Jeremy Corbyn is now leader of the British Labour Party. ASunday Times article likens Jeremy to Caligula – an insane, murderous tyrant who appointed his horse Consul. According to the Tories, he is a threat to Britain’s national security, economic security and, well, galactic security (watch out for those Corbynite Klingons). Well, at the risk of Roman despotism and an alien invasion force landing on the Blaskets could we please have a little bit of Corbynomics here in Ireland?
For at the heart of Corbynomics is something quite modest: a modernising investment drive to re-tool the UK economy. It is a testament to the perversity of a debate that investing in high-speed broadband, public transport, social housing, school and hospital construction, green technology can be labelled as extremist. Does anyone really suppose that British businesses would be outraged if they had a world class broadband system? Or that the economy would dive into the abyss if more energy came from renewable resources rather than fossil fuels?
Maybe the extremism comes from other aspects of Jeremy’s proposals. Renationalise the railways and energy companies? Yeah, so extreme that even a majority of Tory voters support renationalisation. Combat multinationals’ aggressive tax planning and avoidance? Yeah, forcing companies to pay taxes like the rest of us. Build low-cost housing in London? I’m sure tenants would be up in arms. Everywhere you look in Corbynomics, you see common sense.
Even orthodox commentators would seem to agree:
‘It is hard to exaggerate the decrepitude of infrastructure in much of the rich world.’
So begins a provocative article in the Economist, not noted for alarmist language. It points out:
- One in three railway bridges in Germany is over 100 years old,
- So are half of London’s water mains.
- In America the average bridge is 42 years old while the American Society of Civil Engineers rates around 14,000 of the country’s dams as ‘high hazard’ and 151,238 of its bridges as ‘deficient.
Such a state of affairs is not only highly inefficient, but potentially very dangerous.
Public investment is well down throughout Europe, the US and Ireland.
Almost all EU countries have significantly cut their public investment budgets – especially those countries that needed it most: the poorer Mediterranean countries, Ireland, Romania.
It is often assumed that public investment is just about bricks and roads. There is something to that but this has benefits that are often overlooked. The Economist gives a couple of examples from the developing world: paving roads has helped double school attendance by girls in Morocco; improved sanitation has helped reduce child mortality in India by over 50 percent. These are real social gains arising from basic infrastructural improvements.
But investment goes further: at its simplest, investment creates new assets (or upgrades existing ones) that will generate income and growth in the future. It ranges beyond the traditional bricks and roads – to education, health, skills, transport, IT, R&D, etc. It has the capacity to transform the economy and enhance lives.
The Government has accepted that we have significant investment deficits. They have proposed 70 projects for co-funding from the European Strategic Investment Fund:
- Energy (12 projects): inter-connectors, retrofits, renewable energy generation
- Knowledge and Digital Economy (3): broadband, regional infrastructure including research centres
- Resources and Environment (6): forest, fishing, ocean resources, water supply
- Transport (37): port & air infrastructure, roads, public transport
- Social Infrastructure (11): tourism, social housing, school buildings,
- SME Lending
You can have a read of the projects here (starting on page 260). There are more that could be added (after the Eurostat ruling, we could go to the ESIF for assistance in funding our water and waste system). The point here is that there are a number of investment needs in the Irish economy and a lot of work to be done.
The Right is dominating the agenda through tax-cut proposals. Progressive must counter with a modernising investment narrative. In the UK, the Labour Party can propose funding mechanisms that are not open to us – in particular, ‘peoples’ quantitative easing using the funding capacity of the Bank of England rather than borrowing from the private sector. This is not an option open to us and the ECB is unlikely to take this progressive course.
Therefore, we have to be more creative with our resources.
- We will need to forgo tax cuts in favour of public investment.
- We need to use our public enterprises creatively (even creating new ones) that can engage in investment projects that will not impact on the Government deficit. An example of this is the ESB/Vodaphone partnership bringing high-speed broadband to over 50 towns.
- We should explore new types of partnership funding; in particular, public-public partnerships (PuPs) which mirror traditional public-private partnerships but can be less expensive.
- And we will have to devise new funding arrangements for social housing to keep it off the books; such is the scale of investment needed to tackle this problem (I will be posting on this in the near future).
But we need to go further. We need to professionalise and democratise investment decisions. We need a more accountable approach to public investment complete with cost-benefit analysis which for many projects are not published; reviewed by independent agencies that can help cost and prioritise the investment budget.
And we need to bring in civil society organisations into the process, providing ideas and input so that the investment drive is a ‘people’s drive’. Business groups will have their priorities; so will trade unions, housing groups, education groups, environmental groups. We need to bring this together in a popular and democratic framework.
Progressive can capture the ‘modernisation’ ground – campaigning for a process that can boost economic productivity and efficiency leading to more enterprise activity while at the same time addressing the profound social inequities.
If we unite behind this programme, we can challenge the Right – in the debate, in society and, crucially, in the upcoming election.
We have a lot to learn and benefit from Corbynomics.