Wouldn\’t say that George Irvin is one of my favourite economists…..SOAS tends not to produce those to my ideological flavour. Or even to what I regard as the basic rules of logic. But still, this is interesting.
Essentially, trying a Green New Deal and a massive Keynesian stimulus for the economy would lead to a collapse in the pound. This would negate any possible benefit of said Green New Deal.
To which there are two possible solutions:
There are two ways out. One is to impose capital controls. But such controls, supposing for a moment that capital controls could be effectively imposed in today\’s world, would be tantamount to closing down much of the City of London and inviting retaliatory trade attack. Crucially, such controls are incompatible with EU membership, and the EU accounts for nearly 60% of UK trade. Leaving the EU is neither a sensible nor a realistic option.
The other solution is to join the euro. That is no panacea either. It would take time, it would entail conditionality and a referendum on the matter would probably produce a no vote. Some might argue that the EU stability and growth pact is at least as fiscally constraining as meeting current Treasury rules and that joining the euro would leave Britain unable to pursue an independent monetary policy. Others might argue that without the power to set interest rates, we would run the risk of a new housing bubble. But our monetary policy is already constrained by world financial markets, and the power to set interest rates has not prevented our housing bubble.
The central issue of a (hypothetical) negotiation over Britain\’s adoption of the euro should be the \”economic governance\” question. High priority would need to be placed on scrapping the common agricultural policy and creating a well-financed federal European treasury which, much like the US treasury, could issue its own paper and, most important, could be used to effect transfers between Europe\’s regions. In essence, improving eurozone governance should involve promoting mechanisms for recycling surpluses from surplus to deficit countries.
That is, that neither of the two possible solutions are possible in anything like real time. Thus they\’re not actually possible and thus neither is a Green New Deal.
Good, so that\’s that solved then and we can get on with thinking up other ways of dealing with matters.
“Essentially, trying a Green New Deal and a massive Keynesian stimulus for the economy would lead to a collapse in the pound”
How so? I thought that sort of big deficit drove rates up and then caused currency strength? G Osborne’s speech, 16 September.
See also R Reagan, inadvertent policies followed, 1981-4 or whenever
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Though looking through the article you have linked to, I see that the logic lies with him not you.
I think Green Investment funded by a bit of extra QE being diverted OUT of gilts and into more creditrisky stuff might be more stimulative. But what it would do to the proud £ I have no idea.
QE is theft from those holding sterling.
It is as simple as that.
Just because a State can do something does not mean it should.
Remove the monopoly over currency then try your “green new deal” and see your currency do the Zimbub.
You would also need to ban the owning of gold and other Totalitarian, Authoritarian mechanisms. But, hey, we are talking about a “Green New Deal”, so that would fit right in.
Roger, I guess you think gold mining is theft from those holding gold?
Honestly…
Matthew:
In one sense, you’re right. The production of anything tends to reduce the unit price of a preexisting supply (ceteris paribus, of course) and the money commodity (or that portion of the commodity devoted to monetary purpose) would
certainly affect the price (and valuation) of all similar, preexisting quantities.
But the “despotic inroad” on the purchasing power of gold-holders’ stores need be of almost no concern whatsoever. In the first place, only a very small fraction of that value-reduction forms any part whatsoever in the normal plans of the gold mining business (as opposed to the very deliberate
intentions of monetary policies predicated on fiat money, fractional-reserve regimes intent on lowering whatever might be the natural rate of interest). Secondly, the very scarcity and high costs associated with such mining activity render their results–relatively–highly predictable and thus among those considerations most easily and continuously “discounted” by the market for all things vendible (contrary, again, to the intent of monetary policy, which is, at all times and to the highest degree possible, to deceive the largest segment of the public as to the actual size of the erosion of their purchasing power taking place (a “rake” from which government itself, its employees, its principal contracting partners, and its favored financial associates shall benefit).
No gold (as a currency basis) supporter of whom I’m aware has ever proposed or argued that it’s
“perfect,” either as a medium or a system–merely that it’s the best ever known (or likely) and is, more than any other commodity or system, one that is “organic,” in having developed, to a very great degree, from the preferences (among commodities) of people over widely separated regions and over a great amount of time.
The paramount advantage to society of a gold (or any other actual) “standard” is that it restricts the government’s leeway in expanding credit, in incurring expenses not in line with revenues open to public view, and in incurring debt through the consumption of present goods dependent on the ability (and willingness) of future taxpayers (and even of future generations) to pay.
Gold is a millstone around the necks of deceitful governments of all shapes and sizes. And it is physically cumbersome for individuals in quite a few different ways. But no other system (than that of a commodity standard) has ever restrained governments from the excesses opened to them by the combination of fractional-reserve central banking, fiduciary media, and the mandatory acceptance of “legal tender.” On the other hand, it is entirely likely that technology developed in the last half-century might go a long way in relieving much of the inconvenience of returning to a sound, commodity-based monetary system.
“This would negate any possible benefit of said Green New Deal.”
Well, except for averting disastrous climate change, presumably?
Not doing too well on the snark-defence front today, Timmy…
Tim adds: But we know that we can avert climate change by cratering the economy. This plan would crater the economy. What we’re trying to do of course is find a way of averting it without cratering the economy…..
The plan is not going to crater the economy. This is an assertion that doesn’t make sense. The bit about joining the EMU is especially mad.
Tim adds: but that is Irvine’s argument, that it will.
@Matthew: No. What Gene Berman says.
Gene says it is, though?