What Is Corbynomics

With the results of the UK Labour Party Leadership Elections set to be announced this Saturday, its time to take a look at the economic policies of one of the candidates considered the frontrunner, and also the furthest to the left, by many- Jeremy Corbyn.

The Islington MPs economic proposals have made such an impact that they have come under the new title of Corbynomics. Though, admittedly, adding nomics to the names of his rivals would lack the front page appeal of this title (especially Burnhamnomics, or would it be Burnhamomics?), it is undoubtedly the unique nature of Corbyns policies in the leadership race that has brought them a name to come under.

So, what are Corbyns policies, and are they credible? Here are 4 of his policies that are making the headlines.

An End to Austerity

"You just cannot cut your way to prosperity so Britain needs a publicly-led expansion and reconstruction of the economy, with a big rise in investment levels."

Corbyn is a strong opponent to David Cameron and
George Osbornes policy of austerity.

One of the most appealing policies to his supporters on the left, Jeremy Corbyn has pledged to bring an end to the money-saving spending cuts that have been enforced in recent years by the Conservatives.

This means that a government under Corbyn would end spending cuts on public services such as the NHS, the education system and transport- in fact, he would be likely to increase spending on these as demand increases due to a growing and ageing population.

Corbyn would also reverse one of the most controversial austerity tactics, that is the privatisation of public services. He has pledged to renationalise the railway system, and also prevent the further privatisation of the National Health Service.


Reducing Foreign Military Presence

Jeremy Corbyn believes Britain should learn lessons from
an intervention in Iraq seen by many to have failed.

"Thousands more deaths in Iraq ... will set off a spiral of conflict, of hate, of misery, of desperation that will fuel the wars, the conflict, the terrorism, the depression and the misery of future generations." (2003)

However, the only cut that Corbyn proposes is with regards to the military. He is a fervent anti-war activist, something highlighted by his strong criticism of past actions such as Tony Blairs move to invade Iraq, and current proposals like those to militarily become involved in Syria. So, a Britain under Jeremy Corbyn would reduce its military presence in areas like the Middle East, thus saving a considerable amount of money.

Furthermore, as a believer in non-proliferation of nuclear weapons, Corbyn would close down Britains nuclear weaponry facility Trident, located in Scotland. This would not only save money, but also be a welcome move, considering a significant proportion of Scots are against the facilities themselves. However, some worry that such military contraction would endanger Britain, in what many see as an increasingly threatening world.


Quantitative Easing for the People

"QE for people instead of banks"

Banks would no longer benefit from government QE
programmes under Corbyn.

Quantitative Easing is nothing new in government policy, but the manner in which Jeremy Corbyn seeks to implement the divisive policy highlights the new direction in which he seeks to take Britain.

Put simply, in the current system of QE, the Bank of England creates new money that is inserted into the accounts of national banks, with the aim of encouraging these banks to lend more openly and thus stimulate spending in the economy.

Corbyn wishes for the Bank of England to continue creating new money, but proposes that the finances created should not go to the private banks, but a state-owned National Investment Bank, that will "head a multi-billion pound programme of infrastructure upgrades and support for high-tech and innovative industries".


National Education Service

Tuition fees have been a source of discontent for many
of Britains young people. Under Corbyn they would not exist.

"To become a high skill, high pay, high productivity nation we need to invest in education throughout peoples working lives - that is the path to prosperity for all." 

A significant part of Corbyns anti-austerity programme would be the increasing of government spending on education. There has been much uproar in the past decade over university tuition fees, first introduced by Labours own Tony Blair, and increased to as much as £9,000 a year under David Cameron.

Not only would Jeremy Corbyn abolish these tuition fees, but he has also proposed the reintroduction of university grants, which have just been replaced by loans.

Free university forms a major part of Corbyns National Education Service proposal. This system would see the government increase spending on education (funded by tax increases, government military spending cuts and the economic productivity boost the Corbyn camp believe their policies will bring), in order to make education accessible to all, providing universally free childcare right up to free university.

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Government Regulation Gone Wrong

A 2013 report showed France to be quite the bureaucracy- it claimed that over 400,000 directives were being enforced, ranging from how far a postbox is allowed to stick out of a wall to how much boiled egg a kindergartener can eat at lunch time. 

The examples seem petty, but more serious regulation is coming to the cost of small town and village budgets- for example a law enforced making all pavements at least wide enough to allow two wheelchairs to pass. 

Of course, this is not a bad idea in itself, however when Paris enforced this on every French town or village, it becomes a problem- in many cases this blanket ruling is uneconomical, perhaps if there are few disabled people in the area or few people altogether.

According to Michel Therond, mayor of 25 years of the small town Albaret-Sainte-Marie, he gets letters with new regulations or stipulation from every time he opens his mailbox.

In many cases regulation is not as disputed- regulations on the minimum drinking age, or that businesses must hire employees regardless of any disability are largely accepted by society. However this excessive bureaucracy can have damaging effects on a country’s economy- it can mean managerial-type people are employed with high wages to not do very much, it can put pressure not necessarily on the cities, but smaller town or village councils- and it does not always work.

In Mexico City, at the time of a great pollution problem (that still exists in part today) a regulation was enforced that aimed to reduce car use and thus emissions and so on. So the government created Hoy No Circula (literally meaning Today it (your car) does not circulate)- a legislation that stated that cars with only cars with certain numberplates could be on the road on certain days- to bring this example to england you could say that on Mondays, Wednesdays, Fridays, only cars whose number plates begin with letters A-M can drive, and on the other days, cars N-Z. 

In Mexico City however, this plan backfired- it’s a typical example of what is known as the Cobra Effect. Most people needed their cars everyday- to go to work, do shopping, go to places where cars were the only reasonable, comfortable way to get there. So people didn’t start walking or taking the bus on days when their car could not be on the road- instead people just bought a second car, with a plate that would allow them to go on the days they previously couldn’t- granting them car usage for the whole week. It was quite an ingenious way of avoiding the regulation.

However we must remember that most people of Mexico City were not wealthy- so the second cars these people did buy were more often than not old beat-ups- whose emissions were even worse than their first cars. The result? Not necessarily fewer cars on the road, but instead older, more polluting cars on the road. This regulation did not last long, unsurprisingly.

This was the Cobra Effect- the origins of which I’ll briefly explain in another article.

So bureaucracy can be damaging, that’s for sure. Regulation may be necessary in areas, but like all things, in careful measure.

SOURCES:

French bureaucracy effect on small towns 

http://www.theguardian.com/world/2013/apr/30/government-rules-hinder-france-growth

Hoy no Circula regulation http://geo-mexico.com/?p=2343

Driving Restrictions and Air Quality in Mexico City www.rff.org/Publications/WPC/Pages/08_15_08_Driving%20Restrictions%20and%20Air%20Quality%20in%20Mexico%20City.aspx Lucas W. Davis

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