Labour leadership election result:
Yvette Cooper – 17%
Liz Kendall – 4.5%
Jeremy Corbyn – 59.5%
Total votes cast: 422,664
People’s quantitative easing would see created wealth poured into social housing and infrastructure rather than the coffers of the super-rich, writes NOAH TUCKER
In the closing moments of Thursday’s Sky News debate, the “impassioned” attack by Yvette Cooper on Jeremy Corbyn’s proposal for people’s quantitative easing (PQE) pleased the pundits. But it was Corbyn’s calm rebuttal, in which he called for investment instead of austerity, that won enthusiastic applause and overwhelming positive instant poll ratings.
The audience was right to trust Corbyn rather than Cooper. Her tirade against PQE was replete with fallacies.
Her fundamental assertion against PQE was that the money raised would need to be paid back — and many times over — as implied by her soundbite that PQE is “PFI on steroids.”
But as Richard Murphy, the architect of the policy, points out: “That contradicts the facts. Not a penny of QE money the whole world over, including the £375 billion created by the Bank of England since 2009, has been repaid — nor is there any prospect that it will be.”
I asked Murphy to clarify and he explained: “All money in an economy, as is now accepted, is created by lending. Therefore, when loans are repaid the result is that money is cancelled. Banks in the UK economy traditionally made most money by ever-expanding their loan books. The result was the 2008 crash. QE has, in effect, created the new money which the economy has needed since 2008, as bank lending declined.
“There is nothing magical about QE. The Bank of England lends money to one of its own subsidiaries to create new money, which is used to buy back the government’s own bonds (known as gilts). That has effectively cancelled much of the national debt, and means that all the tales of uncontrollable deficits have been complete nonsense.”
Notably, these gilts bought by the Bank of England are not purchased directly from the Treasury. They are bought second or third-hand in the financial markets, from private-sector institutions which have already purchased the bonds, thus — due to supply and demand — increasing the overall prices of financial assets. The result is obvious: QE has made very rich people, who are the ultimate owners of most financial assets, very much richer.
PQE, in contrast, would not involve purchases in the financial markets but instead would fund construction of social housing, infrastructure and other useful investments.
Nevertheless, the principle by which the money is created would be identical. There are transfers between parts of the state, but there is no outside source from which the money has been borrowed: the state does not owe it to anybody and there is nobody to pay it back to because the state’s own bank (the Bank of England) has made the money for the government’s own use and to its instruction.
Had Cooper not been declaiming in soundbites, she might have said that QE money could eventually be “uncreated” — leaving the state £375bn worse off in current terms. Thus the Bank of England would sell its gilts, and then delete, from its balance sheets, the many billions thus received.
But a decision to do this would be entirely voluntary on the part of the government. And it could only really happen if the state was running a surplus, or something near it, or the right conditions for the sale would not exist. Given that no useful purpose (for any section of society) would be served by such a sale, and the negative consequences that would ensue, the likelihood of this ever happening, as emphasised by Murphy, “is remote in the extreme. No government of any persuasion is ever going to pursue such a policy.”
Berating Corbyn for offering “false promises,” Cooper claimed in Thursday’s debate that “quantitative easing has stopped because the economy is now growing. If you simply keep printing money when an economy is growing it simply increases inflation.”
But QE has not stopped. Since 2012, Britain’s QE programme has been maintained at £375bn, but it remains an active programme. The Bank of England makes a profit from the interest paid on the gilts and so far has earned £50bn, which is remitted back to the government. And each year a proportion of the bonds held by the Bank of England come to maturity, resulting in payouts of around £26bn annually (on average) being received by the bank. Currently, this sum is then injected straight into the financial markets to buy more gilts, keeping the total held by the bank at the overall level of £375bn.
The significance of this for PQE is that expansion of QE above its current level, (although that might be considered desirable) would not be necessary for a considerable sum to be released for public investment. Without any money having to be printed, initial funds of up to £26bn (on average) could be diverted each year from gilt purchases and instead be made available to the National Investment Bank. To put that figure into perspective, to build 100,000 new council homes per year would cost an estimated £14bn annually (without taking into account the reduced housing benefit expenditure).
But could the current QE programme be modestly expanded, thus producing further cash for public investment without causing run away inflation? The $6.5 trillion worth of QE money produced globally has mainly been created alongside economic growth (or per-capita growth in the case of Japan), and without resulting in excessive inflation. Current growth predictions worldwide are having to be reduced following the slowdown in China.
In Britain, the government’s target rate of inflation is 2 per cent on the Consumer Price Index (CPI). Yet despite our trumpeted GDP growth — encompassing asset bubbles, rising consumer debt and falling manufacturing output — CPI inflation is currently at 0.1 per cent per annum. There is plenty of scope for a moderate rise in the level of QE without causing raging inflation.
Coincidentally, on the same day as the Sky News debate, Mario Draghi of the European Central Bank announced that the it will consider a further enlargement of its QE programme. This is above its present expansion which is at the rate of €60bn per month, and is increasing the limit on QE bond purchases from 25 per cent to 33 per cent of the national debt for countries in the eurozone.
This will of course not apply to Britain, because our government decides how much QE takes place here. But for comparison, if Britain were to observe an upper limit for QE of 33 per cent of the national debt, that would allow the “printing” of up to £140bn — vastly more than proponents of PQE are suggesting.
Responding to Cooper, Corbyn asked what her proposal was how to fund the public investments which are so needed. Is it PFI? That was of course the previous New Labour solution which has left public authorities with debts of £220bn and rising. For those who accept the narrative of austerity there is no answer to that question — certainly the private sector and the “free” market offer no solutions.
As Murphy points out, the starting point is to look at what is needed to build the country in a way that benefits the people, addresses social problems and supports growth — building social housing, infrastructure and technical innovation. This will have to be driven by the public sector. The money for it can be derived, depending on the economic situation at the time, from a mix including fairer taxation, issuing bonds and PQE.
The importance of Corbyn is not just that he is discussing what means may be used to achieve it, but that he is pointing to what it is that we must achieve.
No words are adequate to describe the heartwrenching picture of Aylan Kurdi lying dead on a Turkish beach. What we can say without any equivocation is that this dead 3 year old Syrian boy symbolises the cruelty and inhumanity that underpins what passes for civilisation in the West.
Denying sanctuary to human beings desperately attempting to escape war and chaos can be described as many things, but justice is not one of them. To those deserving of the hand of friendship we offer the fist of fury. To those crying out for help we turn away. The result is the suffering of children such as Aylan, whose death as a consequence is tantamount to murder.
There is much to be said about the conflict and chaos that has engulfed the Middle East, where the majority of the refugees desperately seeking sanctuary are from. But the idea that we are blameless can only be the product of mendacity or ignorance. We have helped to create and foment crisis and chaos as far back as Iraq and on into Libya and Syria, evidence that we are governed by machine men and women whose conception of politics and the West’s role in the world begins with callous indifference to the human suffering it continually unleashes. Indeed only those who have had their humanity surgically removed could possibly fail to have been moved by the plight of these people on our TV screens over the past few weeks.
A refugee crisis that is now biblical in scope has met thus far with an obdurate refusal by governments across Europe to budge from a refusenik position of denying them refuge. This is no surprise, as aided by a complicit right wing and reactionary media the discourse across the West on immigrants and asylum seekers has plumbed the depths of moral repugnance and disgrace. When they haven’t been dehumanised as ‘economic migrants’ they have been smeared as constituting a ‘swarm’ by the likes of British Prime Minister David Cameron.
Vying for the worst of the many examples of this poisonous narrative was the idea promoted by the UK far right anti-immigration party UKIP that Britain only accept members of Syria’s Christian minority as refugees, asserting that Syrian Muslims can go to other countries in the region.
What kind of sick and twisted morality is this? From here we are only a few short steps away from making Muslims among those fleeing put on an armband with a crescent on it in order to separate them from their Christian or non-Muslim counterparts. UKIP’s position moves them beyond the truth that a little knowledge is dangerous to confirm that it is even worse to be crippled with pig ignorance and be afforded a platform from which to continually prove it.
Meanwhile back in the world occupied by people with a heart and a conscience, the outpouring of rage at the image of Aylan Kurdi allows us to hope that his death may not be in vain. The fact that he died along with his mother and brother only adds urgency to our demand that Britain and Europe come together to implement a cohesive humanitarian reponse to this growing humanitarian crisis. Notably, at time of writing cohesion across Europe remains a forlorn hope.
There have been exceptions to the intransigence that has dominated the issue across the EU. Germany and Sweden have managed to salvage something resembling solidarity in Europe. Merkel in particular, in fact, has been immense, helping to create an atmosphere in Germany that has seen thousands of refugees overwhelmed with kindness from welcoming committees upon their arrival at German train and bus stations.
Who would have thought that the German Chancellor, only recently responsible for punishing Greece with austerity, would be the one to shame other EU leaders on their lack of humanity by comparison?
Aylan Kurdi’s death poses the question of what we are prepared to do in response? Are we going to continue to deny these people refuge or are we going to help them? Upon the answer hinges our right to continue to claim the moral high ground against barbarism.
These people are not migrants. They are not even refugees. They are our brothers and sisters, flesh of our flesh, and denying them help at their time of need is a crime. Lying dead on that beach, Aylan reminds us that a child is the most precious thing in our world. Thus, the need to do whatever it takes to protect and nurture them transcends borders, nationality, ethnicity, religion or any other factor. Whether as a nation, society or culture, we are diminished by his death. Worse, we are culpable in the tragic manner of it.
However at this point words of anger and sentiments of grief are not enough to deal with the disaster unfolding. Surveying the contours of a humanitarian crisis that shows no sign of abating, we see that the EU has unraveled in the face of it. Rather than unity it is disunity that defines it – to the point where it is paralysed with inaction, its member states driven not by a common European agenda but by multiple domestic agendas, none of them progressive.
Consequently, it is now up to the United Nations to step into the breach. Urgently required are the resources, organization, and infrastructure necessary to alleviate the suffering taking place and to ensure that these people are properly cared for, prioritizing their wellbeing and dignity as human beings in the process.
Our enemy is not and never has been those seeking refuge from war and conflict. Our enemy is and always will be those who would deny them.
If you haven’t signed the petition please do so now and join the over 90,000-plus who have thus far.
At 100,000 signatures the petition will be considered for debate in Parliament.
Even if it doesn’t make it to Parliament, it is still crucial to record the widespread and growing opposition to the Israeli Government’s brutal and barbaric treatement of the Palestinian people.
The Labour purge of new supporters, denying an untold number a vote in the leadership election, has brought the party into disrepute. Many are convinced that it is a right wing witchhunt of socialists and people with left wing views.
Whatever its motives, it has exposed a culture of incompetence within Labour that will do little to arrest its perception as a party in decline among the wider public.
The confusion being wrought is widespread. Take me, for instance. I have been a member of Labour since November last year. I have never attended one Labour Party branch meeting or one event organised by my local branch since. Not one.
Moreover, I did not vote Labour in the general election. I voted Green in the general election. Why? Because my constituency Labour candidate accepted a campaign donation from Tony Blair. The idea that any socialist or progressive could vote for anyone who accepts money from a man responsible for the carnage visited on the Iraqi people is beyond belief.
My loyalty is not and never has been to a political party. My loyalty is to working class communities and oppressed people here and abroad. If Labour stands up for working class and oppressed people I will support it. If it attacks working class and oppressed people, as it did under Blair and Blairism, I will oppose it. What’s more, I suspect many on the left feel the same way.
I cast my vote for Corbyn online and have yet to be told it has been rejected.
When they deny people a vote with the words, “We have reason to believe that you do not support the aims and values of the Labour Party,” they are clearly suffering from a lack of historical perspective.
What aims and values are they referring to? Is it the aim of full employment and the values of the welfare state, NHS and social and economic justice that informed the party’s founding principles and the policies of the ’45 Labour government? Or are they referring to the aims of Blairism with the values of the free market, big business, the City of London and illegal wars and imperialism?
To ask the question is to answer it.
This outrageous filtering of votes and people who signed up under the rules set up by the very leadership that is now busy purging hundreds of people from the party is a disgrace. It is an example of the very vote rigging we have long been invited to associate with Robert Mugabe. It is also a studied insult against Jeremy Corbyn, illustrative of their view of him as an incorrigable outsider of mere second class status.
Corbyn will likely win regardless of this process . However who would bet against them attempting to have the election annulled on the basis that it has ended in the ‘wrong’ candidate being elected?
Blair, Mandelson, Brown, Straw, Campbell – a rogue’s gallery of opportunists, war mongers, and liars; men for whom principles in a political leader are like wings on a horse.
A stake is about to be driven through the heart of New Labour and it is not before time.
The defeat of Labour in the 1983 General Election has clearly entered into folklore for many in the party, and simplistic, mono-causal explanations are common. It is an interesting phenomenon, and not one confined to the Labour Party, that historical events of great complexity are shoehorned into the confines of contemporary, factional disputes.
But let us look at the argument advanced by many Progress supporters, and others on the centre right of the party, that we need to win elections from the centre ground, and then move the centre ground once in office.
Firstly, the whole concept of a “centre ground” implies a managerial approach to government where there is an incremental gradation between left and right. There can be no stable “centre ground” when two incompatible political or economic theories are being contested.
Much is said of the way that both Attlee and Thatcher created a paradigm shift that resulted in a new political consensus. However, those political sea-changes were a result of both changes in the actually existing political-economy, and the consequence of shifting intellectual debate outside of the small world of electoral politics, and neither Attlee nor Thatcher won from the centre ground.
It is surely incontrovertible that the greatest Labour government was that resulting from Clement Attlee’s general election victory of 1945. But the prelude to 1945 was the long recovery from the melt down of the second Labour government in 1931.
Those of us who grew up in traditional Labour supporting families in the 1960s and 1970s will have been immersed in the folkloric betrayal by MacDonald and Snowden in 1931. In the face of the Great Depression they proposed cutting unemployment benefit and reducing public sector wages.
Neither of them were bad men, nor were they on the political right. MacDonald was a former Marxist who had opposed the First World War. Snowden, who had been an inspiring speaker about the future socialist utopia, afterwards became a Keynesian and abandoned his support for MacDonald. They did however consider themselves at the time to be prisoners of political moderation and economic orthodoxy. The Labour Party’s own economic theory in the 1920s had been based upon an underconsumptionist model that failed to account for the 1929 crash, and they were under massive political and establishment pressure to maintain a balanced budget to stay on the gold standard. This was a position of such overwhelming orthodoxy, and with such massive public support, that for the Labour government to defy the expectation would put themselves outside the pale of establishment opinion.
The opponents of MacDonald and Snowden in 1931 were hardly firebrand impossibilists. JR Clynes and Arthur Henderson were both former leaders of the Labour Party. Clynes was a former senior official in the GMWU (now GMB), and Henderson an official of the Iron Founders Union, who advocated social partnership. They had the impeccable “moderate” credentials: both had supported Britain’s involvement in the First World War, and Clynes as Home Secretary had refused permission for Leon Trotsky to enter the UK.
However, they did know the difference between right and wrong. They did know that a Labour Party that aspired to build a fairer and more equal society had to side with the victims of an unjust and exploitative economic system, and not simply accept the self-serving economic orthodoxy of the rich. Their instinctive solidarity with the poor was informed by their own personal experience. They had become MPs not as part of a career plan, but because they had arisen out of the working class as able fighters for their fellow workers, their neighbours, families and communities.
The 1930s were difficult times for the Labour Party, and Labour were punished in the 1931 General Election, before recovering in 1935. However, had it not been for the strength and courage of the MPs, and their trade union backers, who refused to vote for cuts to unemployment benefit in 1931, then the Labour Party would have ceased to exist.
In circumstances far more difficult than today, the Labour Party carried out a moral and intellectual rearmament during the 1930s, embedding itself in communities as the centre of opposition to ruthless Conservatism, and developing practical but radical policies that would transform Britain. It was this process which meant that Labour was ready to return to government in 1940 and to win an outright election victory in 1945.
I hadn’t seen Ann Pettifor’s article on a similar theme when I wrote this. You can see Ann’s article here
DOZENS of Jewish campaigners sent an open letter to the Jewish Chronicle yesterday blasting the paper’s “McCarthyite” smear campaign against Labour leadership favourite Jeremy Corbyn.
The group of 47 people — including poets, actors and university lecturers — accused the newspaper of branding Mr Corbyn an “anti-semite” by touting supposed links to Holocaust deniers.
“Your assertion that your attack on Jeremy Corbyn is supported by ‘the vast majority of British Jews’ is without foundation,” said the letter.
“We do not accept that you speak on behalf of progressive Jews in this country. You speak only for Jews who support Israel, right or wrong.”
“There is something deeply unpleasant and dishonest about your McCarthyite guilt by association technique,” it added.
It follows an article published by the Chronicle the week before listing seven “concerns” that Mr Corbyn “must answer” in relation to attending events and sharing platforms with groups such as the Deir Yassin Remembered (DYR) campaign and Palestinian resistance group Hamas.
Chronicle editor Stephen Pollard — also a Daily Express columnist — told Channel 4 News: “I think there is a deep sense of foreboding in the Jewish community about some of the people Jeremy Corbyn associates with.
“I’m not accusing him of being an anti-semite. What we want to know is answers to the question ‘why have you associated yourself with some of these people?’”
Self-confessed Holocaust denier Paul Eisen and cleric Raed Salah — who was jailed for accusing Jews of using children’s blood to make bread — founded DYR.
Mr Corbyn told Channel 4 that he once made a donation around 15 years ago for the village of Deir Yassin — where zionist paramilitaries murdered at least 600 Palestinian people — but said claims that he “put his chequebook on the table” and supports the founders are wrong.
In Monday’s interview C4 hack Cathy Newman badgered the Islington North MP by repeatedly asking questions he had already answered.
He warned her against “putting an awful lot of words into [his] mouth” after she kept asking him whether it was a “misjudgement” to throw money in a collection bucket — despite him having made it clear that there was no evidence the founders were anti-semitic at the time.
He told Ms Newman: “I have no contact whatsoever now with Paul Eisen and DYR. I did attend a number of events concerning DYR some years ago.
“The only donation, if I made any, would have been in the collecting bucket when it went around the room.”
He went on to say: “Holocaust denial is vile and wrong. We have a duty to oppose racism wherever it raises its head, in whatever form.”
Ms Newman — who was exposed for misleading her Twitter followers with claims of being “ushered out” of a mosque earlier this year — was criticised on social media for her interviewing style.
People called for Channel 4 to dismiss her for attempting to “manipulate” viewers during the “attacking interrogation.”
On Your Unsuitability for High Office
“you loved me as a loser, but now you’re worried that I just might win”,
The minute they realise
you might succeed in changing
more than the occasional
light bulb in the new
old community centre,
where the anti-apartheid
meetings used to happen;
the late Lord Lambton
climbs out from between
two prostitutes and into
the next available issue
of the Daily Express
to urge votes for anyone
but you; Earl Haig
gets up from his grave
to bang the table and tell us
you’ve not successfully
organised enough death
to properly understand
Britain’s defence needs
in the twenty first century.
The Telegraph mutters
into its whiskers about your lack
of experience – how you never once
so much as successfully destroyed a bank;
as former comedians gather
in darkest Norwich and Lincolnshire
to speak of your beige zip-up jackets.
LBC Radio exclusively reveals your plan
to give each failed asylum seeker,
and anyone who’s ever
taken an axe to a child,
their own seat in
the House of Lords;
the same day, The Spectator
gives retired General
Franco space to expose your
long term associations
with known vegetarians
and Mexican importers
of fair trade coffee.
While on Radio Four’s Women’s Hour
the former editor of the News of The World
and Dame Myra Hindley agree:
the last thing this country needs
right now is you.