On sectoral balances

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I usually agree with Geoff Tily at the TUC on economic issues, and even interpretation. Likewise with Ann  Pettifor. But I think we differ on the issue of sectoral balancing wrong. Geoff has a post on the issue on the TUC blog in which he argues:

The whole purpose of increasing government spending is to increase incomes, and the logic of four balances is based on actions not affecting income.

I think we have a difference of opinion, or maybe understanding, on the use of accounting data and identities.

I think sectoral balances show relationships that exist in the economy. Knowing them encourages questioning on how they came to be, and what can be done about the consequences, including what the power relationships that could hinder change might be.

I do not think  this analysis implies adoption of a 'household economy' approach or an acceptance that the the economy is constrained to be rearranged within existing means. If accounting data based on sectoral balances  helps identify ways to reduce risk, increase return, and rearrange finance to benefit in that process of growth then all well and good: the accounts have done their job. They're not a constraint in that case, they're a planing opportunity.

Arguing anything else is, in my opinion, first to deny that there are accounting constraints in the economy, second that money balances play a key role in it and third that accounting can inform decision making. Geoff may have got this one wrong, I think. But I stress, sectoral balancing is not and should not be a goal in itself: it's just a tool for understanding.