Debt

Lesson From History: How Bronze Age Rulers Simply Canceled Debts

Published by Anonymous (not verified) on Fri, 19/04/2019 - 12:00am in

Tags 

Debt, history

There has been an explosion of discussion about whether to cancel student debts. Critics of the idea point out that wealthy people would be the main gainers, posing moral hazard. The debate has  has quickly slipped into a discussion of modern economies and whether it was moral to cancel the debts of people who are in arrears, when some people have struggled to keep current on their payments.” Bankers and bondholders love this argument, because it says, “Don’t cancel debts. Make everyone pay, or someone will get a free ride.”

Ontario Electricity VII – Committee Testimony

Published by Anonymous (not verified) on Tue, 16/04/2019 - 6:59am in

The PC Government in Ontario has introduced Bill 87 which would eliminate the rate-based borrowing to subsidize electricity prices and replace it with Government borrowing.

Last week’s Provincial Budget estimates that the required borrowing to subsidize electricity prices for 2018/19 was $2.8 billion. It is likely to exceed $3 billion in 2019/20.

Ontario is the only jurisdiction in North America where the Government would directly subsidize electricity prices.

Today the Government held Committee hearings on Bill 87 and I was one of 7 individuals/groups that provided our views and were questioned by Committee members.

What follows are my prepared remarks. Readers that have followed my work on the subject will recognize all the main themes.

Opening Remarks by Edgardo Sepulveda to the Standing Committee on General Government on Bill 87. April 15, 2019 – Legislative Assembly of Ontario

Good Afternoon.

Thank you for allowing me
to participate in this process.

I am an economist by
training and have been a regulatory consultant for more than 20 years, largely
in international telecoms, with a recent focus on Ontario’s electricity sector.

My presentation is based
on my past research and analysis.  If you
wish to refer to it later, I have distributed an article I prepared last year
and links to other online research.

I will use my time to focus
on three things in relation to Schedule 3 of Bill 87, which replaces off-book
borrowing from future rate-bases under the Fair Hydro Plan with public
borrowing off the tax-base.

First, how did we get to a situation where we are
the only jurisdiction in North America where the Government directly subsidizes
electricity prices?

Well, starting in 2005 previous
Governments implemented a policy of regulation-exempt, long-term contracts to procure new
private sector generation capacity.

The critical design flaw here
is that as policy previous Liberal Governments
excluded those Contracts from regulatory review and oversight.

And the Contracts policy
was often poorly executed. Many Contracts were inflexible and lopsided, with
the public bearing most of the risks.

With no oversight, the
Ministry often ignored expert advice and the result was excess capacity and an
inflated costs.

Which gets us to the Second point – the solutions on
offer.

When prices became a political
liability, the previous Government chose to borrow via the Fair Hydro Plan,
rather than reviewing the Contracts.

But if that was the worst
possible solution, the current proposal to continue with Government borrowing is
almost as bad.

According to last week’s
Budget, the Government will take on about 3 billion dollars of new debt a year
to pay inflated prices to power generators and provide subsidies that will
benefit high-income families most.

This is not efficient or
equitable fiscal policy.

And it does nothing to
address the legacy of excess capacity or inflated costs.

So, we come to the Third point – what to do?

The cancellation of
pre-construction Contracts last summer was a start, but that accounted for less
than 1% of future generation. You can find another percent or so from conservation,
distribution and transmission.

But if you want to make a
real dent in the annual subsidy or achieve the election promise of a further 12%
cut, you have to look at legacy generation Contracts.

Review of these Contracts would not be an
easy or fast process and is subject to legal risk – but this Government knows
this – last summer it enacted legislation shielding it from additional claims from
cancelling the White Pines project.

As a first step, the Government should direct
the OEB or a Government Committee or another entity to undertake a
comprehensive review of legacy Contracts to evaluate which have provided or
will provide fair and reasonable prices and to make recommendations on how to
deal with those that have not, including via renegotiation or a new framework.

Last month the Select Committee released a
Cabinet memo that showed the previous Government had considered, but rejected renegotiation.

But could another
Government, free from association with past policy mistakes, reconsider this
option?

If the current
Government can establish a Select Committee to look at how the previous
Government tried to cover up past policy mistakes, why can’t it also look at
how power generators benefited from those mistakes?

But actual face-to-face
renegotiation is only practical for a few Contracts and more importantly, lacks
transparency.

Better to create a general
rules-based approach. Process and time-tested rules are our best guarantee of
fair and reasonable rates. It also happens to be our best defense against
litigation from unhappy power generators.

My own proposal for such
an approach would be to transition those Contracts that have not or will not
provide fair and reasonable prices to a new rules-based regime that would reduce
prices by applying a regulated rate of return. This is not rocket-science – it
is how here in Ontario the OEB sets rates for transmission, distribution and
OPG generation and is the standard way that regulators around the world set
rates.

Thank you.  Happy to take your questions.

 

Ontario Electricity VII – Committee Testimony

Published by Anonymous (not verified) on Tue, 16/04/2019 - 6:59am in

The PC Government in Ontario has introduced Bill 87 which would eliminate the rate-based borrowing to subsidize electricity prices and replace it with Government borrowing.

Last week’s Provincial Budget estimates that the required borrowing to subsidize electricity prices for 2018/19 was $2.8 billion. It is likely to exceed $3 billion in 2019/20.

Ontario is the only jurisdiction in North America where the Government would directly subsidize electricity prices.

Today the Government held Committee hearings on Bill 87 and I was one of 7 individuals/groups that provided our views and were questioned by Committee members.

What follows are my prepared remarks. Readers that have followed my work on the subject will recognize all the main themes.

Opening Remarks by Edgardo Sepulveda to the Standing Committee on General Government on Bill 87. April 15, 2019 – Legislative Assembly of Ontario

Good Afternoon.

Thank you for allowing me
to participate in this process.

I am an economist by
training and have been a regulatory consultant for more than 20 years, largely
in international telecoms, with a recent focus on Ontario’s electricity sector.

My presentation is based
on my past research and analysis.  If you
wish to refer to it later, I have distributed an article I prepared last year
and links to other online research.

I will use my time to focus
on three things in relation to Schedule 3 of Bill 87, which replaces off-book
borrowing from future rate-bases under the Fair Hydro Plan with public
borrowing off the tax-base.

First, how did we get to a situation where we are
the only jurisdiction in North America where the Government directly subsidizes
electricity prices?

Well, starting in 2005 previous
Governments implemented a policy of regulation-exempt, long-term contracts to procure new
private sector generation capacity.

The critical design flaw here
is that as policy previous Liberal Governments
excluded those Contracts from regulatory review and oversight.

And the Contracts policy
was often poorly executed. Many Contracts were inflexible and lopsided, with
the public bearing most of the risks.

With no oversight, the
Ministry often ignored expert advice and the result was excess capacity and an
inflated costs.

Which gets us to the Second point – the solutions on
offer.

When prices became a political
liability, the previous Government chose to borrow via the Fair Hydro Plan,
rather than reviewing the Contracts.

But if that was the worst
possible solution, the current proposal to continue with Government borrowing is
almost as bad.

According to last week’s
Budget, the Government will take on about 3 billion dollars of new debt a year
to pay inflated prices to power generators and provide subsidies that will
benefit high-income families most.

This is not efficient or
equitable fiscal policy.

And it does nothing to
address the legacy of excess capacity or inflated costs.

So, we come to the Third point – what to do?

The cancellation of
pre-construction Contracts last summer was a start, but that accounted for less
than 1% of future generation. You can find another percent or so from conservation,
distribution and transmission.

But if you want to make a
real dent in the annual subsidy or achieve the election promise of a further 12%
cut, you have to look at legacy generation Contracts.

Review of these Contracts would not be an
easy or fast process and is subject to legal risk – but this Government knows
this – last summer it enacted legislation shielding it from additional claims from
cancelling the White Pines project.

As a first step, the Government should direct
the OEB or a Government Committee or another entity to undertake a
comprehensive review of legacy Contracts to evaluate which have provided or
will provide fair and reasonable prices and to make recommendations on how to
deal with those that have not, including via renegotiation or a new framework.

Last month the Select Committee released a
Cabinet memo that showed the previous Government had considered, but rejected renegotiation.

But could another
Government, free from association with past policy mistakes, reconsider this
option?

If the current
Government can establish a Select Committee to look at how the previous
Government tried to cover up past policy mistakes, why can’t it also look at
how power generators benefited from those mistakes?

But actual face-to-face
renegotiation is only practical for a few Contracts and more importantly, lacks
transparency.

Better to create a general
rules-based approach. Process and time-tested rules are our best guarantee of
fair and reasonable rates. It also happens to be our best defense against
litigation from unhappy power generators.

My own proposal for such
an approach would be to transition those Contracts that have not or will not
provide fair and reasonable prices to a new rules-based regime that would reduce
prices by applying a regulated rate of return. This is not rocket-science – it
is how here in Ontario the OEB sets rates for transmission, distribution and
OPG generation and is the standard way that regulators around the world set
rates.

Thank you.  Happy to take your questions.

 

Low taxes are nothing to brag about

Published by Anonymous (not verified) on Fri, 12/04/2019 - 4:42am in

I’ve written an opinion piece that appears in today’s Regina Leader-Post. The piece argues that the Saskatchewan government shouldn’t brag about the province’s low-tax climate (which it recently did). Rather, I argue that taxes serve important functions.

The link to the opinion piece is here.

Low taxes are nothing to brag about

Published by Anonymous (not verified) on Fri, 12/04/2019 - 4:42am in

I’ve written an opinion piece that appears in today’s Regina Leader-Post. The piece argues that the Saskatchewan government shouldn’t brag about the province’s low-tax climate (which it recently did). Rather, I argue that taxes serve important functions.

The link to the opinion piece is here.

Is there a critical shortage of rich people?

Published by Anonymous (not verified) on Mon, 08/04/2019 - 3:44am in

Resounding cheers from audiences bring mighty puffs and glows to those politicians promising to fund their spending ambitions with cash recovered from tax-havens in distant islands. But how much could the government actually purchase with corporate and tax-haven funds?

Does the heroism of Robin Hood have any application to a modern fiat economy? Does the public money needed to fund quality public services grow on rich people? What are the implications of coupling policy to tax revenue? Can we afford to wait for this ‘money’ to be recovered before the essential work begins; before lives and our planet are saved?

In answer to these questions, for this week’s reblog we welcome Alan Hutchinson’s insightful piece ‘Is there a critical shortage of rich people?’

 This post originally appeared on Alan’s blog Matches in the Dark in September 2018 here.

First Class Stamp showing a view of Highclere CastleHighclere Castle, GB 2016

What percentage increase in UK government spending do you think there will need to be to bring public services up to the level we should expect from an advanced economy?

The additional spending will have to ensure:

  • That there is never a winter crisis in the NHS;
  • That the state pension is sufficient to provide a fulfilling and enjoyable retirement;
  • That the frail elderly are guaranteed the best possible care;
  • That every ‘bog standard’ comprehensive is brought up to the level of the ‘best’ grammar schools;
  • That everyone has a decent, truly affordable home;
  • That there is a job, paying a Living Income, for anyone who wants one.

All that and much more.

Ask a Left-leaning person this question and they are likely to say that spending will have to rise by at least 20%. Many will say it needs to be much higher still. Ask them how they would pay for the improvements and, more often than not, they will say that we need to increase taxes on the rich.

Putting aside for one moment the fact that taxes don’t pay for spending, there is a problem with the ‘let’s tax the rich more!’ argument: we don’t have enough rich people. Let’s look at some facts to see why:

  • Yearly state spending is around £800 billion, so a 20% increase is going to require £160 billion extra from somewhere;1
  • In 2015-2016 (the latest available figures) income tax at the ‘higher rate’ of 40% on earnings over £42,385 raised £33 billion;2
  • Income tax at the ‘additional rate’ of 45% on earnings over £150,000 raised £26 billion.

Let’s define rich people as those who earn over the ‘additional rate’ threshold of £150,000 and assume that a rise in the tax rate produces an exactly equal percentage rise in revenue (it doesn’t). Doubling the ‘additional rate’ tax back in 2015-2016 from 45% to 90% would have raised only an extra £26 billion (26 × 90 ÷ 45), which is well short of the £160 billion requirement.

What about defining a rich person as someone who earns over the ‘higher rate’ threshold (now £45,000)? In 2015-2016, increasing the ‘higher rate’ from 40% to 70% would have raised a further £50 billion (33 × 70 ÷ 40), bringing the total increase to £76 billion. It’s still not enough. It would also be politically suicidal and the dynamic effects of such sudden and massive cuts in individual spending capacity would be disastrous.

So, impractically large increases in tax on the wealthy are not going to ‘pay’ for the desired level of public services. And a modest increase will make very little contribution: a five percent increase on both the ‘additional rate’ (26 × 50 ÷ 45) and the ‘higher rate’ (33 × 45 ÷ 40) would raise a mere £7 billion — less than 1% of total state spending.

As Stephanie Kelton says,

Money doesn’t grow on rich people3

Now, I am not saying that we shouldn’t tax the rich more. We should, but not because we need their money to fund spending. We should tax the rich because it achieves other socio-economic objectives: it reduces inequality and it deprives the rich of the power that comes with excessive wealth.

And we shouldn’t rule out very high income tax rates for the very rich — a 90% marginal rate, for example. These are the sort of rates that were the norm in the 1960s, when inequality was low and before the form of capitalism which we now call ‘neoliberalism’ took over. However, it took decades to bring tax levels down to the current level and it would take decades to get them back up again.

Of course, some on the Left think there are other ways we can extract money from the rich. All these ideas come with their own sets of problems, particularly anything to do with taxing savings or taxing corporations.

The trouble with thinking that taxes pay for spending is that it lays a trap for progressive politicians, and the Labour Party is well and truly ensnared. John McDonnell persists in pushing the household model of government budgets;4 Jeremy Corbyn persists in coupling new policy initiatives with increased taxes.5 The Labour Party is doing nothing to change the narrative. All it is doing is giving credence to the nonsense that the UK government is financially constrained. In effect, the Labour Party is providing intellectual backing, hopefully unwittingly, for austerity.

The solution is to become economically adroit and stop thinking that taxes pay for state spending. It’s actually the other way around: spending causes the tax to happen and almost all spending is eventually taxed away. The only time government needs to consider raising tax rates is when all the country’s resources — people and stuff — are in use and there is the risk of inflation. For example, when there is true full employment there is a risk of price rises and the government may need to reduce spending or increase taxes.

Ideally, the government won’t have to make any difficult decisions regarding spending cuts or tax rises because it’s the job of the MMT Job Guarantee to act as an automatic stabiliser. The Job Guarantee adjusts spending in real time without the need to tinker with tax rates.

Under extreme conditions, the Job Guarantee may be insufficient to control inflation and tax rate increases will be required. That’s when we need to tax the rich more, either directly through income tax or indirectly by increasing tax on the things the rich tend to buy — caviar and yachts, for example.6

There may not be sufficient rich people to ‘pay’ for spending, but there may well be enough of them for us to control inflation without harming the poor.

1.

See Section 1.8 in Autumn Budget 2017, 22 November 2017, HM Treasury.

2.

See Table 2.6 in UK Income Tax Liabilities Statistics, 25 May 2018, HMRC [PDF].

3.

Kelton’s little quip appears a lot in articles about MMT. Here’s one: Stephanie Kelton Has The Biggest Idea In Washington, 20 May 2018, Huffington Post.

4.

When asked by Martin Wolff ‘Does he share the view that ordinary people do not understand economics?’, John McDonnell answered: ‘Most ordinary working people know how to budget better than any politician, largely because they are living off low wages and they have to, therefore, make sure they can get to the end of the week. The best budget person I ever met that understood real economics was my mum. My dad would come in, hand her the wages and, because it was that sort of generation, she would look after the household and we would get by.’ Economics 101, 27 July 2018, BBC Radio 4.

5.

Jeremy Corbyn: I’ll tax tech firms to subsidise the BBC licence fee, 22 August 2018, The Guardian

6.

With any resulting job losses in the fish egg or boating sectors picked up by the Job Guarantee.

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The post Is there a critical shortage of rich people? appeared first on The Gower Initiative for Modern Money Studies.

New Pan-Agency Development Financing Report Suggests Major Economic Crisis Brewing

Published by Anonymous (not verified) on Sat, 06/04/2019 - 8:01am in

By Jesse Griffiths

Cross-posted at ODI.

The 2019 Financing for Sustainable Development report from the Inter-Agency Task Force (IATF) on Financing for Development was launched today.

For those – like me – who worry that the world is sleepwalking into another crisis, it’s not reassuring. It confirms that global debt is at record levels and ‘financial fragilities’ have built up across the globe. It’s also disappointingly light on solutions that could reverse these trends.

What is the IATF report?

The IATF is a group of fifty major international institutions that work on finance issues, including various United Nations bodies, the International Monetary Fund, World Bank and World Trade Organization.

This report is its annual stocktake on progress towards meeting commitments to finance the Sustainable Development Goals (SDGs). It’s an impressive undertaking, covering all major financing sources, with a mandate to look at the global financial and economic system as a whole.

Three things stood out to me:

1. Debt risks continue to grow

graph1_-_jesse_iatf_blog

First, both public and private debt continue to grow in all country categories. As the graph shows, emerging economies should be particularly worried about corporate debt, which is close to 100% of GDP. This high level of debt makes these economies highly vulnerable – changes in the internal or external environment could trigger bankruptcies that could lead to a full-blown financial crisis.

Meanwhile, more than a decade after the global crisis, developed countries continue to have record levels of government debt. Clearly public finances in this group would be badly placed to weather any future crisis.

2. The financial sector is on shaky ground

graph2_-_jesse_iatf_blog

Second, global financial sector risks are very worrying. The graph shows how the financial sector has ‘deepened’ – grown relative to the size of the economy – in all categories of countries since the turn of century.

This can be a good thing for developing countries, but it depends on the way that the financial sector has developed. The report highlights that developing countries’ financial sectors have internationalised, with international banks now making up 40% of their banking sector – a share which has doubled since mid-1990s.

This can bring advantages, but it also makes them more vulnerable to the international financial system, where risks have continued to grow despite reforms taken after the global crash. For example, the report notes that ‘th­e global stock of high yield bonds and leveraged loans has doubled in size since the global financial crisis, driven by low borrowing costs, high risk appetite, and looser lending standards.’

Reports like this are prone to understatement. One conclusion it draws is that ‘In the current uncertain environment, financial markets are highly susceptible to a sudden shift in investors’ perception of market risk, which could result in a sharp and disorderly tightening of global financial conditions.’

In other words, it wouldn’t take much to precipitate a crash. Add to this the fact that three quarters of countries are found not to have a financial sector strategy, and it’s beginning to look like a warning cry.

3. Solutions are lacking

Third, as might be expected from a report that is essentially a compromise between the differing perspectives of a wide range of institutions, recommendations on what to do to prevent another major crisis hitting the global economy are thin on the ground.

One key area I’ve highlighted before is what to do about the increasing risk of a widespread public or ‘sovereign’ debt crisis.

The report devotes a chapter to debt, and does mention some potential solutions. It has a section on the idea of making debt contracts dependent upon the ability of the debtor government to pay – known in the trade as ‘state contingent debt instruments.’ The idea of reducing the repayment burden when, for example, states face recessions or natural catastrophes is a good one, as a recent ODI report explores.

However, on the central issue of how to rapidly and fairly resolve debt crises that do occur – to prevent the lost years (and often decades) that can result – the report is spectacularly unambitious, saying only that it might be time to revisit this issue.

Perhaps I am expecting too much of a report produced by major international bureaucracies: the internal wrangling over each issue is likely to stymie creative, solution-oriented thinking.

The time is therefore ripe for others to pick up this baton and produce the companion set of solutions to help prevent or resolve the problems highlighted by the report, and ensure that the world can meet the ambition of the SDGs without suffering another major crisis.

Jesse Griffiths is Head of Programme at ODI and a specialist in development finance and the international development finance architecture. He has done work for a range of national governments, international organisations, non–governmental organisations and think–tanks, and has published widely on these topics.

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“Earth-Shattering” Book Argues That Ancients Routinely Did What Our Government Should Do: Give Debtors A Clean Slate

Published by Anonymous (not verified) on Thu, 07/03/2019 - 2:00am in

Tags 

Debt, history

Michael Hudson, one of the few economists who accurately predicted the Great Recession, has written a book — …and Forgive Them Their Debts — that caused John Siman to remark in Naked Capitalism: “To grasp his central argument is so alien to our modern way of thinking … that Hudson quite matter-of-factly agreed with me that the book is … ‘earth-shattering’ in both intent and effect.” Hudson’s central argument is that, again and again, century after century, forgiveness of debts had been a necessary cornerstone of successful civilizations.

IOU: Four Cartoonists on Student Debt

Published by Anonymous (not verified) on Wed, 27/02/2019 - 7:00pm in


On fighting to keep school free, avoiding debtors, or, well, just accepting it.

Aaron Bastani on the ‘Independents’ as the Old, Blairite Austerity Politics

In this 20 minute long video from Novara Media, presenter Aaron Bastani utterly demolishes the new ‘Independent’ grouping of MPs. He shows that rather than being any kind of new politics, they are simply the old, Blairite and Tory politics neoliberal politics. They are radically out of tune with what people really want, especially millennials, who have left much worse off than the preceding generation by the same politics the Blairites and Tories were pushing. And they’re being promoted by the media because they represent the old style of politics the media like: austerity with a smiley face.

Labour MPs All Going Before They’re Pushed

Bastani begins the video by describing how the departure of the seven Labour MPs – Gavin Shuker, Chris Leslie, Chuka Umunna, Ann Coffee, Luciana Berger, Mike Gapes, Angela Smith, who left to form the Independents – wasn’t actually a surprise. They were all loud critics of Corbyn, and almost all of them had been subject to motions of ‘no confidence’ or were facing deselection. They were then joined the next day by Joan Ryan, another critic of Corbyn, who had also lost a ‘no confidence’ motion. They were then joined the day after that by Anna Soubry, Heidi Allen and Sarah Wollaston from the Tories, who complained about the old, ‘broken’ politics of Labour versus Tories.

Independents Not Democratic, and Not a Political Party

The Independents, however, aren’t a political party as such. Which means that they don’t get the Short Money given to opposition parties. This could add up to hundreds of thousands of pounds. They also don’t have to conform to the same standards as proper political parties, although they claim that they will try to do so as best they can.  They also don’t have a membership. You can give them your name and contact details, and make a donation, but there is no mechanism for creating a mass organisation where the membership can determine policy. It’s a private organisation more than a political party. But what concerns Bastani the most is that they don’t want to hold bye-elections, because this would ‘crush democracy’. It’s doublespeak, and the truth is that they don’t want bye-elections because they’d lose.

Angela Smith’s Racism

He then goes on to describe how the seven founding ex-Labour members claim that they were driven out of the party by its racism, only for Angela Smith to say within hours the most racist thing he’s ever heard a politician say on television. To show how badly their launch went, Bastani produces some viewing figures. On the Monday the video of their launch had 75,000 views on Twitter. The video of Angela Smith’s apology got 700,000 views. But the video of Smith making her racist comments got even more – 1.5 million views. And while the Mirror and the Guardian wanted to splash on a video by Tom Watson, which got 500 shares on Facebook, Novara’s video of their own Ash Sarkar showing the corruption at the heart of the group – she challenged smith on her chairmanship of a parliamentary group supporting water privatisation, funded largely by the water companies – got 200,000 views. Chris Leslie then appeared later on the Beeb to sort this out. Where once again he talked about their love of democracy. A love so strong, that they don’t want to hold bye-elections, thus disenfranchising the hundreds of thousands of people, who voted for these 11 MPs. They claimed to be anti-racist, but set a new record by being racist ‘pretty much by lunchtime’.

People More Politically Engaged, Not Less

But their fundamental principle is that people don’t want Labour or Tory, but what Labour used to be 15 years ago. But at the 2017 election, 82 per cent of the population voted for either of the two main parties – Tories or Labour. That was the highest percentage the parties had since 1979. In 2010 only 65 per cent of the public voted Labour or Tory. The idea that people are turning away from the two main parties when there is a clear choice, socialism or neoliberalism, isn’t true. And the claim that people are disengaged from politics doesn’t stand up either. Voter turn-out was higher in the 2017 election, just as it was higher during the Scottish reference in 2014, and the Brexit referendum in 2016. Which was the biggest democratic exercise in British history. More people voted in that than in any previous general election or referendum. And Labour now has more than 500,000 members – more than it has had in a generation. The same is true for the SNP. More people are members of political parties now than at any point in Bastani’s lifetime. And if people genuinely do want centrist politics, how is it that the Lib Dems, who got only 8 per cent of the vote in 2015, got even less in 2017? This was despite the ‘media Einsteins’ telling us all that they would do well against the two main parties in a Brexit election. It’s almost as if, says Bastani, that the media don’t know what they’re talking about when they claim to know what the public wants.

Labour Policies Massively Popular

And then there are the policy issues. Labour’s policies are very popular. They’re right at the top of the list of why people voted Labour. But they don’t want to imitate these popular policies. Chris Leslie in an interview with New Scientist said he didn’t want a top tax rate of 50 per cent. That’s not a Corbynite policy, it’s one of Gordon Brown’s. He was also against stopping tuition fees and rejects the renationalisation of the railways, both extremely popular policies. These aren’t just popular with Labour voters, but also with Tories and Lib Dems. And polls conducted by IPPR And Sky News did polls at the end of last year which showed clear majorities of the British public wanting the Bank of England to keep house prices down and a minimal presence, at least, of workers on company boards. People don’t want centrist policies. They’re moving left, as shown on poll after poll.

Millennials Left-Wing because of Neoliberalism

And there’s a clear generational difference. At the last Labour split in 1981 when the SDP was formed, there was a clear movement to the right and post-war socialist policies had become unpopular. And yet when this split happened, the Economist carried an article decrying the popularity of socialism amongst millennials both in America and Britain. This meant ‘Generation Z’ young people, who want the government to address climate change as a fundamental part of 21st century politics. And these millennials despised the Tories, as shown by footage of an anti-Tory march. These are going to be the voters of the 2020s. And they’re not going to be bought off. They’re not left-wing because of something the read in a book, or because they want to be countercultural. They’re left-wing because their living standards and expectations are lower than their parents, they have a less expansive welfare state, they’re going to have higher levels of debt and earn less, and they will have to deal with systemic crises like demographic aging and climate change. They rightly feel that they’re screwed over. And the idea that these same people are going to agree with Chris Leslie’s idea of politics is probably the stupidest thing you’ll hear this year. And this is only February.

The Failure of Centrist Parties in France, America, Italy, Spain and Canada

But since 2015 centrist politicians have been hammered in election like Hillary Clinton in 2016. Emmanuel Macron in France was hailed as the saviour of French centrism, despite only taking 24 per cent of the vote in the first round. Now he’s the most unpopular president in French history after months of protests by the gilets jaunes, which have been met with tear gas attacks by the gendarmes, which have left people losing their eyes and their lives. Then there’s Matteo Renzi of the Partito Democratico, the Democratic Party, the Italian sister party to Britain’s Labour. In 2014 they took 42 per cent of the vote. But he was out within two years, having lost a referendum by 20 points. And in the last election the party lost half of their senators, leaving Italy governed by the Five Star Movement and the far-right Liga. Then there’s the example of the PSOE’s Pedro Sanchez. The PSOE is the Spanish equivalent of the Labour party. He’s also suffered mass protests and this week Spain called new general elections, which his party are certain to lose. Centrism is not popular in Europe or America, so the Independents have to turn to Canada’s Justin Trudeau. But Trudeau is now less popular in his country than Donald Trump in the US. Not that the media pushing ‘centrism’ will tell you this.

The Centrist Real Policy: More Austerity

The unpopularity of centrist politics is due to the fact that they still haven’t solved the problems of global capitalism created by the 2008 crash. They believed that financialisation would create the economic growth that would support public services. But financialisation hasn’t created growth since 2008. And as they can’t create prosperity and tackle income inequality, all they’ve have to give us is austerity ‘with a nice smiley face’.

Labour Splitters against Iraq Inquiry, For Welfare Cuts

And not only do the eight former Labour MPs have Brexit in common, they also voted against an independent inquiry into Iraq. A million people have been affected by the war, along with those, who suffered under ISIS, and Iranian influence has expanded across the Middle East. The idea that Iraq is irrelevant is not only absurd, it is a disgrace. People have died, and it has made an already volatile region even more so. And Britain is directly responsible. The former Labour MPs also abstained on the vote of welfare reform before Corbyn came to power. They do not stand for a moral foreign policy, or for a more just social system at home.

Their politics are a mixture of careerism and opportunism, and their opposition to Brexit actually makes a new deal more likely. They are driven by fundamental democratic principles, but won’t stand for a bye-election. No members, no policies, no party democracy, no vision. Bastani states that this isn’t the future of politics, it’s the past, and the worst aspects at that. He looks forward to sensible people joining them, because they’re going to be found out sooner or later. And if we want to establish the primacy of socialist ideas, he says, then bring it on.

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