The search for a stable economy.

Alison Marshall, 2011-2019.
Land tax, better management of protectionism, and better understanding of demography are my suggestions.

Land tax.

In the last boom there was unjustified faith in inflation targeting. This was made more unrealistic by the fact that house prices were excluded from the inflation index. I think land tax would have been more effective for stabilising the economy.

Unlike most other taxes, land tax doesn’t increase prices. ( “The cost of land”, https://ammpol.wordpress.com/ammlt ). It should be phased in slowly, to avoid a sudden large decrease in land values.

Protectionism.

Protectionism has been seen as a factor in the 1930s depression, but it has never been stopped, may be unavoidable, and may just need to be managed more fairly. (Joseph Stiglitz, “Making Trade Fair”, in “Making Globalization Work”, W.W.Norton and Company, 2006).

Imports may cause more problems, as current account deficits, than government spending or the level of GDP growth. In the eurozone, average current account deficits between 1999 to 2007 are a better indicator of current problems than fiscal deficits or public debt. (Martin Wolf, Financial Times, 7 December 2011).

To improve the current account, a Green tax shift to tax consumption instead of labour would be relevant. (“Green taxing and spending”, https://ammpol.wordpress.com/ammgts ).

Demography.

Since the late 19th century there have been four long-wave economic depressions, in the 1880s, the 1930s, the 1970s, and the 2010s. After each downturn new economic theories become dominant and are credited with the achievement of prosperity and stability until the end of the next boom. (“The crash of 1987” and “The crash of 2008”, https://ammpol.wordpress.com/about )

Balanced budgets, free trade, Keynesian public spending, and inflation targeting have been dominant theories. But an explanation for longwave Kondratiev downturns may still be a major missing link in economic theory. Why do they occur about twice every century? My demographic explanation is on my website. (“Couples and the K-wave”, https://ammpol.wordpress.com/ammwave ).

Green taxes.

To include environmental costs in prices, taxes on resources and pollution should be much higher. The average cost of living could remain stable if these Green taxes replaced income tax.

It’s not clear whether the transition to a sustainable economy would cause economic growth or decline, but it’s not important, as long as welfare is properly looked after, childcare, including the work of mothers at home, is properly paid for, there is paid employment for people who want it, and the financial system isn’t carelessly destroyed. (“Welfare reform for the 21st century” and “Inflation, interest, and the supply of money”, https://ammpol.wordpress.com/about ).

Citizens incomes.

Citizens incomes would be needed to compensate for some of the Green taxes, or in other words, to make the Green tax system progressive.

But they need not be delayed until the Green tax switch is complete. Citizens incomes should replace the current welfare system right now. They would be more efficient, less judgmental, and no more expensive than the current system. ( https://ammpol.wordpress.com/ammgraf ).

Policy suggestions for the new Prime Minister, July 2019.

Don’t cut taxes, move them.
Land tax, carbon tax, Universal Basic Incomes.
No extra borrowing. That failed at the same stage in the last cycle, in the 1970s.