We could fix our economy by giving every man, woman and child £6,000 in cash

It's hard to believe in the economy's so-called recovery when 2.5m remain unemployed and 1.5m are stuck in part-time jobs because they can't find full-time work. So how do we get growth beyond the Square Mile?

Have you heard the good news? The economy is “turning a corner”. Growth is back. Green shoots abound. Hurrah! Forget that this is the slowest recovery in a century; forget that George Osborne promised us 7.7 per cent growth three years ago and yet we’ve had less than 3 per cent. Ignore the 2.5 million people who are still unemployed and the 1.5 million people who are stuck in part-time jobs because they can’t find full-time work. Turn a blind eye to the longest squeeze on workers’ incomes since the 1870s, to the 500,000 people who have been forced to visit food banks in the past year.

OK, you get my drift. To talk of a “recovery” is self-serving spin from the discredited austerians. If you want to see “green shoots”, you’ll have to head for the City of London. Bonuses there are up 64 per cent, while RBS and Lloyds are enjoying combined half-year profits of £3.5bn.

So how do we get growth beyond the Square Mile? Forget fiscal stimuli. Yes, Labour’s proposed VAT cut would boost demand – but by less than 1 per cent of GDP. Forget monetary stimuli. Interest rates have stood at a record low of 0.5 per cent since March 2009.

Then there is quantitative easing (QE), in which the Bank of England, according to the official explanation on its website, “electronically creates new money and uses it to purchase gilts from private investors such as pension funds and insurance companies . . . [This] lowers longer-term borrowing costs and encourages the issuance of new equities and bonds to stimulate spending.”

We have had a massive £375bn of QE so far, which may have saved the financial sector but has done very little for the rest of us. According to the Bank of England, 40 per cent of the gains from QE since 2009 have gone to the richest 5 per cent of households. “QE is a policy designed by the rich for the rich,” says Nigel Wilson, the chief executive of Legal & General.

There is, however, a way of using QE money in a bolder, much more daring way. It’s called “quantitative easing for the people”, or QEP.

QE of £375bn amounts to around £6,000 per man, woman and child in the UK. So why not electronically add this to the current accounts of every member of the public? Why not give the QE money directly to ordinary people to spend, save or pay off their debts? Wouldn’t it be better to inject new money into the real economy, rather than the City of London (where it usually sits unused, unspent, unlent, in bank vaults)?

QEP, incidentally, isn’t my idea. It’s Steve Keen’s. A professor of economics at the University of Western Sydney, Keen was one of only a handful of economists to have warned of the dangers of a financial crisis, several years before Lehman Brothers imploded in 2008.

QEP might elicit snorts of derision from the inflation hawks and deficit scolds, not to mention lazy references to hyperinflation and Weimar Germany, but it isn’t quack economics. Far from it. Remember the freemarket economist Milton Friedman, a hero to Thatcher and Pinochet, who said that downturns could be fought by “dropping money out of a helicopter”?

And remember his liberal-left rival John Maynard Keynes, who called for the Treasury to “fill old bottles with banknotes” and then bury them for people to find, dig up and spend?

QEP bypasses the tired and stale debate over austerity. Having the Bank of England hand over cash directly to consumers would boost aggregate demand without adding a penny to the national debt.

What’s not to like? Well, there’s no such thing as a free lunch, right? Wrong. There is if you’re a banker or a bond trader. The question is: why use QE money to bail out the masters of the universe rather than members of the public?

It’s a taboo topic, I guess. QEP is, in the words of the veteran economics commentator Anatole Kaletsky, formerly of the Times and now of Reuters, “too controversial for any policymaker to mention publicly”. Only a handful of pundits, such as Kaletsky and the Guardian’s Simon Jenkins, have so far dared to discuss the option of QEP. Kaletsky refers to “citizens’ dividends”, Jenkins to “people’s bonuses”.

It’s still a tough sell. Ever since Liam Byrne, the outgoing Labour chief secretary to the Treasury, left behind his now notorious note in May 2010 – “I’m afraid there is no money,” he joked – the austerians have pretended that the UK is broke, bust, bankrupt. In a speech in March, David Cameron declaimed that there’s “no magic money tree” to fund what he dismissively described as “ever more wishful borrowing and spending”.

This is the big lie of the debate over growth and deficits. Don’t take my word for it. Or Keen’s. A briefing document published by George Osborne’s Treasury to coincide with the Budget in March noted how: “It is theoretically possible for monetary authorities to finance fiscal deficits through the creation of money. In theory, this could allow governments to increase spending or reduce taxation without raising corresponding financing from the private sector.”

The Treasury agrees: there is a money tree – and it isn’t magical. It’s called QE and it can, if we so choose, be deployed to support households, not banks; to encourage spending, not hoarding. QEP isn’t just doable: in an age of collapsing living standards, it’s vital.

It would also be revolutionary. To borrow a line often attributed to Henry Ford: “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.”

Mehdi Hasan is a contributing writer for the New Statesman and the political director of the Huffington Post UK, where this article is cross-posted

Economic growth can't only be focused on London's financial district. Image: Getty

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

This article first appeared in the 23 October 2013 issue of the New Statesman, Russell Brand Guest Edit

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The struggles of Huma Abedin

On the behind-the-scenes story of Hillary Clinton’s closest aide.

In a dreary campaign, it was a moment that shone: Hillary Clinton, on the road to the caucus in Iowa, stopping at a Mexican fast-food restaurant to eat and somehow passing unrecognised. Americans of all political persuasions gleefully speculated over what her order – a chicken burrito bowl with guacamole – revealed about her frame of mind, while supporters gloated that the grainy security-camera footage seemed to show Clinton with her wallet out, paying for her own lunch. Here was not the former first lady, senator and secretary of state, known to people all over the world. This was someone’s unassuming grandmother, getting some food with her colleagues.

It might be unheard of for Clinton to go unrecognised but, for the woman next to her at the till, blending into the background is part of the job. Huma Abedin, often referred to as Clinton’s “shadow” by the US media, is now the vice-chair of her presidential campaign. She was Clinton’s deputy chief of staff at the state department and has been a personal aide since the late 1990s.

Abedin first met Clinton in 1996 when she was 19 and an intern at the White House, assigned to the first lady’s office. She was born in Michigan in 1976 to an Indian father and a Pakistani mother. When Abedin was two, they moved from the US to Saudi Arabia. She returned when she was 18 to study at George Washington University in Washington, DC. Her father was an Islamic scholar who specialised in interfaith reconciliation – he died when she was 17 – and her mother is a professor of sociology.

While the role of “political body woman” may once have been a kind of modern maid, there to provide a close physical presence and to juggle the luggage and logistics, this is no longer the case. During almost 20 years at Clinton’s side, Abedin has advised her boss on everything from how to set up a fax machine – “Just pick up the phone and hang it up. And leave it hung up” – to policy on the Middle East. When thousands of Clinton’s emails were made public (because she had used a private, rather than a government, server for official communication), we glimpsed just how close they are. In an email from 2009, Clinton tells her aide: “Just knock on the door to the bedroom if it’s closed.”

Abedin shares something else with Clinton, outside of their professional ties. They are both political wives who have weathered their husbands’ scandals. In what felt like a Lewinsky affair for the digital age, in 2011, Abedin’s congressman husband, Anthony Weiner, resigned from office after it emerged that he had shared pictures of his genitals with strangers on social media. A second similar scandal then destroyed his attempt to be elected mayor of New York in 2013. In an ironic twist, it was Bill Clinton who officiated at Abedin’s and Weiner’s wedding in 2010. At the time, Hillary is reported to have said: “I have one daughter. But if I had a second daughter, it would [be] Huma.” Like her boss, Abedin stood by her husband and now Weiner is a house husband, caring for their four-year-old son, Jordan, while his wife is on the road.

Ellie Foreman-Peck

A documentary filmed during Weiner’s abortive mayoral campaign has just been released in the US. Weiner shows Abedin at her husband’s side, curtailing his more chaotic tendencies, always flawless with her red lipstick in place. Speaking to the New York Observer in 2007, three years before their marriage, Weiner said of his future wife: “This notion that Senator Clinton is a cool customer – I mean, I don’t dispute it, but the coolest customer in that whole operation is Huma . . . In fact, I think there’s some dispute as to whether Huma’s actually human.” In the film, watching her preternatural calm under extraordinary pressure, you can see what he means.

In recent months, Abedin’s role has changed. She is still to be found at Clinton’s side – as the burrito photo showed – but she is gradually taking a more visible role in the organisation overall, as they pivot away from the primaries to focus on the national race. She meets with potential donors and endorsers on Clinton’s behalf and sets strategy. When a running mate is chosen, you can be sure that Abedin will have had her say on who it is. There’s a grim symmetry to the way politics looks in the US now: on one side, the Republican candidate Donald Trump is calling for a ban on Muslims entering the country; on the other, the presumptive Democratic nominee Hillary Clinton relies ever more on her long-time Muslim-American staffer.

Years before Trump, notable Republicans were trying to make unpleasant capital out of Abedin’s background. In 2012, Tea Party supporters alleged that she was linked to the Muslim Brotherhood and its attempt to gain access “to top Obama officials”. In her rare interviews, Abedin has spoken of how hurtful these baseless statements were to her family – her mother still lives in Saudi Arabia. Later, the senator and former Republican presidential candidate John McCain spoke up for her, saying that Abedin represented “what is best about America”.

Whether senior figures in his party would do the same now remains to be seen.

Caroline Crampton is web editor of the New Statesman.

This article first appeared in the 26 May 2016 issue of the New Statesman, The Brexit odd squad