Thursday, 7 August 2014
Ann Pettifor opposes “speculation”.
She opposes it for example in this very worthy sounding paragraph in an article entitled “Why I disagree with Martin Wolf”.
“Because credit (buttressed by contract law, the criminal justice system, the central bank and an accounting system) can be created with such ease, it is a great power, and must of course be regulated in the interests of society as a whole. If, as now its creation is not properly regulated, the finance sector’s hold over society becomes despotic. It is in society’s interests that credit is carefully regulated and directed at productive activity that generates income for repayment – and not speculation or the self-enrichment of bankers.”
Sounds wonderful, doesn’t it? Perhaps she can explain EXACTLY where to draw the line between speculation and non-speculation the following list, which starts with relatively unspeculative activites.
1. Person buys house to live in. It’s tempting to say that is entirely non-speculative, but if the motive for buying rather than renting is to profit from the capital gain that normally comes with house ownership, then there is an element of speculation there. What does AP propose doing about that?
2. Person buys house a bit bigger than they really need with a view to reaping even more profit from capital gains.
3. Person buys house with a view to renting it out. If the motive is PURELY to engage in legitimate entrepreneurial activity, then that’s non-speculative (sort of). But what if the motive (as above) is to profit form capital gains?
4. Person or bank buys stock exchange shares. Oh la la. There’s definitely an element of speculation there. Does AP want to ban the stock exchange? What’s she going to do about those wicked pension funds that invest in shares?
5. Bank lends money. Oh la la (again). Money lending is definitely “speculative”. The money might be repaid and might not.