On Wednesday Ed Balls appeared on Newsnight to discuss the economy with Gavin Esler. The Shadow Chancellor spent a lot of time not saying how much he will borrow to kick start the economy and Esler spent a lot of time asking him to do so. It was all good, familiar fun. As Balls the Keynesian dodges accusations of profligacy he is well aware that the Maxed Out Credit Card story makes sense to the general public. He is making the case for reflation to an audience that has been kept in near perfect innocence about how the economy actually works.
By chance a few days before the saurian wrestling match on Newsnight Ha-Joon Chang had a piece about the British economy published in the Guardian. In it he argues that the debate between proponents of austerity and stimulus misses the central problem of the UK economy: its inability to generate sufficient export income to pay for its imports. We aren’t producing enough of what the world wants to pay our way. And, as Chang puts it, “without addressing the underlying decay in productive capabilities, Britain cannot fix its ailing economy”. To remedy this, Chang suggests that the country “urgently needs to develop a long-term productive strategy through a broad-based public consultation involving not just the government and private sector firms, but trade unions, educational institutions and research institutes.”
I would go further. In November 2011 I suggested that we begin a national convention organized in each Parliamentary constituency to decide how a £50 billion stimulus package should be spent. Part of that is about identifying new technologies and investing in them. But it is also about developing new, more responsive, and accountable political forms that can articulate a coherent account of what we collectively want and need and are willing to work for.
I am convinced that these new political forms will release energy and ingenuity that the roaring and stamping monsters of Keynes-Hayek condominium trample on. And we have to do something pretty spectacular, otherwise our problems will only get worse. What could be more appealing than a country finally putting away its imperial past and becoming a democracy? There’s no doubt we need to earn foreign currency. But we can earn at least some of it by “becoming a showcase for the achievements of a self-governing people”, as I wrote in 2011.
Tourism, education – and the roaring, dazzling ingenuity of a free people. What’s not to like?