Politics Home reports this morning that:
The Archbishop of Canterbury has urged the Government to boost public spending by raising taxes and increasing borrowing.
Justin Welby said ministers had lost their “nerve” over borrowing and suggested that record low interest rates should be seized on to increase funding for public services like the NHS.
His motivation is right, of course.
And he is right to note that we should be borrowing using low interest rates.
But do we need to raise tax? That is not certain. The government is now running so small a deficit that it is hardly creating enough money to meet the demand for new money to match inflation.
And we are very far from gainful full employment.
The reality is that the government has no reason to balance its books and to do so is dangerous: it forces money creation into the private sector where debt bubbles are likely, with likely serious micro and macroeconomic consequences.
The answer to funding the NHS may be simpler than Justin Welby imagines. He is still beholden to the household model of government. In reality rather than in this model the answer to the NHS funding crisis is to simply create the money required by spending it. It's not just the health of the nation that demands that. The health of the economy does too.
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I bumped to work over heavily potholed roads this morning. Reflecting as I travelled to my job in the understaffed, under-funded NHS how crazy it is that when all this work needs to be done, when all the people are potentially there to do it, with all the resources that are needed to do the job, our country’s descent into poverty and decay continues unabated. All for the supposed lack of the money – digital blips in the Bank of England’s computer, that would facilitate the much-needed investment. The artificial scarcity of digital blips is all that’s standing in the way of progress!
A timely blog, Richard. I shall be going to this Resolution Foundation event: https://www.eventbrite.co.uk/e/healthy-finances-how-to-pay-for-the-nhss-70th-birthday-present-tickets-46719791153?ref=elink&mc_cid=b49c721b7d&mc_eid=16390ba2de. Do you want to really upset them too?
I’ve been trying to convince my colleague that the NHS is meeting real demand and so cannot be considered as non-productive. Who do you think is right?
You
No contest, Carol.
Your colleague is confused. Possibly delirious.
I speak what I perceive truth to power
I don’t seek to upset anyone
Sometimes it means I do though
Carol Wilcox says:
” Richard. I shall be going to this Resolution Foundation event………
…. Do you want to really upset them too?”
The outline of the discussion agenda doesn’t lead me to expect you are going to hear anything very interesting, Carol.
Unless I’m prejudging them unfairly….. and they are full of sensible suggestions for dealing with the challenges of the NHS in a 21st Century economy, maybe you would be so good as to upset them yourself, and save Richard the trouble. 🙂
I tried asking a couple of pointed questions at the last RF event I attended – I was just ignored:o(
Carol Wilcox says:
“I tried asking a couple of pointed questions at the last RF event I attended — I was just ignored:o(”
Perhaps you should treat as foreigners….shout loudly, and slowly, and use a lot of hand and arm gestures. (?) 🙂
In the meantime thanks for persisting.
Never forget, Justin Welby is a former oil executive – a compassionate one, but a former player in the world of high finance all the same, so influenced by their views on how the economy functions. Not much MMT there – except for the bit about Governments’ ability to bail then out with “magic money tree” money when necessary.
And an Etonian
Andrew Dickie says:
” Justin Welby is a former oil executive — a compassionate one, …
An interesting concept.
I wonder how he demonstrated this ‘compassion’. I’m not suggesting he wasn’t compassionate, but It does make me wonder how such compassion was manifest.
Andy, forgive the imprecision of my language.
When I say “Justin Welby is a former oil executive — a compassionate one”, I am not, as it could be interpreted, saying he was a “compassionate oil executive”, a matter or which I have no information, but that he now demonstrates compassion, as I believe he does. So I meant “a compassionate man, who used to be an oil executive”, rather than “a man who used to be a compassionate oil executive”.
My real pount was that we should always remember his background in finance and in an extractive industry, as potentially subconsciously influencing his understanding on the economy, leading him to opt for the knee-jerk, “household model” of the economy, and opt for a tax rise, rather than the (alas still heterodox) MMT solution of simply creating the funds and spending them into the economy.
Thanks, Andrew Dickie, for clarifying.
I see, now, entirely what you mean about the Most Reverend ‘gentleman’.
I expect he means well.
In his interview with The Guardian Jeremy Hunts says: “Now the economy is back on its feet and growing much more healthily we’re able to have a discussion for the first time about [a] significant increase in resources, and that presents enormous opportunity for the country in terms of the type of NHS that our children and grandchildren will experience,” (https://www.theguardian.com/politics/2018/jun/06/may-to-give-nhs-significant-cash-boost-jeremy-hunt-reveals).
This is Hegelian Dialectic 101. Create the problem (usually by blaming a 3rd party) – elicit (via the media) public reaction demanding a solution – then offer a solution. It’s a strategy that has historically worked well for Tories and I fear will do so again at the next GE.
So true
And also the myth that we can have this if the private sector can afford to pay for it
John D says:
“This is Hegelian Dialectic 101….”
Love it, John.
Neoliberal BS, perfectly labelled like a butterfly specimen and pinned to a board .
I wish I could do that.
(Thinks: You will, Oscar; you will.)
Even better – whatever money the Tories decide to find will not be able to resolve the desperate staffing issues that are growing worse by the year. Primary care is on the point of collapse but private GP services are growing as people leave from stress, and a downward spiral is working. So then the Tories / Hunt will be able to say that the NHS is not fit for purpose, money has not made the difference and only the private sector can save us all – job done.
Erratum: Hunt not Hunts.
John D says:
“Erratum: Hunt not Hunts.”
No, you’re still not quite getting it right, John. 🙂
It very nearly was a Freudian slip or rhyming slang nor both, but seeing as this is a family-friendly site …. lol.
Let’s draw a line there ……
Delightful juxtaposition in the Guardian digest this morning:
” In a detailed interview he [Jeremy Hunt] has told Denis Campbell that Britain’s decision to leave the EU has contributed to NHS’s staff shortages; and that he is unlikely to be able to fulfil his pledge to boost the number of GPs in England by 5,000 by 2020.”
Followed by, after note of the demise of Mary Wilson (at 102 !) So it goes.
“…..Dacre relentlessly focused on what he believed to be the concerns of middle England, ranging from a tough line on immigration to taking a relentless pro-Brexit line …”
Isn’t it good to see joined up thinking at work in the UK establishment.
I think it was better world when bishops concentrated on their love of steam trains.
The CofE like so many other great British institutions has lost it’s way. 🙂
Tax whether being absolutely necessary or not for such purposes still has a transfer function and most of us here are of the view that the rich should be paying more. So if the archbishop was thinking of a fairer, more progressive tax outcome within this context he wouldn’t be entirely wrong.
I agree with that
It’s inherent in The Joy of Tax
Marco Fante says:
“…So if the archbishop was thinking of a fairer, more progressive tax outcome within this context he wouldn’t be entirely wrong….”
But then, as a professional communicator, if that’s what he meant he would have said so.
Furhtermore….
If that’s what he meant, he would have adopted the trditional sermonising technique of telling what he was about to say…than saying it….and then telling us what he had just told us.
On balance I conclude fairer progressive taxation was not in his thinking.
He’s not alone in thinking that way. The immediate pushback I get when ever the chance to talk about money creation [by government], is nearly always “that it will cause inflation”. The ‘spend first tax later if needed’ notion is more readily accepted. I appreciate that’s my own anecdotal experience.
But all such experience is worth sharing
Agreed