Colin Hines, Convenor of the Green New Deal Group, addresses the Financial Times:
Your editorial was correct to call on the European Central Bank to look at QE, but wrong to say that QE shouldn’t address inequality (‘Farewell to the Fed’s QE3, a monetary job well done’ Financial Times November 1st/2nd).
Opinion is now coalescing around the realisation that rising inequality and the fall in real incomes is threatening future growth through its adverse effect on effective demand within countries.
In terms of the UK, its leading export markets like those of the rest of the Eurozone, are also experiencing slowdowns in effective demand. This points to the need for countries of the EU to concentrate more on their domestic economy, but in a way that benefits all corners of nations as well as the environment. This suggests the need for a new round of QE, which would tackle these problems head on this time.
In the UK this could contribute to funding a carefully-costed, nationwide programme of energy efficiency in the nation’s 28 million homes and 2 million commercial and public buildings. Also crucial, such a QE programme would help to overcome the present annual shortfall of 240,000 new, affordable, sustainably sited, energy-efficient homes.
The previous QE purchased government bonds, and ‘green infrastructural QE’ could buy bonds from a suitably enhanced Green Investment Bank to invest in such a programme.
This is technically feasible since earlier this year your paper reported the Governor of the Bank of England as saying that if the government requested it, the next round of QE could be used to buy assets other than government debt (‘Mark Carney boosts green investment hopes’ Financial Times, March 18th, 2014).
This ‘jobs in every constituency’ approach would create employment, business and investment opportunities in every city, town, village and hamlet in the country, providing a vote winning commitment for all political parties in the run up to the election.