The Tolkien Connection

The upcoming release of the first of Peter Jackson’s films based on The Hobbit gives an opportunity to emphasize, once again, how fortunate Birmingham is to have such a close association with its world-renowned author and how we should make more of this connection.
J.R.R. Tolkien saw himself as a Midlander. This is how he thought of Birmingham: “My father’s and my mother’s family were Birmingham people. I was born far away but came home in 1895, and have remained a Birmingham man ever since. The West Midlands are the best part of England”. Tolkien lived as a child in what was then the hamlet of Sarehole (now part of Birmingham) between 1896 and 1900 and elsewhere in Birmingham until 1911.
Looking back in old age, he described the four years at Sarehole as ‘the longest seeming and most formative part of my life”. The house in which he lived with his mother and younger brother is still there (now number 264 Wake Green Road) just across the road from Sarehole Mill. The Mill was the inspiration for the mill in Hobbiton and is now a most interesting museum in The Shire Country Park.
In one of his letters Tolkien writes: “As for knowing Sarehole Mill, it dominated my childhood.” In another he writes, “…I.. lived for my early years in ‘The Shire’ in a pre-mechanical age.” His own description of his surroundings in Sarehole is that it was “…a kind of lost paradise…there was an old mill that really did grind corn with two millers, a great big pond with swans on it, a sandpit, a wonderful dell with flowers, a few old-fashioned village houses and, further away, a stream with another mill…I took the idea of the hobbits from the village people and children”.
The Shire is based on the area around Sarehole Mill, The Dell, The Dingles and Moseley Bog where Tolkien and his brother Hilary often played as children. It is fortunate that a good deal of the original landscape which Tolkien saw still exists - which is why The Shire Country Park was established to conserve and interpret this unique historic area. In addition to the park’s links with Tolkien, there are Bronze Age burnt mounds in Moseley Bog and Sarehole Mill was also once owned by the famous industrialist Matthew Boulton.
In 1900 the Tolkien family moved to Moseley and then to Kings Heath to be closer to the tram route for him to attend King Edward’s School, at that time located in the City Centre in New Street. In 1902 they moved again to be near to the Oratory Church in Edgbaston, an area which includes the ‘Two Towers’ of Perrott’s Folly and the Italianate Waterworks chimney. The towers are strikingly aligned to the eye when leaving the old St Philip’s School (which Tolkien also attended) into Plough and Harrow Road and many people are convinced that they contributed in Tolkien’s imagination to the Towers of Middle-earth.
Hall Green’s annual atmospheric Middle-earth Weekend takes place in May and attracts over 10,000 visitors each year – proof, if it was needed, of the vitality of Tolkien’s legacy and how it is embedded in the community. Shire Productions gives unique dramatised extracts from The Hobbit and The Lord of The Rings with the next event on 8th and 9th December as detailed in the previous posting.

There and Back Again

My wife Vivienne recently made the following post on her popular blog, Stuck in the Mud  www.stickinginthemud.blogspot.co.uk
about an interesting forthcoming Tolkien related event in Birmingham associated with the release of the first Hobbit film. She posted:
“I write, not just as a volunteer gardener at Sarehole Mill, but donning my other hat, as a founder member of Shire Productions, a theatre group who have long been associated with the Middle-earth Weekend held annually at Sarehole Mill  www.middleearthweekend.org.uk  
We are very pleased the group are associated with this pre-Christmas and pre-'Hobbit' film event at Sarehole Mill.  Come with us on an unusual journey.
‘There and back again’.
Readings, poetry and songs by J.R.R. Tolkien in Moseley Bog starting from Sarehole Mill, Cole Bank Road, Hall Green, Birmingham B13.
2.00 - 4.00 p.m.  Saturday 8th and Sunday 9th December 2012 
Join a winter afternoon walk to Moseley Bog and feel the magic of 'the Old Forest' that inspired J.R.R. Tolkien. Members of theatre group Shire Productions will join you on the walk from the Mill to the bog and lighten your travels with songs and anecdotes.
Once there, surrounded by ancient trees, you might meet Thorin, Bilbo, Lord Elrond and other characters from The Hobbit.
Tolkien’s stories and songs will come alive through his readings, poetry and songs and on the way back again, magic lanterns will light the path for you.
On your return at the Mill it will be time for a well-earned 5th breakfast of hot drinks and sweet cakes.
Start at 2pm from bridge at the mill car park. Please dress appropriately for a winter afternoon in December. The cost is £6 (including 5th breakfast), children under 16 free.
Booking is essential, as numbers are limited.   Tickets are available from the on-line box office  www.bmag.org.uk  or phone 0121-303 1966.
Come in costume if you wish.”
Since the posting, tickets have been going fast and there are only a few remaining for the Saturday event. Once again Birmingham leads the way in community led Tolkien related activities.

Usury still Rules

In the credit crisis – it is notable that it is called this and not the savings crisis - we hear a lot about rates of interest. You’d think that official interest rates were the be-all and end-all of people’s woes or wealth. But there’s much more to effective economic management than the manipulation – legitimate or otherwise - of certain rates of interest as any unreformed Keynesian such as myself will tell you!
Interest - the price charged for the use of money over time - remains a contentious subject. The Medieval Christian Church saw banking as usurious regardless of the rate of interest applied. The Old Testament (Deuteronomy, 23) allowed interest charges only to foreigners! Islamic opinion is that overt charges for the use of money are sinful.
We hear about sporadic action against loan sharks. This is good of course and Birmingham has led the way in this. But as ever the law is weak and stupendous rates of interest can be charged quite legally. Governments refuse to set a legal limit. This allows vulnerable people to become victims of usury – exploited and trapped in perpetual debt.
A survey carried out in Birmingham twenty years ago (and it is still highly relevant today) showed that equivalent annual rates of over 100% for money lending to be common. At a 100% rate debt will double yearly if capital is not repaid.
In fact this little publicised survey found loans with annual rates of over 1000% - in which case debt can increase tenfold in a year. All this points up the importance to small borrowers of joining a Credit Union and avoiding this appalling usury.
There was even one case of loans charged at an annual equivalent rate of 4,822%! To illustrate the financial enslavement consequent upon this unimaginable usury, at this astronomical rate the liability from borrowing £1 would, in the absence of capital repayment, in eight years exceed the entire UK Gross National Product!
And outrageous annual equivalent rates around these levels are still in operation today, being applied by the mushrooming payday loans ‘industry’ with over 200 outfits in operation. For example the Wonga AER is 4,214%. But appalling as this is, it is exceeded by the AER for unauthorised overdrafts charged by some commercial banks!
It is no use wittering on about regulation or private enterprise. The first doesn’t work and the second generates private cash from vulnerable sections of the public.
‘Self regulation’ is a contradiction in terms and official regulation doesn’t work - as we’ve seen no end of times in the areas of finance, domestic fuel prices, petroleum pricing etc. The problems are too deep seated (tax dodging by corporations and rich individuals is another) and represents a character flaw in both individuals and industries.
This is why there is a need to establish publicly owned exemplar institutions, such as municipal banks, that will operate on fair, reasonable and moral bases and draw off some of the captive business from the grasping and cheating sections of the private sector. Until that is done, usury and exploitation will still rule.

A Bank You Could Trust

No, this is not a contradiction in terms! As regular visitors to this blog will know, I am a strong supporter of the re-establishment of the Birmingham Municipal Bank – and similar publicly owned banks elsewhere - as a safe and trustworthy haven for the savings, small and large, of the people of the city and nearby areas.
The fundamental values of the Municipal Bank would exclude pressurising of customers and needless chopping and changing of frivolous and misleading financial ‘products’, slippery small print, hidden charges and other devices of the trickster.
In such a bank, the simple principle of constancy would prevail. And in my view people throughout the country should be pressing for the re-introduction of Municipal Banks for their areas too. There is opportunity amidst the present crisis - there is a clear gap in the ‘market’ for plain, honest, straightforward savings banks.
Sometimes there’s a value in being unsophisticated - a remark originally attributed to RBS. There most certainly is, and bankers should know this better than anyone. But I suspect that reform for them will be well nigh impossible - their deeply ingrained habits are very hard to drop altogether. Incidentally, an old meaning of the word ‘sophisticated’ is ‘corrupt’ - which I think serves to underline the point.
Constancy and confidence were the values on which most of the true wealth of this country, much of it, alas, now cast to the winds, was built and which other institutions, such as the Municipal Banks and National Savings, sought to complement and support.
Is it too much to suppose that these fundamental principles might be worth rediscovering and implementing again today? They have not been lost by the majority of our population, but are hard if not impossible to find in the financial sector.
When the Birmingham Municipal Bank was first established in the early part of the last century, it faced significant opposition from the commercial banks – no surprise there. We are beset with austerity but the need is as pressing as ever. One tactic today from the various quarters opposed to the idea, is to frighten the horses by waving around large numbers, which are claimed to represent costs.
It is also suggested that commercial banks can provide any required service. The very same banks that, as one developer told me, had pulled out of financing over 90% of their viable projects and put at risk the jobs that would have been created. And these are the very same banks that have taken the Queen’s shilling - or rather billions - are effectively owned by the public, but who are refusing to do their bit for the economy and the country that has sustained them.
They are not to be trusted, and I still hope that a way will be found to once more offer ‘Security with Interest’ (the motto of the former Birmingham Municipal Bank) and attract the trust of the citizens of Birmingham. Such a service is widely desired amongst ordinary, respectable people.
Perhaps if a lead is given by Birmingham, there could be Local Authority led banks throughout the country. Having such ‘exemplars’ might force a change in the behaviour of commercial banks for the many years needed to bring in a new generation of ‘unsophisticated’ bankers who will not need enforcement to conduct their business in the public interest.

The ‘Invisible Hand’

The term ‘invisible hand’ describes the theoretical self-righting mechanism that the original political economists thought to be a characteristic of genuinely competitive markets. But the one thing that can surely now be seen is that this hypothetical hand has been more than usually invisible in recent years or else, of course, we do not have properly competitive markets.
In fact both of these things are true in my view. Hidden hands are not only invisible but also insubstantial and in fact totally incredible. Many so-called ‘markets’ in these benighted days of globalisation are rigged and operate as cartels comprising companies owing no loyalties save to themselves and mammon.
These outfits and their rich owners profit excessively from ordinary people by taking advantage both of them and of their timid and credulous governments and politicians who witter on, textbooks in hand, about the equally non-existent ‘level playing fields’ (about as likely to exist as the Elysian Fields) for international competition.
All this and the obsession with so-called ‘free’ trade and it’s claimed virtues - while some other countries are allowed to get away with cheating 365 / 24 / 7 with, amongst many other things, blatant trade restrictions, industrial espionage and fiddled exchange rates, plundering our once proud industries as they go. What fools we were to allow self-interested corporate management to hand over our assets to them, what fools some of our leaders still continue to be and what fools we are to keep returning them to power.
The only ‘invisible hands’ in evidence have been digging deep into the public purse and less than invisible tills fishing out quantities of the nation’s money that would make a spectre blanche. This along with the disgraceful and shameless industrial-strength tax avoidance widely practised by international companies.
What we need of course are very visible hands, not only bringing the discipline of regulation (and a sizeable stick) and perhaps some genuine competition but the helping hand of direct intervention in the real economy resourced by taxes that are actually paid by corporations and wealthy individuals. We either save what industry we’ve still got left or we shall lose that as well.
I have argued in other postings on this site for the adoption of pro-active Keynesian policies including taking advantage of the balanced budget multiplier effect and focusing on the economic benefits from direct investment in physical assets.
These measures should be taken by the Government as soon as possible but we are unlikely to detect much trace of these in the Chancellor’s upcoming Autumn statement. Alongside these measures should be the establishment of ‘exemplar’ companies - such as municipal banks - in co-operative or public ownership and management. Complaints that such organisations would ‘disrupt the market’ miss the point - that is exactly what they need to do.
There is no ‘invisible hand’ and one thing at least is abundantly clear, either we take our future into our own hands with pro-active public involvement or we will have very little that is visible to hand on to future generations.

Balance and Recovery

While the Bank of England’s recent caution in respect of a further expansion of ‘quantitative easing’ is understandable - indeed welcome - this does not mean that all sensible options are closed.
Much more needs to be done to secure economic recovery in the context of the global financial crisis that is corroding the real economy and which, along with the state of the public finances, remains in very poor shape. This is partly, of course, as a result of dismal, depressing and continuing ill-advised government policies. The Government’s likely juggling with the apparent proceeds from earlier quantitative easing will not disguise the underlying harsh realities.
But even within the timid and self-deluding mindset of the austerity brigade there are things that could be done. If I can return to my Keynesian position I would draw attention once more to the concept of a balanced budget multiplier. This is where in a broadly neutral budget, spending power is moved towards those with a higher propensity to consume. In other words smaller deductions from the pay packets of lower income earners and somewhat higher taxes for the rich - and I mean rich, not the middle classes picking up the bills again.
One way to achieve this would be to smooth out individual National Insurance contributions, making them a flat percentage of earnings with no limit on the range so that the rich contribute more and the less well off have lower reductions. Also, to balance over a longer period, the top rate of tax should go back up to 50% from the entirely unjustified and partisan proposed 45% due next year. Alongside this, the rashly abolished 10p rate should be reinstated.
If the flat rate of National Insurance contributions were set at a level that brought in a greater total sum this would free resources for increased support for manufacturing industry and public works projects. In the latter respect there will not be a Local Authority in the country that does not have ready to go engineering schemes that have been thwarted by budget cuts and the ever-increasing demands on the social care front.
Speed of action is important too; with the glacial progress of assistance to manufacturers and the essential root and branch reform of banking as dismal examples of the dilatory implementation of official policy – such as it is. And action needs to be taken to deal with massive corporate tax avoidance. There’s a double whammy here since many of the rich recipients of the untaxed profits will be tax dodgers too. It’s not just the economy that needs to be re-balanced but the taxation system too.
And there are other fiscally neutral measures that can be taken both at local and national level. Here I refer to procurement of goods and services. The Government must ensure that as much of its purchasing goes to domestic producers - from major defence or construction projects right down to the cars provided for ministers. There are ways of framing conditions for bids that do not contravene Euro legislation that can help domestic producers. You can be sure that certain other European countries already do this - and much besides.
The same goes for contracts from Local Authorities. There is a multiplier of around four so that when a contract for say £500k is awarded to a business there is a total benefit of no less than £2m to the area (as that firm and its employees spend and the beneficiaries of that spend also spend too.)
So there is considerable policy latitude remaining even if the Government is afraid to take radical action. Perhaps it is a forlorn hope, but maybe an element or two of this kind of traditional Keynesian thinking will filter through – in the fullness of time of course.

Keynesians of the World Unite!

The country needs a revolution, we need change that puts the common good and the national interest in front of corporate profiteering and austerity for all but the rich. Western governments and significant others need to rediscover – and be quick about it - the merits of the positive and proven economics of John Maynard Keynes in which public investments are made and effective stimuli are provided to depressed, damaged or heretofore forsaken economies. As an ‘unreformed’ Keynesian myself I naturally see this idea as preferable to doses of depressing, divisive and failed austerity. Keynesian economic policies would bring an end to the recession and stop the economic ‘bumping-along-the-bottom’ for good.
Major countries - particularly the United States and ourselves – lived for years in a fantasy world of non-existent ‘wealth’ that was ‘created’ by bankers and believed by gullible political accomplices. Creative industry - and by this I mean manufacturing since nothing is more ‘creative’ than making things - has been hollowed out since the disastrous years of the early eighties. I recall Mrs Thatcher’s chief economic adviser asking (privately but not in public) ‘why does the country need manufacturing?’ I was flabbergasted and outraged at that time and have been so ever since as successive governments acted as if they’d been reading the same too-clever-by-half monetarist textbooks. We can co-exist with Monetarists in good times but when the going gets tough it’s time to send for Uncle Maynard.
We need a new industrial revolution, increasing the number of things that we make and mine and have a thriving agriculture. This is not just because self-sufficiency means that the country is less exposed to the consequences of get-rich-quick or manipulative behaviour elsewhere, but because the nation’s self-respect demands it. And ownership does matter - again because of national pride but also because being a ‘branch plant economy’ leaves industry and employment more exposed to closures made by foreign owners. The lack of control over industry represents a failure of the private sector, laissez faire economics and compliant and timid government.
There’s a Dorian Gray feeling about an economy that has relied so much on money lending, taking in washing (sorry, providing services) and wheel clamping (for many years one of the strongest growth sectors). With industries eviscerated and household name British firms falling under foreign control and exporting jobs by the thousand each month, what exactly was it that those in control supposed to have been growing all those years?
Casino capitalism creates nothing, it is a zero sum game - the amount won equals the amount lost. Real capitalists - our Victorian forebears - would be horrified to be bracketed with today’s fly-boys pretending to be beacons of free enterprise. These old-fashioned entrepreneurs had many faults not least their relentless exploitation (now also exported to China) but they had two other qualities - a sense that what they were doing was important for the nation and that the national interest counted as well as their own profits, and the basic money-morality that meant that you didn’t set out to lie and cheat your way to riches.
The other downside of an industry shrivelled in the shadow of globalisation is that some Keynesian remedies do not work quite as easily these days because more of any stimulus leaks out through being spent on imports. In the old days we would have been making the goods on which people spent their extra money, thus creating more wealth which in turn was spent on domestic goods leading to the Keynesian ‘multiplier’ where an original pound of expenditure generates several pounds worth of economic recovery. Investment in infrastructure is preferable to tax cuts and it is important to construct the stimulus to minimise leakage.
So more should be spent on expanding public works (in which more of the good stays at home) and helping to rebuild industry and create jobs directly. What is more, a Keynesian solution does not require huge budget deficits. There is the long-neglected concept of the balanced budget multiplier where higher tax rates are applied to those who spend smaller proportions of their income (the rich) with lower taxes on those who spend greater proportions of income (the rest). But since the adoption of the convenient nonsense of ‘trickle down’ arguments, the idea of taxing people who can afford it has been swept off the table with the crumbs.
I’m tired of hearing that there’s nothing that can be done about globalisation. I for one will never ‘embrace’ it. Eisenhower spoke of the ‘military / industrial complex’. Globalisation has involved a ‘corporate / political complex’ where the actions of rootless corporations are tacitly supported by politicians seeing a short run gain in wealth and needing their campaign coffers filled. But the chickens have come home to roost in droves and the first step would be to break this failed alignment working with like minded nations and getting a grip.
I’m also sick to death of hearing about the ‘vital importance’ of free trade - whatever is meant by that - and hearing chancellors urging the creation of ‘level playing fields’ when what they should have been doing all along is applying the same degree of tilt as the others have been doing for years. I say ‘whatever is meant by that’ because no (legal) trade is completely free in the sense of having a complete absence of regulations and standards. It is a question of how much regulation is needed and how it is enforced when not voluntarily observed.
Just how dreadful do working conditions have to be in China or India before you admit that this isn’t legitimate competition but exploitative cheating? Just how much pollution is it alright to belch out in China? In fact we have been exporting pollution along with our jobs. Production under domestic conditions would have caused less pollution. So globalisation (even without the additional transport emissions) has made global warming worse along, as we now realise, with ecological damage and the spread of disease.
In this context there’s also a lot of dangerous talk about so-called ‘comparative advantage’ where countries to the East make products cheaper for some reason. These ‘reasons’ always including low pay, dire working conditions and serious environmental damage and in certain cases use of child labour, currency manipulation, export subsidies, copyright violations and industrial espionage. After apparent short-term gains in the quantity of electronic gadgets and household bric-a-brac in our homes, this theory leads ultimately to ruin for us too. It is often alleged that we surely have a comparative advantage in being ‘smart’ doing designs and selling services - as if the competitors to whom we have handed our manufacturing and engineering work are stupid and that these ‘smart’ things are not already on their list.
So do I favour so called ‘protectionism’, whatever is meant by that, as opposed to ‘free’ trade? It seems that you can use the word ‘protect’ positively when you insure or take other precautions to secure the future of your home and family but to apply ‘protect’ to the economy on which all this depends has been given utterly negative connotations. The descriptions of ‘fair or ‘loyal’ trade give a flavour but we really need a new word in the mercantile lexicon. But it is not a binary choice. Nothing is ever totally free or totally protected. We need fair and balanced trade and patriotic producers.
I favour a trading environment where our industry, independence, national pride and environment are conserved and where we as a country display the extent of self-interest that other nations do. I favour repatriated production and a context where business leaders rediscover loyalty (bankers need more than this – their very own cultural revolution with a few years spreading muck in the fields to see if they can turn this into brass) and act to enhance the common good. And where consumers preferentially buy English and local and where government, national and local (if any of this is left after the savage cuts) facilitates the rebuilding of productive industry so long dismissed and derided by service economy smart alecs and quick fixers.
Can’t be done? Of course it can – come the revolution! There needs to be the will, robustness in international terms and a genuinely long run vision for the national future. Quite a lot to ask for these days I suspect. In the meantime we should apply the approach advised by John Maynard Keynes to our national infrastructure in all its aspects and not be averse to a fairer system of taxation that would make this an affordable reality. If other countries in Europe adopt a similar approach the effect will be that much greater. Keynesians of the World Unite!

Four More Years!

I was delighted to see the result of the United States presidential election with the return of a Democratic president for four more years. While Democrats retained control of the Senate, today’s Tea party dominated Republicans will keep control of the House of Representatives. It’s probably a vain hope that the obstructionism of the House will moderate given the overall result.
The Founding Fathers when framing the constitution never envisaged the doctrinaire and irrational Tea Party intransigence that has crippled government and which must dismay genuine one-nation Republicans and which makes the US system of government dysfunctional. And if the problem of the ‘fiscal cliff’ approaching in January is not resolved the consequences will be bad for the until now steadily recovering US economy and the rest of us too. It’s said that politics is the art of the possible – and it is the art of skilful compromise too.
Let’s hope that reason rather than doctrine prevails.

A Keynesian Dynamic Still Essential

There is no doubt that the country was badly placed to withstand the immense damage caused by the financial sector when it first hit the economy and it is not in a lot better shape today. Badly placed indeed, due an unbalanced economy that had become far too reliant on casino capitalism rather than the productive sectors and of course, on an epic scale, due to the abandonment of prudence, wisdom, decency, diligence, respect and even plain common sense in the banking and financial sector and the absence of effective financial regulation.
Added to this has been the destruction of social and industrial foundations caused by globalisation on manufacturing and engineering in particular, with much production closed down by disloyal and herd-driven management and greedy ‘stakeholders’ and many jobs already exported.
The evisceration of our industries of substance has left the country less able to benefit from the lower value of the pound by producing for export - where external demand has not been destroyed by external banks and ill-advised economic policies particularly in Europe. The commercial banks added to the damage caused by their own greed and incompetence by effectively forcing viable producers out of business with severely tightened conditions or recalled loans. I sometimes think that banks, in their behaviour towards industry and individuals alike, are little better than a fifth column. As a result of this and government policies of austerity there is little prospect of anything much better than the economy continuing to bump along the bottom and there is still a real and present danger of approaching a 1930s situation.
How is this dire predicament to be remedied? Certainly not without a cost -  folly always has a steep price. But how do we ensure that such a deep recession, where productive output recedes and where spending and incomes are well below normal, does not worsen further into sustained depression where there are further falls and the loss of GDP approaches double digits? And how do we ensure that a sustainable economic recovery begins as soon as possible?
Those in power, or aspiring to power, must develop effective recovery strategies. It is clear that these do not exist in Government and the opposition continues to be excessively timid and fearful of offering a constructive alternative to the depressing consequences of continuing and deepening austerity. If output, income and employment are to sustain an upward trend, then there must be extra spending, preferably in the form of investment in public utilities and infrastructure. In this connection parts of Michael Heseltine’s recent recommendations are welcome and long overdue although few will find their way into government policy. The rational debate - and there is plenty of scope for discussion of which measures will prove to be most effective - is about how a Keynesian solution is to be implemented, and which quarters can be persuaded and enabled to spend more.
Entirely predictably, precious little benefit has come from exports due to the demand suppressing austerity obsessed policies of European governments promoted and pushed by Germany. If the death grip of the banks can be loosened, and companies can be encouraged to increase their investment spending, then that would be of great benefit. But, to justify such investment, companies need to see demand for their products, which of course is precisely what isn’t there. To add to this situation by further cutting makes no sense at all.
In terms of expanding aggregate demand, you could try to create that extra consumption with tax cuts. But cutting taxes for the rich is precisely not the way to do it – as all concerned know. It is true that continuance with low interest rates cause borrowers to have more at their disposal. But interest rates are a double-edged sword whereby those who rely on savings for income are made worse off and so spend less. We know only too well that, courtesy of the banks, savers are hit early and in full and borrowers benefit later and less. Additionally, experience in Japan in the 1990s found that in the face of interest rate cuts some people may save harder to preserve their future security and incomes.
Important though they are, there has been too much concentration on interest rates and taxation (though not enough about helping those who save) and the related adoption of risky monetary policies such as quantitative easing. Though these policies have a role to some extent, there has been not nearly enough focus on public works projects, support for manufacturing industry and pressing companies to repatriate production in the national interest - and indeed their own.
With infrastructure work - and goodness knows that after decades of under-investment we need it in energy, transport, public and heritage buildings and right across the board - we generate business to firms and encourage them to invest, create or save jobs, keep more of the money at home and provide a better quality infrastructure and the much needed energy security along with stable prices in the future if cartel behaviour can be regulated or re-nationalised away. To my mind that’s a whole lot better and wiser than, in effect, saying: ‘Here’s £100, dash down the shopping centre and spend it on imports’.
What about Government waste? All too much of this is gone for good, but no-one in their senses would object to cutting current waste and improving efficiency - it’s important to do this. But it is also important to divert the bulk of such savings to public works projects - and then to add to this total. It is imperative that the total be increased. Also, if too much of the savings from waste reduction are passed on in the form of tax cuts then, entirely rationally in individual terms, people will use much of it to repair their domestic balance sheets - rather like the banks and with the same lack of benefit to the economy as a whole.
Economic recessions are about a serious and sustained shortage of aggregate demand - and it matters what makes up that demand. The less expenditure that is frittered away on fashionable gadgets and bric-a-brac and which leaks out on imports, and the more of it that is invested in improvements in the nation’s infrastructure and the environment, securing productive jobs and supporting manufacturing, the better. And in the longer term, a restored and re-balanced economy, achieved by these Keynesian means described, will provide the firmest foundation for the restoration of future public finances and the resumption of prudent and sustainable ways of living.