The case for a programme of publicly funded works

I thought I would share some thoughts about the case for a programme of publicly funded works that I think would be part of the answer for Double Dip Britain:

There is nothing economically unsound in increasing temporarily and artificially the demand for labour during a period of temporary and artificial contraction. There is a plain need of some averaging machinery to regulate and even out the general course of the labour market, in the same way as the Bank of England, by its base rate, regulates and corrects the flow of business enterprise. When the extent of the depression is foreseen, the extent of the relief should also be determined.

There ought to be in permanent existence certain recognised industries of a useful, but uncompetitive character, like, we will say, reforestation, managed by public departments, and capable of being expanded or contracted according to the needs of the labour market, just as easily as you can pull out the stops or work the pedals of an organ.

I sometimes fear the increasing evil of casual labour. We talk a great deal about the unemployed, but the evil of the underemployed is the tap-root of unemployment. There is a tendency many trades, almost all trades, you have a fringe of casual labour on hand, available as a surplus whenever there is a boom, flung back into the pool whenever there is a slump.

I can almost see Paul Perrin spilling his warm milk as he reads this nonsense about public works. But don’t have a go at me, Mr Perrin, paragraphs 2, 3 and 4 above are the words of that well-known radical, Winston Churchill writing in ‘The People’s Rights’, first published in 1909.  It is a powerful plea for ‘a great policy of social reconstruction and reorganisation’.  He was at the time, of course, a Liberal. Whatever became of that great radical party …?

Green Shoots of Recovery?

Yesterday I criticised politicians who are raising hopes of an early recovery from recession, saying they were perpetrating a cruel hoax on the public.

Even if the economy begins to grow again, unemployment will continue to rise.

There are 890,000 people under the age of 25 now unemplyed, and likely to jump to over 1 million when the Class of ’09 join the dole queue later this month.

One of my favourite ecocomists, David Blanchflower, formerly a dissenting yet prophetic voice on the Bank of England’s Monetary Policy Committee, described this as “a tragedy for the nation”.

The Bank of England, in it’s latest quarterly bulletin, reported that more than a million households are now in negative equity, and house prices will probably fall a further 15%!

David Blanchflower, writing in Thursday’s Telegraph, said: “We are faced with a toxic cocktail: sliding house prices, rising negative equity, inadequate levels of credit” (needed for growth to sustain economic recovery) “soaring unemployment and zero, or even negative, wage growth.

“In such circumstances, it is almost academic to try to pinpoint whether economic growth is returning.

“The simple fact remains that we have yet to realise just how painful the coming years are likely to be”.