By Tony Weekes on October 14, 2011
A number of Friends have shared with me their unease about the idea of Quantitative Easing (QE). It may be of interest to share my response with Quakernomics users.
What QE does is show that the Central Bank can, in effect, create ‘money’ (or liquidity, or credit). But what many thoughtful economists (Ann Pettifor and Caroline Lucas, for example) are saying is that the ‘Easing’ is going in the wrong place – directly to the banks rather than to (let us call it) a National Energy Agency (NEA) whose task would be to start now to create the lower carbon, renewable energy economy. The NEA would pay the bills for a systematic renewal of our built environment. Ann Pettifor describes the idea more fully in her ‘debtonation’ blog at http://www.debtonation.org/2011/10/my-plan-b-for-the-new-statesman-launch-a-green-new-deal/#more-5482.)
We would create real work – for people of all kinds of (working) collars. There’s need for those with skills to deal with the technical, legal, spatial aspects of this task. The training of people to do the retrofitting and subsequent maintenance is, itself, a major task. Training would create stable, future employment. Young people recently qualified in (among other occupations) architecture, law, spatial planning could be engaged immediately in a junior capacity, thereby acquiring useful skills and experience for the future – rather than left unemployed.
The money would flow into the economy, rather than into the balance sheets of banks. We might well find that – rather than horrendous and growing unemployment – there would be a serious skills shortage – the task is so large!
Two weeks ago, I posted a (rather polemic) piece to Q’nomics, contrasting the behaviour of the medical professions with the incompetent behaviour of the (so-called) “profession” of economist. It’s been read a few times – but no one has either agreed or disagreed with me – or with my proposal that it’s time for some anger.
Quakers seem to feel they mustn’t “do anger” – but Jesus (from whose recorded life comes our heritage) shows anger over the money changers in the temple!
2 Comments
With all this talk of QE and what it can do to kick start growth, I don’t think enough thought has been given to the true reasons for the end of the Great Slump of the 1930′s.
I believe that it was World War II that laid the basis for the economic growth of the post-war years. The war destroyed so much of the infrastructure of many countries and reduced their citizens to poverty that the only way was up. Now that we’ve hit several limits to growth I can’t see how more growth can be used to get us out of this mess.
Don’t get me wrong, I agree with the idea of a NEA Plan , but it should be seen as a way to avoid war and destruction as a means to create growth.
Another way of putting it is to say that if we don’t solve the problems of energy supply, food supply and unemployment, we will be heading for another war.
Thank you,Pete Fry, for your contribution to this thread.
I think we have to be very careful about how we use terms like ‘no growth’. Conventional economists (and their disciples) set ‘growth’, in the undifferentiated use of that term, as (pretty well) the only objective of economic policy. In other words ‘growth’ of anything, as long as it leaves a statistical trail in monetary terms.
My view is that the creation of a renewables led economy may well leave a statistical increase on GDP. But we’d be harvesting solar energy, directly and in its many consequences; we’d have buildings which required less energy; we’d have spatial planning which would reduce the need for travel. We might evenhave an attractive environment which would reduce the need to go off to ‘other places’, perhaps several times a year.
Would it be enough to save us? I don’t know – but we have hardly (if at all)started the task I envisage.