Last week “Call me Dave” Cameron spoke about a Green Investment Bank, a bank that is government run and government funded (aren’t they all?) that would be able to leverage more investment than a private bank. A government bank isn’t a “bank”. It is a “fund”. A bank is supposed to take the money invested and make a profit for the shareholders. A building society is made up of shareholders so makes a profit for its members. A fund is a pool of money from many investors that is used to grant loans and make other investments. Given that the government is using our money to make this Green Investment Bank then what it is really doing is making a fund out of our money. Another example of government doublespeak? Well what do you expect?
What do we need a state run bank for anyway? Isn’t the market already saturated with banks? Oh hang on though. They aren’t lending are they? They’ve been hurt and some of them nearly went down the toilet because of their irresponsible lending practices. Well that’s what you get for taking risks with other people’s money and not having a government that’ll regulate the industry. Rather I should say “many successive governments” because it would hardly be fair to blame it on just one or even two or three. No, it is decades of neglect and unnecessary risk with our money.
So the banks aren’t lending and the government decide that somebody has to or the economy will freeze over like the Ninth Circle of Dante’s Hell. They decide that they’re going to lend our money out to investors. They’re tying up our money, money that we don’t actually have, in order to stimulate the economy. Now they can’t just come out and say that because it would look really bad when they are making “austerity” cuts to public expenditure. That is where I think that this “Green Bank” idea comes in. It looks better if the state is doing something good with our money rather than just ripping us off and making yet another quango to keep boys in the City happy and rich.
There are other ways to stimulate the economy of course without creating a fund to lend back to us our money. They could just tax us a bit less. If we had an extra £100 per month in our pockets we’d spend that money or save it. If we’re buying things then someone has to make things to buy and shops have to exist to sell them. That means more jobs and more tax payers. If we’re saving the money (or paying off our debts) then that means the banks have more money and can pay back their creditors (us again as the bail outs came from our money) and lend money for people who want to buy things like houses. More money is in the economy rather than tied up in the state.
Of course if taxes are cut then that means that less money can be spent in the public sector. That means fewer services, fewer civil servants, etc. Then again the public sector is made up of tax consumers and needs to shrink anyway. Quite a lot. If they taxed us less then they could pay out fewer benefits to workers. If they paid out less in benefits then they would need fewer staff in the benefit office to administer benefit payments.
I do not like the way that this government is spending our money. Unfortunately no other party seems to have an alternative.