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Escaping austerity, preparing for sustainability: the immediate importance of Green economics

Escaping austerity, preparing for sustainability: the immediate importance of Green economics
August 6th, 2012
Author: Guest Writer

By Peter Cranie

A few years ago, a typical Green politician would probably have been saying this: “We need the Green Party primarily for economic reasons". That’s because the biggest threat to the world’s economy comes from the damage which climate change looks set to inflict through a combination of more frequent and more extreme weather events, sea-level rises, loss of productive coastal areas, droughts, famines, disruption of food production worldwide and the accompanying refugee crises and even wars, all of which will have devastating effects on the global and national economies; and at the next general election someone needs to be offering a full-blown package of policies calculated to meet science-based CO2 reduction targets.”

Now, as a contender in the current Green Party leadership election hoping to follow in the august footsteps of Caroline Lucas MP, I would put it differently. I’d say all the above is still true, but I’d say there’s another reason why Britain needs a strong Green Party: because at the next general election, there will only be one parliamentary party offering an alternative to the austerity agenda being pursued by the Coalition, and which Labour has pledged to continue if it returns to power.

I’d say the Green Party is a bastion of a certain economic model that’s in danger of extinction. The big three parties plus UKIP agree on a neo-liberal-cum-neo-conservative model. The Greens argue passionately for a model which, in time of recession, adopts the Keynesian approach of state intervention.

The Greens have a better track record on economics than many people might imagine. For instance, the Greens were the first politicians to point to the need to take into account external costs when evaluating a given policy – for example, assessing the economic costs attributable to air and noise pollution when considering transport proposals. The Greens also had the foresight to oppose the financial deregulation which facilitated the recent financial crisis – deregulation supported by the bigger parties.

Peter Cranie photo

Peter Cranie (Green Party)

Private Finance Initiatives have recently been under the spotlight as an abject failure – providing inadequate infrastructure that costs several times more than it should have done. Labour and the Coalition parties supported PFI. The Greens opposed it from the outset.

The Tories and later Labour and the Lib Dems argued that only privatisation could bring the necessary investment in such things as the railways. But rail privatisation has been widely regarded as a failure, and it was reported that in the first decade the privatised rail companies received more in subsidies from the public than they had paid to purchase the railways. The Greens opposed rail privatisation.

The Greens also predicted that a double-dip recession would be caused by government austerity policies. (See e.g. Jeff Taylor, Economic Voice, April 27th, 2012, “The Green Party saw the double dip recession coming”)

So I’d ask, why believe Labour and the Coalition parties when they tell you that a country can’t keep going with a high level of debt? Why not believe the Greens? After all, the Greens are pointing to history and observing that the UK itself has provided a particularly good example of a country that has functioned well during times of high public debt. We won World War Two and created the National Health Service during a period of high indebtedness.

Crucially in the current context, why should we believe Labour and the Coalition parties when they tell us we need austerity measures? The Greens are not merely promoting an ideology, but pointing to history and observing that austerity measures have never worked. Just look at the Great Depression. Look at the major crisis over debt in the developing world in 1982, and the crisis in Mexico in 1994, and the Asian crisis in 1997, and the Brazilian and Russian crises in 1998, and the Argentinian crisis in 2002. History shows that when you get a crisis-stricken country and force it to cut spending and run budget surpluses, you will see its economy sink deeper into recession.

Of course it isn’t just the Greens saying this. Top economist Paul Krugman points to the urgent necessity of massive government spending to get us out of the recession.

Here’s where the Greens have not one, but two unique selling points to offer the electorate. The first is to make the UK economy not only ecologically sustainable but balanced again.

The Green Party’s 2010 general election manifesto contained a costed programme of government investment. Based on the existing government’s budget, that manifesto showed how we could sustain current levels of spending on public services, and also how we could afford to pay for a Green New Deal – a plan to invest massively in a new technological revolution as the way to make our economy sustainable. This Green New Deal would quickly create over a million new jobs and training places. More importantly it would trigger a new industrial revolution. Britain would be ‘making things again’, making them in large enough quantities to bring unit costs down, which would mean we’d almost certainly start exporting large quantities of those things – which in turn would help other parts of the world cut their CO2 emissions. The manifesto was costed (see the table on p 17 of the manifesto); it showed how we could pay for this through a combination of increased (and fairer) taxation, borrowing and some efficiency savings.

The Green Party’s second unique selling point is this: no other party is offering to support the principle that government spending is necessary to prevent the current devastation of public services. That is, no other parliamentary party is challenging the idea that the rich must inevitably get richer, or pointing out that “trickle down” doesn’t actually work.

As Owen Jones has observed, the wealth of the richest 1,000 Britons increased by 30 per cent in 2010 – the biggest increase ever recorded – and then again by a fifth in 2011. But ‘Throughout 2011, living standards for the average Briton were declining at the fastest rate since the 1920s’ while ‘boardroom pay for Britain’s top one hundred companies soared by 49 per cent’ having increased by 55 per cent the previous year. (See Owen Jones, Chavs: The Demonization of the Working Class, Verso, 2012, pp vii-viii.) Meanwhile, this week it has been revealed that homelessness in the UK has increased by 25 per cent in three years (BBC) – yet the government wants massive cuts in housing benefits.

Cuts inevitably impact disproportionately on poorer people. Take, for example, library services, which are important to poorer people but are not needed at all by rich people. But cuts also hurt the broader economy. It’s been revealed this week that cuts to library budgets have forced 150 libraries to close or be run by volunteers, with 225 more libraries at risk, and so far 2,100 jobs lost (Independent). That’s 2,100 more people now chasing jobs that increasingly aren’t there, which in turn will put further strain on benefit services. In human terms it means more stress and anguish for redundant workers and their families. And in broader economic terms it means 2,100 fewer people paying taxes, which reinforces the downward spiral of falling government revenue, and 2,100 fewer salaries being spent, which reinforces the downward pressure on retailers and service providers. More of this means more shops going out of business, more jobs lost, thus more human misery but also further reductions in tax revenue.

I believe it’s crucial to the UK economy and to British democracy that the Green alternative is heard loud and clear between now and the 2015 general election. There are probably millions of former Labour and Lib Dem voters who are closer to the Greens on a wide range of issues, not least economic issues, than they are to their former parties. Consider also all those people opposed to the austerity agenda who will have no established party other than the Greens to vote for; all those who want a Robin Hood Tax, redistributive taxation, a crackdown on tax avoidance and evasion; those who want to protect the NHS and post offices. Those who want an end to huge bonuses in the publicly-owned banks, and a windfall tax on private bankers’ bonuses; those who want a government that would pay not one penny more to the private banks in bailouts, but which would establish a not-for-profit People’s Bank as a safe place for people to keep their money.

All this, and a Green New Deal to kick-start the economy and create huge numbers of jobs – but, crucially, to do so as the first major step in the transition to the truly sustainable economy of the future. A British economy that would show the world how to promote fairness and compassion, cooperation and the ideal of public services, at the same time as tackling the immense threat posed to the world’s economy and its inhabitants by climate change.

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6 Responses to “Escaping austerity, preparing for sustainability: the immediate importance of Green economics”

  1. Please note that the link to the Green Party manifesto may not work as their site is undergoing an upgrade.

  2. Gary Barker says:

    In a country that supposedly works around a political centrist model what does it actually say for that claim that the only party that is even slightly left of the real centre is the Green Party?

  3. Mary Gray says:

    The writing was convincing The last two paragraphs stood out for me The reference to a People's Bank: Halleluja! And now perhaps this idea will have more credibility considering the alternatives and the track records Provided the jobs offered are real grean and meaningul jobs this too could be timely. Factor 4 book from The Rocky Mountain Insitute in Colorado would undoubtedly be of use here. It is time for all the little people to stand up and be counted. Keep up the creativity and Go Green! It is a paradigm shifting experience. "If not now, when?"

  4. silver account says:

    While it is not surprising that conservatives try and discredit the Greens and use various tactics to limit the chances of more breakthroughs in lower house seats, the question Labor Left needs to answer is, should they also be putting their effort into demonising a party with progressive policies?

  5. Gary Barker says:

    silver,

    If I have understood you correctly you appear to think that Labour are still a party of the political left, is that correct?

  6. Hans Schwabe says:

    Thank you for spelling out the obvious, we need a complete re-writing of economics that encompasses the economic consequences of not responding adequately to the climate crisis. Surely many well to people can work out that a realistic and stable economy without a desperately poor majority is better for them as well. A boom-bust model in a crumbling environment will be completely unmanageable and ultimately pretty awful for everybody and their off-spring – wilful ignorance is just not going to be acceptable.