A new report from Tax Research UK shows how Conservative economic policy has been a disastrous and expensive failure used to line the pockets of the already wealthy elite. Jeremy Corbyn’s economic policy was singled out as being the best way to reverse this.
The report authored by Richard Murphy, Director of Tax Research UK, and Professor of Practice in International Political Economy at City University, London, illustrates how Corbyn’s economic policies will actually cost less than the Tories, and provide far great benefits.
Since 2009, the government has injected £435 Billion through quantitative easing, and government bonds into the economy. The purpose of this, we were told, was to stimulate the broader economy following the financial collapse of 2008.
By pumping new money into the system it would make it easier to invest in riskier business ventures, and this in turn would allow a new wave of investment, enterprise, and innovation to surface. This would then create new employment opportunities, spread wealth, create new products, services, etc.
This was the political line, however the very opposite has happened as Murphy notes:
the result of the programme has been guaranteed investment returns for those already wealthy in the UK. Bankers have enjoyed bonuses. Estate agents have had a field-day. The wealthy gave got wealthier. Income inequality has risen. Social tension has increased.
The businesses that have benefited from QE do not re-invest the profit they’ve made, instead they sit on piles of dead cash.
This is just another example of how taxpayers, and the state are used to fund what are supposed to be private capitalist enterprises, with no real benefit to the wider population.
There is another use of QE though, one that could allow the kinds of innovation, and investment we actually need.
Corbyn is putting forward the policy of a national investment bank or “people’s QE” which Professor Murphy is a strong advocate of, because not only will it cost less, but the government will get a far greater return for investment.
This would allow us to invest in infrastructure, high skilled jobs in areas such as green energy, new products, services, etc.
People’s QE provides a massive yield to the government. That’s because it takes people off benefits, increases incomes, so reducing claims levels, and increases the level of economic activity so unceasing tax paid. Some estimates say it can pay for itself within a very short period in this way; those suggesting that’s the case include the IMF and major rating agencies. I think they are right.
Corbyn has received numerous attacks from his own party, as well as the mainstream media, for having a dangerous economic policy that would, they say, drive the country into the ground and create havoc.
But in reality, the Tories, and those who support their economic policies, are the dangerous ones. They have had six years in power, and all they have done is make the economy worse for the majority.
As well as the scandal of QE, they have spent the last 6 years imposing austerity. Spending cut after spending cut by the Tory government, and for what? It was supposed to be the necessary pain needed to survive so the economy would boom in the future, and it has completely failed.
Most of us are either worse off, or at best the same as when they came into power. Living standards continue to decrease, wages stagnate (in real terms they have fallen), job insecurity continues, and child poverty has increased.
The emphasis by Osborne on deficit reduction, and running a budget surplus by the end of 2019 completely failed.
Not only did he fail time after time to hit his own targets, Osborne added significantly to the deficit in the process.
The IMF openly condemn this type of policy, and have identified it as being the worst way to recover from a financial crash.
His successor, Phillip Hammond, recently announced that he has no interest in deficit reduction, and this policy would essentially be dropped in favour of government investment.
If that isn’t a testament to the failure of the Tories on the economy, then what is?