How to build council housing where everyone wins
And how Ukraine will be rebuilt when the war is over.
Standard Keynesian thought is that governments get a return on infrastructure investment from the taxes on the extra jobs created and from the increased consumption. This is true and it works in practise but it seems too complicated for classical economists to grasp.
So here's a model that combines Keynes and Friedman
1. The government borrow money from an investment bank or fund perhaps like the one Rishi Sunak worked for.
2. The Government lend money to councils to build houses at a higher rate of interest that they pay the investment bankers.
3. Councils build council houses creating thousands of jobs in the process earning rental income that is higher than the interest on the government loans. In due course, the rental income pays off the government loans and can be used to improve services.
4. All the infrastructure work is done using existing British resident Labour and British made products. Reshoring where necessary further benefitting the UK economy and working along with the ideas in the Brexit campaign.
5. The government still benefits from increased taxes paid through job creation and through consumer spending.
6. Families are securely housed bringing prosperity to the indigenous population and to the millions of migrants the Tories are inviting to Britain.
