Friday, 28 August 2009

A simple guide to Qualitative Easing The BBC's Robert Peston, the man who makes the financial news sound like a Roald Dahl story, believes that the macro-economic policy of quantitative easing is not working. As a service to readers, this blog now offers an easy guide to the little-known alternative micro-social policy of qualitative easing. Qualitative easing is the government's strategy of floating-off prosocial behaviour by reducing the rate of interest that services actually take in people, thereby 'artificially' increasing the amount of mutual support in the market. With the index of mutual support having dropped for three successive quarters, and government guilt levels thought to be at an all-time low, the minister for social capital had to move quickly to bolster the reciprocity sector if the social economy was not to go into melt-down. What does that mean for the ordinary tax-payer? [Pestonian smirk: 'I have a brilliantly-clear answer to this question, dummy, which is why I raise it rhetorically now. So listen meekly...'] Let's assume that a local neighbourhood absorbs X hours of unpaid work per week, augmented by Y hours of local service delivery. Now, some residents are retired people who had uninterrupted careers followed by enormous pensions, and have established a market in which narrow world views can be traded in for high status. They have no need for Y since they have expensive health insurance. They are now Daily Mail readers who are preoccupied mainly with liquid assets and having two 4 x 4s in the driveway. They provide advice to the government. Lots of it. The precise value of X is vulnerable to the proportion of lone elderly people in tower blocks, which is decreasing at a rate of thirty-six feet per second per second (a four feet increase over the established laws of physics); plus there's a 35% added-single-mother-syndrome-effect, equivalent to the square on the other side of the estate, so of course a typical Neighbourhood Mutual Support and Internal Care Demand Ratio is volatile at the best of times. Although X and Y have an influence on each other, Y decreases according to quite different economic laws, mainly to do with spending money on things like nuclear submarines, and making payments to people with gambling addiction problems who happen to work for banks. This means that if, say, a single mother or a lone older person goes to market with a basket of long term needs including food, shelter, and support, their chances of being qualitatively eased out of it completely have been increased by a factor of between today and tomorrow. In the past, residents would have bought assets from the government in the form of promises, in return for votes. With the complete collapse of this primitive economy, it's not yet clear what effect the increased pressure on unpaid care will have. But what makes qualitative easing so clever is the way it leaves prosocial behaviour to look after itself.

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