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| Towards an economy that works for everyone | Towards an economy that works for everyone |
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| Surveying the legacy of the 2008 financial crisis (A decade on, rethink the relationship between the state and the market, Editorial, 15 September), you rightly call for the vacuum created by the collapse of free-market economics to be filled. But you wrongly imply that no one has done this. | Surveying the legacy of the 2008 financial crisis (A decade on, rethink the relationship between the state and the market, Editorial, 15 September), you rightly call for the vacuum created by the collapse of free-market economics to be filled. But you wrongly imply that no one has done this. |
| In fact, there has been huge progress in building an alternative. Economists have a better analysis of how sustainable growth and innovation occur, and how the state can co-invest with industry to meet challenges such as climate change and an ageing society. It is clear that the decline in bargaining power in an overly casualised labour market has held down wages, and that both stronger trade unions and regulation are needed to raise low-income earnings and productivity. | In fact, there has been huge progress in building an alternative. Economists have a better analysis of how sustainable growth and innovation occur, and how the state can co-invest with industry to meet challenges such as climate change and an ageing society. It is clear that the decline in bargaining power in an overly casualised labour market has held down wages, and that both stronger trade unions and regulation are needed to raise low-income earnings and productivity. |
| The role of the financial sector in causing financial instability, short-termism and wealth inequality is much better understood, and new public institutions – from a national investment bank to regional economic government and a new digital regulator – are now on the table. | The role of the financial sector in causing financial instability, short-termism and wealth inequality is much better understood, and new public institutions – from a national investment bank to regional economic government and a new digital regulator – are now on the table. |
| All these and more are proposed in a recent report by the IPPR commission on economic justice, Prosperity and Justice: A Plan for the New Economy. And they are underpinned by an analysis of the purpose of the economy and the relationship between state and markets. Government policy has not moved on much in the past decade, but thinking has. It’s time to turn the latter into the former.Michael JacobsDirector, the IPPR commission on economic justice | All these and more are proposed in a recent report by the IPPR commission on economic justice, Prosperity and Justice: A Plan for the New Economy. And they are underpinned by an analysis of the purpose of the economy and the relationship between state and markets. Government policy has not moved on much in the past decade, but thinking has. It’s time to turn the latter into the former.Michael JacobsDirector, the IPPR commission on economic justice |
| • Your editorial is spot-on in summarising the failings of the global and UK economies – public services are cut, wages stagnate, living standards fall. What is needed is a drastic change in economic policy. Instead of regarding the economy as a household where it is vital for income to cover expenditure, governments should draw on the “magic money tree” that bailed out banks with quantitative easing to the tune of £435bn in the UK and trillions worldwide. This should take the form of a green new deal, where major investment is made in infrastructure, energy conservation for buildings and renewable energy. There is sufficient underemployment in the UK for extra money to be spent on these projects without the danger of Weimar Republic-type hyperinflation. | • Your editorial is spot-on in summarising the failings of the global and UK economies – public services are cut, wages stagnate, living standards fall. What is needed is a drastic change in economic policy. Instead of regarding the economy as a household where it is vital for income to cover expenditure, governments should draw on the “magic money tree” that bailed out banks with quantitative easing to the tune of £435bn in the UK and trillions worldwide. This should take the form of a green new deal, where major investment is made in infrastructure, energy conservation for buildings and renewable energy. There is sufficient underemployment in the UK for extra money to be spent on these projects without the danger of Weimar Republic-type hyperinflation. |
| Adopting a green new deal strategy will boost employment and wages through the “multiplier effect”, and go a long way towards fending off runaway climate change.Bill Hughes Swindon, Wiltshire | Adopting a green new deal strategy will boost employment and wages through the “multiplier effect”, and go a long way towards fending off runaway climate change.Bill Hughes Swindon, Wiltshire |
| • I agree with your editorial. Comparisons between 2008 and 1929 are apt, as are your calls for a counter-revolution in ideas aimed at resetting the boundaries between state and market, and reconsidering how a civilised society should treat its people. | • I agree with your editorial. Comparisons between 2008 and 1929 are apt, as are your calls for a counter-revolution in ideas aimed at resetting the boundaries between state and market, and reconsidering how a civilised society should treat its people. |
| You call for a fundamental review of the role of government in providing a good economic life for voters. A recent report from the Institute of Employment Rights echoes your sentiments, taking as its lead the successful policies adopted by governments following the 1929 crash and the devastation after the second world war. | You call for a fundamental review of the role of government in providing a good economic life for voters. A recent report from the Institute of Employment Rights echoes your sentiments, taking as its lead the successful policies adopted by governments following the 1929 crash and the devastation after the second world war. |
| We call for a ministry of labour, led by a secretary of state with a cabinet seat, to represent workers’ voices in parliament. Its responsibilities will include introducing a collective bargaining act, wages high enough to reduce reliance on in-work state benefits, strategies to ensure technological advances increase productivity not unemployment, and appropriate training and education to reduce skills gaps. The bargaining act will be responsible for rolling out national joint councils across the economy to negotiate pay and conditions in their sector. We also propose strengthening the safety net for workers by an extension of employment rights suitable for the challenges of the modern workplace, with strengthened enforcement mechanisms to turn paper rights into enforceable rights. | We call for a ministry of labour, led by a secretary of state with a cabinet seat, to represent workers’ voices in parliament. Its responsibilities will include introducing a collective bargaining act, wages high enough to reduce reliance on in-work state benefits, strategies to ensure technological advances increase productivity not unemployment, and appropriate training and education to reduce skills gaps. The bargaining act will be responsible for rolling out national joint councils across the economy to negotiate pay and conditions in their sector. We also propose strengthening the safety net for workers by an extension of employment rights suitable for the challenges of the modern workplace, with strengthened enforcement mechanisms to turn paper rights into enforceable rights. |
| The free market has failed. Austerity has failed. It is widely acknowledged that collective bargaining at sectoral level is the best way to put money in workers’ pockets, increase the tax take, reduce the cost spent on state benefits, stimulate demand and productivity and decrease the levels of inequality that so harm our society.Carolyn JonesDirector, Institute of Employment Rights | The free market has failed. Austerity has failed. It is widely acknowledged that collective bargaining at sectoral level is the best way to put money in workers’ pockets, increase the tax take, reduce the cost spent on state benefits, stimulate demand and productivity and decrease the levels of inequality that so harm our society.Carolyn JonesDirector, Institute of Employment Rights |
| • Larry Elliott highlights the shocking demise of trade union collective bargaining from a 1970s high of 70% to 26% today (The rise in zero-hours can only be halted by strong unions, 14 September). On this 10-year anniversary of Lehman Brothers’ collapse, a further overlooked failing is the refusal to recognise union affiliation, power and rights. | • Larry Elliott highlights the shocking demise of trade union collective bargaining from a 1970s high of 70% to 26% today (The rise in zero-hours can only be halted by strong unions, 14 September). On this 10-year anniversary of Lehman Brothers’ collapse, a further overlooked failing is the refusal to recognise union affiliation, power and rights. |
| There is a powerful argument that, had union representation been an established feature of the high-finance arena, individuals would have felt empowered and protected in voicing their concerns at the overleveraged, high-risk strategies that had become unassailable. We all suffered for this silence. Whistleblowing mechanisms are far stronger today, but this doesn’t prevent the lone voice who seeks to expose looming catastrophe from the constraining solitude that only a trade union can overcome, empower and protect.Nick MayerSouthampton, Hampshire | There is a powerful argument that, had union representation been an established feature of the high-finance arena, individuals would have felt empowered and protected in voicing their concerns at the overleveraged, high-risk strategies that had become unassailable. We all suffered for this silence. Whistleblowing mechanisms are far stronger today, but this doesn’t prevent the lone voice who seeks to expose looming catastrophe from the constraining solitude that only a trade union can overcome, empower and protect.Nick MayerSouthampton, Hampshire |
| • Stronger unions would surely do good for Britain, but Larry Elliott is mistaken in claiming that is the only way to reduce zero-hours contracting. Here’s a plan that would eliminate most of it, while preserving enough flexibility to avoid inefficiency. The idea is to legislate a limit on the fraction of working hours a company can assign to people other than full-time employees. The limit could kick in when it uses five or more full-time equivalents for certain work. At that point, the law might require at least 60% be done by full-time employees (three of them, in this scenario), so that no more than 40% could be done through other arrangements including zero-hours contracts. | • Stronger unions would surely do good for Britain, but Larry Elliott is mistaken in claiming that is the only way to reduce zero-hours contracting. Here’s a plan that would eliminate most of it, while preserving enough flexibility to avoid inefficiency. The idea is to legislate a limit on the fraction of working hours a company can assign to people other than full-time employees. The limit could kick in when it uses five or more full-time equivalents for certain work. At that point, the law might require at least 60% be done by full-time employees (three of them, in this scenario), so that no more than 40% could be done through other arrangements including zero-hours contracts. |
| As that kind of work increases, the limit would decrease, perhaps to as low as 15% for companies with many workers on one job, such as Uber and Deliveroo. A full-time employee does not necessarily have to have a fixed schedule. Working hours could be scheduled weekly, in accord with certain rules. Workers deserve to know their schedule. Any shift not scheduled in advance, regardless of the terms of employment, should pay 50% extra on top of overtime pay if it is overtime.Richard StallmanCambridge, Massachusetts | As that kind of work increases, the limit would decrease, perhaps to as low as 15% for companies with many workers on one job, such as Uber and Deliveroo. A full-time employee does not necessarily have to have a fixed schedule. Working hours could be scheduled weekly, in accord with certain rules. Workers deserve to know their schedule. Any shift not scheduled in advance, regardless of the terms of employment, should pay 50% extra on top of overtime pay if it is overtime.Richard StallmanCambridge, Massachusetts |
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