David Davis: an unlikely Keynesian

David Davis comes out today as an unlikely Keynesian. In today's Times he sets out the case for utilising Britain's unemployed to lay superfast broadband.

David Davis comes out today as an unlikely Keynesian. In an excellent article for today’s Times (£) he sets out the case for employing the 2.4 million people who are out of work or on welfare to lay superfast broadband for the UK.

In an article that could have been written by the great economist, John Maynard Keynes, Davis sets out the multiplier effect of greater broadband penetration:

“Britain is fantastically talented at digital content, from video games to music, and a new broadband network would be a huge boost for this growing part of the economy, which now generates £130 billion every year and employs 1.7 million people. Fast broadband will deliver between 280,000 and 600,000 new jobs; lack of it will undermine our competitiveness.”

He then goes on to outline the market failure explaining that the cost is “more than the ponderous, monopolistic companies in this sector are willing to risk”. He also argues that it is “more than the Government can afford” but appears to contradict this by invoking President Roosevelt’s ‘New Deal‘:

“During the Great Depression, President Roosevelt established the Civilian Conservation Corps, a relief programme that provided work for jobless young men. In its nine-year existence, three billion trees were planted, 800 parks created and thousands of miles of new roads built.

“A similar effort will transform Britain. And for once workfare will not simply be makework. Building a superfast rural broadband network is largely low-skill — digging trenches, laying pipes, filling them in. Only a small fraction of the cost is in high-tech materials.”

Davis even invokes an idea proposed by Keynesian economist, Gerry Holtham, on this blog and in ‘Going for growth‘ – the book I edited recently setting out the enabling role for government in promoting growth – by suggesting that the public sector could then sell the infrastructure back to the private sector:

“We should also remember that the State, while enabling this project, does not have to own it in the long run.

“The network could easily be spun off into the private sector, perhaps making the taxpayer a profit on the original investment. In this way the Big Society and the growth agenda will come together, boosting the economy and opportunities for the whole nation, not just for today but for generations to come.”

Time for that Plan G for growth, Mr Osborne?

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