Social infrastructure is also vital to any recovery plan

This is a letter to the FT from the Progressive Economy Forum (an outfit that our esteemed benefactor, Richard Murphy, has been expelled from – simply because he doesn’t think Quantitative Easing will ever be paid back. Time has actually already told – it’s 12 years and counting that it has not…)

UK chancellor Rishi Sunak plans to set up a national infrastructure bank to “channel billions of pounds into capital projects” (Report, November 21). We write to urge the chancellor to broaden his vision. The regeneration of Britain’s “national infrastructure” must include investment in “social infrastructure” such as childcare, schools and universities, regional theatres, orchestras, common spaces and local sports. The pandemic has shown these economic activities are just as vital to society and the economy as the physical infrastructure of asphalt roads, green energy and safe bridges. And research demonstrates that investment in care has multiplier effects many times those of investing in construction, while generating far fewer greenhouse gas emissions. Furthermore, these investments can be kickstarted in less time than construction projects. Under-investment in social infrastructure before the pandemic was a false economy; it would be even more so as we move into the recovery phase. Channelling money into Britain’s social infrastructure and especially into its care, education, arts and training sectors would create jobs, generate income for workers, the Treasury, and the wider economy, and contribute to a more robust and sustainable economy.

It seems to me that ‘broadening his vision’ is the very least that Sunak can do. Though having earned millions in a hedge fund he may find it particularly difficult.

Caring – that is caring for us all – is indeed absolutely essential.

And for some further, more psychological care – Britain actually exports lots of classical music performances – even those composed by those pesky Europeans that did not eventually, like Handel, decide to become ‘British’.

Are the money men ignorant of all art? And if they aren’t do they realise what it contributes to life?

Or is money and Brexit sovereignty all Sunak dreams of?

Comments

  1. Schofield -

    One of the central reasons for being an MMT supporter is awareness that democratic accountability in money creation is a vital necessity for general well-being.

    This means being aware that both right and indeed left wing authoritarians can subvert this accountability. One of their chief ways is to claim a state bank is needed for money creation but it must have ill-defined powers of independence that in practice turn out to be mystical or unfathomable.

    https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3635059

  2. Schofield -

    My above comment can be further supplemented by my paraphrasing of a Frank Wilhoit quote:-

    “Authoritarianism consists of exactly one proposition, to wit: there must be in-groups whom the law protects but does not bind, alongside out-groups whom the law binds but does not protect.”

    1. Peter May -

      Excellent quote, thanks.
      In the end money is created to get stuff done and I agree the ‘independence’ of a wholly owned bank is always going to be mystical. And the only question that needs to be posed is why would you do that? Or in the legal phrase, cui bono?

      1. Schofield -

        The two key parts in the paper I reference above are the link to the following which tells you Congress has the legal power to create money:-

        https://www.law.cornell.edu/supremecourt/text/110/421

        and the following sentence:-

        “The Fed was understood merely as a backstop for banks making the real decisions, as opposed to a source of funds that would compete with Congress.”

        Congress created two sources of money creation, itself and a central bank. Now there are democratic accountability problems with the second whereas with only one source there wouldn’t be!

  3. Jim Osborne -

    There are other accountability issues associated with the outsourcing of money creation via credit issued by joint stock private banks – they are only accountable to their shareholders and even that accountability is weak as my own personal experience of “shareholder activism” has demonstrated in the past as a pension trustee. Too many shareholders are indifferent to anything other than maximising their short term returns despite all the “social responsibility” tosh

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