I was, until a week ago, scheduled to be on Any Questions tonight. But I am not pro-Brexit and so did not balance the panel, so I am not. That has not stopped me wondering what my big theme would be.
I suspect it would be that if the audience felt that none of what they were being told made any sense any more then they were exactly right to think that.
There is not only no economic sense to cutting disability benefits now, because we can most definitely afford to pay them, but it definitely makes no social or ethical sense either.
The reallocation of wealth upwards in society that the budget also delivers also makes no sense: there is not a person in this country who really thinks those in the top half of the income strata are those in greatest need of support, especially if resources are supposedly tight.
Other messages are as confused. If ever there was evidence needed that the eventual plan for schools is to privatise then the abolition of parent governors - who would have been a guaranteed block to ideologues progress as they already are to many academisations - is it
The supposed master of politics has very obviously lost his touch. And even his numbers - the bedrock of Conservative party power - very obviously do not add up.
There's always Boris of course once Cameron has been consigned to history, and like Trump he will have his supporters. Extremists always prosper in a vacuum.
So, the big question is why the vacuum? After all, it's not only on the right. I met a member of the shadow cabinet yesterday who, I suspect, is more inclined to the current Labour leadership than most and he complained of drift, and begged me to spend more time in Westminster. The malaise is widespread.
There is, I suggest good reason for that. Politically voters know that none of the solutions they are being offered makes sense. Those offering them are far, far too frightened to offer them anything much different. You can't explain John McDonnell's unnecessary (and thankfully largely meaningless) fiscal charter any other way. Instinctively people know we can do better than this, but no one is sure how that can be true when the economy looks set to stay forever in the doldrums.
So let me suggest an answer. It's simple. It's bold. It sets people free to work. It liberates the government to do its proper job. It ends forever the myth that the state can do nothing unless the private sector pays for it. It recognises and seeks to liberate the worth in all of us. It will tackle the malaise of low productivity. Astonishingly, it's also costless. It's called creating credit. But it can also be called printing money if you really want. And I am also suggesting borrowing for the public good. Attached to all three is the related issue of then using the resulting funds for public good.
The fact is that we don't have enough money to go round at present given the constraints the government is imposing on itself. That is the problem we face. It has been ever since 2008. Since then we have had no problem with government spending. We have had shortfalls in government income. That's because the private sector has simply not generated enough economic activity to pay the tax to balance the government's books. So we have had a deficit. And to try to solve that problem we have, quite absurdly, tried to cut the government's contribution to the economy to guarantee that it too reduces its contribution to our well-being. That's exactly why we end up in the absurd position of being the fifth richest nation on earth and supposedly unable to supply the assistance people with disability need to live dignified lives.
But it's no true that we cannot afford these benefits for those who need them. The problem is that the resources required to meet those needs are sitting idle or underemployed. We know the private sector is not generating wealth. We know it is not investing. We know that we take five days to produce the output in the UK that the French make in four (let's forget comparison with the Germans). We know that our emphasis on financial services, on saving, on accumulation of property wealth, on selling tax avoidance (what else is the 17% corporation tax rate about?) and keeping the City of London happy is hollowing out our economy for the benefit of just a few. But what we need to do is ensure that these absurd situations can be changed.
That's why we need to accept three things. The first is that the private sector will not deliver the recovery the UK wants. It will partner that recovery, but not deliver it. That's because recovery requires customers and right now the customer for the things that are really needed in the UK - like aids for those with disability - can't buy them because their income to do so is being cut. The reality is we have enough stuff of the sort the private sector is so good at making. What we need are customers for its also undoubted ability to help meet real fundamental needs, and the current government is refusing to play that role at cost to those with disability, to business that is losing business asa a result, to those who cannot work as a result and whose productivity is lost as a consequence, and to the government itself as the sum total of economic activity continues to collapse.
Second, we need to accept that in that case the government cannot solve this problem by cutting. Cuts may help a household balance its books but they actually do the exact opposite when you're trying to get an economy going again. When you are responsible for a whole economy (and the government is, although this one tries to deny it, thinking it is not responsible beyond the boundary of its own books) then cuts do not just reduce your spending - and so make you worse off - they also reduce your income too, which compounds the loss.
Third, that means someone, somewhere has to talk radical change.
This is the radical change that ensures that there is more money in the system. We have already done this once. We made £375 billion of quantitative easing in the UK to effectively bail out banks and not a single penny was charged to the taxpayer for doing so. Banks make money out of thin air. We can have just as much of it as we like. And creating £375 billion of it - which reduced the national debt forever by that same sum although all politicians refuse to acknowledge it despite the fact that this amount of government debt is now owned by the government itself and so due to no one - did not create inflation. We do, in fact, have almost no inflation at all and no risk of it. And yet, despite that, we hear tortured discussion after tortured discussion on news bulletin after news bulletin on how George Osborne must, but may not, balance his books.
Well, I will tell you how he can balance his books. He should say that because of the shortfall in private sector activity in the UK right now he accepts that he has no chance of covering government spending with taxes. And that he has no chance of paying for the investment he needs to make with taxpayer funds. He should say he recognises the sheer impossibility of those goals. There is just not enough demand for privately made goods and services right now for enough taxes to be generated to ever make that happen. He should say it is time to acknowledge a truth that there are things that the economy needs to do, and which it must do, not least for those with disabilities and all others in need. And that to do this he will deliver a new economic plan.
Firstly, he will borrow to invest and to show he has done so this borrowing will be through a national investment bank that makes clear the accountability for the funds it pouts to use. The commitment should be to invest as much as is possible to use up the capacity of the UK to build for its future. This is the real way of making sure the next generation do not lose out. Nothing less will do. And he will acknowledge that financial markets are queuing up to let him do this. He will start small with new streets of houses and not HS2s or major rail line electrification. That way things get going quickly. And he will train people along the way so that bigger projects that might follow. Vanity will not come into this. But every constituency - whoever it voted for - will.
And he will say he will run a deficit. He will admit the truth that he has no choice but do so. But he will say it does not matter. He will run a QE programme - at least £70 billion and maybe more for the next five years if need be - which is a total sum less than was needed to bail out the banks - to clear the debt that this would otherwise generate. There will be no cost to creating this money - because that is quite literally true. But there will be benefits. People will go to work. People will pay tax. People will stay in their own homes. More people will have homes. More people will be trained. People will earn more as the demand for labour grows. Government revenues will grow. Benefit claims will fall. Productivity will rise. Economic growth aimed at meeting need will be delivered. A newly balanced economy will be created.
And all that can happen if we accept that deficits are part of life, but that deficits can be cleared by QE when there is no or low inflation and that government has a central role in getting us out of the mess we're in by delivering not fripperies, or silly savings products for the already rich, but the things that the people of this country who have real needs actually require to ensure that those needs are met.
When that happens those with disability will not be the victims: they will be at the forefront of out thinking. As will be the young, those on low pay, those who need training and those children who need a stable location called home to live in.
And all this is possible if we'll just risk printing the money we need that might at best deliver the inflation we so desperately want of maybe 3% a year.
Never has a more virtuous economic prospect that is so readily available to so many been denied to them by a political class made up of so few out of touch people.
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Shame you didn’t get on, Richard-no doubt it will turn out to be a stale debate about the EU riddled with myths and confusion about what sovereignty means.
I like the phrase: ‘It will partner that recovery, but not deliver it.’ because we need to be reminded that when the Government spends it spends into the private sector so the -public/private is a false dichotomy in some respects. The plans to shrink Government spending (without which we’re left with endogenous flows) to 37% of GDP is beyond absurdity.
let’s hope the Tory back bench mini-revolt is a sign of some change-though I doubt it because they still support the principle of cutting welfare to balance books that don’t inherently need balancing.
Hear hear!
If you were hanging around Westminster all of the time you could not have written as clearly as this.
No Westminster politician could have written something like this – not a one.
But I do hope that you continue to exert a gravitational pull on those more open minded.
The Tories are trapped by their ideology. But this is making excuses for them surely?
I have for some time thought that their nonsensical approach to economics is based on undermining the tax system because they see it as a source of public sector and social security funding. Therefore Osbourne and his party are acting deliberately – not our of benign ideological ignorance.
This came sharply into focus on Tuesday.
There is no ‘forgive them father for they know not what they do’ here at all. There is no excuse for that they have done or continue to do.
In the kinder, more enlightened times ahead they will be condemned for what they are: callous.
Once again – your piece above is superb. It repudiates the current ethos and says things that I’ve wanted opposition politicians to be saying. Just to hear someone say these words at all is a relief and I may stop shouting at the TV now!!
Thank you.
What a shame that you will not be on Any Questions tonight. I watched Question Time on BBC last night, and waited in vain for someone to contradict the hapless, struggling, enbarrassed Nicky Morgan, when she yet again asserted that the country has to be run like a household. “We have to live within our means. It’s what we do as individuals, it’s what we have to do as a country”. And so the insidious drip feed of this pernicious idea continues unchallenged; by Emily Thornberry for Labour, and Tasmina Ahmed-Sheikh for the SNP.
Sadly I don’t think McDonnell would have challenged it either, because he would have invited ridicule from just about everyone there.
The counter argument is out there, but it needs repeating. Andreas Whittam-Smith commented yesterday about the funding for flood relief via increased insurance premium, and said:
“He (osborne) won’t borrow to pay for infrastructure investments, even though the British Government can currently raise funds that don’t have to be repaid for 30 years at 2.3 percent per annum.
I thought of this when the Chancellor came to a moving passage in his speech referring to sugary drinks, Osborne said that he was not prepared to look back at his time here in this Parliament, doing this job and say to his children’s generation: “I’m sorry. We knew there was a problem with sugary drinks. We knew it caused disease. But we ducked the difficult decisions and we did nothing.” Instead, he might have to say to his children’s generation: “We knew there was a problem with infrastructure. We could have borrowed long-term money at just over 2 per cent per annum to build what the nation required — but we did nothing.”
http://www.independent.co.uk/voices/a-bittersweet-budget-has-acted-on-sugar-but-not-on-infrastructure-a6934951.html
We need to hammer this home as often and as loudly as we can: we have the means to fund a decent society, whether through standard borrowing, or “printing money”.
I hope you will soon have the opportunity do do this on Any Questions and elsewhere.
Thanks
Was annoying that my long term sparring partner Comrade Littlewood (as I call him) was on and I did not have a chance to get a go
I once saw Littlewood interviewed about austerity and his justification to closing libraries was that people should buy books instead! Like Cameron and Osborne he is simply a corporate shill.
You only have to do a little research into the funding and history of the Institute of Economic Affairs to see exactly why Littlewood spouts his right wing, free market, von Hayek inspired diatribe.
Read Owen Jones on Littlewood in his “The Establishment”. Indeed, read the whole of Chapter 1 of that book and you get a very good run through of all the Hayekians who have and are influencing Tory governments, and particularly this one and the previous “coalition”.
Confession: I know I am in it and still have not read it….
I’d always assumed that the IEA was a libertarian, Georgist type group, so not the natural bedfellows of Crony, corporate capitalism as practised by the Tories -have I got this wrong?
To some extent it is different
But it is heavily pro tax haven
And it is anti-charity
Gagging law ideas emanate from there. So much for libertarian
And what a plonker he is. He is the absolute opposite of you. Made my blood boil.
Good points!
To try to crystallise this into a sound bite….
“Yes, of course, we have to live with our means, but we have the means to build a better, fairer and more successful society.”
But I think “printing money” is a hard sell to the public. First they need to understand what money is, how it is created and destroyed. In my experience very few people understand this, including me, until, I started reading books on it, which turned my world upside down!
So we are doomed for lack of willing to educate?
Or even just tell the truth?
I touched this point in a previous comment.
If we do not subvert the perception that the economy of a country is the same as a family’s in the public. Nothing can be done.
Professor Murphy is dead right in this post, but I am sure it would sound strange to many, even the more open minded.
That’s the real challenge and the Labour should live up to that.
I have to admit I am still always taken by surprise to see me referred to as Prof Murphy
No not doomed, I am willing! And right behind you and others. Knowledge is power and freedom.
I think “printing money” is an expression we should replace with something more in tune with what is happening in reality. We need words that cannot be thrown sneeringly back in our faces – “interest free credit” seems to have a lot going for it. Would that work?
I like that
I actually think it’s just credit really – from the government’s own bank
There was no problem convincing the public that we had to bail out the banks or “print” £385 billion of QE to keep fixing the problems in the financial sector and artificially pump up non-productive asset values – oh hang on a minute the politicians didn’t even ask the public if that was a good idea!!
So I fail to see why there is any need to convince the public of anything anymore as they are so used to being fed a diet of spin, drivel and downright lies that most don’t trust a single word any politician or economist utters anymore.
It seems that the Treasury and Bank of England run this economy whatever way they want to. The government in power can do whatever it wants to stimulate the economy in whatever way it feels best. I don’t even remember Alistair Darling going to parliament for a vote to rescue the banking system – he just did it because it needed to be done in his and his advisers opinion (but should have been permanently nationalised).
If that’s the plan for the next financial crisis if a left wing government is in power, then so be it. No need to shout about it now if it means the public are going to be less likely to vote them in because they are fed a diatribe of Tory nonsense in the meantime. No need to deny it either – that’s the Tory way of doing things!
“printing money” — But it is not printing money. If the government creates new values, eg new houses built, more people in employment, etc, then the government need also to increase the amount of money, otherwise we would have deflation. So even if it is printing money literally, it is not morally: It is just creating enough money so that the newly created goods and services can circulate. — Maybe we need to find a better language.
McDonnell, and Corbyn too, have been trying to get this message out there again and again … Admittedly not as succinctly as here but then they are nver allowed to finish a sentence, or even a soundbite, by our perfidious right wing media. Why do you think the excellent Richard Murphy is advising Labour? It would of course help if the PLP managed to pull its fingers out of its collective ears and listen a bit more carefully too.
BTW I’m not a Party member (gave up at last election) nor active anywhere these days. However any chance of a democratic change of govmt before the UK is destroyed and I’ll be out on the streets!
I am not advising Labour, although I do talk to them and other parties
Re the term ‘printing money’… Ordinary people find it hard to believe in anything that sounds too easy, so it’s hard for them to regard this as plausible, whereas rich bankers are accustomed to having things handed to them on a plate, so had no difficulty in accepting the idea of quantitative easing for a huge bail-out as being perfectly sensible.
‘Credit creation’ may be the answer
An excellent analysis (as usual) of the present UK political economy and suggestions to improve things. But will anybody listen? Being barred from Any Questions says it all………..
The economy – or, more precisely, the economic policy – makes perfect sense when the objective is to maximise the concentration of wealth.
If you are a beneficiary of these policies, it all makes perfect sense; and our Chancellor is, quite rightly, enjoying the approbation of his peers for his success.
Admittedly, it only makes sense if you are a sociopath as well as a beneficiary; or a fool, easily deceived if the deception is profitable, and eager to deceive others.
While former are rare – rather less than one percent – they are powerful andthe latter are all too common.
Richard,
I agree with much of what you say, except for a couple of points:-
1) I believe you should reconsider your view that lowering corporation tax was a tax avoidance issue unless of course, you mean a means of avoiding tax for those bringing money into the UK. Corporation tax, in my opinion, was reduced to send a signal to international capital movers (and therefore shell companies) that London is still staking its claim to be the least legally volatile/politically risky home for their money, whether clean or ‘stained’. Barclays, giving them their due regarding Said, are doing what the government or their law enforcement officers themselves abstain from doing, given the potential impact to both house prices and Sterling of this signal breaking.
2) credit creation is part of the answer, but there are methodologies other than debt creation to support credit. A savings-based (insurance/funded) approach creates good collateral to support borrowing. It is the essential rebalancing from debt-fuelled to savings-based growth that is vital. It was Henry Ford who said in New York at the beginning of the 20th Century that NY wouldn’t have been possible but for the insurers as what funder would lend money to construct a building that could be destroyed by a single cigarette butt? Banks have spent the last 30 years dissing the idea of saving (insurance/funded) as an sound economic choice. Their somewhat failed product suite proves that. This bank centric orthodoxy embedded as well in central Banks must be challenged as it simply encourages the outsourcing of individual financial security and responsibility to the financial system and lacks focus on ways to encourage growth and equitable risk sharing. Since 2007, we have all experienced the dangers of outsourcing our personal, corporate or governmental wellbeing to financial markets. Time to promote savings/insurance/fully funded alternatives.
1) is avoidance
2) assumes we must use private capital
Generally I support the principle of well regulated capitalism accompanied by a comprehensive public sector. If the mechanics of such a system work then we have growth, a healthy balance of payments, adequate tax receipts and a fair distribution of the income generated by society (note by society, not by individuals).
If the system does not work then what is the failsafe position? If there is no monetary demand for the goods and services that we are capable of producing as a society do we allow a growing number of people to go without and our public services to wither away. In this scenario land, labour, materials and organisation begin to atrophy because capital (funding) is absent and we descend into a situation where a privileged minority fights to maintain it’s advantages.
Surely it is evident that we are reaching this position, the private sector is not creating self sustaining demand. We need a booster to put the economy back onto a healthy trajectory.
QE is incomprehensible, where is the evidence that financial entities exchanging gilts (near liquid assets) for cash ( a liquid asset) is increasing demand.
This absurd austerity project will be allowed to run until its absurdity becomes so egregious that we are forced to change course; and in successive budgets the Chancellor will rearrange the deck chairs so that the wealthier are ensured of the sunniest aspect.
This is PQE
Not QE
This is debt monetisation in other words: the financial institutions are not involved
“Generally I support the principle of well regulated capitalism accompanied by a comprehensive public sector. If the mechanics of such a system work then we have growth, a healthy balance of payments, adequate tax receipts and a fair distribution of the income generated by society (note by society, not by individuals).”
Keith P – can you tell me of one example when the statement above ever applied anywhere in the world at any time in human history?
Capitalism (whether lightly or heavily regulated) has had several hundreds years in its current form to deliver one single one of the benefits you suggest it could deliver below.
How much longer do you suggest we leave it to miraculously somehow change its spots and become a benign and positive force for social change?
Do you really believe what you said, or are you just not daring to question the reality of current and past social and economic results. History is a far more powerful measure of results than social or economic theory, in my opinion.
“Insanity: doing the same thing over and over again and expecting different results” Albert Einstein
Oh for that message to be more widely available on the mainstream media.
I’m interested to hear that the BBC demands a 50/50 split on the EU referendum for it’s coverage. They seemed happy enough with an 80/20 split for the Scottish independence referendum, using professed voting preference in the 2010 Westminster elections. Funny that.
Also the usual 100/0 spilt whine it comes to challenging the ‘government is a household’ myth.
It is indeed a strange household this Government, along with those who cling to this comfort blanket meme, are running.
Selling off the family car and drastically cutting expenditure on bus fares ensures that no member of the family can get to work to generate sufficient household income. Not that this represents the main problem when, to balance the household budget, food expenditure has been cut so drastically that no one is getting sufficient calories to physically do a days work to generate any household income.
Moreover, again to balance the household budget given that income has now been cut even further because the family cannot get to, or physically do any, work, maintenance and cleaning has been reduced and the household infrastructure is rapidly deteriorating. What little income the household is generating from the sale of fruit and veg from the back garden allotment is being handed over to the local Parish Guardians to keep them solvent and maintain their bonus culture lifestyles because they pissed away both their assets and those of the household in the casino.
Granny’s wheelchair has been privatised in order to provide the spare parts for the Parish Guardians Formula 1 car in the Azerbaijan Grand Prix, whilst the front railings have been removed and melted down to make a secure perimeter for the gated estate where the Guardians live. However,the Parish Guardians have kindly agreed to second an elderly part time night watchmen from G4S on a zero hours contract to occasionally look in and make sure no one strolls into the garden from the street to nick what’s left of the household veg plot.
Meanwhile, wealthy uncles Tristan and Tobias have persuaded the Parish Guardians to let them off any contributions for the upkeep of the village green as they urgently need a new yacht. This means the already struggling majority within the household are expected to cough up more from their depleted budget to prevent vandals from wrecking the green by getting the household retaliation in first and smashing up the duck pond in the neighbouring village.
The twin town arrangement with the other households on the street, in which resources are pooled to create economies of scale, is up for grabs as some within the household think that it would be better off breaking off all arrangements with other households and standing alone, apart from those arrangements which enable those in the household so inclined to go around trashing other households three streets away and grab their resources.
Any household run along those lines is not going to last for very much longer and those who cling to this fallacy of a meme need to rapidly make their minds up as to what they really want. Do they want a country or do they want to maintain this delusion? Because they cannot have both and the sane ones in the household cannot afford to indulge their fantasies any longer.
I like
So do I – I can imagine it played out like an episode of Camberwick Green in Trumptonshire (for those of a certain age!.)
brilliant sketch Dave!
Wonderful parody Dave – sadly becoming ever more the nightmare of reality!
Fantastic Mr Hansell. Tragi comedy at its best
I like too – a mini ‘Animal Farm’ for our age!:)
On the general points it is disastrous that the opposition is so lily livered that it doesn’t speak up forcefully in radical terms. They have nothing to lose!
If the opposition do not do their job the only mid term partial fix I can see is to persuade local authorities, most of whom, regardless of colour, rightly feel they have been s**t upon from a great height, to set up banks (which once established would mean finance was really ‘devolved’).
Interestingly the Sheffield Telegraph led the front page the other week with a story about the introduction of a local currency for the city, at parity with sterling, which has the objective of keeping the money circulating within the local area rather than having it sucked out as is the case at present.
I’m aware that Totnes in Devon has some kind of scheme along these lines but the article mentioned two other cities already running such a scheme, one of which I think might have been Bristol. I’m also aware that a number of city regions in the North have signed devolution type deals with Westminster and the thought occurs that perhaps the creation and introduction of locally based currencies is something those at local level considered prior to getting the Government to devolve more responsibilities wit a view to raising financing for local services.
It raises any number of questions in the contexts of tax, localised money creation, finance of local spending on services and infrastructure, and trading relations with similar regional economies.
Further observations, ideas and discussion would be an interesting exercise.
The Bristol Pund is the leader in this area and has the answer to most questions
I’m not a great fan of local currencies, though I like the idea at first. They are pegged to the pound and offer no real solution to distributional issues nor do they breakdown the hegemony of banking in general.
We’ve got a sovereign currency, we need to get politicians to use it for the public purpose and get credit controls operating so banks can’t create asset bubbles at will.
We have lost the days of a healthy manufacturing industry such as the 1950’s, all the male members of my family worked in skilled engineering jobs. Now through, I don’t know, no investment whilst taking profits it has died. A financial market driven economy, clever people I am sure, but does not compare to making things, good quality things needed and wanted, why can’t we compete. Why have we let this happen. Of course I am harking back to bygone days, it’s an age thing. Global markets looking for a fast buck, cheap labour, it will all end in tears. That you present your case wonderfully Mr Murphy always focused on justice is valued by many I am sure.
Just to add, my sons went into teaching, not everyone suited to wonderful trades, more’s the pity. But there should be something for everyone, that’s how it is supposed to work. A rich varied landscape. Just ignore me, I will be better tomorrow.
I refuse to ignore you!
Absolutely agree.
Heard John McDonnel being grilled on the radio yesterday, and he was boxed into the usual corner – “so, you are going to balance the budget by borrowing more money?”. Disappointing t.b.h.
Why be played out by artificial rules set by unknown and unaccountable propagandists? Radical is what people expect now!
We are seeing plenty of “Radical” from the government, with the health and education systems being carved up. By allowing the commentariat to set the terms of the debate and define the limits of possibility he will appear defensive and appologetic. He needs to come out fighting!
I still find McDonell inexplicably anodyne. WHY!
Even the Telegraph suggests Labour could be really hurting the Tories! http://www.telegraph.co.uk/news/politics/labour/12196734/Labour-should-be-hurting-the-Tories-but-Jeremy-Corbyn-and-John-McDonnell-are-too-rubbish-at-politics.html
The Telegraph’s reasoning (sic) is vile but they have a point here.
What they need to say is: screw the Overton Window-we are going to change the discourse!
You know what -it would eventually work!
“I still find McDonell inexplicably anodyne. WHY!”
Me too. I suspect the depressing reality is that he just isn’t up to the job.
Corbyn has a very small gene pool to recruit from; McDonnell is prob the best that can be done in the circumstances.
How about
“Print money for the People! YAY!!!”
As said, the PLP is so fiercely hostile to Corbyn that he hasn’t got much choice. I’d like to hope that someone like Alan Johnson will be prepared to get involved in the party he is, after all, paid a lot of gelt to represent in parliament.
Failing that, John McDonnell could ask Richard to write ALL his lines for him. (Well, it worked for Reagan).
We are no where near our 2% inflation targets. £375 billion quantitative easing barely made a dent. “Obviously” printing money causes inflation so we need to print more. But we can’t just give it to the greedy bankers. Spend it on society and infrastructure instead.
Companies and Bankers are hoarding all the money so there is none in circulation. We need to a cash boost to get the economy flowing. £375 billion quantitative easing wasn’t enough. Our inflation target is 2% a year and the government is ignoring it.
My plans are all for infrastructure and constructive spending and nothing for banks
As Richard has pointed out in the past and in his Green Deal document, QE was done in a way that lacked any transparency and it was not explained to the public. The nature of the accounting involved was designed to hide the fact that it was new money and money printing. So it was explained away as an asset swap with some future notion of ‘unwinding.’
It increased the wealth of bondholders and had an impact on commodity prices as the near zero interest rates kicked in encouraging leveraged speculation and all sorts of unproductive uses of capital.
…or even:
“Print money for the Planet! BOOM!!!!”
Something’s got to burst out of the trap of the 2 second soundbite
Great tweet , very informative and pertinent . We wish the politicians on both sides would put their brains in gear, read your
criticisms , suggestions and share your down to earth vision .
What the heck do these politician see as their duty to the Country ?
I have this theory but I don’t know if it’s plain daft. So please advise.
We could build a new town/city for the Houses of Parliament etc like USA did with Washington DC, Austrailia with Canberra and other countries have their parliament away from their biggest city.
My rational stems from the various issues we have.
1) the building itself is falling apart
2) London is too crowded and expensive
3) Governments seem to be too London focused (lots of infrastructure expenditure)
4) London has a democratic surplus ( with a major and parliament trying to appease them)
5) there is a shortage of houses
6) population is going up
7) the country needs to spend money to get us out of this hole
I could go on.
But I would like your thoughts, many thanks
You ignore the need for massive infrastructure support
That is nowhere else and won’t be for a long time to come
Kenneth
I strongly agree. My candidates for the new parliament would be Stoke, Ipswich or, probably preferably Sheffield.
It would revolutionise the country
IDS quits “I am unable to watch passively while certain policies are enacted in order to meet the fiscal self imposed restraints that I believe are more and more perceived as distinctly political rather than in the national economic interest. Too often my team and I have been pressured in the immediate run up to a budget or fiscal event to deliver yet more reductions to the working age benefit bill.”
http://www.theguardian.com/politics/2016/mar/18/iain-duncan-smith-resigns-from-cabinet-over-disability-cuts
The resignation of IDS does sound very noble on the face of it.
But let’s see what happens next.
May I draw your attention to the Tory in-fighting over Europe.
The thought occurs as to whether this really is a principled resignation or part of a cynical internal squabble to wreck Osborne’s leadership chances in favour of London’s village idiot?
What the heck do these politician see as their duty to the Country ?
Well, I think George is fairly clear. He wants Govt spending at 35% of GDP. The last time it was at tat level we had no NHS & the likes of my mum & dad went to “council schools” which weren’t too wonderful, although arguably better than a free school run by some tripe hound like Toby Young.
I genuinely don’t know what David Cameron sees as is duty to the country except to lead it. Even if you are one of those people who deny all scientific consensus, it surely must seem odd that he promised to “lead the greenest Govt ever” then abolished subsidies on renewable energy, encouraged fracking, built motorways & cut support to trains! One might intuit that he is prepared to say what is necessary to get elected!
I can’t begin to guess what Boris sees as is duty to the country. I honestly think he sees it as an enormous joke & is waiting for someone to have the nerve to pull down his pantaloons & yell “Fire”.
Johnson sees the country as an extension of his ego (his mum over inflated it when he was a kid).
Cameron is a witless incompetent, barely articulate and lacking in any qualities other than being a glove puppet.
I’ve long regarded most politicians as shysters but these people represent a historic low qualitatively.
https://m.youtube.com/watch?v=p8OzJ0OjUXY
Hope the link works Richard, and forgive me if I pinched it from you in the first place!
The Deficit’s A Good Thing!
PS Great piece…let’s hope JMcD is reading it.)
The link did not seem to work
I’m sorry Richard, you’re a busy man and could do without correspondents who can’t type! – try please:-
https://m.youtube.com/watch?v=p8OzJ0OgUXY
‘The Deficit’s A Good Thing,A Necessary Thing! 2.0’ works as a search too.
The more I wrack my brains, the more I think it did come from you, or one of your correspondents, in the first place…but since I first looked at it I have shown it to lots of friends and family, and watched the light bulb go on above their heads as the penny drops!
I drag it out again because I think it illustrates so well what you’ve been talking about here (specifically and generally) and is a piece which merits wider circulation…especially to (by!?) the Labour front bench – it would make a wonderful Party Political, don’t you think?
Cameron was at it again in the House yesterday – ‘we must live with in our means blah blah blah’. Nooooooo! If you must reduce economics to household metaphors try ‘We can’t spend week in week out on champagne and caviar that we can’t afford…but we can borrow the money to buy/build a house because in the long run that will be cheaper for us and will provide work for the builder down the road and two or three of his tradesmen…and we all remember when mortgages were 10% and more so it makes even more sense to do it now when we can fix at a historically low rate.’
Please, if you agree that it’s a useful piece (as well as a jolly tune which will stick in your head all day) give it half a column inch in a future blog!
Interesting
But not clear enough on how it happens
And too US centric
But thanks
So are you going to heed the call to ‘spend more time in Westminster’? If the Labour opposition to HMG is too scared or ignorant to think, let alone promote the kinds of things you (rightly) say in this thread, who will?
I suspect I will not be
I have no platform there
And am not seeking one
Richard. Could you take the time to read my blog and correct me if you think I have misrepresented anything? I am trying to reach people who do not understand economics at all(not that I can speak too much) It will likely reach about 93 people and a few groups who have several hundred. Many of the people on my F/B do not understand economics or even Tax issues, so I wanted to write something that will be easily understood.If you wish to advise me not to send this out, fair enough.
“Until the Labour Party starts educating people on where they and successive Tory and Labour governments went wrong – namely the deregulation of banks who are accountable only to their shareholders and the soaring Tax Evasion and avoidance schemes going unchecked – McDonell must spout the ridiculous adherence to “austerity” continuing. Keynesian economists know that in times of extremely low interest rates is the time to invest not cut back or downsize. If there is investment in business and opportunity there is employment coupled with incentives towards sensible wage increases linked to sales then there is spending and money to the exchequer in workers taxes, because more people are working for better wages, sales profits taxes, because there are more sales and regressive taxes such as VAT and Community Tax. The added benefit, not realised by the public, is that people earning more means fewer people needing “in work benefits”, Housing Benefit and Child credit payments and the welfare bill is reduced. Peoples Quantitative Easing is investing in all things which create wealth and therefore revenues to the exchequer and with a NIB to administer it, will cost the government nothing since it is essentially it’s own money. Labour, as has been shown, borrowed less than Tories and paid more back, often significantly more, of what they borrowed. In essence this means that newly installed governments inherit the debt of the previous government so every time a Labour government came into power they inherited the unpaid debt from the Tory government and still managed to borrow less and pay back more. The only reason the Tories succeeded into power is because Labour put the wrong emphasis on how to recover the money owed and bailed out the banks – hence the massive debt caused by bailing out the banks. Successive governments, Labour and Tory, BOTH caused the banking problem by failing to regulate and monitor, it could just as easily have been on the Tory watch, so inevitable was the scenario we witnessed in 2008. Both major parties are avoiding the real issues, rather than tackling them, Labour in particular, always synonymous with tax increases, need to broaden their vision and get the facts out to the public and look at PQE, and a NIB and strong legislature on Tax Evasion/Avoidance with emphasis on country to country reporting and a level Corporate Tax Levy across Europe.
I have no problem with the essence of that
“He should say that because of the shortfall in private sector activity in the UK right now he accepts that he has no chance of covering government spending with taxes.” — one question here: Why can’t we tax the financial sector? And/or introduce a land value tax? Both taxes might actually help the economy: The first would dampen possible financial crises and stabilise the finanial sector. The second would lower land prices and encourage investments instead of holding on to unused resources.
We simply don’t need to is one answer
I like LVT, but it is no miracle. We do tax finance – but not those who benefit from it enough
But remember we only need to tax if there is a risk of inflation
We have no such risk
So we can spend without saying we need to raise tax to cover it right now – although getting the taxes we have right remains an issue, I agree
Baffled – Graeber argues the UK might well be better adapted for the entirely different problems of the 21st century, provided there is political change. http://thebaffler.com/salvos/despair-fatigue-david-graeber
Thanks for the link
Well worth reading
Agree entirely, Richard. Superb. And a considerable synergy with your blog. Both should be compulsory reading for anyone seeking a different/new vision of a future beyond neoliberalism. We have lived too long under the shadow of this barbarism.
Thanks Ivan
Good article and hopeful -more hopeful than I am at present. Lots of good suggestions about how Labour can change the narrative-but will they? Who can wake up the country from the mass hypnotism of 40 years of bullshit economics?
If McDonnle can use phrases like ” I’ll swim through vomit to get there” (on the vote fro welfare reforms) then I’m sure he can find equally colourful phrases to reframe economic debate -why isn’t he?
Forgot to ask, if you do not disagree with the post, can I make reference to your blog, in particular todays blog?
I can always be quoted
Have lost the context of the rest of your comment as yet
Dear Professor Murphy, when I read this a short while ago, and went on to read all the responses your words generated I was left with a strange feeling of being utterly lost. I’m a Brit the wrong side of 70 living in Southern Oregon in the USA. Living in a country where the voices of sanity cry out in an utter void. So it is with the UK. It seems way to much to hope that your common sense will prevail back home anymore than it will here. But please carry on doing what you do so well! For you offer a rare compass heading in these very strange times!
Thank you
It’s amazing how many people have time to comment at length in this down trodden UK. I actually enjoyed your piece, although you seem to ignore the international dimension- as if the UK could act on its own entirely without risk in regard to international Capital flows. And also to ignore supply side problems, like land that is fit to build on, where people want to live, is in short supply (unless you want to build in the back garden of stockbroker belts of course). What really hacks off intellectuals though is Democracy, how thick ordinary people must be to Vote- in Centre and Right wing parties. It can’t possibly be that ordinary people get their hands dirty and so have a good deal more sense, can it? I am off now to work for people who actually add something to the economy.
I feel your loathing of anyone with a conscience Stephen
Like IDS, you may realise the folly of your ways one day
I will hope
So you’re alright Jack are you Stephen Griffiths? Well lucky you but perhaps one day you will not be and perhaps then you will realise the value of perspective and being able to view life through more than your own very narrow and blinkered eyes.
I don’t wish illness, disability, misfortune or unemployment on anyone – however I would also appreciate a government and supportive commentators who do not deliberately aim to inflict further suffering on those already afflicted.
As I seem to be sadly let down by this government and its supporters, I am becoming more inclined to look forward to the day that they may themselves be in dire need and hope that they are also treated to their own medicine in very large doses!
Not sure if you are aware of this Steve but since the Factories Act of 1819 us real working people have actually managed to win sufficient concessions from our feudal masters which means that we are not working 24 hours a day, 7 days week. Taken with the fact that the dynamics of mercantile capitalism have permanently stalled to the extent that many people in jobs are not able to work sufficient hours to earn a living this means that people do have more leisure time to observe the world around them and comment upon it.
On the issue of voting outcomes your observations would only be valid in a system in which all votes were amalgamated rather than a FPTP constituency basis. As it is the largest bloc for a number of GE’s running has been those not voting, many of which are not down to apathy but from an absence of genuine choice. Which is what you are going to end up with when people want water and the choices available are Coca Cola, Pepsi Cola, Virgin Cola and generic cola.
The attitudes surveys which regularly occur show majority public opinion well to the left of the elite neo liberalism to found in the Westminster bubble and it’s corporate media commentariat. It is only a failing and flawed voting system, based as it is on the false premise of a limiting consensus accross the country which keeps delivering right wing Governments on the back of only around a third of the voting electorate and a quarter of the actual electorate.
The plastic working class have always been an over vocal and over represented section of our society and getting ones hands dirty (I was an external cable jointer) is a guarantee of neither sound or poor sense.