Budget Day: Time for Some Radical Proposals

Today is budget day and the desperate economic crisis suggests the urgent need for some radical policy proposals. Unusually, the BBC has allowed its business correspondent to actually think outside his corporate box and propose some genuinely innovative policies. We have already covered the proposal for negative interest rates on this blog, which might serve to circulate money currently being hoarded by companies and financial institutions.

More interesting is the fact that some ideas to tackle the debt directly, since until this millstone is removed the economy cannot flourish. Under the rather misleading heading of 'Helicopter Money' Lawrence Knight suggests the creation of new money for public investment or to be given to citizens to spend. Although he claims that the process of money creation is 'rather hazy' he seems to accept the proposal for direct money creation along the lines argued for by monetary reformers. Professor Richard Werner's letter to the FT earlier this month is like sunshine on a hazy day in terms of its clarity of presentation. His proposals for direct money creation by the government to fund public infrastructure projects is the sort of advice the Chancellor should pay heed to.

Relying on Steven Keen as cover, Lawrence Knight, BBC business correpondents, then makes a proposal to actually just cancel the debts. The concept of 'odious debt' finds its place for the first time on the BBC's business pages, although the social and political implications of the massive reapportioning of assets that such a debt repudiation would result in are not discussed. As a long-term supporter of the idea of odious debt I am greatly cheered to see the BBC at least reporting this proposal, if not supporting it.

Meanwhile, Green MEP Caroline Lucas has proposed a Private Members' Bill on Land Value Taxation. The bill is summarised as follows:

'A bill to require the Secretary of State to commission a programme of research into the merits of replacing the Council Tax and Non-domestic rates in England with an annual levy on the unimproved value of all land, including transitional arrangements; to report to Parliament within 12 months of completion of the research'.

How might a Land Value Tax help us out of our current predicament? I think it is a novel and creative solution. It identifies clearly the source of all true value within an economy: the land itself. It was forgetting this link that led to the divorcing of real and nominal value and bankruptcy for many economies. Iceland and Cyprus have become demonstrably bankrupt but many of Europe's economies would already have been obliged to call in the receiver had they been corporations.

A Land Value Tax would challenge the government's so-called 'presumption in favour of sustainable development' that is supposed to underpin its approach to planning found in the National Planning Policy Framework. What this policy and its unaccountable but clearly biased National Inspectorate really supports, however, is speculative developments whose value ends up in the pockets of property developers and those who hold land banks. A Land Value Tax could end this at a stroke, since the value of development would be taxes into the public coffers. While this might put put a break on speculative development in the short term, in the medium term it would shift the ownership and value of land, breaking the bottleneck that prevents citizens and communities from developing their local land for social and environmental benefit.
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Evolution become Conscious

Following up on my earlier post about 'joining the evolution', Michael Dunwell, my fellow green economist from the Forest of Dean, writes to tell me that Teilhard de Chardin thus described the human race in his book The Phenomenon of Man, published posthumously in 1955. It prompts me to post a talk I gave at a seminar in London on Europe Beyond Growth shortly before Christmas.

I’m going to start by saying something about science. On Monday I listened to Evan Davies interviewing fisheries minister Richard Benyon about his decision to oppose the latest EU fisheries proposal which Benyon claimed he was doing ‘on scientific grounds’. Davies brought in the top fisheries scientist from Defra, who argued for the EU proposal. Evan Davies seemed genuinely perplexed by the inability of the scientists to agree. He was seeking a ‘right’ answer, that was scientifically proved and unassailable.

Years ago I put together a report called ‘I Don’t Know Much About Science But I Know What I Like’. It’s Martin Amis’s joke but I’ve always enjoyed it. The reason I enjoy it is that it achieves with wit and brevity the task of challenging the right of science, usually in this context meaning statistical evidence, to trump other forms of thought.

Caroline Lucas has said that we are going to be the first species that is able to scientifically monitor our own extinction. Consecutive reports from the IPCC suggest that she is right about this, but I am a bit more optimistic. My optimism organises itself under my latest personal mantra: ‘Join the Evolution’ and it works like this.

We are unique in being a self-conscious animal. When other animals receive indications that they are reaching the limits of their evolutionary niche they respond to these by finding a new niche, or by failing to reproduce, or otherwise by ensuring that their numbers decline. As humans we are too clever for that. We can use our clever minds and our technology to keep pushing the boundary outwards, ignoring and filtering out the clear evidence that the ecological safety-limits have been exceeded.

So as a self-conscious animal we need to evolve self-consciously. We need to find a way to get a collective grip on ourselves, to stop believing our own fantasies, to get back down to earth. This is what I mean by ‘joining the evolution’,  and I would argue that it is a desire to do something like this that has brought you here today.

So I have nothing against science, and I think being able to prove that resources are not limitless and have some idea of the scope of the problem we are facing is vitally important in convincing those trapped in the scientistic mind-set. But it is not going to save us. We need much more human solutions to do that.

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The Voice of Reason

The following exchange from Hansard neatly illustrates the benefits and the limitations of having a Green MP:

Caroline Lucas (Brighton, Pavilion) (Green): Violence is always to be condemned, but as the Prime Minister said, seeking to understand violence is a world away from seeking to justify it. Indeed, we ought to try to understand it to stop it happening in future. Given the growing evidence, from Scarman onwards, that increasing inequality has a role to play in drawing at least some people into violent behaviour, can the Prime Minister reassure the House that comprehensive impact assessments will be undertaken before his Government introduce any more policies that increase inequality?

The Prime Minister: Everyone wants to see a fairer and more equal country, but I have to say to the hon. Lady that young people smashing down windows and stealing televisions is not about inequality.
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Will the UK Abandon its Climate Targets?

During the past year we have seen the painful exposure of the political strategy of a party that has thrived by promising all things to all people. Now that the Liberal Democrats have had their bluff about coalition government called, we see both their opportunism and their political incompetence exposed to full view. This is by turns hilairious and tragic for the party but leaked documents about cabinet splits over climate change policy suggest that it may soon prove tragic for the country and the world. These documents suggest that the Tory government, in its desperate drive for growth, is seeking ways to avoid the strict carbon dioxide emissions targets enshrined in law by the previous Labour government.

The Climate Change Act, which became law in November 2008, was a recognition that climate change is too important an issue to be left to the vagaries of the electoral cycle. It included two important provisions. First, 'a legally binding target of at least an 80 percent cut in greenhouse gas emissions by 2050, to be achieved through action in the UK and abroad. Also a reduction in emissions of at least 34 percent by 2020. Both these targets are against a 1990 baseline.' To remove the temptation to avoid these strict targets the bill also established a Committee on Climate Change, with a particular remit to ensure that the law was being respected.

It would appear that this committee is becoming nervous about a battle within the cabinet over the tension between the CO2 emissions reductions and the desire to reboot the destructive growth cycle. This follows the leak of a letter from Business Secretary (and ex-chief-economist at Shell) Vince Cable to Energy Secretary (ex-anti-nuclear, ex-merchant banker) Chris Huhne. Cable challenged the Committee's attempts to reduce CO2 emissions as a threat to economic growth.

The fact that the CCC is leaking to the press is a sign of how serious the situation is. This is hardly a radical green outfit: the list of its members indicates the usual selection of ex-business and conventional science establishmentites. But they find themselves at the sharp end of the tension between pro-growth economics and the climate reductions the human race needs. The battle-lines are drawn and the issue will be decided at the cabinet meeting on Monday.

The evidence of this fight at the very heart of government makes it clear that climate change emerges from a structural problem within the capitalist economic system, as green economists have long argued. Both sides in this current spat are right: we must have CO2 emissions, but we cannot have CO2 emissions. The only was to resolve this apparent impasse is to ditch the 19th-century economic paradigm we are still suffering for the ideas of green economics that Caroline Lucas has called 'the economic paradigm for the 21st century'.
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