Last week, PCES hosted a panel debate on Jeremy Corybn’s proposed ‘People’s QE’ (PQE), which would see the Bank of England (BoE) create money electronically and use it to fund public projects such as infrastructure spending, or possibly send cheques to peoples’ homes, in an effort to stimulate the economy. Speaking on the panel were Frances Coppola, former financier and well-known blogger; James Meadway of the New Economics Foundation (NEF); and Chris Giles of the Financial Times (FT). The full talk is available in the embedded video below:
Giles opened with a brief but interesting discussion of PCES in general, saying that he believes orthodoxy should always be open to challenges – even if the alternatives aren’t necessarily better. Leading on from this he said he welcomed these kinds of debates about ‘unorthodox’ monetary policy, but thought that PQE was not a good proposal. He argued that Corbyn and other PQE adherents such as Richard Murphy had not made it clear exactly when PQE would be needed – in recessions or as a permanent policy – and he argued that they PQE conflated a number of different issues such as the need for stimulus in a recession; the need for improvement in Britain’s infrastructure; BoE independence; and the debate over unorthodox monetary policy. He finished by pointing out that in many ways conventional QE had achieved many of the goals of PQE, allowing the government to finance its deficits with BoE-created money.
Coppola agreed with many of Giles’ points, although she stressed that conventional QE hadn’t been benign and could have been carried out better, since the BoE admitted that it has benefited the wealthiest, asset-owning groups of society the most. She argued PQE had been presented as a panacea and expressed frustration with the Labour government not simply endorsing more borrowing to fund public projects.
Meadway began by arguing that ‘the economy’ should always be the subject of public discussion, rather than seen a an esoteric, technical area in which only experts can have a say. Like Giles he therefore welcomed this debate. He pointed out that both private and central banks continually create money and so money creation should not be seen a cause for panic, disagreeing partly with Giles about whether something like PQE might turn the UK into hyperinflationary Zimbabwe. Nevertheless, he agreed with the past two speakers that PQE should not be seen as a panacea that solves a wide number of issues, and that each issue it had claimed to solve should be debated on its own merits.
It was clear that the panel members agreed on many aspects of this question, which meant that there wasn’t as much of a clash as might have been expected from their different backgrounds. But the consensus – that PQE was incoherent as a package, but raised important questions – from 3 well-known experts was a good sign. Following the introductory presentations, several related questions were raised, such as the possibility of negative interest rates and the issue of whether conventional QE had increased inequality. These made for some interesting and informative discussion which is well worth a watch, so take a look at the full video above!