UK GDP down 9.9% year on year - one of the worst Covid impacts in the world. 1/ But it would have been much worse without furlough, unlimited Bank QE and numerous yet-to-be quantified soft loans to businesses. The challenge now is recovery...
2/ Build Back Better is vacuous unless government prepared to go on a) borrowing and b) letting/telling the Bank to expand its balance sheet (I don't believe in the fiction of CB independence, and it's evaporated anyway)...
3/ This country is going to have a state-supported private sector for years to come. Better to recognise that and make the recovery state-led and substantially state owned...
4/ In Postcapitalism I advocated a mixed-economy transition path - beyond carbon & capitalism. The 2018 IPCC report plus Covid now means I think the state will have to play a much bigger ownership role, rather than just framing/investment - it will need to direct...
5/ Sure there'll be a consumer surge; sure the grey pound will mobilise once everyone has a jab (I get mine today because of my 💓)... but... who wins the longterm recovery depends on dirigisme on steroids...
6/ Cummings et al understood this - but all they could do was My Little Crony type investment/sweetheart deals. Labour's timid fiscal orthodoxy - and sticking with 2017 is timid in the context of Covid - will hamper their ability to tell a recovery story...
7/ For clarity, though MMT is BS as a theory, its short term conclusions for a monetary sovereign are correct (with a caveat): borrow, invest, create money but take direction and ownership over strategic parts of private sector and boost wage share (+ shrink the profit share)...
8/... otherwise the recovery will be for asset prices only, not the productive economy. There's a golden opportunity for Labour/SNP/PC/Green to make a joint case for fiscal expansion after the pandemic...
9/ Paradoxically the one UK politician who is COMPLETELY stymied from making the case for a spending-driven recovery is, step forward, @NicolaSturgeon - because the Growth Commission mandates fiscal austerity for a decade in a post-Indy Scotland...
10/ Fiscally, both Labour and the Tories could, if they wished, outflank the SNP given its commitment to short term poverty-independence... but the UK wide issue remains...
11/ The pandemic has tanked growth, tanked the public finances and scarred the real economy. It makes a fiction of CB independence so go with the flow, borrow, spend, print and invest... having ditched Summers, that's what I suspect Biden will also do...
12/ But a social-democratic, investment led, social cohesion oriented model can only be delivered by Labour in alliance with other progressive parties....
13/ Levelling up, building back better etc etc sound nice but unless Sunak goes, the Tories will be back to austerity by 2022, once again slashing police, council, defence budgets - and the political opportunity for a brave, left-led Labour Party is open. ENDS
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