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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A father’s murderous rage, the first victims of mass killers and Trump’s phantom campaign

From the family courts to the US election campaigns.

On 21 June, Ben Butler was found guilty of murdering his six-year-old daughter, Ellie. She had head injuries that looked like she’d been in a car crash, according to the pathologist, possibly the result of being thrown against a wall. Her mother, Jennie Gray, 36, was found guilty of perverting the course of justice, placing a fake 999 call after the girl was already dead.

When the trial first started, I clicked on a link and saw a picture of Ben and Ellie. My heart started pounding. I recognised them: as a baby, Ellie had been taken away from Butler and Gray (who were separated) after social services suggested he had been shaking her. He had been convicted of abuse but the conviction was overturned on appeal. So then he wanted his daughter back.

That’s when I spoke to him. He had approached the Daily Mail, where I then worked, to tell his story: a father unjustly separated from his beloved child by uncaring bureaucracy. I sent a writer to interview him and he gave her the full works, painting himself as a father victimised by a court system that despises men and casually breaks up families on the say-so of faceless council apparatchiks.

The Mail didn’t run the story; I suspect that Butler and Gray, being separated, didn’t seem sufficiently sympathetic. I had to tell him. He raged down the phone at me with a vigour I can remember half a decade later. Yet here’s the rub. I went away thinking: “Well, I’d be pretty angry if I was falsely ­accused and my child was taken away from me.” How can you distinguish the legitimate anger of a man who suffered a miscarriage of justice from the hair-trigger rage of a violent, controlling abuser?

In 2012, a family court judge believed in the first version of Ben Butler. Eleven months after her father regained custody of her, Ellie Butler was dead.

 

Red flags

Social workers and judges will never get it right 100 per cent of the time, but there does seem to be one “red flag” that was downplayed in Ben Butler’s history. In 2005, he pleaded guilty to assaulting his ex-girlfriend Hannah Hillman after throttling her outside a nightclub. He also accepted a caution for beating her up outside a pub in Croydon. (He had other convictions for violence.) The family judge knew this.

Butler also battered Jennie Gray. As an accessory to his crime, she will attract little sympathy – her parents disowned her after Ellie’s death – and it is hard to see how any mother could choose a violent brute over her own child. However, even if we cannot excuse her behaviour, we need to understand why she didn’t leave: what “coercive control” means in practice. We also need to fight the perception that domestic violence is somehow different from “real” violence. It’s not; it’s just easier to get away with.

 

Shooter stats

On the same theme, it was no surprise to learn that the Orlando gunman who killed 49 people at a gay club had beaten up his ex-wife. Everytown for Gun Safety, a gun control group, looked at FBI data on mass killings and found that 16 per cent of attackers had previously been charged with domestic violence, and 57 per cent of the killings included a family member. The Sandy Hook gunman’s first victim was his mother.

 

Paper candidate

Does Donald Trump’s presidential campaign exist if he is not on television saying something appalling about minorities? On 20 June, his campaign manager Corey Lew­andowski quit (or was pushed out). The news was broken to the media by Trump’s 27-year-old chief press officer, Hope Hicks. She was talent-spotted by The Donald after working for his daughter Ivanka, and had never even volunteered on a campaign before, never mind orchestrated national media coverage for a presidential candidate.

At least there aren’t that many staffers for her to keep in line. The online magazine Slate’s Jamelle Bouie reported that Trump currently has 30 staffers nationwide. Three-zero. By contrast, Bouie writes, “Team Clinton has hired 50 people in Ohio alone.” Trump has also spent a big fat zero on advertising in swing states – though he would argue his appearances on 24-hour news channels and Twitter are all the advertising he needs. And he has only $1.3m in his campaign war chest (Clinton has $42.5m).

It feels as though Trump’s big orange visage is the facial equivalent of a Potemkin village: there’s nothing behind the façade.

 

Divided Johnsons

Oh, to be a fly on the wall at the Johnson family Christmas celebrations. As Boris made much of his late conversion to Leave, the rest of the clan – his sister Rachel, father Stanley and brothers, Leo and Jo – all declared for Remain. Truly, another great British institution torn apart by the referendum.

 

Grrr-eat revelations

The highlight of my week has been a friend’s Facebook thread where she asked everyone to share a surprising true fact about themselves. They were universally amazing, from suffering a cardiac arrest during a job interview to being bitten by a tiger. I highly recommend repeating the experience with your own friends. Who knows what you’ll find out? (PS: If it’s juicy, let me know.)

Peter Wilby is away

Helen Lewis is deputy editor of the New Statesman. She has presented BBC Radio 4’s Week in Westminster and is a regular panellist on BBC1’s Sunday Politics.

This article first appeared in the 23 June 2016 issue of the New Statesman, Divided Britain