Work in progress, latest update 5/7/2016 – comments welcomed….. to firstname.lastname@example.org
This information is being prepared for the Leader of the Opposition and Shadow Chancellor as requested in face-to-face meetings during recent weeks. In the wake of the unexpected Brexit vote, which may give rise to a leadership challenge, and/or a mid-term general election, the urgency for a credible economic alternative to be defined has increased considerably.
This paper, which is informed by work done by CCMJ – http://www.ccmj.org – over several decades, in particular the period since 1998, under the chairmanship of Rev Peter Challen. It surveys the basic issues, giving references to organisations working on each, and suggests potential policy initiatives that may have traction. For continuity, readers are reminded of the House of Commons Debate: “Money Creation and Society” that took place on Thursday 20 November 2014, which is recorded here: http://comer.org/content/UK_MoneyCreation.htm
One reason for voting Brexit was a fear of uncontrolled MIGRATION. The EU’s policy of free movement across borders, which, after the atrocities of the second world war, aimed to promote peaceful integration, appears to have resulted in a net influx of people who are perceived as either “taking our jobs away” or having a free ride on our benefits system, but the underlying reason was economic austerity. However immigration might be controlled, e.g. by making job offers mandatory and/or by limiting newcomers’ access to benefits , whilst ensuring provisions for genuine refugees, we need to address the underlying issues, e.g. (a) improve the UK’s skills training, and (b) build infrastructure for low-carbon energy production, e.g. wind farms, and solar panels, in areas which have suffered industrial collapse, and (c) enforce the “living wage” and ban zero-hours contracts which prevent employees from engaging with other employers, (d) urgently increase the stock of social housing.
The second type of reason given by Brexiters was TAKING CONTROL, which for most people was the need to re-establish sovereignty over our legal system. Despite the fact that most European legislation is generally considered to be beneficial to the UK, ensuring common standards in relation to human rights, employment, farming subsidies, water management etc, the decision to leave Europe will involve years of re-legislating not just these issues but also renegotiating world-wide trading agreements, without necessarily improving on them. The perception that the EU is controlled by unelected officials and is a stepping stone to world government by the “global elite” is widespread. When President Obama made his “back of the queue” statement, he was referring to the secretly in progress TTIP negotiations, which if agreed will enable international companies to sue national governments if their policies cause them to lose profits, and those taking this view are more than sanguine to see the UK omitted from these provisions. This ultimately leads to an examination of our constitutional rules, and a number of different groups, who were simultaneously considering different routes towards constitutional reform, have been brought together by Assemblies for Democracy https://assembliesfordemocracy.org. See also http://www.constitutionalists.uk and http://www.freecriticalthinking.org/images/Documents/LeaptoSalvation/NewModelCharter.pdf
A third type of reason for voting Brexit focused consciously on the problems of INEQUALITY. The evils of banking cartel practices were identified by CCMJ in the sixties and an increasing number of well informed analysts and activists, and as the antics of the neoliberalism proceed unchecked, the division between rich and poor has escalated. Whatever our relationship to the EU, the sorry truth is that most of the progressive policies introduced by Clement Attlee’s Government in the post-war years have been systematically dismantled, with creeping privatisation of the NHS, secondary schools being turned into independent academies, sell-offs of the garden cities, a planned demise of local authority and housing association affordable homes, with rents of the remaining properties set to rise to 80% of the market rate, and many of the properties emerging as buy-to-lets and properties built on land that cash-strapped local authorities have been forced to sell to commercial developers are being sold off-plan to foreign investors, and left empty for “land-banking”, whilst the problems of homelessness are on the increase.
MONETARY REFORM: With much of the UK’s income being derived, not from productive industry but from the City of London’s position as an epicentre for financial services. Whether or not one views fiscal gambling manouevres as immoral, the activity amounts to a bubble that could collapse any time that market forces turn against it, making the UK vulnerable, and with Brexit, the risk is even higher than before. Positive proposals are thus needed to inspire confidence in the electorate. The purpose of these notes is to identify key issues and point to possible remedies which can be included in election manifestos.
In 1963, the Christian Council for Monetary Justice (CCMJ) – http://www.ccmj.org – (in particular see http://www.ccmj.org/proposals.htm) – began its campaign for reform of the banking system. Members of CCMJ and another group campaigning under the name “Prosperity” – http://prosperityuk.com – honed their ideas at a series of residential conferences at Bromsgrove and have continued articulate their concerns to their own members and the public at large of the years. As the situation has worsened over the years, other organisations have provided similar overall analyses and/or joined them in campaigning on particular issues:
i.e. • Money being created as DEBT by private institutions for their own profit rather than for the good of the people [Forum for Stable Currencies: http://www.forumforstablecurrencies.org.uk and Positive Money: http://positivemoney.org] • USURY as in instrument of injustice, and an accelerator of economic growth, ultimately giving rise to over-use of the earth’s resources, and global injustice: see Jubilee Debt Campaign: http://jubileedebt.org.uk, Campaign for Interest-free Money: http://www.interestfreemoney.org, currently being incorporated into the Campaign for Co-operative Socialism: http://www.co-operativesocialism.org • with LAND as the key repository of wealth [Coalition for Economic Justice, representing a number of separate campaigns: http://www.c4ej.com]; and • INEQUALITY in ownership and earning power causing increasing social distress [“The Spirit Level” and The Equality Trust: https://www.equalitytrust.org.uk/resources/the-spirit-level]; • exacerbated by Tax Avoidance on the part of some of our overwealthy citizens [Tax Research: http://www.taxresearch.org.uk/Blog/] and [Tax Justice Network: http://www.taxjustice.net]
These issues are closely intertwined, and although each campaigns gives primacy to its own particular concerns, our view is that a set of economic reform proposals needs to draw from all these areas of analysis. Policies must cover areas which have been identified as key, to be in any way credible, such as Housing, and provision of Health, Education and Employment, and go into sufficient detail of how change can be effected in each of these areas. However, the central question is what to do about the MONETARY SYSTEM itself, beginning with Money Creation as Debt and the problem us Usury, i.e. charging of interest.
Money Creation as Debt: Long done are the days when the crown issued coin as fiat currency, based on gold robbed from ancient colonies, or simply printed and distributed as paper notes, recalling the chaos of the hyper-inflation experienced by the Weimar Republic. Nevertheless several secular groups advocate such a system, recalling the fact that in wartime, government has in fact issued currency direct: e.g. UK Column: https://www.ukcolumn.org/article/case-greenback-pound, the British Constitution Group: http://www.britishconstitutiongroup.com/campaign/bring-back-the-bradbury and the Reset Group: http://www.thereset.org/proposals/bradbury-pound. A programme of quantitative easing following the 2008 collapse, when the Treasury authorised money-creation to re-fund the banking sector, but the beneficiaries were the banking fraternity, who had collectively mis-managed the monetary system by such manoeuvres as funding mortgages to people who could not afford to repay, then floating the debts on the stock-market as “collateralized debt obligations”. It is not clear why the government having saved the banks from collapse, allowed everything continued as before, with the culprits continuing to receive bonuses of millions – the Cooperative Bank was not immune and suffered its own scandalous collapse some years later in 2013 – https://next.ft.com/content/b8fffd52-f7d1-11e5-803c-d27c7117d132.
The Brexit vote was in some cases, an inarticulate vote of protest against this type of corruption which continues to be endorsed by the government, the only type of reform that seems to have been carried out is a small tightening of regulations concerning banking reserves. With the knowledge that this kind of mechanism has been employed, there has been some talk of “helicopter money” but this seems to be an idea for crisis management, and the method of creating money as debt appears to be well-entrenched technically as the way to do it. However, Positive Money – campaigns to remove the power to create money as debt by the bankers and to bring it under the control of a public organisation – see details on http://www.positivemoney.org.
The problem of Usury: The work of Margrit Kennedy is a key resource: http://www.margritkennedy.de. Islamic Finance: sets out to avoid usury by a different model of stake-holder finance: http://www.islamic-finance.com] and some of its ideas have been incorporated into Binary Economics – see http://www.binaryeconomics.net • http://www.globaljusticemovement.net/home/binary.htm • http://www.cesj.org/learn/binary-economics/binary-economics-in-a-nutshell. Some of these ideas have been picked up in proposing stake-holder finance for housing (see below).
Another model, State-Owned Banking, which is in practice in the state of North Dakota, USA has been endorsed by well-respected economist Ellen Brown, who recently presented it at a meeting hosted by the RSA – see https://www.thersa.org/events/2016/02/why-we-should-own-the-banks • https://ellenbrown.com/fixing-the-economy-with-state-owned-banks/ – in the example she described, existing infrastructures of smaller banks are used as outlets, and the challenge would be how to adapt the model to the UK situation, something that it can be argued may be more possible than before, given the Brexit vote. In the UK we do have a network of Credit Unions, which are community-owned savings and lending institutions – http://www.abcul.org/credit-unions/setting-up-a-credit-union • http://www.brighterfuturestogether.co.uk/brighter-futures-together-toolkit/create-a-credit-union-for-your-community/ – and there is scope both for supporting them, and enlisting them as outlets for such a proposal. In the meantime. In the meantime, the nearest model we have to an ethical bank is Triodos: https://www.triodos.co.uk. One glimmer of hope for future planning is that the taxpayer owns 70% of share of the Royal Bank of Scotland.
The huge rise in precarious employment has in recent months caused a number of organisations to coalesce around a campaigns for CITIZENS’ INCOME, now usually referred to as UNIVERSAL BASIC INCOME (UBI). Although it may at first appear to be unrealistic to give everyone “something for nothing”, on closer examination there are a number of cogent arguments in its favour, ie, (a) predictions of fewer jobs being available due to increasing automation, (b) the current benefits system dis-incentivising people from seeking work, and (c), an abusive (privatised) system of assessment enabling petty bureaucrats to impose arbitrary sanctions, leaving job-seekers without income for weeks at a time, sometimes directly causing homelessness, (d) the positive idea of providing basic security so that they can volunteer in many available schemes for doing good in the community, and mothers who so wish can stay home looking after their children, free of financial pressure. Campaign Groups include: Citizens Income Trust: http://citizensincome.org and Basic Income UK: http://basicincome.org.uk.
The left-leaning think-tank, Compass, has commissioned research on UBI and their report costs out several models of UBI: http://www.compassonline.org.uk/publications/universal-basic-income-an-idea-whose-time-has-come/. The general idea is to have continuity from a much-increased child benefit, continuing during study and training, right through adulthood and connecting up to old age pensions. The level of income, which would replace the tax-allowance for all workers, is of course crucial, whether it’s equivalent to unemployment benefit, or amounts to a decent “living wage”. UBI would not alter the need for additional disability support, and/or housing benefit. Being universal, the system would be much cheaper to run than assessed benefits, and although “land reformers” suggest supporting it by “land taxes”, Compass’s figures indicate that it could be supported by modest increases in overall taxation, which would of course apply to all employees, with the UBI forming the basis of their income. This proposal is therefore definitely worth considering as a proposal that if properly presented, could gain wide support amongst the electorate.
HOUSING: Organisations such as Housing Justice: http://www.housingjustice.org.uk and Shelter: http://www.shelter.org.uk provide emergency help with the enormous upsurge of homelessness. However, with mortgage-debt accounting for around 80% of money-creation in the UK, housing is a key factor in our economic system, embodying the four basic issues identified by CCMJ so long ago, i.e. Debt, Usury, Land and Inequality, and is considered by most people to be the most important challenge for improvement by any government. With key workers who cannot afford to live in the centre being forced into the suburbs, putting even more pressure on our transport system; with cash-strapped local authorities being forced to sell off land for development by commercial companies and many of the flats sold off-plan to overseas investors who have no intention of even renting them, just keeping them as an investment to sell on; many of the younger generation, even those with good jobs, are living in over-crowded shared accommodation or continuing to live in the parental home into their thirties because they cannot afford to get on the housing ladder. Lack of available housing is also one of the reasons for the rise of xenophobia. Even without attempting to alter the basic mechanisms of the economic system, there is considerable scope for practical intervention, for example:
(a) If possible, to reverse recent legislation forcing Housing Associations to sell off their properties as a discount.
(b) Controlled Rents should be re-established to cover both public and private sector rentals to ease the pressure on those renting properties.
(c) A modest form of Land Value Tax could also be considered, i.e. varying council tax according to the property size, which would incentivise owners of under-occuped to take in lodgers. Punitive rates can be imposed on landlords who practice “land-banking” by keeping properties empty, and if necessary, legislation should be enacted to enable local authorities to do this.
(d) Legislation can be framed, and generous finance provided, to enable brownfield or fringe agricultural land to be purchased to enable new large-scale housing to be provided in suitable locations, either Local Authority-owned or via Community Land Trusts and other models of Co-Ownership should be encouraged.
Co-Ownerships can exist informally when two or more individuals or couples share accommodation, commune-style, whilst they save up deposits for housing, but in current conditions, even with this arrangement, they may never be able to raise the funds required. The idea is that by forming legally watertight partnerships, a group of private investors can come together to fund housing projects either for themselves and/or for others. The current situation is that housing co-operatives, having amalgamated into larger commercial organisations, will be forced by the latest legislation into providing yet another tranche of right to buy properties. Co-ownerships are envisaged as operating on a much smaller scale, as stake-holding investments rather than an anonymous co-operatives. The basic concept is that two groups are in partnership, the investors and the occupiers, and these groups may overlap. A key part of the proposal is flexibility, so that occupiers who become able to put more funds into the pot than the basic rent can gain a proportional share in the whole project and that should they wish to relocate, their shares can be sold on to new partners coming in. Such projects can thus serve as starter-projects for aspiring home-owners. The theory of this area of housing is set out in Open Capital: http://www.opencapital.net and currently http://co-ownership.org.uk points to a page on this website (which may need updating).
TAX REFORM should be used to raise finance by more progressive taxation of international companies, and abolishing tax havens, to re-establish more funding for the above and for the voluntary sector, including better support of Neighbourhood Planning Forums, Community Centres and Voluntary Organisations, which will be even more important to provide opportunities for the elderly and the unemployed. More follows…..