Only fundamental policy change can save the economy, Phil Tomlinson in the FT
A letter written by Dr Phil Tomlinson, Lecturer in Business Economics at the School of Management, with Professor Keith Cowling of University of Warwick, has been published in the Financial Times (Letters, September 6th 2012):
Dear Sir,
Peter Diamond (Comment, 3rd September 2012) is right to suggest the Labour Party ought to start giving serious consideration to its own economic strategy if it is to offer a creditable alternative to the current regime of austerity. In this regard, he identifies some useful strategies for growth, namely a national house-building plan, a national investment bank for small business lending and a greater emphasis upon enhancing (economic) participation among local communities. We would argue these measures should be incorporated within a broader ‘industrial strategy’, which not only attempts to rebuild the UK’s industrial capacity but also focuses upon diffusing the balance of power in the economy away from large corporations and the financial sector. Much of the problem of the UK’s high levels of indebtedness lies behind successive governments seeking a short-term stimulus to the economy, without recognising that the ensuing demand is often satisfied by larger corporations sourcing production from abroad. This has largely contributed to both the UK’s fiscal and trade deficits (the classic ‘twin deficits’ scenario), while financial liberalisation and associated unbridled consumerism has also left consumers becoming saddled with high levels of personal debt. UK economic policy requires a fundamental change in direction, with a greater emphasis upon long term industrial planning.
Professor Keith Cowling, Dept. of Economics, University of Warwick
Dr Phil Tomlinson, School of Management, University of Bath
The letter can be viewed on the Financial Times’ Letters page. A subscription is required.
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