Friday, October 10, 2008

Benn's Public Banks The Only Solution

Labour grandee, Tony Benn, has called on the government to put the banks into public ownership. Power has switched from parliament to the City. Brown's doomed £500 billion bank bail-out is the final straw. 

The City now calls the shots and voters will see through it. On this issue, the Orange Party is more than happy to nail its colours to his mast. 

It has been observed here on a number of occasions how New Labour has cosied up to their pals in the City. 

Now, when times are tough, like Bush in the US, the answer has been to throw them more taxpayer's cash and borrow billions getting the country deeper in debt. The piper is calling the tune.

There's plenty of life in the old Labour dog yet. In June, Benn delivered a masterclass in politics over civil liberties. Now Benn's argument, over public-ownership, is a simple one and he makes the point forcefully: 

"The trouble is that the Prime Minister and the American President have been relegated to mere spectators, commenting on what has happened, and whose only role is to dish out more and more taxpayers’ cash."

Benn argues for public ownership of the banking system and the reason is accountability, sadly lacking in current economic policy.

Strategic public services such as the army, police, fire service, health care and education are still, in the main, in public ownership, despite New Labour's best efforts to sell them off. Why should the banks be any different. The seeds have already been sown with a nationalised Northern Rock.

For ordinary people, banks are somewhere you can trust to look after your hard earned cash. And somewhere to go for a loan without fear of being ripped off. That's a public service. 

"I have concluded that a publicly owned and accountable banking system would be better for Britain and judging from the way opinion is moving, I suspect that those views would appeal to people from right across the political spectrum," said Benn.

His view is shared by LSE economics professor and former MPC member, Willem Buiter, who believes nationalisation may be the only answer to restore confidence, as a temporary solution.

Liberal economist, JK Galbraith, referred to here on a number of occasions, doesn't call for public ownership but his acute analysis of the failed banking system in the years after the Great Depression has prophetic warnings of the doom ahead. 

And support for Galbraith comes from a seemingly unlikely source. Jeff Randall writing in the Daily Telegraph is firmly of the belief that Galbraith got it right: 

"His analysis of the greed and self-delusion that led to the unravelling of America’s stock market and the subsequent Depression is undimmed by time ... Replace 1929 with 2008 and the story, I’m afraid, is eerily familiar: a speculative orgy, crescendo, climax and crash. As this plays out, important people – business and political leaders – rely on “the power of incantation” to keep the rest of us calm. Their efforts are doomed to fail."

Brown is keen at the moment to spin the banking "crisis" for his own political ends. Blair developed a notorious "taste for war". Brown, a taste for the City. Both leave a bitter taste in the mouth.

As the devil in the detail of Brown's bank bail-out is exposed and share prices crash on the stock market, Benn's answer - fully accountable public ownership - is looking increasingly like the only realistic solution.

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