Thursday 11 March 2010

The case for a second stimulus

I am a signatory to a letter in today's Guardian, coordinated by Colin Burgon MP, which makes the case for a second stimlus, particularly for long-term investment in the transition to a low carbon economy:

The Conservative party's calls for immediate cuts to the economy have been met by a growing chorus of criticism, warning that this risks sending the economy back into recession (Report, 8 March). The government was right to stimulate the economy with a variety of measures last year and so offset some of the worst effects of the recession. Yet, as some of the world's leading economists have pointed out, the fragile nature of the recovery means that fiscal stimulus is still required. However, according to the IMF, Britain is one of only two G20 countries not currently planning any such fiscal stimulus in 2010.

A programme of government investment would not only stimulate the wider economy in the short term, but would increase long-term growth, thereby lowering the debt levels through a higher tax take. To this end, we encourage the chancellor to use the forthcoming budget to announce a second fiscal stimulus – especially in housing and transport, where investment has fallen most, and with a focus on developing a low-carbon economy – which would both help to secure economic recovery and create much needed jobs.

Colin Burgon MP; Alex Smith, Editor, Labourlist; Austin Mitchell MP; Anne Cryer MP; Alexandra Kemp, Chief Executive, West Norfolk Women and Carers' Pensions Network (personal capacity); Bellavia Ribeiro-Addy, NUS National Officer; Billy Hayes, General Secretary, CWU; Byron Taylor, National Trade Union Liaison Officer, Trade Union & Labour Party Liaison Organisation (TULO); Cat Smith, Vice Chair, London Young Labour; Chris Edwards, Senior Research Fellow, UEA; Chris McCafferty MP; Chris McLaughlin, Editor, Tribune; Christopher Cramer, Professor of Political Economy of Development, SOAS; Clifford Singer, Director, The Other TaxPayers' Alliance; Colin Challen MP; Compass Youth Executive; Dave Anderson MP; David Drew MP; Dai Havard MP; Dave Prentis, General Secretary, Unison; David Hamilton MP; Diane Abbott MP; Denis Murphy MP; Edward O'Hara MP; Ellie Gellard, Labour blogger; Grazia Ietto-Gillies, Emeritus Professor of Applied Economics, Director Centre for International Business Studies, London South Bank University; Glenda Jackson MP; Gerry Doherty, General Secretary, TSSA; Gordon Prentis MP; Prof. George Irvin, Univerity of London, SOAS; Professor Ian Gough, Professorial Research Fellow, LSE; Hugh Lanning PCS Deputy General Secretary; Hywel Francis MP; Harriet Yeo, Labour Party NEC; Hilary Wainright, Co-Editor, Red Pepper; Ismail Erturk, Senior Lecturer in Banking, Manchester Business School; Janet Dean MP; Jeremy Corbyn MP; Jim Cousins MP; Jim Sheridan MP; Jon Cruddas MP; John Austin MP; John Ross, Editor, Socialist Economic Bulletin; John Weeks, Professor Emeritus of Economics, SOAS, University of London, and former director of the Centre for Development Policy and Research; Jonathan Rutherford, Professor of Cultural Studies, Middlesex University; Katy Clark MP; Karen Buck MP; Keith Norman, General Secretary, ASLEF; Ken Livingstone; Kevin Maguire, Associate Editor, Mirror; Kelvin Hopkins MP; Martin McIvor, Editor, Renewal; Malcolm Sawyer, Professor of Economics, University of Leeds; Mehdi Hasan, Senior Editor (politics), New Statesman; Michael Connarty MP; Michael Meacher MP; Mick Shaw, President, FBU; Mike Wood MP; Michael Burke, Economist and contributor to Socialist Economic Bulletin; Neal Lawson, Chair, Compass; Neil MacKinnon, Chief Economist, VTB Capital; Paul Kenny, General Secretary, GMB; Paul Truswell MP; Paul Sagar, New Political Economy Network; Pat Devine, Honorary Research Fellow, University of Manchester; Peter Kilfoyle MP; Peter Willsman Labour Party NEC; Prem Sikka, Professor of Accounting, University of Essex; Richard Ascough, Regional Secretary, South Eastern GMB; Richard Murphy, Director, Tax Research UK; Roger Berry MP; Robin Murray, Fellow, Young Foundation, Author of Danger and Opportunity:Crisis and the New Social Economy; Roger Godsiff MP; Ronnie Campbell MP; Sam Tarry, National Chair, Young Labour; Sunder Katwala, General Secretary, Fabian Society (personal capacity); Susan Himmelweit, Professor of Economics, Faculty of Social Sciences, Open University; Terry Rooney MP; Tim Roache, GMB Yorkshire Regional Secretary; Tony Juniper, environmentalist; Tony Woodley, Joint General Secretary UNITE; Will Straw, Editor, Left Foot Forward.


Renideo said...

It's good to hear more voices favouring stimulus. It cannot be denied that the crisis is far, far from over and that the feedbacks involved would amplify the normal effects of fiscal austerity. Couldn't agree more with the focus on sustainable investment, one way or another, we will have to reduce our consumption, but that can be through efficiency or simply suffering.

Roger Thornhill said...

"long-term investment in the transition to a low carbon economy"

It can only be "investment" if it can be attributed to improving efficiency to the extent that it raises enough extra revenue to pay back any spending plus interest.

Seeing as "low carbon" tends to cost (significantly) more and is likely to do so for decades until we harness Fusion, I think it is vanity and delusion to call it "investment", if not outright misrepresentation.