year programme would eventually create 140,000 jobs. If that were to be extended to all the potential 9 million homes that could benefit from PV installation at a cost of up to £55 billion, then the employment growth would be much larger still. The households involved would save up to £250 per annum in reduced electricity bills.

A further £16 billion of Green QE could be spent kick-starting the Government’s Green Deal energy efficiency programme for homes. The Government expects this to support at least 65,000 jobs in insulation and construction by 2015. Local authorities, many of whom are already involved in planning to make tens of thousands more local homes energy efficient, could access a QE Green Deal fund to initially finance such work.

Professor Richard Werner said:

“These are exceptional times and they call for exceptional action from the Bank of England. Mervyn King has expressed a desire to see QE help tackle “the most serious financial crisis at least since the 1930s if not ever.” Another serious crisis is climate change and Green QE could not only help address that, but through the huge number of jobs and business opportunities involved, it could also help tackle our financial crisis.”

Press contacts:

Professor Richard Werner

University of Southampton

Mob: 07717 855478

Email: R.Werner@soton.ac.uk

Colin Hines

Convener Green New Deal Group

Tel: 0208 892 5051

Mob: 07738164304

E: hinescolin@gmail.com

Melissa Freeman

Senior Parliamentary Press Officer

Office of Caroline Lucas MP

House of Commons

Tel: 020 7219 0221

Mob: 07590 050565

Email: melissa.freeman@parliament.uk

Website: www.carolinelucas.com