Prospect magazine article (July): The web makes us richer (Maniyka & Roxburgh of McKinsey) reports that:
'in 15 years the web has enabled the same level of GDP per capita growth that the industrial revolution took 50 years to achieve'. Other McKinsey findings: small enterprise job creation = 2.6 jobs for 1 lost through productivity efficiencies; internet accounted for 10% of GDP growth over 15 years in mature economies; etc, etc. Thus economies are being shaped for the better by investment in the internet. [Original McKinsey MGI Report here: Internet Matters]
Trouble is, with the dire economic state of the economy, investment in infrastructure such as wires in the road and so on, is falling behind. Telecoms companies will invest only if there is a quick payback. Rural broadband is severly bad (i.e. slow, even if available). Web IT needs the governmet to act and invest. Next problem: government debt levels prevent traditional borrowing for investment.
Solution: Government should create the credit needed for internet investment and spend it into circulation by getting telecoms companies to build the rest of the network needed. It does not need to be new debt from banks. Prof Richard Werner in his series of YouTube interviews explains that productive credit creation is non-inflationery and the Propect / McKinsey report shows this to have been true for the past 15 years.
In summary: Banks are not creating the credit needed for such productive investment as they have their self-induced bubble crisis to get over. The only institution that can lift the economy by creating the credit needed is the government. Currently they only create about 3% of the money (notes and coins). They desperately need to start creating some of the huge shortfall of credit that is left uncreated by the malfunctioning banking sector. There need be no famine if you hold the key to full grain stores.
'..many politicians think, that governments need to borrow and get indebted in order to fund government expenditure. That’s not actually true,...The government can spend money into circulation, money that it has issued. '
Pretty simple really.
The web brings wealth.
Investment i.e. issuing credit & spending money, must precede the extension of the web on the ground.
Banks aren't issuing credit much.
Governments can issue credit.
Why aren't they?
Let's get the web finished.
See also the previous blog post for what they are thinking about such investment in the USA.posted by Charles Bazlinton. Read the book: The Free Lunch - Fairness with Freedom