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Letters: Gambling on our financial future

Stagflation is now the likeliest result of government economic policy unless a radical departure can be fashioned. But the radical action required (Comment, 22 September) may be beyond this government’s increasingly entrenched orthodoxy. Quantitative easing and reductions in VAT to stimulate demand can only go so far. What’s needed is investment in infrastructure and human capital that raises borrowing in the short-term yet reduces unemployment and builds national assets for the longterm.

Social housing should be the first port of call to tackle ballooning waiting lists, growing homelessness and affordability problems in both home ownership and private rented sectors. Investment in the green economy, R&D in manufacturing, skills and education allied to national insurance holidays for employers taking on new staff are also ways to stimulate the economy, while preparing the UK competitively and environmentally for the future. This is targeted Keynsianism, enshrined in Obama’s stimulus package, enabling employment, confidence and hope to return to the UK.
Kevin Gulliver
Director, Human City Institute

• David Cameron suggests that we need political leadership to tackle low growth and fears of recession (Report, 23 September), amidst developing countries catching us up with growth rates averaging 6-8% per year. The mood music is changing, with the IMF and the US proposing growth and jobs stimulus, because without people working, paying tax and shopping, growth isn’t going to happen. In the UK the interest rate on government borrowing, public bonds and gilts, is at an all-time low (2.3%). In fact, the cost of government borrowing (debt interest payments) has been almost half what it was during the whole 18 years of Conservative Ggovernment for over 10 years. Why are we led to believe that debt interest payments equivalent to £120m per day is high, when the Thatcher government paid the equivalent of £174m per day – and that was manageable?

What is more, much of our borrowing is scheduled over 15 years. That tells us that we can and should borrow cheaply now to create jobs and stimulate growth. Isn’t this a better option that giving our banks another £250bn through quantitative easing?
Barry Kushner

• Because economic crisis management has substituted technocratic policy fiddling for bold political vision (As Beveridge said: in a crisis, be revolutionary, 19 September), the responsibility for generating new ideas now falls outside the political parties.

Our day jobs are to ask simple questions like, what kind of a good society do we want and how do we make the great transition to get there? In addition to Larry Elliott’s list – a safe place to put our money, a rewarding job and a natural environment enhanced for the next generation – we would add: an affordable home; security in old age; a society committed to nurturing, and prepared to pay for, the health and development of its people; communities where we can belong; and the chance to find a work-life balance that leaves enough meaningful leisure time.

However, none of these things will be possible in a world where finance continues to enjoy extraordinary privileges. The modern precondition for a good society to flourish, and to fund a great transition to a productive, sustainable economy, is a new regime of checks and balances on capital. Without taming finance, we will be like revolutionary sailors lacking rigging, or sails.
Andrew Simms Fellow, new economics foundation, Neal Lawson Chair, Compass, Richard Murphy Director, Tax Research UK

• The Labour party conference comes around again and the opinion formers discuss concepts such as Blue Labour and Purple Labour (Report, 24 September). Meanwhile, in the real world, ordinary citizens are beset by insecurity as a result of financial market turmoil. Recent research found that someone retiring this month would get a pension worth 14% less from a personal pension than someone retiring at the beginning of the year.

Retirement incomes should not be subject to such a market lottery. But citizens are increasingly expected to use market solutions to build secure financial futures in other areas such as insuring against the risk of losing jobs or paying for long-term care. This transfer of risk from state to individual can work well for a minority of wealthier citizens who can afford to take risks with their financial futures but it means yet more insecurity for the majority.

At least the centre-right is consistent with its ideology in the way it promotes self-reliance through private insurance and capital markets. But, the centre-left does not appear to have a credible alternative – no wonder given the amount of intellectual capital wasted on abstract debates and the lack of a serious analytical framework to understand the role of markets. If society is to have a real choice about how to deal with financial insecurity, the centre-left needs urgently to develop an alternative to the centre-right’s approach which is fast becoming the default policy and will be incredibly difficult to reverse once in place. Markets do most things better than the state. But when it comes to pensions, health and social care, state or collectively organised systems are more equitable, sustainable and economically efficient than the market.
Mick McAteer
Director, the Financial Inclusion Centre © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds