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Green/Labour collaboration to achieve People’s Quantitative Easing?

March 3, 2018

Wikipedia describes People’s Quantitative Easing as a policy proposed by Jeremy Corbyn during the 2015 Labour leadership election, which would require the Bank of England to create money to finance government investment via a National Investment Bank.

As Bright Green adds, “People’s QE is essentially a re-badging of an idea contained in the Green New Deal, championed on numerous occasions by Caroline Lucas. Green Infrastructure QE was the idea of using public money to build highly insulated homes and to convert buildings to be more energy efficient.  By doing so, the economy would grow, people would have better-quality homes to live in and we would finally be starting to take proper action to deal with climate change”.

We also draw attention to the work of Richard Murphy and Colin Hines who presented Green Quantitative Easing in 2010 as explained here. In this alternative form of QE, the money created by the Bank of England is provided to a National Investment Bank to inject into the real economy. In other words, it funds new investment, infrastructure repairs and retrofitting.

QE4People says: “The current Quantitative Easing program of the European Central Bank is an ineffective and unfair response to the financial crisis. We, civil society organisations from all across Europe, propose an alternative form of QE which would make sure money is spent into the real economy and benefits those that need it the most. We call this concept ‘Quantitative Easing for People’ “.

Current QE is ineffective, unfair and risky. It works by pushing money into the financial markets, in the hope that some of the new money will ‘trickle down’ to the real, non-financial economy, through extra spending by the wealthy, or through money creation by private banks – when they make loans.

In 2016, MEP Molly Scott Cato spoke to EU Reporter’s Catherine Feore on a better alternative to the ECB’s quantitative easing programme. She argues that #QE4People could be used to finance green investment and expressed the hope that there could be some cross=-party collaboration on this issue- just as Bright Green does in the final paragraph of this post.

In the UK, the Bank of England created £375bn, used to flood the financial markets, and by the Bank of England’s own estimates, this pushed up share and bond prices by around 20%. Since 40% of the stock market wealth is held by the richest 5% of households, QE has made those households better off by an average of £128,000 each and the evidence is that it has done very little to create jobs and increase economic growth.

With over 18 million people currently unemployed, the Eurozone needs money to be injected directly into the real economy instead, so it can improve people’s lives by boosting employment and spending.

There is a range of concrete proposals for how QE for People could be implemented. The money currently being created by the European Central Bank could be given directly to Eurozone citizens and/or spent on much needed public investment such as green infrastructure, affordable housing – or in any other way which would contribute to the genuine development of the real economy.

QE4People, and their civil society organisation members from all across Europe, believe they urgently need to re-think this approach and turn this wasted opportunity into a programme that delivers a sustainable recovery in the Eurozone. They aim to foster a public debate around Quantitative Easing for People, arguing that the money created through QE should be spent into the real economy so that it can benefit individuals and society as a whole.

In a recent article in The Week, Delhi’s Devinder Sharma harks back to 2013, when an Oxfam report said that $240 billion, the net income in 2012 of the richest 100 billionaires, would be enough to wipe out global poverty four times over.

In other words, he continues, removing global poverty and hunger, which was always on the top of WEF rhetoric, required only $60 billion.

Over the years, he continues, especially after the economic meltdown in 2008-09, the United States and the European Union have been aggressively printing money and he tweeted that year to then US President Barack Obama asking him to print an additional $120 billion and give it to a group of international organisations (with backing from G-20 countries) to launch a time bound programme to remove poverty two times over. As expected, he didn’t get any response, but later he learnt that economists had launched a campaign for ‘Quantitative Easing for People’ in 2015 and comments: “That’s the way it should have been. Poverty and hunger could have become history by now”.

Endnote, Bright Green says that the Labour Party may now have a proper socialist leader once more, but the Green Party is still the home of ecosocialists . . . and while retaining our own distinctive ideas and influences, Corbyn’s election is a chance for us to collaborate to achieve our aims.

 

 

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