It’s time to start talking about re-capitalising the real economy….
Another day, another bailout – this time from the Bank of England which no doubt feels obliged to do something given the appalling lack of growth evident in the British economy. Some people may say hurrah, that is exactly what we need, some cash flowing round the economy. Sadly, that is not what the BoE is doing, neither me nor you will see a dime; quantitive easing in fact a) doesn’t actually create fresh money supply – it’s all electronic nor b) does it pump money into the actual economy. It involves the BoE creating electronic money to buy primarily government bonds from investors in the financial markets.
This tells us exactly where the money is going – not into the real economy, to create jobs, to help households or even small business. It is yet another pump-primer for the still ailing financial sector. It is time for the left to start making some radical arguments about this sector. For example, it is time to point to its utterly parasitic nature, how it is bleeding the rest of the economy, the real, wealth-creating economy dry. It is time, in my honest opinion, to say let the finance sector wither and die the way it deserves too – yes this will be painful at first but it is the only way to achieve the fundamental rebalancing of the economy we need. In the end, it is what will happen inevitably in any case.
The finance sector is putting nothing back into the wider economy. Businesses are not receiving the credit they need and households, rather than being helped with debt are still being subjected to utterly absurd bank charges. All of this is set against the backdrop of rising inflation, falling wages and rising unemployment. This is brewing a perfect storm for the economy and for the government as people continue to be crushed in this ever-tightening vice. You begin to see how futile and utterly wrong-headed both the Bank of England and the government are in this context – they, like Nero, fiddle and faff feeding the parasite economy located in the City of London while the real economy burns.
In this situation, it amazes me that left-wingers continue to support measures like quantitive easing and bailouts in general. It is dubious on grounds of principle but it makes absolutely no economic sense. What is needed is a bold economic alternative deliberately pitched to the real economy. Nothing should be ruled out but certainly on the table should be:
- Erasing of all debt – resetting the debt clock either by doing this manually or by giving people specially printed vouchers and/or cash. This deals with one problem, the debt one and in the short-term would be a temporary shot in the arm for the economy.
- Money printed but specifically funnelled into investment funds. If this was done to promote new forms of ownership – as suggested here in Progress – this would represent a start on the work of restructuring the economy that needs to exist.
- Other measures, in terms of the necessary restructuring need to take place, it will not be enough to erase the debt problem but the time has, for example, without a shadow of a doubt come for a serious incomes policy which has as its goal improving the wages for the majority and curbing the excesses of the minority.
No reason exists for the left, or the Labour Party to continue supporting bailout after bailout – they don’t work and represent a direct attack on the very people we are supposed to be helping. We need to counterpose the parasite economy which is an absolute drain on our resources and a fetter on our growth to the real economy and start to advocate re-capitalising that instead of lining the pockets of an already bloated and out-of-control financial sector.