Sometimes things are so obvious that one can't see them, or if one does, one tends not to believe them. It can't be that simple, can it, is the response of the mind. Take, for example, the £375bn of money electronically created by the British government and stuffed into the banks under Quantitative Easing (QE), in the hope that the banks would lend it to businesses and entrepreneurs to stimulate the economy. The banks did not play ball, with numerous attempts to cajole the banks to lend falling on deaf ears. Let us think of what the government could have done with that money. To get our heads around such a huge figure, this QE money is equivalent to £5,933 for every man, woman and child in the UK.
I fully understand that simply giving the money to people to spend as they wish would create inflation, with money losing its value. But there are other ways to use that money; the overwhelming majority of people would accept that government, using our taxes, should come to the aid of people if they fall on hard times due to illness, disability or unemployment, also if their wages are too low to have the basics of life - a home, food, and heating. We also expect our taxes to be used efficiently.
Looking at housing, the government spends £20.8bn on housing benefit. A substantial part of that is going to private landlords, in effect subsidising the low wages of people who are unable to pay the exorbitant rents demanded. Is this an efficient way of using our taxes? Far better to have enough stock of social housing where the affordable rents charged are returned to the government. Councils should be given the resources to build the houses needed. They know the problem, so trust them.
There are 1.8 million households on waiting lists for social housing. If we use half of the £375bn to satisfy all or part of that need, would that be inflationary? I don't know how much inflation it would cause, but I know that such investment would bring happiness to a lot of people. It would improve their health, and would remove a great amount of stress and worry from their lives; it is very likely that it would save the NHS a lot of money as well.
The investment would boost employment, with people paying taxes instead of receiving unemployment pay, with their work boosting our GDP. It would have the effect of reducing the price of housing so that more people, particularly the young, could afford to buy, which would help with labour mobility, which in turn would reduce the demand for social housing. With all of that, it is probable that such investment would produce only modest inflation, if at all.
The government is also anxious, or so they tell us, to rebalance the economy to make it less dependent on the financial sector, moving it towards engineering and manufacturing.
Climate change, the overwhelming majority of scientists tell us, is happening and is due to our profligate use of fossil fuel. It is estimated that $5tn needs to be invested globally in the next decade to meet a CO2 emission target of 450ppm. A substantial part of that investment must come through developing renewable energy sources. The IPCC report quoted in the Guardian estimates that "Renewable energy could account for almost 80% of the world's energy supply within four decades"
What better way for Britain to grow the economy sustainably than to invest the remaining £187.5bn ($283bn) into renewable energy sources. It is a substantial sum that will create and develop industries, the products of which the world will need to move it away from its addiction to fossil fuel. It is an excellent investment in the talent of British scientists, engineers and industrialists, and creates a great export potential for Britain to earn its keep in the future.
So let us escape from the straightjacket imposed by the "moneymen" and conventional economics; take the money back, gradually, from the banks and invest in people and the future of Britain. Sometimes the obvious and the simple thing to do is also the right thing.