Hartlepool levelling up: Was that it?

What did 'levelling up' mean in the Hartlepool swing to the Tories?  The Hartlepool constituency, returned a Tory MP Jill Mortimer, 'farmer and business woman', after a 50 year run for Labour. That day was also the vote for the Tees Valley mayor and Ben Houchen won a resounding victory. Perhaps the Mayor Houchen factor was at work. Perhaps it was that in  Hartlepool with the Labour candidate still an EU fan who wants a second referendum, and with Hartlepool  very strongly Leave, maybe that prompted the strong rejection. Who allowed that to happen?

Ben Houchen, in winning his first Tees Valley contest in 2017 as a Tory promised to nationalise the local airport which he did and it created many new jobs.  Nationalisation is a policy borrowed from Labour.  Houchen has always said he is locality oriented and the use of socialist policies shows he is a non-ideolgical Tory.  The Boris-Rishi government has supported his Tees Valley projects - including environmental climate change schemes - by directing spending to the area. Also Treasury North, which is a partial government departmental move to Darlington, is a rather socialist, state planning idea. It probably helps in all these local changes that Chancellor of the Exchequer Rishi Sunak holds a nearby constituecy.  

Freemarket conservatives wanting small government (don't move but reduce the Treasury?), low borrowing and 'let the market rule'  are rare these days. Covid-19 financial support has meant Tory central government money is now always on tap for lots of schemes. The (allegedly) penny pinching austerity gloom of the Cameron-Osborne era is well gone, and now seen merely as anti-Labour sound bites, but which helped dampen expectations of government-directed productive investment which now the New Tories are unashamedly borrowing from Labour.  But remember: the high priestess of the free market, Margaret Thatcher secured a deal for Nissan in Sunderland in the 1980s with a  special central government money deal for Nissan.     

So the Conservatives are doing what is needed to remain in power whilst favouring neglected voters by boosting their local economy with cash handouts. Old fashioned pork barrel politics, as ever. The latest scheme is the Community Renewal Fund which will share £220m with 100 favoured places in a year and five of those are the five towns of the Tees Valley. Red Tories are in town.

The problem with such politics - sensible enough given the limited vision - is that only some groups of voters are favoured rather than producing a fairer outcome for all. Under Old Labour it might be such as union members,  managers of state institutions, and home renters; under Old Conservatives it might be shareholders, capitalists eager for state grants and home owners. 

When will overall fairness prevail? Instead of a hope that a trickle-down of government money may come my way via my Mayor, why not each citizen respected as contributer and beneficiary of a good recovering economy?   The previous blogpost on Universal Basic Income  illustrates how that idea of a payment to everyone unconditionally is well researched to be affordable - 'revenue neutral'. Even better an extra measure would be the funding of UBI to include land value tax charged on the land value underlying all homes, and allowable against income tax,  along with a reform of council tax. Renters would benefit as they would pay no charge, the landlord would. 

We need a re-set in our politics and economics in favour of fairnes for all, not just for instance the homeowners who are benefitting  from a housing boom. That would be better levelling up. Our society is becoming increasingly divided as defined by owning or renting a home. Renters are being sidelined as they have no unearned nest-egg accumulating on the value of the land with their house as homeowners do. We all contribute to our economy as we work and run things and a healthy economy raises house (actually land) prices, but that value is soley due to land ownership. Too bad if you rent your home, no level playing field for you from your contribution, it all gravitates down to the owner. What's fair in that?

Posted by Charles Bazlinton author The Free Lunch - Fairness with Freedom

 

Alan Greenspan cold shouldered Richard Werner and set back economic progress for decades

Central bankers speak in very measured ways as they pronounce on important things such as the likely track of the national or global economy, Brexit or reading the runes about future interest rates, but what are they really up to? Are they truly working for the best interest of each of us? The Bank of England set its base rate at 0.5% in 2009 which lasted for years until a Brexit dip to 0.25% in 2016/17, and last week it went up to 0.75%. Well paid officials and back up teams deliberated over this inactivity for nearly a decade. But you might say democracy is expensive. But is it democracy? Are central banks answerable to us or anybody? Is there an agenda in central banking that we don't understand? 

Professor Richard Werner who revealed the hidden workings of the Bank of Japan in his best selling book Princes of the Yen published in 2001 in Japan, has just re-published the book in a new English edition which includes a chapter that was missing from the 2003 US, English language edition. Before that US publication he became aware of a problem over one chapter in the original Japanese language edition. It related an interesting story about the US Federal Reserve's then chairman Alan Greenspan. 

Werner is renowned for his clarity on banking and he explains these for the non-expert - and for the uninformed expert - in a series of short videos.  A key banking fact is that ordinary banks create by themselves most of the money we use in society, out of nothing. They don't wait for deposits to arrive before being able to lend. They create the money, lend it to their customers then it goes into general circulation - a new deposit arises in the borrower's account at the point of loan creation so everything balances. In the UK, only notes and coins come from the Bank of England itself the rest of the money is from private banks. It has taken a lot of Werner's career so far to get acknowledgement of this money creation fact officially stated and it is only belatedly, in 2014, that a UK chancellor of the exchequer George Osborne admitted it.    

The offending chapter was that Alan Greenspan had discovered the bad effects promoted by the Fed central bank in the 1920s, which had encouraged excessive and unwise credit creation by ordinary banks. He published his findings in a 1967 paper: 'Gold and economic freedom'. And this is just what Werner discovered about Japan in the 1990s! Werner relates how Greenspan in his paper, had shown how the US Fed both allowed the 1920s bubble to arise though unwise bank lending; and then failed to prevent the Great Recession of the 1930s 'the lost decade' when it could have kept banks solvent and encouraged the flow of money into the economy. What happened then was that the political understanding grew that the banking system was powerless (wrong, it was just malfunctional) and that the government needed to take more control to get the economy moving (only needed because the banking system wasn't working benignly). This led to new federal taxes and the growth of centralised control through the New Deal the effects of which endure.      

Werner relates about his personal dealings with Fed officials and a brief encounter with Alan Greenspan when Greenspan fully acknowledged Werner's precise findings which he had studied for himself. He then embarrassingly blanked him and moved away from further conversation. 'I received the cold shoulder. I began to realise that central bankers did not like my work. I was spilling the beans on their actions'.

Werner considers Greenspan's embarrassment arose because since the 1960s he had been captured by the same power at the heart of central banking he had observed in Japan and recounts so tellingly in Princes of The Yen. For, in his time as Fed chairman 1987-2006 Greenspan behaved as the 1920s Fed had done earlier. He frequently majored on interest rates, which as Werner says are not the determinant for economic growth whilst the quantity of productive credit creation is. Soon after he retired the world economy suffered the financial crisis of 2007/08  'triggered by Greenspan's policies'  (see Foreword in Princes of the Yen). 

Werner has much to show in the new Foreword and in the missing chapter about how central banks should operate and also how they should not operate. One of his key ideas is that many local banks should be encouraged to form and supply credit to local businesses and local institutions. Central banks should encourage the growth of lending to productive businesses and employment and discourage lending to the speculative buying of assets.

See my and other reviews of Princes of the Yen, the book is very readable and insightful. Every politician bothered enough to want to bring a better life for their voters should absorb this story which needs to affect future economic policies.       

Greenspan knew what went wrong in central banking in the US in the 1920s and 1930s and failed to practice his insights when he was able to do so. Nearly 100 years of less than optimal economic and financial policy with crashes have ensued from those times. Are central banks democratic? Do they work for the interests of all? 

Posted by Charles Bazlinton. Author: The Free Lunch - Fairness with Freedom. Director, Local First CIC , Promoting Local Banks
     

Big Society is the way? Taleb, Rafael Behr, David Cameron, Civil Society Forum in agreement?

Nassim Taleb who wrote The Black Swan is interviewed in The Times (UK) today. A Black Swan event is one that is very rare, an outlier, and is a random shock that catches almost everyone by surprise - such as the banking crisis which came along just after his book was published.  Wikipedia says that the main idea in Taleb's book is not to attempt to predict Black Swan Events, but to build robustness to negative ones that occur and being able to exploit positive ones. 

He has a lot to say on banking: ' Banks have now just become a machine to pay big bonuses'...'Have you ever heard of a bailout of restaurants? We should transform the economy into something that looks more like the restaurant business'... 'You have to bring back economic adventures, not bankers and bonus earners'. He says it is essential to decentralise: 'Labour believed that if a pin dropped at some hospital in the Lake District someone should hear it in Whitehall '. 

Taleb has the ear of a Prime Minister Cameron. 'When I speak to David Cameron and his staff I feel as if I am talking to myself, we think alike.' 

Taleb's views have a resonance with talks by speakers at the session run by the recently formed Civil Society Forum one of the School Of Commoning  recent series of Quilligan Seminars.  The School of Commoning's approach is that the earth's resources  should be handled for the long term benefit of all with domination replaced by partnering and responsiveness to everyone. The recognition between public and private makes this a non-socialist way for the future.  The seminar on 15th May on Organisational Practice and the Commons  had Tim Harle of the Bristol Business School saying this was a time for looking forward for new patterns of self-organised behaviour. Leadership is needed, self-organisation is not totally spontaneous.  Trust emerges from personal interactions. 

Eileen Conn had a similar theme in her 'Social Eco-System Dance'. She sees many of our problems in society due to a painful interaction between the dynamics of the vertical hierarchical system of the organised work world and that of the horizontal peer system of ordinary, neighbourly, community actions. Blind unawareness of the horizontal  by the vertical brings pain and blunts the effectiveness of both.  Another illustration was the invisible nature of the horizontal system as being like the root system of a grass plant which is the only obvious part to the eye. But both systems are essential to each other and respect is needed to nurture the spirit of the invisible. Many organisations are not visible and not counted.     

These themes: from Taleb, to the School of Commoning, to the  Civil Society Forum are those of the book The Free Lunch - Fairness with Freedom. It themes are also aligned with those of the Tory Big Society idea which is clearly still (just) alive in 10 Downing Street - Taleb: 'Political leaders need to think of new ways of protecting their countries from future shocks'.  Exactly -just what The Free Lunch's aims would bring. But why after two years of Tory power is the empowerment of citizens to enable them to cope with future shocks, so moribund?  Even Rafael Behr in the New Statesman 26 May admits  'The Big Society was never a bad conceit' (but it was sold badly). Perhaps Labour will grasp the message.

posted by Charles Bazlinton

The amazing Kristen Christian LA USA - lesson for Occupy London?

Copies of The Free Lunch - Fairness with Freedom are now in the St Paul's Occupy London Starbooks library. A common theme of press reporting on Occupiers is that 'they don't know what they want'. Obviously not true as far as Robin Smith is concerned, but reading The Free Lunch will show  various but connected ways of getting to a fairer society as well Robin's.  


You wait for years for a peaceful mass protest for fairness and then two come along at once! Ms Kristen Christian  in Los Angeles who owns an art gallery, started a Facebook campaign a few weeks ago calling for 5 Nov to be  'Bank transfer day': DROP mainline banks/JOIN a credit union. In the US 650,000 new accounts have opened for credit unions in 1 month (whole year 2010 = 600,000).  Kristen is not affiliated with Occupy but it shows that there can be  something extraordinarily powerful going around which chimes well with Occupy. 


In the UK, credit unions are hobbled by law and are not permitted to act as full banks - they are people's banks but could be so much more powerful and relevant if given the same powers as ordinary banks. Credit Unions keep out of speculative investment, distribute profits to members & lend small scale at reasonable interest rates but these worthy aims in the UK are severely hampered. Economist and sometime international banker Prof Richard Werner explains in a paper that the UK legislation means that  'they cannot compete on level grounds with banks'.


He says there appears to be a powerful lobby group 'that has been influential in the creation of legislation' on credit unions. He fingers the banks who have a monopoly on the creation of credit and who want to keep this 'most lucrative activity' almost wholly to themselves. Interesting topic for Occupy London.
See YouTube interview with Prof Werner:  Banking for the Big Society - means small local banks
Posted by Charles Bazlinton. 
   

Richard Werner on 'Banking for the Big Society'

A new video interview on YouTube posted today Banking for the Big Society has Prof Werner explaining why the UK Coalition Government is having problems pursuading banks to lend to small and medium sized businesses. We get regular hand wringing from the highest level and now even threats. Prime Minister David Cameron  is reported by George Parker in the Financial Times (18th May) 'Cameron warns banks to lend more'  that if the banks don't keep to the Project Merlin deal of promising more lending they will face new taxes.

But Werner points out that the underlying problem in the UK is an extreme case of a mismatched banking market. In other major countries there is a much more appropriate sizing of banks to the credit need at the local level. Here is a chance for the Coalition Government to get real with its commitment to localism and release the potential of the Big Society by transforming the banking sector along Werner's lines:  Legislate for new independent local banks and encourage the expansion of Credit Unions.
posted by Charles Bazlinton. Buy the book The Free Lunch - Fairness with Freedom on Amazon

Decentralisation? Fewer MP's?

The UK political party conference season is over and one of the topics has been decentralisation. What does this mean? Fewer jobs in Whitehall and more in the regions and districts? An increase in power for the Regional Assemblies (currently not directly elected)? More power for Parish and Town Councils?
The ultimate decentralisation would begin when a government transfers cash raised in taxation from itself back to citizens, so that they make the decisions as to where to spend it. The Free Lunch advocates the Citizen's Royalty to start this process. The idea is partly to do with sorting out the real problems of means-tested benefits and from then on more to do with empowering people. One assumption is that individual people look after their own money more carefully than governments and bureacrats do. Look at www.citizensincome.org where you will find, in Issue 2, 2006, the case for giving £110 per week to pensioners; £90 pw to other adults and £50 pw to children, all possible within current financial restraints.
See http://www.the-free-lunch.com/ for more on this and other related topics. Read the book!