There is an elephant in the room at the next election that no one will name. It’s not austerity, although it is closely related to it. The elephant is the question that floored Natalie Bennett of the Greens this week, and is the automatic response of any questioner to any proposal that any politician makes, which is: How are you going to pay for it?, writes Richard Murphy in his Tax Research UK blog on 26th February 2015
Here’s a short extract:
The third option is to ignore the market altogether, and to simply print the money. This, of course, is Green Quantitative Easing where money is created, in exactly the same way that it was to bail out the banks to the tune of £375 billion, but this money is instead used to finance investment in the UK economy. This might be investment in infrastructure such as transport, hospitals, schools and new energy systems, or investment through a Green Investment Bank in partnering British business in creating new opportunities in this country for the benefit of our economy. This is not money that will, in that case, leave the UK economy: the whole purpose of this activity is to invest as much as possible of the money in this country, and for the long-term to make a return for us all.
The return for borrowed or printed money is broadly similar. In either case it is critical that the money is used for what will largely be investment purposes: frittering money away, as those who propose simply giving quantitative easing money to individuals suggest appropriate, is a ludicrous course of action. If that is done all that you do is create a short-term consumer boom, and when that’s happened people remain in as much debt as they are now, the balance of payments is worse, and the cash has no further useful purpose to play. Investing creates a wholly different opportunity.
Read the whole article here.