Thursday 26 November 2020
Not On Borrowed Time
The National Infrastructure Bank is an excellent idea, and it shows that Rishi Sunak knows why the public sector pay freeze is an economically illiterate piece of political opportunism.
The freeze is designed to placate the knuckle-draggers in his own party and in its pre-2019 electorate, while in fact devastating demand during a recession. That was a predictable and predicted disaster 10 years ago, and it will be a predictable and predicted disaster again.
Not one penny piece is being "borrowed", or ever needs to be. The State's printing of money for the State is not lending. Nothing is ever going to be paid back. Paid back how, exactly? Paid back to whom?
Through the National Infrastructure Bank, or a National Investment Bank, or both, the State ought to lend money directly to businesses, at very low rates of interest and to be repaid over a very long term. In fact, it may as well just give it to them, as it should give money directly to potential customers through public sector pay and through the Universal Basic Income.
At one stroke, the State could pay off every penny that it already owed. A sovereign state with its own free floating, fiat currency has as much of that currency as it chooses to issue to itself, as the present Government is demonstrating on a scale that is startling even by the usual standards of these things.
It also has readily available fiscal and monetary means of controlling any inflationary effects. Those means therefore need to be under democratic political control, and the reversal of the Blair Government's electorally unwarranted surrender of such control over monetary policy now looks like a formality, since a truly independent Bank of England would simply have said no to this latest "lending".
The public sector pay freeze is a particularly hard assault on the areas that have already suffered the most under the iniquitous tier system that has now been restored, but where the Conservative Party now has to hold onto 70 or so highly marginal seats. Here, the national pay scales of the public sector maintain a middle class that the local private sector wage market could never begin to deliver.
Most of the direct beneficiaries are Labour voters, but their spending power is the backbone of the local economies that employ the people whose votes turned the Red Wall Blue, and could just as easily turn it back again even if only by abstention, since the public sector middle class is going to turn out in force for Keir Starmer next time.
Still, the National Infrastructure Bank, and the effective reassertion of considerable control over the Bank of England, are steps in the right direction. Onwards to the strict Glass-Steagall statutory division between investment banking and retail banking, to pro-business tariffs and subsidies, and to a pro-business National Investment Bank to promote the growth of productive enterprises rather than speculation.
Onwards to collective bargaining and trade union representation, to cooperative and mutual ownership, to the Universal Basic Income, to the Jobs Guarantee, and to reconceived models of public ownership as another means of getting money into the hands of the people who would spend it, all in the context of an economic realignment with the BRICS and with the other emerging economies.
And let there be absolutely no suggestion of remaining subject to the State Aid rules, or indeed to any other feature of the European Single Market or the Customs Union. I am the Independent candidate for the parliamentary seat of North West Durham at the next General Election. What are you doing?