Friday, 20 July 2012

The Liberal Solution of Keynes

Crunch time has come for the Coalition. On the Conservative back benches - rebel MPs have had their first taste of blood and are in the ascendancy. The Political genie is out of the bottle and Conservatives now want to return to Tory Policies. They want to cut back the size of the state, end the deficit, cut taxes for taxpayers, restore the armed forces and get the hell out of Europe.
As for the Lib Dems we are on the face of it traditionally and ideologically opposed to most of this. If however on the other hand, real economic growth in the economy can be stimulated by real quantitative easing and not just the pretend quantitative easing, and if this growth could get to the hands of taxpayer, consumers and small businesses and away from the hands of bankers, public sector workers, the filthy rich and big business (the HSBC's & G4's of this world) then perhaps we have a game changer.

Simon Jenkins of the Guardian has put his finger on the QE Scam by our incompetent Bank of England run by the keystone cops. Jenkins quite rightly calls for an old fashioned fiscal stimulus which puts money in the hands of the people and not the bankers,as correctly identifies there is insufficent demand in the economy. He aired his plan on BBC This Week on 19th July and it reminds me of the 1972 Barber Boom but given the near death state of British Growth at near 0% and Interest Rates at near 0% perhaps expanding demand by putting £100 billion in the hands of the Electorate - say £3000 per voter in a cheque from HMRC to spend now might just float the economy off the rocks.


I certainly would give every unemployed person willing to start a business £10,000 to do so and keep them on benefits for a year while they did so. The new money in the economy would stimulate the high streets, manufacturing and services and give people the money to improve their lot. Of course with freedom of choice many would buy a foreign holiday, or spend on drink and tobacco but unemployment and welfare benefit payments would drop, tax revenues increase, consumer spending rise, the psychology of austerity end and there would be money to cut the deficit.


Of Course at the same time measured and fairminded cuts to wasteful government spending could be made to shift the balance of the economy away from junk spending into wealth creation . A blend of Thatcher and Barber which might work. As for Europe and the Armed Forces, Lib Dems might differ on enthusiasm over Europe but we want a more democratic, higher growth and less bureaucratic europe as well and it was the Great Liberal Winston Churchill who alerted Britain to the folly of putting National Security after spending cuts. Of Course if the Tories are wedding to Austerity, then bring on Plan B.

For the Thatcherite remedy for another round of spending cuts - try the Guardian's Cut calculator to see if you could make some more intelligence and compassionate cuts than so far attempted - I made £164bn!

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