What Would Keynes Recommend Today?
Entrepreneurs need stable economic environments within the countries that they operate. Early in the 20th century wars and catastrophes occurred leading to the great depression in 1930s. At that time John Maynard Keynesrecommended that the government should spend its way out of the recession, helping employment, demand and consumerism. Today we have austerity, what would Keynes think of this approach and recommend?
Keynes always considered that the government should drive the economies out of problems. The media and public ‘hype’ create; unsubstantiated and unsupportable demands for the National Health Service to be overhauled, if not ‘saved’; and for expenditure on education to be a priority; and as a final demand to control the country’s borders to stop hordes of unwelcome immigrants who may divert and usurp much needed funds. However, there is one issue above all that unless it is solved will undermine any progress on any of these issues and others, it is a policy on housing. Below, I mention two further initiatives.
The government policy on housing needs overhaul. Unless social housing is made a priority there will be an underclass. An underclass without a belonging nor hope. A policy such as this, is it not meant to create bubbles or swathes of flats and areas full of those unemployed or in the lower echelons of society but a mixture of affordable, partnership housing, where the homeowner has an interest in their property, street and town. Releasing land for planning, developing small towns and also creating tax incentives for such ‘partnership’ properties will create a supply which should go some way to meet the demand and allow prices to halt their growth and steep upward curve. Keynes would approve of this policy and the related expenditure.
Anyone travelling around London will know that there is congestion, not only on the M25 but also within the city. Why add to this with extensions at any of the 3 major air terminals around the city? ‘Boris Island’ has to be the way forward. A 21st century designed, up to date terminal in the Thames estuary will be a safe place to build, lead to mass employment and supply of goods. It will be the answer to all the planning and competitive issues surrounding Gatwick, Heathrow and Stanstead. It is a must. Government money to create ‘London Thames Airport’ is a scheme that is a flagship enterprise for everyone in the UK to be proud. It is Keynesian.
Then there is the effect and applications of the internet in terms of trade and communication. Keynes saw the effects of the telephone, computer and radio and TV, but did not live long enough after WW2 to witness affordable computerisation, personal computers and of course, the internet take effect on such a world wide scale. The internet enables anyone to trade and communicate with anyone else at anytime, anywhere in the world with almost any goods or services. Perhaps Keynes’ overriding concern would be safety, security and control. He would not like the concept of virtual currency (such as Bitcoins) nor illegal goods and hacking (as seen from the darker sections of the media).
Those areas continue to need safeguarding and control. The world banks have their work cut out. This would be an area where Bletchley Park, GCHQ and some of the best minds at NASA and the CIA need to pour their resources into. Keynes would be supporting this.
Next week I shall be discussing: Why price stability (or controlling inflation) is the ‘holy grail’? In the meantime, please feel free to share your opinion on this post below.
*Image courtesy of Flickr