FT in the dock 2: a host of economists say our failing economic model demands Labour’s bold ideas
(Ed) Is Jim Pickard’s language in this article – seize, confiscate, state raid, expropriate – actually adding to Project Fear, which is becoming Project Cold Hard Reality according to the Scotsman – no doubt thinking of the number of jobs and assets moving to continental Europe?
In a letter today signed by over eighty economists, including Richard Wilkinson, Guy Standing, Prem Sikka, Kate Raworth, Richard Murphy, Steve Keen, Joseph Huber, John Christensen, Dani Rodrik, Thomas Piketty and lead signatory, David Blanchflower, the FT is charged with failing to appreciate the severity of the UK’s current economic condition. The indications include:
- the country’s ‘meagre recovery’ from the 2008 banking crisis, fuelled by rising household debt,
- stagnating earnings,
- a housing market crisis,
- the wealthiest disproportionately benefiting from growth since the 1980s and
- a failure to take adequate action to prevent climate and environmental breakdown and prepare for their effects.
They point out that all political parties in the UK are proposing increases in public spending to meet these challenges – and charge the FT with reproducing a number of misconceptions:
Labour’s proposals are affordable: the FT’s source, an Office for Budget Responsibility analysis, “ignored the impact of public spending on growth, and thus on tax receipts” – a critical relationship noted by senior IMF economists in their critique of austerity.
The economists pointed out that government can borrow at negative real interest rates to fund pressing infrastructure, education and environment projects, many of which offer returns well above zero, generating higher future tax receipts to spend on social and environmental needs such as those listed above. At present, they observe, taxation levels in the UK remain lower than in most well-provided European countries.
They corrected the implication that a mechanism such as an Inclusive Ownership Fund (p.42) would require companies to pay out cash out; companies would issue new shares to be placed in a mutual fund – just as shares are now issued for executive compensation.
After being reminded that in the 1940s and 1980s, major policy changes were made in response to a failed economic model – at first seen as overly radical but later accepted across the political spectrum – the FT editor might heed the advice of the critical reader whom he invited to write a letter:
“There needs to be a revolution in the FT — not the communist type of revolution, but a revolution that turns the mindset to see the world beyond a white middle-class neo-liberal tinted lens.”