Media 60: the BBC, aka the ministry for disinformation, attacks an ‘alliance of leftists and libertarians’
Analysis’ latest programme indicates that the political establishment is seriously worried about the pro-poor, anti austerity economic programme of the new Labour administration with its talented line-up of advisers which includes David Blanchflower, Thomas Piketty, Richard Murphy, Joseph Stiglitz, Ann Pettifor and Simon Wren-Lewis.
Universal Basic Income was a vehicle selected to downgrade ‘the left’ – or the Corbyn threat to vested interests.
Briefly it asserts that UBI:
- gives the right to be idle/lazy.
- is a bizarre idea, a Utopian daydream,
- is gaining serious traction on the left and
- is just the ‘flavour month for policy wonks’.
On the programme she called UBI “an idea winning support from an unlikely alliance of leftists and libertarians” and on Twitter: “Universal basic income: salvation for the left or the seeds of its destruction?” Search engines find Is the left’s big new idea a ‘right to be lazy’? – BBC News.
Sonia made serious omissions – due to ignorance or strategy? Though carefully lacing the programme with references to robots, she interviewed no acknowledged experts on the subject of UBI and never referred to the widespread interest and pilot projects by governments and universities in other countries.
So who is Sonia? The invaluable Public Affairs News enlightens us
Sonia Sodha, appeared on the programme merely as the chief leader writer for the Observer. She did not tell listeners that she is employed by the establishment’s PR supremo.
As several times stated on the programme she was a policy adviser to Ed Miliband but an online search reveals that she has now joined the Westminster Policy Institute, headed by Sean Worth, a special adviser to David Cameron in Downing Street. WPI describes itself as an experienced and highly-networked team of consultants drawn from backgrounds in Downing Street, the Treasury and senior policy and media roles, providing strategic advice and hands-on support.
To compensate for the programme’s deficiencies, here is a helpful thumbnail UBI sketch on Money Week, no hotbed of the ‘loony left’, but a widely read financial magazine:
(UBI) makes all work pay by abolishing the classic trap of all means-tested benefits.
Under a universal income, there are no perverse disincentives that give people an excuse to stay at home in the face of an effective marginal tax rate of 80%.
Given that one of the main challenges of the age appears to be in-work poverty, rather than mass unemployment, a basic income system could play a significant role – especially in an age of disruptive technologies that make working lives less and less secure.
Nor is there any disincentive to prudent long-term saving – no one has their benefits stopped for having too much in the bank.
Goodbye British made steel: would a Corbyn-led government say “we can’t favour domestic production in the face of Chinese dumping”
The 99% don’t agree with this government policy
Why not favour British production? As festivities celebrating the visit of President Xi Jinping proceed apace, Richard Murphy’s Green Deal colleague, Colin Hines, describes the collapse of the steel industry as “A triple whammy forced on Europe by the Treaty of Rome’s open borders diktat”. He adds – in the Guardian:
The Magic Money Tree: there is a way out of this – and a funding source to finance it
- The EU must be reformed by a “treaty of home”, allowing national economies to flourish via border controls to goods, money and people. The problems of protecting domestic sectors like steel could then be overcome.
- Future mass migration could be limited once its causes are tackled; in the interim massive aid should be given to those countries hosting refugees.
- Finally, austerity should be replaced by funding the rebuilding of social and physical infrastructure. The simple way to pay for all this is with the EU’s magic money tree (phrase coined by the Economist?), the European Central Bank, which is e-printing €60bn a month in a failing attempt to counter the downsides of the free market in Europe.
“The Bank of England’s quantitative easing programme has created £375 billion of magic money, which keeps interest rates artificially low, thus engineering a recovery, or at least the illusion of one. But this sort of magic money tree is more at home in a Grimm’s fairy tale than a modern one where everyone is destined to live happily ever after. Because not everyone’s a winner under QE. If you’re rich and you’re able to borrow, then you’re laughing all the way to the bank as it boosts the value of assets and keeps debt cheap . . . But if you’re prudent – a saver, or a pensioner – then you see the opposite happen”.
And Positive Money points out that creating money is as easy as the flick of a pen and the clattering of some computer keys. While the UK’s “magic money tree” is currently controlled by the private banking system, the UK government is quite capable of altering this situation. All it requires is the political will to act.
Colin Hines recommends that next month, the ECB could instead print:
- €20bn of “migrant QE” to help cope with the refugee crisis,
- €20bn of “jubilee QE” to deal with the continent’s debt problems and secure the future of millions of future global warming migrants and
- €20bn of “climate QE” put on the table at next month’s climate change conference in Paris.
As Scots rescue their shipyard the government merely says “Goodbye British made steel” and buys shares in foreign steelmakers.
Corbyn would do better: the banks have had more than their share: now for migrant, jubilee debt and climate QE.
The title reference is to an article by Matthew C Klein, a contributor to the FT’s Alphaville: ‘daily news and commentary service giving finance professionals the information they need, when they need it’ – retweeted by Paul Gosling.
Klein (right) says that if Jeremy Corbyn becomes leader of the UK Labour Party, one positive consequence will be ‘the ensuing discussion of the monetary policy transmission mechanism’:
The existing monetary policy tools have the ‘unseemly property’ of appearing to work mainly by making the rich richer and hoping that some of the extra wealth gets spent.
To rebalance the economy, “moving towards the high-growth, sustainable sectors of the future, the Bank of England could be given a new mandate to upgrade the economy to invest in new large scale housing, energy, transport and digital projects”.
Quantitative easing for people instead of banks? The bulk of the British economics commentariat erupted but Klein deems the core idea sound, possessing ‘an impressive intellectual pedigree’.
Corbyn’s plan to have the Bank of England fund government-directed investment in infrastructure could work – in 2011, American economist Adam Posen (left) supported something similar when he was on the Monetary Policy Committee of the Bank of England, except that he focused on small businesses.
Posen thought that private lenders weren’t providing credit where he believed it was needed and recommended creating new public investment banks that could originate and secure loans into bonds that could then be purchased by the Bank of England, thereby funding new business investment.
Corbyn wants specialised “green” investment banks, housing authorities, and local governments to be able to finance infrastructure investment with funding support provided by the Bank of England. Klein comments on the Posen/Corbyn proposals: “We fail to see a significant difference”.
Nicholas Watts in the Guardian reports that Richard Murphy, Tax Research UK, who drew up the people’s quantitative easing plan for the Corbyn campaign, points out that we will get near the Bank of England’s inflation target of 2% only when we have established people with higher wages and increased productivity and the economy is “humming along nicely”. He adds that once you have people back in work on decent wages, you have to turn QE off because continuing at that point would be inflationary.
Quantitative easing for people instead of banks?
Klein agrees that if Corbyn’s preferred investments prove to be productive, they would help to restore some lost ground and lead to higher real wages for Britons and goes further, predicting that the expanded capacity due to extra investment spending may avoid inflation.
Corbyn, also quoted in the Guardian article, “It is in the long-term interest of the UK to rebuild a resilient industrial base . . . with its people, energy, land and water . . . ”.