Ann Pettifor discussed how Phillip Hammond’s stint at the treasury will differ to Osbornes on Share Radio yesterday, with their regular economics commentator John Weeks.
Listen to the full show here.
On the 1st July Ann Pettifor spoke at the FT’s Festival of Finance. Ann gave a presentation on ‘The New Nationalism: the money story’ and discussed nationalism, and Polanyi’s Double Movement. She was joined by a panel made up of Frances Coppola, Tyler Cowen, and Srinivas Thiruvadanthai. The discussion was moderated by John Authers.
The full podcast is available on FT Alphaville.
In September 2015, we were pleased to accept the invitation to serve on an Economic Advisory Council (EAC). We felt strongly that it represented an opportunity to develop a vision of a progressive economic policy for Britain that departed from the destructive austerity narrative. Our collective view is that the EAC, and its various policy review groups, has indeed had a positive influence on the development of Labour’s economic policy, and we hope it continues whatever the result of current divisions.
We have always seen this body as providing advice to the Labour party as a whole, and not as an endorsement of particular individuals within it. For example we all share the view that the EU referendum result is a major disaster for the UK, and we have felt unhappy that the Labour leadership has not campaigned more strongly to avoid this outcome. We believe it is now crucial to find a way to resolve the economic and political impasse with the EU in a way that brings the least damage possible to the UK economy and those of our neighbours. We will be honoured to advise the Labour Party in the future, should our advice be sought once the current situation is resolved.
I fluffed my lines on a recent BBC Newsnight segment on Uber. As the discussion was wrapping up, I warned that the uberisation of the economy – the ambition to corral the entire cash flow of whole sectors of the global economy into the pockets of a few – is utopian.
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Mohammed Ali – ‘The Greatest’ – died today, at the age of 74. With his loss, the world is deprived of the terrific energy of a principled, devout and committed man. A boxer, a philosopher and a poet. But for those of us who worked hard to achieve the cancellation of about $100 billion of debt for thirty five of the poorest countries, Ali occupies a special place in our hearts. This great man, celebrated around the world, took time out to join us in London in 1999, and to give his backing to our campaign.
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Back in 1975 I did not just oppose membership of the EU, I actively campaigned against it. In the 1990s I strongly opposed Britain’s membership of the Exchange Rate Mechanism (ERM). My opposition to the Labour leadership’s support for ERM helped ensure that I did not get chosen as Parliamentary candidate at the time. I won a modest 6 votes at a General Committee Meeting that in 1991 selected the next MP for Dulwich and West Norwood! (While I was to be vindicated by Britain’s eviction from the ERM in September 1992 that was no comfort as Labour, having backed the ERM, was unable to capitalize on the huge political damage caused to the Conservatives by the Black Wednesday fiasco.)
Finally, I am firmly opposed to the way in which European Treaties (signed by Labour as well as Conservative governments) have embedded market fundamentalist economic policies into quasi-constitutional law. No doubt this is because the authorities are aware that policies for austerity, privatisation and the financialisation of European economies would be fiercely resisted by the people of Europe, and so had to be buried like concrete, in Treaties.
So why then, am I voting to Remain? The reasons are threefold, and are essentially political rather than economic reasons (Please ignore George Osborne’s “facts” from the UK Treasury. That institution’s forecasting record is abysmal. According to the outgoing Permanent Secretary, Sir Nicholas McPherson, they made the “monumental collective intellectual error” of failing to forecast the biggest ever financial crisis facing Britain.)
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On Thursday 7th April Ann Pettifor took part in one of John McDonnell’s road shows with Professor Simon Wren Lewis. The events are aimed at broadening the debate around economics in Britain. Ann discussed The case for the Green New Deal, and her powerpoint presentation is attached below.
Framing the Economic Narrative
From the March 2016 Preface to The Economic Consequences of Mr Osborne
By Ann Pettifor, Professor Victoria Chick and Geoff Tily
… when sustained, fiscal consolidation increases rather than reduces the public debt ratio and is in general associated with adverse macroeconomic conditions. ‘Economic Consequences of Mr Osborne’, June 2010
Having missed the genuine threat of the private debt bubble, the economics profession misread disastrously the increase in public debt. In their 2009 This Time is Different, Kenneth Rogoff and Carmen Reinhart discreetly warned:
However, the surge in government debt following a crisis is an important factor to weigh when considering how far governments should be willing to go to offset the adverse consequences of the crisis on economic activity. (290)
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The following is a letter by Professor John Weeks and Ann Pettifor, published today, 15th March 2016 in The Guardian.
Andrew Harrop’s article on John McDonnell’s public borrowing for investment points out its improvement on the chancellor’s deficit obsession (John McDonnell’s new fiscal rule is strong, but it’s no election winner, theguardian.com, 11 March). Of particular concern is George Osborne’s determination to “balance the books” by cutting current spending on the disabled. To McDonnell’s widely accepted principle of borrowing to invest so as to expand the nation’s income at a time of private sector weakness, we add a complementary guideline for macroeconomic stability: adjust current expenditure for demand management. If as is now the case, interest rates are low, exports contract and demand remains weak, responsibility falls on the public budget to prevent recession by expanding income. Once started, investment expenditures are relatively inflexible to adjust, making current (day-to-day) expenditure the rational choice for demand expansion. Come that happy day when the economy starts to overheat, current spend should be reduced.
As Keynes argued: the boom, not the slump, is the time for austerity. It is that simple.
Ann Pettifor Prime Economics
John Weeks SOAS, University of London
“For the proposition that supply creates its own demand, I shall
substitute the proposition that expenditure creates its own income”
JM Keynes Collected Writings, Volume XXIX, p. 81
G20 Finance Ministers met in Huangzhou, China recently and refused appeals from both the IMF and the OECD for “urgent collective policy action” that focussed “fiscal policies on investment-led spending”. Instead the world’s finance ministers concluded that “it’s every country for themselves”.
Keynes’s simple proposition is compelling: that expenditure will expand national (and international) income (including tax income) and thereby reduce the deficit. But it is a proposition that is anathema to OECD politicians, their friends in the finance sector and their advisers. Instead they adhere stubbornly to the antiquated classical economics embodied in Say’s Law.
Rather than relying on expenditure or investment, the British 2010-2015 Coalition government and then the 2015 Conservative government placed excessive reliance on monetary policy to revive aggregate demand for goods and services. The consequences were predictable. Loose monetary policy enriched those that owned assets – stocks and shares, bonds or property. The evidence of this grotesque enrichment is clearest in London. According to the FT (20 Feb 2016) the owners of South Kensington residential properties have seen “substantial capital appreciation – 45 % over the past five years and a remarkable 155% since 2006.” And as the Bank of England concluded back in 2012 in its paper on the Distributional Effects of Asset Purchases” (i.e. QE)
“the benefits from these wealth effects will accrue to those households holding most financial assets.”
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