Wednesday 30 September 2015

Jeremy Corbyn is not as radical or unpopular as the mainstreaam media try to portray him

Anyone who has failed to notice the incredibly biased mainstream media coverage of Jeremy Corbyn's exponential rise in popularity is either someone who shuns mainstream media entirely, or the kind of absurdly gullible fool who rote learns all of their political opinions from the mainstream media without subjecting any of it to even the most rudimentary critical scrutiny.

The BBC habit of referring to Corbyn as if he's some kind of radical left-wing extremist (when his policies are actually those of a centre-ground social democrat) is annoying, especially since they don't constantly frame David Cameron and George Osborne as being extremely right-wing, even though they're pushing the right-wing dogma of tax cuts for corporations and the super-rich, wage repression, attacks on labour rights, undermining of civil liberties, and vast ideologically driven rip-off privatisations much further than Margaret Thatcher ever got away with in the 1980s.

Ideological austerity

Probably the most annoying bias can be found in the way that Corbyn's economic policies are so commonly portrayed in the mainstream media as being dangerously radical or even extremist, when the evidence is absolutely clear that ideological austerity is a dangerous extremist ideology with severely destructive social and economic consequences.

I've written article after article presenting the evidence that ideological austerity is a socially and economically destructive agenda based on ludicrous economic fairy stories that make no sense whatever from a macroeconomic perspective. In order to save you from reading all of those articles I'll outline a few bullet points.
  • George Osborne promised that ideological austerity would have eliminated the budget deficit by now, in reality it hasn't even been halved. Amazingly the Tories even dressed this abject failure up as a great success by bragging that they'd "cut the deficit by a third" before the last election (or missed their stated target by two thirds in other words).
Given the mountain of available evidence that ideological austerity is an extremist political agenda that has caused long-term damage to the UK economy and failed to achieve anything that George Osborne promised it would back in 2010, it's astonishing to see Jeremy Corbyn being derided as some kind of raving lunatic for proposing a change of direction.

Media misrepresentation

Corbyn's policies have been portrayed by the mainstream media as some kind of lunatic far-left agenda with no public support, but the evidence paints a completely different picture. Despite the decades of media saturation with right-wing pro-privatisation propaganda, the majority of the public still see privatisation for the rip-off scam that it is. Polls consistently show that a huge majority of British people believe that the NHS, the railways and the energy companies should be run as not-for-profit public services. Corbyn is speaking the people's language when he proposes renationalisation of the railways and opposes the ongoing Tory carve-up and privatisation of the NHS.

There is widespread public support for the kinds of social democratic policies Jeremy Corbyn proposes, but the mainstream media like to frame the situation as if Corbyn is talking some kind of alien language that nobody but the far-left would ever agree with. Note the way Corbyn is so regularly described in the mainstream media as "left-wing", "radical" or "hard-left", while David Cameron is never described as being the "right-wing Prime Minister", despite the fact that he's pursuing an extremely right-wing economic agenda that goes way beyond what Margaret Thatcher managed to get away with in the 1980s.

The mainstream coverage of one particular strand of Corbyn's economic policy has been especially biased and uninformative, not least because the subject is so complicated that many of the people commenting on it clearly don't even know what they're talking about, and have little to no appreciation for the wider context. The subject is Direct Quantitative Easing (or "People's QE" as Labour have been calling it) and some of the critiques of the policy have been amongst the least informed fearmongering diatribes I've ever had the misfortune of reading.

Money Creation

In order to understand Direct QE, it's first essential to understand how money is created in the modern economy. Almost all of the money in circulation taday has been created out of nothing by the private banks at the point they make interest bearing loans. 97% of the money in circulation is this kind of invented bank money and only 3% is created by the state in the form of coins and banknotes. Of this money that is created by the private banks, the vast majority is directed into property and financial sector speculation, with only a tiny percentage being loaned to actual businesses that generate productive economic activity.

If this description of how private banks are allowed to create new money out of nothing sounds like some kind of crazy conspiracy theory, I suggest you read this document for the Bank of England explaining the process.

The vast majority of the public are unfamiliar with the fact that the process of money creation has been stealthily privatised into the control of an oligopoly of private institutions with liberty to create money out of nothing and spend it where they expect the highest short-term profits (not what might be best for the long-term development of the wider UK economy). 

The fact that the banks controlled the money supply before the economic crisis is crucial because it showed that when a small group of private banks are allowed control over the monetary supply of entire nations, huge economic crises ensue because the money is directed into risky but profitable short-term activities like the inflation of unsustainable housing and asset price bubbles, not into long-term investments that promote genuine economic activity.

The money creation policies of the private banks caused the economic crisis. Far too much of the money they created was poured into the housing market bubble and into the unregulated free-for-all that is the bloated global derivatives market, and far too little was directed towards support for innovative British businesses that actually engage in productive economic activity. 

When the sheer scale of the reckless financial sector gambling with the money supply became clear in 2007-08, the banks stopped lending and the credit markets froze up triggering the global financial sector insolvency crisis. The response of the UK state to the imminent collapse into insolvency of the financial sector was an "emergency policy" of creating £375 billion in new money in order to save the banks from the insolvencies they so thoroughly deserved.

QE for the banks

The results of this QE for the banks policy are clear. The insolvent financial sector was resurrected with money created by the state, but left to their own devices when it came to how money is distributed into the UK economy. The financial sector soon got back to their old schemes of inflating unsustainable property and asset price bubbles, just backed with cash invented by the state rather than cash they'd invented for themselves. The Bank of England conservatively concluded that 40% of the benefit of QE for the banks went to the 5% of wealthiest UK households, which is no surprise at all given that discretion over how these funds were to be distributed into the UK economy lay with the very institutions that caused the crisis with their reckless short-term profiteering in the first place!

Without familiarity with how the money creation process is controlled by the private banks, and what the initial tranche of QE for the banks actually entailed, anything resembling a coherent critique of Corbyn's Direct QE policy is impossible. If the media commentator is unwilling to explain how money is actually created in the modern economy and confused about the reasons for and consequences of QE for the banks, they'd be completely unable to come up with any kind of meaningful comparison with contemporary reality, instead just presenting childish platitudes about "printing money" and fearmongering about hyperinflation by making absurd comparisons to Zimbabwe or Weimar Germany.

Once we understand that the power to create money has been outsourced to the private banks, that their reckless use of the money they created out of nothing caused the global financial sector meltdown, and that QE for the banks was designed to save the financial sector from insolvency by inventing £375 billion for them to play with, it's possible to understand what Jeremy Corbyn's team are actually proposing in it's proper context.

Direct QE

When Jeremy Corbyn talks about using quantitative easing to directly stimulate the UK economy through investment in infrastructure spending, he's not talking about revoking the money creation powers of the private banks, he's talking about the state taking responsibility for a small amount of the new money that is created, and directing it towards genuine economically productive activity rather than the reckless "get rich quick" housing bubble and asset price inflation schemes favoured by the private banks.

I struggle to see how anyone could seriously object to a policy of using central bank money creation powers to invest in infrastructure, for example by ensuring that all British households and businesses have access to high speed Internet, rather than just allowing the private banks to continue gambling as they please and doing virtually nothing to promote genuinely productive long-term economic activity. 

Making sure that the UK has the best broadband network in the world would create a short-term economic stimulus as the money is spent and and the jobs are created to improve our IT infrastructure, and the end result of a highly connected marketplace would undeniably be great for British businesses in the long-term.

People who oppose Corbyn's Direct QE policy tend to fall into two camps. Those who just don't understand how money is created in the modern economy, nor the significance of what he's proposing, and those who fully understand that the private banks have an oligopoly on money creation but believe the ideological nonsense that the market somehow still knows best, despite the fact that the private banks caused the global financial sector meltdown with their reckless short-term profiteering, and are busy inflating the very same kinds of debt backed housing and asset price bubbles all over again instead of investing in economically productive activity.

The major difference between Corbyn's Direct QE policy and QE for the banks is that Corbyn's plan wouldn't just hand the money over to the financial sector in order to save them from insolvency and allow them to continue gambling on property and asset price inflation, the money would go direct to infrastructure projects with tangible economic benefits for the whole UK economy.


The mainstream portrayal of Corbyn's renationalisation and direct QE policies as unpopular with the public and dangerously radical is completely backwards. Especially given that the current government is pursuing an extremely radical and destructive ideologically driven agenda with the complicity of the mainstream media.

In reality Corbyn's policies aren't that radical or unpopular at all. 

I'd prefer to see Corbyn present a truly radical proposal, such as new legislation to prevent the banks from just creating money out of nothing through the introduction of cryptographically secure electronic money, but what Corbyn is proposing is at least an improvement on the current policy of leaving money creation policy entirely in the hands of the banks that plunged the economy into crisis in the first place, while the government uses that same crisis as an excuse to go on a highly destructive ideological crusade to slash and burn public infrastructure and services with the ridiculous justification that it is possible to cut our way to long-term economic prosperity.

 Another Angry Voice  is a "Pay As You Feel" website. You can have access to all of my work for free, or you can choose to make a small donation to help me keep writing. The choice is entirely yours.

Austerity is a con
Jeremy Corbyn: the more they attack him the stronger he becomes
The Tory "economic recovery" mantra is a lie
George Osborne has created more debt than every Labour government in history combined
How Ed Balls' austerity-lite agenda ruined Labour's election chances
The Tory ideological mission
Asset stripping "bankrupt Britain"
Margaret Thatcher's toxic neoliberal legacies


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