Welby's Wish List for fairness. A new mandate from the IPPR rooted in the common good.

The IPPR (Institute for Public Policy Research) has published its interim report 'Time for Change: A New Vision for the British Economy'. Archbishop Justin Welby is leading the publicity with an FT article 'What sort of British economy do we want for our children?' [Digital title: British society deserves an economy rooted in the common good']. He continues the May/Corbyn themes (our last blogpost):
Theresa May, PM: 'We will make Britain a country that works not for a privileged few but for every one of us.'
Jeremy Corbyn, Opposition Leader: 'For the many, not the few'.

Welby calls for comprehensive economic justice - socially, regionally, generationally, environmentally - and from the IPPR report highlights his priorities: the need for reform of the education system; a fairer tax system; decarbonisation; improvements in public and private pay and the expansion of the housing stock. He believes most people want a system working in the service of human flourishing and the common good and asks why are we hearing 'Why are so many people so poor when others are so rich?' and 'Why are young people going to be poorer than their parents? 

An interesting aspect of the report is its criticism of recent economic policy.
We have experimented with bold monetary policy, but are constrained by pre-Keynesian fiscal orthodoxy. It points out the significant cuts in public spending due to government austerity programmes and says that austerity has not worked well. It suggests that monetary policy has been majored upon but helpful fiscal policy has been neglected. It wants government-initiated investment for growth and monetary policy to be coordinated to redress this, with the Bank of England advising on the integration of monetary and fiscal policy. Personal note: Ask a high official at the Bank (as I have done) if it would be possible to  invest in an industry by creating money in the QE manner - at no interest and no repayment - and they will affirm that it can be done. The IPPR obviously thinks so too and wants a change. It wants the hands of the Bank untied so that it can join in to help the economy in new ways. 

Most items on the Welby Wish List could benefit from ideas promoted on this blog over the years. Some of these are indeed mentioned in the report, which is a strong vindication of the views of book The Free Lunch- Fairness with Freedom. Such as: Education reform using monetary policy to fund education grants (Prof. Richard Werner); improving pay by  universal basic income ; a fairer taxation system which also helps the expansion of the housing stock through the incentive for development through a new land value tax .

Under the final heading (IPPR p81-83) 'Inequality and public purpose'  the report challenges the way we have measured success over the last 50 years and includes: 
'..inequality is largely a result of the ability of economically powerful groups in society to extract ‘rents’ or incomes beyond those earned by their economic contribution'. 
This gets to the heart of the matter in the way of the principles of The Free Lunch. In the vital matter of banking  (IPPR p80):
 'new insights into how the banking system creates money in modern economies, and therefore the role and limits of government or central bank monetary policy'.
The IPPR needs to look further into Richard Werner's New Paradigm in Macroeconomics who is arguably the first modern economist to have this insight. 

A banking problem from the report shows how only 5% of UK bank lending goes for businesses (15% in the Eurozone) with most going to land and property lending:
'The bulk of real estate loans and mortgages do not increase the productive capacity of the economy or contribute to growth; instead their primary effect is to drive up asset prices'.

To redress the bank lending imbalance the IPPR wants regional banks with 'geographically bounded  mandates to support the local economy' . 
It is happening already! The Hampshire Community Bank is likely to be the UK's first such regional bank and it is designed to that pattern. Additionally, being owned by a charitable foundation it will use its profits for the common good in its area and not for the high staff salaries and bonuses so roundly criticised in the IPPR report and by Archbishop Welby. Hampshire Community Bank in its whole ethos, aims to change banking for the better. Banking for the common good.  The bank, whilst not open for business yet, is currently in its licence application stage under the Bank of England's PRA. Such distinctive banks are needed across the UK. These new banks will play one part in a greater fairness for all.

With political parties broadly united over the fairness theme, and with the IPPR's excellent report spelling out some telling home truths over broad areas of economic life, the prospects that something serious for fairness will be done, are good.

Posted  by Charles Bazlinton. Author : The Free Lunch - Fairness with Freedom.  Director: Local First CIC which is promoting Hampshire Community Bank.

Is land value tax as bizarre as antimatter? Sherlock Holmes' brother Mycroft says NO!

I expect you have become intrigued about the current hunt for antimatter that is supposed to exist...or to have existed...either actually...or only in the mind of scientists. For me the interest grew when I needed a bit of matter to prop up a wonky table leg. I picked out a dusty tome from my shelves (the book had come from a secondhand bookshop in Radstown, in the bee-keeping area of the Sussex Downs), but unfortunately something was the matter - too thick. I flipped it open before replacing it on the shelf.

Would you believe it! In its browning pages was an account of some previously unknown conversations between Sherlock Holmes the renowned detective and his biographer Dr Watson and others, about this very subject, and much more. It seems that Holmes was a acquaintence of Arthur Schuster who first coined the term 'antimatter' in 1898. This seems unusual for Holmes as earlier he was renowned for trying to expel infomation from his mind if it seemed to have no possible bearing on likely cases that might come before him. He dreaded cluttering his brain with useless information - it might take up valuable space needed for more vital things.

The book is from a time well after the Moriaty incident and we find Holmes in an unfamiliar philosophical mood. His experiments in chemistry and the superior deductive skills of his older brother Mycroft, the high ranking government official, seems to have led him on to want to fine-tune even his famed powers. 

Mycroft Holmes was a supreme source of  current political and social information, moving as he did in the highest government and political circles. He was not personally a man for fighting causes, but he knew so much about the workings and financings of government that he once told his younger brother Sherlock that there was only one way to solve what he foresaw as the continuing problem of poverty. Sherlock was aghast at this idea: 'Surely, Mycroft we are on an upward path of growing and shared prosperity - what with the railways and the penny post, no one will lose out in future?' 

Mycroft carefully took his brother through his inside knowledge of where wealth grew and resided in the nation, culled from his own working day experience and as explained so clearly in Henry George's 1879 book 'Progress and Poverty'. His work for many government ministries had convinced him that Henry George was absolutely right to point out that if an annual levy on land values was not made, the modern state would have to greatly increase the tax on the incomes of ordinary people. Mycroft had seen the battle to abolish income tax in the last decades of the 19th century  - when almost no ordinary citizens were then liable for it. He said that anyone with the most elementary understanding of evidence and ordinary deductive powers would see this.  At this point Dr Watson records that at first Sherlock's face drained of colour, he then he leant forward eagerly as the power of his keen intellect was directly focussed on a new subject worthy of intense interest.

Mycroft: 'My dear Sherlock, there is far more evidence for this enlightened policy than the antimatter mystery that you are fussing about: It is elementary - landowners of all sorts get something for nothing as their land increases in value. Where does this value come from? It is only the surrounding successful society that creates the value in their land. The roads, railways, water supply, the new-fangled electricity, other people's businesses - all these enhance the value of any piece of land nearby. Did the landowner somehow engineer this  spectacular increase through effort? No! '

'Sherlock, remember this: Don't tax the buildings, don't tax the work people do and don't tax enterprises until you have fully taxed the land which attracts community-inspired value like a magnet attracts iron filings. If they don't follow this path then the poor will need increasing help though the decades. No more something for nothing should apply to all land and home owners as much as it does to welfare scroungers and to the apprehension of criminals that you are such a past master at.' And with that he shambled off to the Diogenes Club, where they sit silently - not even discussing antimatter - but where the occasional smirk or grimace at a satrical article is permitted.

posted by Charles Bazlinton with acknowledegments to Sir Arthur Conan Doyle and help from Wikipedia.

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