Panacea: Plan P

A Growth Policy which will work is simplicity itself.

Remember and recommend this, and repeat what it says to your friends.

This is the much called for growth Plan B, which should have been Plan A for growth from the start.

Audacious Growth Policy

for Right Wing Nutters & Hippy Lefties

Look after Growth, and the debt and the deficit will look after themselves.

Imagine the whole of the financial sector loaded, aimed, then fired at the real economy. All that wealth, our wealth, the wealth of the nation, tied up by banker-mathematicians in Gordian bundles, trying to rip each other off. All that. Fired at good businesses in need of honestly priced finance.

A new scientific truth does not triumph by convincing its opponents and making them see the light, but rather because its opponents eventually die, and a new generation grows up that is familiar with it. - Max Planck

Growth is the panacea, no matter what you are trying to achieve politically, it will work better with Growth; if you have full employment.

I've espoused and proselytised it, but most people, intelligent or not, seem to react as if from a post-hypnotic suggestion; "that'll never work", but they can never articulate why not.

So how do we get the whole of the financial sector loaded, lined up and fired at the real economy?
We "incentivise" the most influential people in the financial sector to move capital away from impossible to predict, emergent behaviour, "financial products" to investment in the real economy.

Think about tax and regulation. Then think about performance related pay. Think about bankers pay being related to the performance of the UK economy.

Remember we want Growth.
This is how you do it.

Plan P

Dynamically link bankers top-rate of income tax to the unemployment level.
This Engine Governor image shows the classic feedback mechanism we need to apply to the banking system.

This will force the Quantitative Easing and Funding for Lending money, which the banks are using to boost their own profits and bonuses (with the government standing by doing nothing about it) out into the real economy; namely SMEs.

If I say so myself, and I do, but I'm not the only one, this is a stroke of genius!

Bankers will object, but if you are a "real" businessman or entrepreneur, you SHOULD see that this will divert much working capital in your direction - you know you could use it to good effect.

Let's say bankers top-rate of income tax is dynamically set at ten times the percentage unemployment level.
This would have seen it around the 80% mark for the first half of 2012.
Before the bankers melted the globe, this would have been about a 50% top-level of income tax.
Strictly speaking this is offering them more money, we're just resetting the base level from which "more" is measured.

The income tax rate is adjusted with the release of unemployment data from the Office for National Statistics.

Simplicity itself.

If I say so myself, and I do, but I'm not the only one, this is a stroke of genius!

Underemployment

Professors David Bell and David Blanchflower of the University of Stirling and Dartmouth College have created a new index which combines both unemployment and underemployment; the extra hours workers would work if given the chance. It also accounts for overemployment, those thinking of retirement and slowing down a little.
This index, using data from the UK Labour Force Survey, measured 9.9% in the middle of 2012, so if we were to use that, bankers would have their top-tier income taxed at 99%!

Incentivise Institutions

This only incentivises the individuals. How do we incentivise the institutions, get them singing from the same hymn sheet - without catching on fire?
Dead easy!
Scrap the bank levy (don't get excited Pinstripe), and replace it with a simple presentation of the cost of Jobseekers allowance - about £6 billion per year.

The amount is adjusted dynamically with the release of unemployment data from the Office for National Statistics.

The problem with this is that it is VERY local, the Euro problems will decrease exports to the EC, and will also damp down the global economy, further reducing export pathways. Hence we need a strong internal market. So the problem of localism actually becomes a strength.

No Buggering About

The Government is left out of the nitty gritty details, no buggering about with the type of negotiations seen in the failed, and now defunct Project Merlin, or dishonest protestations by the British Bankers Association that targets are being met, no need for Funding for Lending, which has also failed. There are no targets, just a feedback relationship between the performance of the economy and the taxes on banking: simply set the income tax and levy as I've described, then tell the bankers to sod off and get on with it. No argument.

Zero Incentive

If the bankers get the economy to full employment their top-rate tax will be near zero percent. How's that for an incentive we can tell the bankers they'll be getting?
Tell them that ...

Banker Frightner

Imagine we had shown the bankers a projection like this in 2008, do you think the economy would be anywhere near as bad now?

Show them this graph right now, tell your Member of Parliament - don't ask, demand - your MP has an absolute duty to put questions to ministers, and ministers are duty bound to answer.
Use the link to find your MP's email etc, and send them a message.

Result

Osborne and Cameron chillax, really do sit back, complacently, with their feet up, watching investment soar, unemployment plummet and a landslide at the next general election. Or whoever pushes this policy through. Plotting - I mean New Coalition - between LibDems and New Labour?

Nobel Prize in Economics for me? I should bloody think so.
:)

Zeitgeist

The only way these things are going to happen is if they become the Zeitgeist, the more people that start to contemplate these ideas, the more chance they have of becoming policy - eventually.

The coalition government will not do these things, but when it becomes clear that there are MASSIVE cuts required, these ideas in the wind will hopefully catch on as an alternative to mass unemployment, or a lost decade.

Note

All truths are easy to understand once they are discovered; the point is to discover them. - Galileo Galilei

I think Galileo must be wrong. I estimate only 1% of people I've spoken to or contacted grasp the true significance of this idea. If you get it, it will seem astoundingly obvious to you, and you will struggle to understand why almost none of your friends can see the merits of it. You will have to explain it to them very slowly, and try to engage their support, because the only way this is going to happen is if there is a mass movement for it - we need everyone.