There are a lot of problems we face that we need our government to tackle. Some demand the time of effort of policy makers, like the forging of new relationshops within and outwith our borders, the provision of new rights, and changes in regulations. Others demand cash, for example to increase spending on public services.
Economic investment is different again. Like service provision it costs money, but it in each case it should be a one off. You spend money to do a project – be it public or private – and society is better off afterwards whether or not further investment is provided.
Since neoliberal economic policies came to the fore in the 1980s government intervention in developing the economy has become unfashionable. The expectation that it is normal for a government to have an industrial policy has fallen away. “Let the market work it out” is the norm.
The result has been a chronic lack of long-term investment in the UK economy. What little money has been invested has been at the whim of private investors, far more interested in earning a quick buck than improving our society.
With the UK’s economic position more fragile than perhaps any time since it joined the EU, the Governments of these isles are starting to wake up to the idea that industrial policy may well be due a come back.
Greens have been advocating for a Green New Deal since the 2008 financial crisis, returning economic investment to the mainstream with their explicit linking to climate change policy.
In early 2016 the UK Labour Party announced their response, a £250 billion National Infrastructure Fund and National Investment Bank.
Since then Governments have started to move. That Autumn the UK Government announced in a £23 billion National Productivity Investment Fund and in 2017 the Scottish Government announced funding for a new ‘Scottish National Investment Bank‘. Both are intended to enhance the economy and provide new jobs.
This is all encouraging: a return to reason. Governments are once again acknowledging the power they have to make our economy function in the long-term.
But there’s a catch. Just as that this private sector investment does little good because it is purely purposed with lining shareholders’ pockets, public investment also does little good when its only objective is to increase the quantity of economic activity.
We need to make our economy more useful, and that means industrial policy and investment needs to be targetted towards solving our biggest challenges, like tackling inequality and fighting climate change. There are plenty of candidates for such investment: in housing, renewable energy, public transport, energy efficiency.
Without this focus we shouldn’t be suprised if the investment ends building new polluting highways, airports for big business, superfluous shopping centres and housing for the super rich.
A clue to the way the wind is blowing? Nicola Sturgeon hasn’t appointed an economist or development expert to run the Scottish National Investment Bank – she’s given the job to the Chief Executive of Tesco Bank.
It’s time to get involved in the debate about what public investment is for, before it all ends up in private hands.
- This article was published as part of an ongoing series on Bright Green responding to Naomi Klein’s book ‘No Is Not Enough’ exploring new directions for progressive politics.