It’s time to let go

February 21, 2014 2:01 pm

I’m a Londoner, born and bred.  But part of my heart will forever be in Manchester.  It was my first home away from home when I left Streatham to go to university. Now the example of Greater Manchester is inspiring a new enthusiasm amongst policy makers in Westminster for a renaissance of our great cities.

There we can see what is possible when 10 local authorities work together. Labour-led councils have led the way in driving this cooperation, which – moulded, tested and strengthened over a couple of decades of joint working – is a shining example to other cities around the country of the benefits of common working towards shared goals.  In Greater Manchester we have shown what is possible, even within the UK’s centralised political economy.

The return of our economy to growth is welcome after three wasted years.  But it has brought into much clearer focus the long-term economic challenges our nation faces.  Business investment remains weak, our export performance is dire, and productivity has fallen below our major competitors.  For most of the last four years wages have risen more slowly than prices, squeezing household incomes and creating a cost-of-living crisis.  The growth we have seen remains as unbalanced as ever – the Centre for Cities recent report showed that eight of in 10 new private sector jobs created since 2010 have been in London.

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Returning to business as usual cannot be good enough.  To grow our way out of the cost-of-living crisis towards more sustainable, balanced and inclusive growth requires fundamental change.  We need a banking system that works for the real economy.  We need an energy market that offers consumers a fair deal.  And we need an economy creating more, well paying jobs in every part of the country.

But here lies the hope.  It is not difficult to see where improvements can come from in our national economic story.  If British business engaged employees at a level equivalent to our main competitors, where employees are involved in company decision-making processes and as a result have a greater stake in success, this could be worth an additional £26bn to our economy each year according to the business-led Engage for Success organisation.

If we set clear direction for our economy, and if we combine stronger market competition with new means for firms to collaborate away from the market on skills, technology and supply-chain development, we can support more of our strong sectors to become world class.  If we remove barriers to entrepreneurship we can allow more people to become masters of their own destiny, because no class or group has a monopoly on good ideas.

Moreover if we could support our cities beyond London to perform at the level of their German equivalents this would give a significant boost to our economy.  In Germany, all eight of the biggest cities outside Berlin outperform per-capita GDP, whereas in the equivalent eight cities in Britain only Bristol does.

Some of this change requires a stronger centre, to set a clear direction and to hold that direction for the long term.  But some of it requires the centre letting go.  We have seen a drift towards greater autonomy for cities, with the Government’s City Deals building on earlier initiatives from Labour in the same direction.  But if we want truly to liberate our cities so that they can fulfil their economic potential, we have to go faster and we have to go further. That is why Labour has committed to implementing a network of regional banks, to work with the British Investment Bank to tackle the lack of access to finance and drive innovation and growth outside London and the southeast. Lord Adonis’ review is due to report later this year on how we can drive growth across the UK.

We must not repeat the mistakes of this Government by tearing up Local Enterprise Partnerships as they did the Regional Development Agencies. The Tory-led government said they said they would devolve radically but in practice this hasn’t happened – Local Enterprise Partnerships still don’t have access to the budgets and powers they need to drive local growth and concerns remain on their lack of accountability and whether they represent the diversity of the business community.

So we must find new ways of embedding the voice of business that LEPs represent into the democratic structures of combined authorities to get the best of both.  Here the politics pulls in the same direction as the economics: giving power back to our cities will be good for our economy, but putting real decision making power closer to the people will be good for our democracy too.

Chuka Umunna is Shadow Secretary of State for Business, Innovation and Skills and MP for Streatham. 

Today is “Cities Day” on LabourList in association with centre for Cities. Ahead of the General Election, Centre for Cities is asking all parties to Think Cities. To read, listen and watch contributions from some of the UK’s leading city thinkers, politicians and practitioners visit www.thinkcities.org.uk

  • Peter Martin

    Chuka,

    If Labour wants to do the things it claims it wants to do like having ” an economy creating more, well paying jobs in every part of the country” it needs to have a major rethink on fundamental economic questions. Suggestions like improving the banking system, the energy market, involving employees in the decision making processes, while being worthwhile aren’t going to do it. Everyone knows that.

    The voters aren’t fools. They’ve heard all this kind of stuff before. Party activists aren’t fools either and they aren’t going to be motivated by current Labour policy in the pre-election period.

    Let’s start at the beginning. The UK has been a net importer for many years. The USA runs a similar style of economy. Imports have to be paid for and the payments drain money from their economies. This is ‘retrieved’ by the sale of the Treasury securities on the international market and recycled back into their economies by government budget deficit spending. You might want to make sure you understand this. Its fundamental.

    So whereas the UK runs both an internal (govt budget deficit) and an external (trade & current account) deficit of about 3.5% Germany runs a surplus in both of about 6.5%. The Germans have a money-go-round which goes in the opposite direction to the UK’s and they have to tax those export revenues away to prevent inflation in the domestic market and use the proceeds to buy securities from the UK and USA so that the citizens of those countries can carry on buying Audi and BMW motor cars!

    So does this mean that Germany is always going to have less unemployment than the UK and the USA? No it doesn’t. There are times when it has been higher.

    Does this mean that when politicians talk about “export led growth” they don’t know what they are talking about? Yes, it does.

    Does this mean that when Ed Balls promises an internal surplus in five years time he doesn’t know what he’s talking about either?
    Well its theoretically possible but he’d have to make the UK a net exporter like Germany in just five years. It’s really not possible, outside of a severe wartime economy situation , in my opinion. If he tries to ‘achieve’ an internal surplus while running an external deficit , he’ll crash the economy.

    Is an external surplus, which will lead to an internal surplus too, possible over a longer period?
    Yes if that’s what the electorate really want. As the sale of Treasury securities funds the external deficit they will need to be phased out or greatly reduced. The pound will fall making exports more competitive. Imports will be much more expensive and the government might expect to get some flak when petrol breaks through the £2 per litre barrier. Income and other taxes probably will have to rise to similar levels to Germany to remove excess spending power from those export receipts.

    • David Battley

      If petrol breaks £2 per litre anytime soon, we will have more to worry about than budget deficits: read Jeremy Leggett’s most recent book, and consider the effect of the fuel strikes a few years ago lasting for more then 3 days…

      • Peter Martin

        I’m not sure how much the £ would have to fall by to eliminate the external deficit but if it was 33% then the price of imports would rise by 50%.
        So if the petrol price were raised by 50% it wouldn’t be far off £2 per litre. I know it probably wouldn’t work quite like that but, even so, the effect on the standard of living would be severe for several years.
        This is what has to happen though if Ed Balls wants to eliminate the deficits.

        • David Battley

          You might eliminate the deficit, but the actual debt overhead to be repaid would skyrocket!!! edit: on reflection, obviously this only applies to debt which is denominated in a foreign currency, which in fairness is a tiny proportion of UK debt, but it would significantly reduce our ability to borrow in the future, a la Argentina, and may limit us from borrowing in £ in the future (i.e. if lenders stopped believing in the stability of it)

          • Peter Martin

            “may limit us from borrowing in £ in the future”

            Firstly if there were less of an external deficit there would be less need to ‘borrow’.

            Secondly, the UK government issues pounds so there is never any need to borrow them in the normal sense of the word.

            ££ are the IOUs of the British government. Can you imagine borrowing back your own IOUs? You can’t. All you can offer is to swap one type of IOU which doesn’t pay any interest for another type which does pay some interest.

            When the UK imports stuff the the suppliers get paid in pounds, or they exchange them on the international market for some other currency. Either way someone ends up with pounds. They are drained from the market by the UK government selling securities which pay a small amount of interest so the holders of the pounds naturally choose something rather than nothing. Ie they swap one sort of IOU for another type of IOU.

          • David Battley

            Horribly flawed analysis Peter.

            “££ are the IOUs of the British government.” but the value is not owned by the government: ££s are backed by the assets of the British (and, to a lesser extent, foreign) people who own them and convert them backwards and forwards into “stuff” in a dynamic marketplace. If the government “issues pounds” instead of borrowing to meet its commitments it is, directly, causing monetary inflation and consequent devaluation, and simultaneously destroying global confidence in its own currency, causing further devaluation as everyone rushes to move their cash out of ££s. This is not a zero-sum game.

            Secondly, you (well, the treasury) sells securities in exchange for ££s which are then given to government departments and spent, so can you explain how this caused ££ to be “drained from the market”?

          • Peter Martin

            My “horribly flawed analysis” of the nature of all modern currencies would be that they are indeed IOUs of the government and don’t have any intrinsic value. Lets try a simple thought experiment:

            Suppose you received a printed voucher from the government saying it was a credit of £20 towards your next tax bill or TV licence or whatever. Of course, you’d think that was worth keeping and was worth exactly £20.

            Further suppose the voucher said you could pass that on if you didn’t need it yourself. In that case it wouldn’t be any different to a £20 banknote. In fact that is exactly what a unit of currency is. Just a tax credit. There’s nothing of any tangible value backing it up. No gold no silver. Even if you don’t pay tax yourself you’d know that someone else will need it for their tax payment which is what gives the voucher a value.

            “Drained from the market” means buying excess ££ on the foreign exchange markets which have built up because the UK imports more than it exports. If the sale of treasury securities were to be included in the trade figures there wouldn’t be any gap. There’ll always be a gap if the UK government are successful selling these securities. If the UK government want to eliminate their trade gap the answer is simple enough. Phase out the sale of treasury securities.

            The economy can be considered to be an iteractive flow of money. If the flow is blocked then the Government needs to do something to keep the currency moving. Large piles of idle currency can be a problem. If I deposit £10k government cheque in the bank, the bank will put that £10k in its reserves and may well buy treasury securities with it. This can be considered taking my unused £10k and recycling it back into the economy.

            Another view is that they just tear up any money that comes their way, just like I would tear up my own IOU if it came back to me. On this basis taxation is the process of the government destroying money. When the government spend they create or issue new money.

            Of course it doesn’t always work quite like that. They may well shred a pile of old banknotes which are used to pay taxes. But they wouldn’t destroy coins. It doesn’t really matter. A bag of £100 “worth” of coins isn’t worth £100 to the government , its worth whatever it costs them to make new ones, in resource terms. Just like a £100 chip isn’t worth £100 to a casino operator. It’s only worth the cost of a replacement.

            That’s enough of my “horribly flawed analysis” for now!

          • Chris Cook

            Nice, Peter. You’re one of the few who has a clue how the system really works. And that includes >99% of economists and almost the entirety of central bankers.

          • David Battley

            Basing currency on metal only works if enough people ascribe an intrinsic value to that metal. I could equally base my currency on tulips, feathers, or seashells (all of which have been done before), and fiat currency is no different: the difference that you cannot see the value as a pile of shiny stuff doesn’t mean it has no value.

            But to your example: ok, if the government created a £20 voucher for me to spend then you are correct that I would (not unreasonably) assume the value of ££ would remain unchanged. Perhaps you can walk me through what you believe the outcome would be if the government wrote the same cheque (sorry, voucher) for, let’s say, £20,000 for each and every person in the UK (what are we now, say 70 million?) at an overall cost to the exchequer of £140,000,000,000, and everyone with an additional £20,000 of spending power in their pockets?

          • Peter Martin

            A metal standard is an example of commodity money. The metal itself has an intrinsic value and so can be used as a medium of exchange. Similarly you could use bars of chocolate or packets of cigarettes. There’s an obvious problem though. With metal its possible to remove a portion. The cigarettes or chocolate may be of dubious quality.

            So all money has to be more than just the value of the commodity itself and has to be backed up by the power of the State. The Bitcoin is an interesting exception but that’s another story!

            The quantity of money is always varying in any economy and is largely outside of governmental control. If you Google the phrases “banks create money out of thin air” or “endogenous money” and you’ll see what I mean. This causes quite a lot of consternation! Largely through a misunderstanding IMO but there is a valid concern about the effects of bank lending.

            Governments can vary their spending and taxation too. After the 2008 crash various measures were taken. Like a temporary reduction in VAT to 15% and the introduction of cash for clunkers schemes etc. In Australia everyone got cheques for about a $1000! But there was no hyperinflation.

            Looking at it from the Govts POV, the economy consists of a range of available resources. Factories, machinery, agricultural land, railways, power stations etc etc and millions of workers. The aim should be to maximise the productive power of all that. Governments naturally have their bean counters, but their, and others, mistake is to think that there are only a finite number of beans whereas every economist knows Governments can create them without limit. There’s never any shortage. If they push their economies too hard and try to use resources which aren’t there, though, they will generate inflation in the economy. Everyone agrees on that.

            On the other hand, if they don’t push hard enough they’ll have recession and high unemployment. Resources will be wasted in the pursuit of saving money, but of which there is no shortage anyway! How can there be?

            It seems pretty obvious what needs to be done in the recession hit economies of Europe and the UK. The tragedy is that we’re mired in the superstition of austerity economics. No matter how many times it is seen to fail, the belief in it, even in the Labour Party, remains.

          • David Battley

            Oh dear, you still persist with this false assumption that government somehow control productivity. No-one in Whitehall can tell me how hard I should work. Government primarily influence economies by encouraging activity and innovation by providing direct or indirect incentives to work in one sector over another.

            Also you say metal has an intrinsic value. Really? And what is that then. What good is a lump of largely inert, shiny metal to me, if push comes to shove? How do I value it: in terms of the man hours required to mine it? What when the price of labour changes? What do I know of it’s rarity to provide this valuation? Like all things it’s value is determined by supply and demand, not some empirical constant.

            You also mention Australia and hyperinflation: nice red herrings! Perhaps you’d like to explain it’s relevance to your thesis, noting a) the tax rebate structure in Australia (typically used as an alternative to some of our tax banding and exemptions: it is unequivocally NOT used to create money out of thin air) and b) how it varies according to the Australian budget surplus (or deficit). Also c) I’d be interested why you raise an export-heavy economy (like Australia) to demonstrate your proposition that an import-heavy economy like the UK could use this? and d) who said hyperinflation: can you comment however on the effect of inflation when you give everyone extra spending power?

            You say it is obvious what needs to be done: I am glad for all our sakes that the world sees Chartalism in all it’s Emperor’s New Clothed glory!

          • Peter Martin

            I think you must be confusing me with someone else. I didn’t say anything about productivity just that Government controls aggregate demand which is just a fancy word for spending power.
            On a point of information. Australia also has a trade deficit of 3.7%, this compares to the UK’s 3.8% so there isn’t much in it.
            Yes all metals have an intrinsic value. Gold can be made into jewelry and has many applications in the electrical
            industry. So if you have a TV set, a PC or mobile phone you’ll be an unwitting Gold user. The same with other metals like copper (for wires), silver (for plating and solders), tanatalum (for electrical capacitors).

          • David Battley

            1. “Australia also has a trade deficit”

            On a point of information, this is incorrect: your figures are out of date. The government publishes all this information and it varies over time, but typically Australia runs a trade balanced economy. It is currently in surplus, having been in deficit in 2012 and 13, but last in surplus 2010 and 11.

            2. I didn’t say gold is completely valueless, nor entirely useless. It also has significant applications in medicine, and as it happens I am far from an unwitting user: however you say it has an “intrinsic” value, which I would ask you to provide a hard figure to in order to back up that assertion. Perhaps we have a different interpretation of “intrinsic”, but my starting point is that the intrinsic value is very low – indeed practically zero: if we were to come across a huge deposit of gold, what do you think would happen to the price, in with it, your basis for currency stability?

            3. “Yes extra spending power can lead to inflation if it means that spending power is chasing resources which don’t exist. But if it is directed towards unused resources which do exist then it prevents them going to waste.”

            Hmmm… perhaps you can try again in English? Do you mean that providing the government tell me I can’t spend my new voucher on certain things then the price for them will remain static? What if that product or service was imported? You still appear to ignore the effect of devaluation of the currency (by having created a massive amount of ££ through these vouchers) and the knock-on impact of loss of confidence from investors who then seek to rid themselves of the (excess) currency. If sterling devalues against the USD, will I still be able to buy my foreign made iPad at the same price, do you think? Does this price increase not qualify as “inflation” for you?

          • Peter Martin

            The figures I had for Australia were for the last full calendar year. But this is getting somewhat off the point. Currencies work the same way regardless of the size of any surplus or deficit.
            Currencies haven’t depended on gold or any other commodity for at least the last 40 years.

          • David Battley

            You have indeed veered off the point: countries haven’t tried to print their way out of an unbalanced budget ex nihilo, something that Chartalists suggest should be not only possible, but desirable. Do you still support this assertion?

          • Peter Martin

            The current thinking is that budgets tend to do what they do.

            If governments try to close reduce their deficits by increasing taxes and/or reducing spending in times of recession, the recession deepens leading to reduced revenue and increased need for mandatory social spending.
            The deficit can end up worse than previously.

            The way to reduce the deficit is therefore to increase economic activity.

          • David Battley

            I am rather suspecting you don’t want to address the core issues of Chartalism by the way you are retreating into (mostly) stating points that are accepted across all economic schools of thought.

            Of course there is a role for government in providing counter-cyclical economic stimulus: no-one would deny that. This issue that has affected the UK in the last few years is that, according to mainstream economic thinking at least, it was not counter-cyclical in that the government was running a deficit during a period when they might have been expected to run a surplus. There is generally considered to be a hard limit % GDP that you can borrow before lending parties get spooked and increase your borrowing costs up to unmanageable levels, but of course this unmanageability is disputed by Chartalists.

            As an aside I am aware that in the 1930s (and to a lesser extent the 80s) this % of GDP that could be, and was, borrowed was much higher than now. However, the realpolitik view is that Japan today represents the extreme far end of what is possible.

            Therefore, when you say deficit spending “more sustainably” to revive an economy, you are implicitly stating that the country could take on significantly more debt. Some would disagree with this, as a result of the economic policies undertaken towards the end of the 2000-2010 decade. I would assume that you believe we can take on accelerating amounts of debt (i.e. by increasing the year-on-year deficit) and this is fine because deficit spending is by definition going to create an equal or greater benefit to the economy, and we can always de-value the currency later. I disagree with the first assertion on the basis that no evidence exists to support such an inelastic relationship between deficit spending and productivity growth, and my other point revolves around the second (which I have been banging on about, but do please re-read the whole thread if you have lost track as this has been over a number of days) which is that devaluing GBP to achieve the “one-off” elimination of some/all UK debt would a) import inflation in a horrific way and b) destroy whole swathes of the UK economy by undermining global confidence in the government’s fiscal credibility.

            Finally: you state the cycle of austerity leading to recession as a truism. Can you therefore comment on whether the UK economy is currently in recession as a result of the increased taxes and reduced spending policy of the present government? Or has it, as a point of fact, grown. Put aside the level of redistribution under the current government from this argument: how the taxes are balanced against rich and poor is a straight left-right discussion, but the Chartalist economic argument of deficit spending is on a different axis altogether.

          • Peter Martin

            it would be good if it were generally recognised that cutting government budget deficits couldn’t be achieved by cutting spending and raising taxes. That’s not true , even in the present day Labour Party, where austerity economics has taken a firm hold.

            It would be good if the link between the internal and external deficits were more generally recognised and also that the difference between the two represented the savings , or desavings, of the private sector. These aren’t difficult concepts so there is no reason why they shouldn’t be.

            Its sometimes said there are deficit hawks and deficit doves in economic terms. You might want to Google the term deficit owl. I’m one of them!

          • David Battley

            “It would be good if… as you put it, cutting government budget deficits couldn’t be achieved by cutting spending and raising taxes”

            Except that’s not how I put it, and indeed I pointed out that this has been exactly what the UK government has done. How do you explain that counter-example, according to your theory?

            Also, having reviewed some articles on these “Deficit Owls”, am of the opinion that “Deficit Cuckoos” would be a more appropriate name…

          • Peter Martin

            Look, if you are going to quote then try to get the quote right. It should be:

            It would be good if it were generally recognised, “across all schools of thought”, as you put it, that cutting government budget deficits couldn’t be achieved by cutting spending and raising taxes.

            The government budget deficit increased sharply in 2008 because tax receipts fell very sharply when the GFC hit, not because tax levels were too low, and needed raising. People stopped spending even if they had money available to spend. The equation:
            Government Deficit = Private Surplus +External (trade) Deficit
            must hold in an accounting sense.

            So the Government deficit is defined by the external deficit and the desire, and ability, of the Private sector to net save. The latter is less now than it was in 2008. See graphs on “3spoken” website.

            The USA has recovered, including their budget deficit, from the GFC, because the USA didn’t raise taxes but did raise spending.

            The USA GDP is 9% higher than the GFC peak. The UK is still 1% less.

          • David Battley

            It is telling that you still can’t bring yourself to recognise that while growth may currently be lower than the US (how do our respective trade deficits compare BTW, given this was your original thesis), we are still in growth.

            This stands in contrast to your earlier statements which appear to suggest such a thing is not even possible.

            p.s. the quote was precise, and my use of “…” indicated an abridgment for brevity: your meaning was not lost, so please don’t split hairs just because your argument fails to hold water.

          • Peter Martin

            It might be better to continue this discussion somewhere else. I noticed you used the term ‘chartalism’ with an implied negative connotation earlier.

            Lets just be clear what that means.

            I don’t particularly like “ism” s but we can have either “metallism” or “chartalism”. The theory of metallism defines money as a commodity with intrinsic value that makes it widely accepted as a medium of exchange usually in terms of precious metals such as gold.

            The term “chartalism” comes from the Latin word charta, which means ticket or token – items that may be accepted as payment, but which do not have intrinsic value. Thus money is a unit of account with value that is determined by what the government will accept as payment for tax obligations. In other words, chartalism states that money does not have intrinsic value, but is given value by the government.

            Up until the early 1970′s most countries were on a gold standard, even if only indirectly, due to having a fixed exchange rate to the US$. The removal of the link between gold and the US$ and, at almost the same time, the removal of fixed exchange rates meant that the currency regime moved away from being metal based to being token based. That change wasn’t at all recognised to the extent it should have been.

            That’s all a £ is now. Its just a token. A government IOU. The government can make as many tokens as they like. They can never run out. If they issue too many they get inflation. Too few then recession. On a £10 note is written “I promise to pay the bearer on demand”. Its got a nice picture of the Queen on it. So what does she promise? She promises to give you another one. That’s all she promises. She might give you two fives for a ten, or a bag full of coins but there’s no gold and no silver.

          • David Battley

            Flawed logic I’m afraid, once again.

            1. Your assumption that the term “Chartalism” has negative connotations is your own. I am explicitly scathing about the absurdity of the theory, not the nomenclature.

            2. “Metalism” was coined by the inventor of Chartalism to describe other people who did not subscribe to his theory. Metallists therefore do not have to subscribe to a Gold Standard, and your inference is therefore flawed.

            Or, to put it another way:

            “In the broad sense of the term, which tends to be used only by scholars, metallism considers money to be a “creature of the market”, a means to facilitate exchange of goods and services. In this broad sense, the essential nature of money is purchasing power, and it does not necessarily need to be backed by metals. Understood in this broad sense, metallism reflects the majority view among mainstream economists, which has prevailed since the early 19th century.”

            (that from Wikipedia)

            Out of interest can you explain, according to Chartalist theory, what went wrong in Zimbabwe?

            Finally, you must copy-paste Investopedia, at least paste the rest of the page which is rather more explicit about the definition of Chartalism.

            Definition of ‘Chartalism’

            A non-mainstream theory of money that emphasizes the impact of government policies and activities on the value of money. The early-20th-century German economist Georg Friedrich Knapp first developed the theory of chartalism, which defines money as a unit of account with value that is determined by what the government will accept as payment for tax obligations. In other words, chartalism states that money does not have intrinsic value, but is given value by the government.

          • Peter Martin

            You are “explicitly scathing about the absurdity of the theory” of chartalism ” which states that “money does not have intrinsic value, but is given value by the government.” ?

            What planet are you living on?

          • David Battley

            Please stop digging, and take it up with “Stephanie A. Bell and Edward J. Nell, ed. (2003). The State, the Market, and the Euro: Chartalism Versus Metallism in the theory of money.”

          • Peter Martin

            I’d almost certainly go along with whatever Stephanie A. Bell has to say on the topic. She’s an excellent economist.

            Stephanie changed her name to Kelton when she married!

            Google (Kelton Fields Youtube) and spend the next hour or so educating yourself. If she’s saying anything that you think is contrary to what I’m saying let me know!

            I’d be happy to defer to her!

          • David Battley

            Excellent: so you agree then that “in this broad sense, metallism reflects the majority view among mainstream economists, which has prevailed since the early 19th century.”

            Now that we’ve agreed on that nomenclature, it would be nice if you were also able to address any of the questions previously raised without further recourse to logical fallacy.

          • Peter Martin

            Yes I agree. Stephanie is saying that mainstream economists have always thought in “metallist” terms. This was, of course, fair enough when currencies were on a gold standard. Then, if governments borrowed an amount of gold to fund their spending, the problem of repaying it had to be faced at some time in the future and the burden could even pass to the next generation.

            But, now that currencies are not linked to Gold there needs to be a rethink on what debt actually means. Government borrowing is no longer borrowing in the literal sense of the word.

            Look, stop writing comments until you’ve listened to what Stephanie Kelton has to say in the youtube lecture! Then come back and let me know if you still agree with her!

          • David Battley

            An Appeal to Authority is a logical fallacy in itself. Why bother engaging in a debate only to then “tag out” to someone/something else? It suggests to me that you don’t have a firm grasp on the point you are trying to make.

          • Peter Martin

            Look, you were the one who brought Stephanie Kelton nee Bell into the discussion.
            Stop bothering me until you have done the homework I’ve set for you by listening to her lecture!

          • David Battley

            #epicfail

    • BillFrancisOConnor

      ‘The UK has been a net importer for many years’.

      Since about 1981 in fact when Thatch and her chums decided to destroy the manufacturing base of the country:

      https://www.google.co.uk/search?q=uk+balance+of+payments+history&newwindow=1&espv=210&es_sm=122&tbm=isch&tbo=u&source=univ&sa=X&ei=BWUIU527KsyxhAfqqICADg&ved=0CC8QsAQ&biw=1600&bih=799

  • rekrab

    Chuka. If you take the time to post these articles then lets hope you also take some time to read the replies.Please read and reply to @Peter Martin’s re-post, there’s a lesson there for you to learn.

    Stop trying to woo the electorate with political talk that has no practical bearing nor outcome.

    Here’s a test for you Chuka, you want to engage? you want to find a better way. then reply to the posts I’ve said above or else nobody will take you seriously.

  • swatnan

    Spoken, like the next Leader of the Party. London is not the centre of the Universe.
    I often wonder what Scousers and Mancurians and Brummies, let alone the North Britons across the Border, think of the way we live now.

    • swatnan

      … and I forgot the Geordies.

      • treborc1

        I suspect next leader of the party he may well put his name forward but Progress have a few who will be ahead of him, what’s the betting we have a New Thatcher look alike in Reeves.

  • crosland

    Another poor contribution that only highlights some of our party’s lead spokespersons haven’t a clue about local govt or have as little regards as the Tory lead coalition towards if.

    Roll on the agenda of merging councils etc and the mess that will follow.

    Only an out of power MP could praise the failed system put in place by the Tories instead of sweeping it away and replacing it with something that actually works.

    A timid future awaits if this is all we have to offer.

  • http://www.darrenpricelabour.co.uk Cllr Darren Price

    Chuka, All good stuff and I fully agree with the thrust of this argument, the Centre for Cities report always makes compelling (yet harrowing) reading and we desperately need to foster growth outside of the M25 if this ‘recovery’ is to be well-balanced and long-term. However, I think that to do this the changes needs to be more radical and a fundamental reorganisation of local government is required, redesigning the complex often three tier system of counties/districts/boroughs/parishes etc and using a system based on areas of economic activity instead of historical happenstance. Not only would this provide better, more consistent and more effective local government (with more likely better quality councillors) it would demystify the process for the electorate, an electorate that is not engaged with politics and who in my experience often have absolutely no idea about which council is responsible for what! These new authorities should be supplemented with a revitalised town/parish council structure with a clearly defined remit acting almost (ideally) apolitically.

    With regard to Manchester, a city I know well…yes, it is (largely) a success story but let’s not forget this relies on Manchester/Salford/Trafford etc. etc. working together when I believe that they should be one (in terms of governance) in the first place. The key role of strong and consistent leadership from the members and the officers should not be downplayed there too as it is fundamental to their success. That is something that I believe would be easier to replicate with the larger authorities I suggest above.

    Of course I understand that the fundamental reorganisation I suggest is a mammoth undertaking but as a first step, I would like a Labour Government to: a) make a firm commitment to re-starting and speeding-up the process of creating unitary authorities stopped so prematurely by this Government and b) then start to devolve powers to these new units, beginning with the sort of powers held by the RDAs in terms of responsibility for regional growth.

    “Roll on the agenda of merging councils etc.” indeed……as a District Councillor and former local authority employee it may well be a case of Turkeys voting for Christmas but it is the right thing to do and fundamental to geographically rebalancing the countries economy.

    • Peter Martin

      If you must use that dreadful and meaningless phrase “rebalancing the countries economy” then please, at least get it grammatically correct!
      It should be ” country’s “.

      • http://www.darrenpricelabour.co.uk Cllr Darren Price

        Of course it should and thank you for highlighting that 4-days after it was posted. I have edited the post and hope that my heinous error didn’t cause you and your fellow pedants too much anguish. Whilst I was at it I also replaced the uppercase ‘T’ of Turkeys with a lowercase one and am considering embarking on a detailed review of my use of the comma and apostrophe.

        • Peter Martin

          What causes the real anguish is phrases like “rebalancing the economy”. You’ve used it but what does it mean? Do you know? Would anyone on the doorstep have the slightest idea what you were talking about?

          The implication is that it was at one time somehow balanced but, if so, when was that? How did it become unbalanced? What needs to happen to rebalance it?

          • http://www.darrenpricelabour.co.uk Cllr Darren Price

            I’m not keen on it either and I can see the scope for confusion as this Government use the phrase often to describe the ‘balance’ of public and private sectors. However, I think it is obvious that I didn’t mean that. I was (I thought clearly enough) talking about the economic differences between London/south east and the rest of the country – differences being exacerbated by this ‘unbalanced’ London-focussed recovery.

            As I said, I firmly believe that we need to encourage more/better economic development in the regions and that in order to achieve that we need to both reorganise and empower regional/local government. It doesn’t work well now aside from a few exceptions (like the Manchester one cited by Chuka) and we can and should learn from those – as we should from other places.

            Finally, I am one of those sad/mad people that spend a lot of time on ‘the doorstep’ and no, this isn’t one of the things I talk about often! This however is a discussion on a political site, under an article about that very topic. I thought it might be appropriate.

            PS ‘Rebalancing the Economy’ is exactly the sort of phrase I’d pull my MA students up for using, so I consider myself chastened. :-)

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