A Jeremy Corbyn-led government would be a boom for business, here’s why

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The corporate media line that Jeremy Corbyn is a threat to business is nothing short of a caricature. Economically speaking – it’s nonsense, which is why 163 economists recently endorsed the Labour manifesto. In reality, there’s no question that a Corbyn-led government would be a boom for business.

Repeat after me: government finances are not like your household’s

It takes a degree of unlearning to understand why Labour’s manifesto would be a boom for business. Usually, the corporate media treats government spending as the same as household spending. The line is ‘if you spend £60 then it’s gone and the same applies to the government’.  But actually, when the government spends, the money doesn’t just go down the drain. It circulates in the economy through people buying and selling services and products from each other.

Reduce inequality, power the economy

So the question then becomes: where is the best place to direct government spending to power the economy? Recently Labour released ballpark figures suggesting that their policies will save an average family £6,716 per year. Policies such as nationalisation of essential services and investment in communities will put money in people’s pockets. This is exactly what the economy needs. Because businesses need customers. And UK economic inequality is so polarised that the majority of people do not have the money to make the purchases they otherwise would.

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To illustrate, the UK’s richest 1,000 families have increased their wealth by over £500bn since the 2008 financial crash, while the majority of people have much less money because of austerity cuts. This wealth extraction from the majority of people to the already rich is terrible for business. That’s because the UK’s richest 1,000 families are not going to buy a million pairs of jeans, a million coffees, nor a million smartphones. But, by contrast, if the public had more money, they would purchase millions more innovative products and services. Buying local can also keep the money circulating in the community.

In the UK, there are 14 million people, including 4.1 million children, living in poverty. Aside from the moral disgust, obscene inequality is terrible for business because these families are also millions of lost customers. Labour’s policies address a fundamental problem with the arse-end of free-market capitalism: it’s run out of consumer spending power. Corbyn’s Labour aims to rebalance the economy in order to ensure that both consumers and businesses can thrive. Because you cannot have one without the other.

Featured image via ITV/ YouTube

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  • Show Comments
    1. Well said, but grasp of the distinction between government debt and private/corporate debt is ill-understood and unlikely to gain traction during the next three days.

      Johnson lacks even the ‘Noddy certificate in economics’ possessed by those of his colleagues who did the equivalent of a first year economics degree during their Oxford PPE.

      There is no better time for extensive government borrowing for infrastructure investment. Interest rates for governments and major banks are zero. Negative interest rate territory is being entered. ‘Quantitative easing’, yet under other names, looks set to continue indefinitely because nobody knows how to stop the treadmill without precipitating ‘pitch fork’ revolution. Return to commodity backed currencies engenders deep fear among powerful people living atop pinnacles constructed from paper.

      The bright side in all this is that the UK can borrow (loans and bond issues) as much as it wants. This can be done in expectation of never having to pay much, if any, of it back. Western economies, especially that of the USA, are in perilous state and face ruin when the quantitative easing quasi-Ponzi scheme collapses. When that occurs, the UK shall have woes but its written-off (or reneged upon) debt shall leave a substantial irremovable legacy if it arose to fund tangible infrastructure.

    2. No one knows what to do with this society as the Biggest Boat Afloat with the unimaginable momentum too scary to even comtemplate without causing a “pitch fork” revolution is an apt decription of the situation.
      This article starts to tackle in detail some of the aspects of a financed democracy which is so welcome to see.

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