I can't do better than share this post from Progressive Pulse this morning, which I do, with permission of the authors:
Authors:
David Laws, Consultant Anaesthetist, City Hospitals Sunderland NHS Foundation Trust, Sunderland, Tyne & Wear, SR4 7TP
Professor Charles S. Adams, Department of Physics, Durham University, Durham, DH1 3LE
Introduction:
The unquestioned assertion that a highly developed currency-issuing nation cannot afford high quality healthcare [1] is based upon a set of inter-related and almost universally-held false assumptions:
- Money is in limited supply (as there is no ‘magic money tree').
- Taxes fund government spending.
- Private banks lend out pre-existing savings.
- NHS spending is a burden on the economy rather than a boost to the economy.
1) Money is created ‘out of nothing' on bank computers
In 1973 the Bretton-Woods international exchange rate system, where currencies were ultimately pegged to the price of gold, was formally ended. Since that time we have used an international fiat monetary system where the value of each currency is determined by the workings of international financial markets. Fiat (Latin: ‘let it be made') money is created from nothing on the basis of a promise — a promise to deliver goods or services in the future. Only if we believe in these promises and the systems that support them, does money have value.
The following description of the monetary system and its components is highly schematic to aid elucidation of the underlying principles. Money is created either when the government spends or when a bank makes a loan.[2] We can think of government spending and bank loans as the beginning of two interconnected money circuits. The government and bank circuits form the duopoly of money creation, rather like the pulmonary and systemic circulations of the cardiovascular system only in this case the circuits work in parallel. Both circuits are supported by the central bank which creates a unique type of money held within the bank known as electronic reserves (Figure 1). To extend the analogy of the cardiovascular system, the central bank is akin to the heart, individual bank accounts would be equivalent to the capillaries and the wider economy would be the working cells of the body.
The two monetary circuits commingle through banking transactions so bank money and government money become indistinguishable to bank account users. After money is created it flows through the economy and eventually returns to the issuer.
Figure 1: Schematic diagram of the monetary system of a sovereign nation. Bank account users cannot distinguish the origin of their deposits.
2) The government money circuit — taxation removes money from the system
In the government circuit, money is spent into the economy and is effectively cancelled when it returns to the government via the payment of taxes. The collection of taxes is not a prerequisite for government spending as many people assume, but exists at the end of the government money cycle when taxes removed prevent too much money being created. Taxation mainly helps to control inflation and alter peoples' behaviour in a way that should be beneficial to all. The net result of deficit spending is to leave savings in the form of Government Bonds in the hands of the private sector (Figure 2).
Figure 2: The government spend and tax circuit with a deficit. The difference between spend and tax equals private sector saving and is known as the deficit.
Conversely a government surplus (where taxation exceeds spending) would destroy these savings. The superficially sensible idea of running a balanced government budget simply prevents saving in the private sector. This is illustrated in models a) and b) within Figure 3. In a) the government injects money via a fiscal stimulus in year zero. Taxation means that over time all this money is returned. In b) the public choose to save a fraction of their income which leads to the deficit. Savings simply delay the return of money in the circuit. In other words, the private sector is only able to save money because the government supports this activity by running a deficit. The government circuit is leaky by design. For example, people are encouraged through tax breaks to save for their future (e.g. pensions & ISAs). Therefore, the national debt is not what we currently owe but what we currently own.
Figure 3: (a) model which shows that after government spend (fiscal stimulus) if people do not save then all the money comes back as tax, whereas if people save this leads to the deficit (b).
3) The private bank money circuit — banks create credit and don't lend out savings
Most of our money is created in the form of bank loans (credit). When a loan agreement is signed the bank creates a new bank deposit to the value of the loan in the borrower's bank account. Money is returned to the bank by the repayment of the loan plus interest (Figure 4). Similar to government spending, bank lending influences private sector behaviour but the allocation of money creation is not democratically controlled. The primary purpose of bank lending is to enable individuals and businesses to function and to generate profits for bank shareholders, both over the short and long-term.
Figure 4: The bank circuit where loans concurrently create bank customer deposits and private debt leading to bank profits.
Banks must have a licence issued by the government to create money in this manner and aspects of their activities are regulated. However there are no formal economic, social or environmental responsibilities associated with the creation and allocation of bank credit despite the significant influence these decisions have over our lives. Bank credit creation is predominantly distributed towards land (property) and financial asset speculation which dwarfs their support for entrepreneurship. The majority of UK small businesses are actually self-financing.[3]
As the proportion of unproductive private debt increases in an economy a correspondingly increasing proportion of economic output is directed towards servicing this interest-bearing debt. Consequently the private bank money circuit tends to be inherently destabilizing as it drives assets towards the already wealthy making the economy increasingly fragile.
What are the outcomes when the two circuits combine?
If all the money was returned to the issuers the quantity of money would go back to zero (the balanced budget illustrated in Figure 3a). In practice the rate of new money creation is usually higher than the rate of money cancellation and the total amount of money in the economy grows over time to support economic growth (Figure 5). Ideally growth in the money supply should match the growth in economic activity, such that prices remain roughly stable and we maintain confidence in the value of our currency unit. Control of the rate of money creation and destruction in the government and banking circuits are known fiscal and monetarypolicy, respectively.
Figure 5: UK Money (M4) Supply 1987 — 2017. Source: Bank of England.
The money supply increased significantly in the decades prior to the Global Financial Crisis (circa. 2007) primarily through bank credit expansion. In contrast, between 2009 and 2014 net credit was negative.[3] As bank credit creation wavered from 2008 onwards, government deficits rose to prevent a deflationary depression. The actual sector balance data for the UK is shown in Figure 6 and there is similarity with the simple model we presented in Figure 3. Note that the rest of the world is a net saver of UK money (these savings have to be spent in the UK ultimately). Note also that when these three sectors combine, the balance is near zero as this is nothing more than an accounting identity.
Figure 6: UK sectoral balances data from the ONS. The inverse correlation between Private and Public sectoral balances. Private sector savings mirror the public sector deficit as illustrated by the model in Figure 3.
Why two circuits?
Why do we need this duopoly of both a government circuit and a banking circuit? Why do we need both fiscal and monetary policy? As money is a collective good, should we transfer all money creation powers to government and demote private banks to the role of intermediaries as some propose? Or could we hand over all money creation to private banks as free-market fundamentalists would prefer?
Put simply, the commercial bank circuit serves private needs while the government circuit serves collective needs. The bank circuit exists to serve individuals and ‘capitalism', while the government circuit exists to deliver on democratically controlled promises.
Economists often call our collective interests public goods. The failure of the private interest bank circuit to provide public goods is easy to understand by exploring healthcare. The market solution is to cater for the patient offering to pay the most. Even worse, the market may deliberately create a scarcity in order to charge a higher price. A market cannot operate effectively in matters of life and death. Kenneth Arrow a highly-respected pioneer of neoclassical economics and winner of the Nobel Prize in Economics in 1972 wrote ‘the laissez-faire solution for medicine is intolerable'.[4] In situations where competition is not viable, where demand is unlimited like health, and supply delivers societal benefits, then collective democratic control is the optimal solution. The House of Lords Select Committee on the Long-term Sustainability of the NHS report in April 2017 reaffirmed that the principal method of funding the NHS should be via government spending.[5]
What has gone wrong?
The art of economic management is to balance fiscal and monetary policy. An over dependence of one or other is doomed in the long term. The core failure over recent history lies in the inability of politicians and central bankers to regulate the banks and to use fiscal policy appropriately. There now exists UK Department of Health data to support the assertion that government austerity may be the primary underlying cause for the deterioration of health inequality measures in England.[6]
‘In her present condition, Great Britain resembles one those unwholesome bodies in which some of the vital parts are overgrown…and through which an unnatural proportion of the industry and commerce of the country has been forced to circulate, (which) is very likely to bring on the most dangerous disorder upon the whole body politick'. When one considers the unhealthy dominance of the financial sector within the UK and global economy today, it may be surprising to discover that Adam Smith wrote these prescient words in the Wealth of Nations over two hundred and forty years ago.[7]
In a similar vein, using central bank monetary policy alone to rescue the global economy has been misguided. In 1969, the world-famous economist, Milton Friedman said ‘The available evidence . . . casts grave doubts on the possibility of producing any fine adjustments in economic activity by fine adjustments in monetary policy'.[8] More recently, Mark Carney, the Governor of the Bank of England, reinforced this point in his ‘The Spectre of Monetarism' speech published in December 2016 where he stresses that monetary policy needs to be in ‘better balance with fiscal and structural policies'. [9] The sudden change to no money growth after 2010 in Figure 5 is evidence of the complete failings of recent monetary and fiscal policy.
4) NHS spending boosts the wider economy in excess of the money spent
Fiscal policy is very powerful but needs to be carefully managed. The NHS was conceived and built in times of high national debt. This could occur because creation of money is not an inherent constraint. Thanks to the government spend and tax circuit, the NHS nurse, doctor, physiotherapist or pharmacist need not cost anything as long as (they serve a useful purpose and) the money spent on them is also spent. In fact, it is more likely that society will profit through ‘crowding in' more economic activity through NHS employees' subsequent spending and a healthier public.
It is estimated that the fiscal multiplier for UK healthcare spending currently lies between 2.5 and 6.1. This means for every £1 spent on the NHS approximately £4 of economic activity results.[10] If you had a cash-back card that gave you £4 back for every £1 spent, you would not cut back on your spending! Only when we reach a position of over supply when NHS staff wait forlornly for patients to present do we reach a point where the multiplier falls to below one. We are, at present, an unsafe distance from a workforce oversupply scenario.
As a sovereign nation, the UK can always afford high quality universal NHS healthcare. Money is essentially an accounting system designed to facilitate our collective activities and development. Fiscal policy needs to be activated to meet the needs of our society as there is now observable failure of the prevailing reliance on monetary policy and preservation of rent-seeking private interests. It is evidently wrong to assert that healthcare access and quality is limited by the availability of money. The constraint, in truth, has never been the potential availability of money, but the desire to resource the NHS appropriately. In the words of John Maynard Keynes, ‘Anything we can actually do we can afford'. [11]
References
[1] Department of Health annual report and accounts 2016 to 2017 https://www.gov.uk/government/publications/department-of-health-annual-report-and-accounts-2016-to-2017 (accessed August 2017)
[2] Money Creation in the Modern Economy. Bank of England Spring Bulletin 2014
http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q102.pdf (accessed August 2017)
[3] Bank of England interactive database
http://www.bankofengland.co.uk/boeapps/iadb/newintermed.asp (accessed August 2017)
[4] Uncertainty and the Welfare economics of medical care. Kenneth J. Arrow. The American Economic Review December 1963. http://www.who.int/bulletin/volumes/82/2/PHCBP.pdf(accessed August 2017)
[5] House of Lords Select Committee on the Long-term Sustainability of the NHS. The Long-term Sustainability of the NHS and Adult Social Care Report Published 5th April 2017. p44. https://publications.parliament.uk/pa/ld201617/ldselect/ldnhssus/151/151.pdf (accessed August 2017)
[6] David Buck, King's Fund https://www.kingsfund.org.uk/blog/2017/08/reducing-inequalities-health-towards-brave-old-world (accessed August 2017)
[7] Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. p468-9. Edited by S. M. Soares. MetaLibri Digital Library, 29th May 2007 (accessed August 2017)
[8] Milton Friedman and Walter W. Heller, Monetary vs. Fiscal Policy, W. W. Norton and Company Inc., New York 1969.
[9] ‘The Spectre of Monetarism'. Speech by The Governor of the Bank of England. December 2016. http://www.bankofengland.co.uk/publications/Documents/speeches/2016/speech946.pdf (accessed August 2017)
[10] Does investment in the health sector promote or inhibit economic growth? Aaron Reeves et al. Globalization and Health 2013. https://doi.org/10.1186/1744-8603-9-43
[11] The Collected Writings of John Maynard Keynes. Vol. 27 p270. Activities 1940—1946: Shaping the Post- War World: Employment and Commodities ISBN 978-1-107-65156-2
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A very fine post. One observation: in health care, prevention is usually better (both for the patent and economically) than cure. This being the case, and given this statement from the article: “The market solution is to cater for the patient offering to pay the most. Even worse, the market may deliberately create a scarcity in order to charge a higher price”……..one can draw the conclusion that the market would also be against prevention since it would reduce income.
The ‘market’ isn’t some singular organisation or mafia – and you only need to swing by your local gym or health food shop or pharmacy that sells vitamins to see how the ‘market’ will provide what ever it can make money from, including prevention.
As a wider point I agree with this article and the need for sensible investment by govt in core services and infrastructure.
The NHS is universally popular across people of diverse political and faith beliefs. The NHS is founded on the principle of “each according to their needs” which is a communist ethic. Health provided under the principle of “to each what they can afford” is by contrast a capitalist imperative. The two are incompatible.
Excellent exposition of Modern Monetary Theory, alas without any reference to its authors.
Labour need to stop taunting the government with jokes about the Magic Money tree. Whilst it might seem politically advantageous to fire the same accusation back against the government that they use against labour, all it does is further entrench the idea that money is a finite thing.
Excellent distillation of how public and private finance really functions, with the NHS as a specific example. It’s a piece I’ll share
However, after a week in a confined space (a small boat) with 3 hard core Brexiteers I’m reminded I’ve how much we are dealing with beliefs which fly in the face of any evidence. Cognitive bias writ large. These were three university educated, well off, late-60 year olds, all retired ‘professionals’. One had worked in the NHS earlier in his career. Some clues are that they are also Telegraph readers, live in rural Lincolnshire and all have small farms. I know the area and also Cumberland where I was brought up. It’s not just the poor and struggling who do not recognise the real causes of the UKs economic woes – I can understand their frustrations. It’s also people who do not want to hear anything that conflicts with their comfortable world views.
Finding both a narrative and an underlying rationale which together can get through to all sections of society is a huge challenge
I agree
This is my small attempt at change
I am not pretending it is wholly successful
Richard don’t undersell yourself. The repercussions of what you do are very influential. You put morality centre stage in the economic and tax debate – a rare virtue among accountants. Very difficult to counter.
Thanks
Although it feels like I just wake up each morning with another blog or three to write
And I guess that’s what I’ll keep doing
“Although it feels like I just wake up each morning with another blog or three to write
And I guess that’s what I’ll keep doing.”
I hope so, Richard
I believe what you do is valuable and worth doing, but that’s easy for me to say when I’m not the one who has to get out of bed and do it.
I know the feeling well. I always keep two JK Galbraith qotes in my mind when that feeling of frustration with blinkered, self-centred baby-boomers gets a bit much. The first is:
‘Ideas are inherently conservative. They yield not to the attack of other ideas but to the massive onslaught of circumstance with which they cannot contend.’
So when feeling trapped you could just keep your counsel and wait.
But then the other quote is:
‘There is something wonderful in seeing a wrong-headed majority assailed by truth.’
And that is irresistible.
The article above won’t do the trick with the already brainwashed. It’s far too technical. But it contains lttle nuggets like:
‘… the national debt is not what we currently owe but what we currently own.’
I’ll be assailing many with that one.
Me too
And I like your selection of quotes
I’ve always felt that Shaw’s quote about all progress depending on unreasonable men was not a bad maxim for life
Along with other regular contributors here, I see Richard as a good example of how to be constructively unreasonable!
It was my wife who introduced me to that quote
I say no more
Robin Stafford,
As you have experienced even amongst your friends or crew (I guess they are friends):
No social class has a monopoly on ignorance.
Nor stupidity for that matter.
I’d better read the article as you recommend me to do.
Thank you for this, it will I’m sure be going into many bookmarks this morning.
The difficulty is that selling this narrative to a nation conditioned on household thinking probably will lose an election for the party who would balance fiscal and monetary policies for universal prosperity and decent provisions.
I have always guessed that John McDonnell’s budget balance pledge was to appease New Labour economic dinosaurs as a bottom line necessity to keep his right flank MPs placid. The headstrong Labour neoliberal core is very blinkered and very self-serving, and certainly not promoters of the above because they carried on deregulating and pushing a diluted austerity myth.
But, as Lee has commented, language that perpetuate the myth needs to change. And the narrative needs to be clear, as you have always stated, and been frustrated about, Richard. I always told/tell my children not to be frightened of the truth.
In Labour, perhaps Labour’s grassroots strength is the way to do this by adopting this specific narrative change as a headline mission.
But as a sovereign currency nation what a wonderful place this country could be if the manipulative greedy were evicted from the control tower.
Final thought: a deficit narrative put to a household-constrained nation and what they should expect to happen to the deficit under a new approach should be best put .. how?
Answers on the back of a postcard please ….
(Those were the days…this is how radio competitions were run before email and apps)
From the above article the following line struck me as a good starting point for the deficit narrative:
Therefore, the national debt is not what we currently owe but what we currently own.
(i.e. private savings)
Yes, absolutely go with that perfect line
‘Therefore, the national debt is not what we currently owe but what we currently own’
Brian Cartor,
(Never seen that spelling of ‘Cartor’ before it must be archaic. We still use the ‘..or’ ending for so many trades and professions but Carter went over long ago a I think. Before I was born anyway!)
“I have always guessed that John McDonnell’s budget balance pledge was to appease New Labour economic dinosaurs as a bottom line necessity to keep his right flank MPs placid. The headstrong Labour neoliberal core is very blinkered and very self-serving, and certainly not promoters of the above because they carried on deregulating and pushing a diluted austerity myth.”
I share your suspicion in this regard. This core which I tend to refer to as a ‘rump’, but your word is better, has not gone away, they are just pragmatically eyeing their seats. ( Hence rump perhaps:) )
New Labour was nothing if not pragmatic.
The household budget analogy is not entirely useless in common discourse.
The family at rock bottom simply cannot reduce its outgoings. Most families haven’t yet hit absolute rock bottom. Nobody knows where that is until they get there, and it is not measurable in income terms because mental health, and upbringing and attitude enters the equation. When they get there the food-bank beckons. Not even a state supported food-bank; these are very old fashioned charitable arrangements. (Tories have been heard to remark what a valuable opportunity they provide for people to show their generosity !!)
The same Theresa May who preaches ‘we cannot spend what we have not got’, is leader of the party of home ownership made possible by mortgages. Fancy name for a loan. It is also the party of the student loan which doesn’t even bother to hide its nature by euphemism.
The household budget analogy also works reasonably well if you think in terms of ‘the public’ as recipients of pocket money from its parents.
Note, I’m not saying these are useful models for a national economy, merely that they have some explanatory value for people who think in the ways they have been told to think.
Since the bank created money will eventually all be paid back (with interest), is it fair to say that a large proportion of wealth in this country comes from government spending.
I’m thinking here when a company get a loan, it spends it on wages and materials (including machinery), some of which transfers to the Government money circuit via tax. For it to be able to repay it’s loan it’s dependent on government spending more money into the economy.
Even if Governments didn’t tax, in-equal private saving would mean that since most saving gravitate to the already rich, it isn’t a source which the company (via sales) could use to repay it’s loan.
I would prefer to ask the question: Can we afford NOT to have the NHS?
No
In a word
This is a really good effort to explain this issue – well done to those who have had a go.
It never ceases to amaze me that the Telegraph reading population who parrot “we cannot afford the NHS” never go on to consider what that means – i.e. either they will not be able to access health care when they need it or that they will have to pay a lot of money for private health insurance. Why not pay a small increase in tax, if necessary, rather than a much bigger personal bill?
And of course the knock on impact of failing to care for people is a growing risk to everyone’s health- in todays paper cuts to STI clinics in London will almost certainly result in much higher levels of STI, and of much more serious and hence much more costly late STI’s needing treatment. As ever, this government makes short term cuts with long terms costs that presumably they hope not to be around to pick up.https://www.theguardian.com/society/2017/oct/15/sti-warning-as-clinics-close-in-london-and-self-testing-is-delayed
You are asking them to think beyond 5pm
And the evidence is most don’t
They’ll have to pay a lot of money for a comprehensive health policy.
The cheaper ones, like car insurance, come with a variety of opt-outs and cash payments up-front.
None will cover you for long-term treatment for any condition.
Look at the UKs’ basic “private”
GP consultation = £50
Prescription = £25
Pharmacy dispensing charge = £25
Drug cost = from £15 for a 7-day prescription for Amoxicillin (which costs the NHS £0.88) to several tens of thousands for the more costly items on the pharmacy list.
In the STI situation, a private drug cost for a months supply of the anti-retroviral compounds can run to over one thousand pounds..
Now, if you can guarantee you are never going to be ill, or are a multi-billionaire tax-avoider looking to make a killing from leeching public money away from the NHS, then the NHS is “unaffordable”
If however you are a normal human being, the alternative to the NHS is unaffordable.
75% of USA bankruptcies are due to healthcare costs…. A rather under-stated statistic.
John M,
“They’ll have to pay a lot of money for a comprehensive health policy.’
Unfortunately true except for ‘They’ substitute ‘we’.
If ‘they’ get their way ‘we’ don’t get an opt out.
This piece may be useful at some stage to me as reference, but at present I can’t be bothered to read it because the question is purely rhetorical and the rhetorical answer is ‘can we afford not to?
The moral and economic case is bombproof, or at least it should be.
You need to read it
Ok OK I’ll read it.
You wouldn’t have published it if wasn’t worth looking at. I was being lazy. OK. I’m sorry.
Worth the effort to read Andy. Especially because it links how money is created, both private and public, to the specifics of financing a public service like the NHS. And it’s pretty readable
Great piece but it’ll fall on deaf ears as far as most voters, in a hurry over their cornflakes for work or whatever, will be concerned. It’ll sadly go straight over the heads of the Sun, Express and Mail readers who need to be convinced. This preaches to the choir, and while I have to respect the eloquence of the authors, I wonder what their aim was, other than reiteration. It’s no good being clever if the only people who appreciate you are people similarly clever, you have to communicate, not lecture, to reach the Clapham Omnibus crowd needed.
Bill
You are too cynical, by far. Cynicism is useful and wise. Too much is harmful
This lesson is hardly known by those who are receptive to it. You may know it but most on the left do not, and nor do many so called alternative thinkers. Practicing and refining it, even amongst friends, is a necessary pre-condition for change
Richard
The Trojan Horse was Simon Steven’s Five Year Forward Plan which operationalised the Lansley bill. Very cunningly, he praised the NHS politically and undermined it by coming at the provider end, i.e. free at the point of delivery remained untouched. By privatising provision and re-organising the “assets” he pulled the rug out from under our feet, ably assisted by austerity and cost reduction policies.
Time to expose all that and not dwell to much on the macro side.
True, John Carlisle.
That was indeed a neat move to shift the logic of free provision into market territory. It would be easy to ‘sell’ as an idea.
It would even work if it were to be operated without the greed/profit motive. But that’s a logical impossibility it seems. Market proponents are quite upfront in saying that markets operate on fear and greed.
“Most of our money is created in the form of bank loans (credit).”
The impression I get is that government money is only issued via the banks. (By the issue of bonds) Is this a false impression? Or am I just witnessing the mechanism rather than the underlying process?
“The majority of UK small businesses are actually self-financing.[3]” – As opposed to the giant corporations in the US particularly the Military industrial and ‘Security ‘industry which is entirely fuelled by government ‘spending’. And without which the US economy would grind to a halt. ?
I’m still not sure any kind of material fluid (blood or water) provides a serviceable model for the behaviour of money.
I think it all comes down to Turnips and electricity. But I need to think a bit more carefully about that to make it explanatory so that it can be (probably) demolished.
My excuse for not reading this article yesterday is because it appears from the headline to be about health. It isn’t. (Except in so far as it relates to the health of the economy) Its import is general. I was misled.
(Pronounced ‘Mizzled’ 🙂
“I think it all comes down to Turnips and electricity. ”
Good call – may be sand, sun and electricity.
The water/blood analogue fails because there is usually a finite amount of it and no equivalent of double entry accounting (credit and debt). The electricity analogue is better (but takes more explaining) as I can almost always make more by adding another solar panel (made from sand) and there is credit and debit as electrons are lent to the circuit and then annihilate again when they return to the battery.
I like the idea that it might be all about turnips though 🙂 Just make the batteries out of turnips 😉
Explanation that last one to me……
Turnips are the basic unit of commerce. I thought an economist would see that immediately.
Where the NHS financing model falls short is that it may well go a long way towards explaining the financing model, but what is anybody going to eat. Not turnips and that’s for sure.
The whole ‘gold is money’ argument falls down because you can’t eat gold. Fiat is merely an extension of that. If you can’t eat it anyway it might aswell be made of something cheap. And it saves a lot of tedious digging and panning.
You can however eat turnips. If somebody is prepared to grow them. Kings can have lots of turnips because they collect them as tithes. In theory in return for the right to have land to grow the damn things on, and protection. (from the ravages of international turnip thieves, and swede rustlers) It may have been a valid deal somewhere once, briefly. May have been, but probably wasn’t.
When the peasants don’t produce enough turnips the king demands all the turnips he needs and all the peasants he needs to form an army and sets off to steal somebody else’s turnips and haul them home in a (probably commandeered) tumbrel.
It’s not rocket science.
It got complicated when somebody came up with the the idea of cryptoturnips. Gold was the same colour as turnips so there was a powerful associative link and gold in coin form was portable didn’t rot, and was useful for trading…er….? .more turnips.? But perhaps not until next year (thus was born the futures market); perhaps we won’t have ’em at all (the options market) and that basket has a couple of nice ones on top (the dodgy derivatives market).
It sounds frivolous, but it isn’t really. The entire financial system goes to bagwash because when people start trading cryptoturnips as if they were an edible commodity they confuse themselves and everybody else.
Confused peasants do not grow good turnips and the clever-buggers never did know how to grow anything. That’s why they need peasants, but of course they pretend they don’t – and that the peasants are lazy and overpaid (?) How do they work that out? The only people who produce anything are overpaid??
I give in.
Charles,
“….Good call — may be sand, sun and electricity….”
No, Charles maybe not , because somebody needs to grow turnips to turn sand into into the ‘silica’ that makes solar panels.
Only plants do the capture and exchange of sun to energy for free.
Turnips are ‘god’s gift’. The bounty of mother nature. At bottom that’s where all economics starts. Somebody ‘as to plant ’em tend ’em and ‘arvest ’em.
Everything else is a pyramid scheme I think. Burning oil is just releasing the energy of yesterday’s sunshine. It is a renewable resource (probably) but the cycle of replacement is in geological timescale rather than human timescale.
Economics without turnips is an electrical circuit with no live input. Been there done that. A two way switched staircase light. NO live input (and return to earth/neutral) = no light.
This is of course the Baldrick school of economics…
At least he had a cunning plan, unlike the current lot
Most of you are missing the wood for the trees. Richard’s original question was “Can we afford the NHS?”. So you have chosen to debate the source of financing and not the needs (demand) of the NHS. Like the man who chooses to look for his lost key under the lamplight the debate has focused on the easy option – the macroeconomic consideration.
As good economists you really should study the nature of demand and not just focus on supply. After all, that is where an economic process begins.
Start here, just to get a picture of the Brexit impact:
A BBC analysis shows that there is a greater proportion of EU Nationals leaving the NHS and many fewer joining, presumably in reaction to their uncertain future after Britain leaves the EU.
The BBC Share of European Union staff leaving NHS rises following Brexit
The Argus — Hospitals feel the impact of Brexit vote as number of EU nationals leaving the NHS rise
The Guardian (Polly Toynbee) — While all eyes look to Brexit, our NHS is about to collapse
Nursing Times — Brexit worse case scenario could deepen nursing shortage
The Telegraph — No deal Brexit could place £500m a year added strain on NHS, health chiefs warn
Herald Scotland — NHS staff quit over independence worry and Brexit hit recruitment
ITV news — Bexit sparks ever worsening NHS staffing crisis
Hertfordshire Mercury — Number of EU staff quitting jobs at Hertfordshire hospitals has almost doubles since Brexit vote
I have just had a discussion with a colleague concerning an experience that her mother had in Lincoln’s NHS.
It was concerning a cataract operation for an elderly friend whom my friend’s Mum was helping.
The friend received a letter telling her that her operation had been brought forward and that she had to go to a private hospital. So, she turned up at said private hospital ready for the op to be told that she would have to pay £300!!
My colleague’s Mum went up the wall because there was apparently no mention of any fees in the letter. One chap who was in there was going on holiday paid £2500.00 to get the operation done earlier. It seems other NHS patients had been told that they’d have to wait an additional 13 weeks for an NHS treatment.
As this is a second hand story we have to treat it with caution but it is worrying nonetheless.
Pilgrim,
(admitting your caveat about veracity or accuracy of the detail)
This is the sort of thing that has been mooted as a market oriented way of operating health services; Except that when put forward it also includes the proposition that the commissioning NHS ‘provider’ foots the bill.
This is not an inherently bad idea, but with certain provisos.
1) the private operator can do the job more efficiently (cheaply) without compromising standards of care and outcome. (In which case why can’t the nhs management get their house in order and do it properly one wonders?)
2) The nhs is still picking up the tab, and doing so because it is more cost effective than providing the service in house. ( same question concerning current nhs failure)
3) the net result, longterm, is not that the nhs loses the ability to find competitive services viz the old creeping monopoly argument, or still retains the capacity for provision in house. (Which might in practice be the nhs hospital in the next parish. Nhs hospitals should not be competing against each other for access to patients, though there was a visible move in this direction at one stage in the (bogus) name of patient choice.)
4) other provisos I haven’t thought of yet, but will be screamingly obvious perhaps to people with a closer working knowledge.
The story as related to you represents something quite unacceptable and completely at odds with the nhs ethos and purpose. I would not be surprised to find that it is a true story. I don’t fear this is happening in Scotland, but the culture in England seems to be much more precarious at present.
Twelve intensive-care beds.
Four being used by private health patients.
Leaving aside the humanitarian issue: four beds not available for NHS patients
Now we move onto the provision, within each NHS hospital, of beds “reserved” for paying patients. Not necessarily “private”, but also for NHS patients who want “privacy”..
Under the H&SCR act, NHS hospitals can source up to 49% of their revenue from “paying” patients.
£150 a day…is not a “paying” patient, it is a private patient!
I’ll not mention new hospitals called NHS hospitals, but really paying-patient hospitals where private health gets subsidised beds and treatment.
I will mention that all insurance, of whatever type, is socialism in action.
Private health insurance is such.