Concerns about the economy, be they low paid jobs, insecurity or our apparent inability to fund decent public services and infrastructure, are at the top of most people’s concerns.
Lack of investment, both public and private, led to this situation. However, the standard answer from most of our politicians has been ‘but there is no money’ – the excuse for the austerity of the last 13 years – which has only made things worse. Meanwhile our debts, both personal and public, have just got bigger.
What’s needed is a different approach and a new way of thinking about political economy.
In this first episode of Green Book Pod, we look at what has been done differently elsewhere, in particular in the USA where Biden is turning the economic approach of the last 20-30 years upside down, and we ask where the money might come from.
Our three great guests are:
Vicky Pryce who is a very well-known economics commentator, regularly on TV, radio and in the media. She is the Chief Economic Adviser at the Centre for Economics and Business Research and was joint head of the Government’s Economic Service.
Max von Thun was economic advisor to the party when Vince Cable was leader and is now the European director for the US based Open Markets Institute. He brings good insights into what is happening in the US with Bidenomics, which is a real challenge to the economic assumptions of the last 20-30 years.
Richard Murphy who was one of the creators of the original Green New Deal and also the tax justice movement. He is a very active blogger on political economy, and has thought long and hard about government funding and where the money could come from.
Chairing the session is editorial team member Robin Stafford.
Synopsis and analysis
Overall, the panel felt that just ‘leaving it to the market’ with the cuts to state expenditure and investment have left us with failing infrastructure and public services, and with an unproductive economy. Brexit and Covid have made problems that were already there much worse. This needs the state to take more of a lead with a very different economic narrative along the lines that we are seeing in the USA and the EU. This especially applies to infrastructure and the investment needed to tackle climate change where the state can take a lead to stimulate private sector investment.
At the same time, concentrations of power and wealth, most obviously in the digital space, need to be tackled, again as in the USA and EU. They are taking much more pro-active and positive moves against anti-competitive practices and businesses, while the UK is being left on the side lines, despite recent efforts by Sunak on AI. The money to fund these investments can be found, not least by changes to the existing tax and savings systems, to release productive capital. Generic wealth taxes, whilst superficially attractive, are complex to implement and vulnerable to evasion.
The fascinating discussion produced plenty of potential Lib Dem policies and messages on the economy – starting with recognising that just ‘leaving it to the market’ has failed, and that Brexit and Covid have reinforced pre-existing problems. The Lib Dem role in the coalition in driving forward renewables shows what can be achieved when the state takes a lead in enabling investment. As Richard Murphy identified, the money required can be found from a wide range of potential changes to the existing tax system, in particular to taxes on capital. Tackling the excessive concentrations of power and wealth that exacerbate the problems fits with core Lib Dem principles. With both the USA and the EU heading in this direction, it is now the UK that is the outlier. That supports the case for closer alignment with the EU.