Rafael Behr has a comment piece in The Guardian this morning under the title:
At the heart of this NHS cash boost lies a dishonesty: tax
His argument is:
In her speech on Monday, May boasted that the new plan involved “no increase to people's taxes”. That should set alarm bells ringing. In no other field do leaders get to conjure multibillion-pound investments from thin air. But British politics is steeped in the fiction that good things happen by magic.
So The Guardian is employing a commentator who does not understand that governments have to spend before they can tax, or the money to be taxed does not exist.
And who does not understand as a result that the spending pays for the tax.
Or that there is such a thing as a fiscal multiplier, and that it is very large in the case of the NHS, meaning that this spend may well recover more tax than it costs.
Let alone that governments may quite legitimately run deficits if they so wish.
And that they need to do so as a matter of fact to create the money that the economy requires.
Whilst apparently being unaware that the government and the rest of the economy are fundamentally different precisely because the government can create fiat money, at will. It is, after all, just a government promise to pay.
All of which is really rather worrying.
And should be a disqualification from commenting on economics. But apparently isn't.
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Thanks, Richard, for pointing this bit of incompetence out. I was going to write and tell him what you have just said, but I guess I now don’t have to. Of course, you and I know that Behr is not the only economically incompetent journalist working for the Guardian.
Quite the opposite. As more people begin to understand the big lie at the heart of the “household budget” narrative, it is pushed more and more relentlessly. It is well established and deeply embedded in the public mind, told as truth in MSM and political discourse since Thatcher’s day. It is not easy to dislodge, but it is beginning to happen. That scares them, because it is the sole underpinning of austerity.
It is utterly debunked by the banking bailout, by the “magic money” for brexit contracts and on and on with the examples. Sites like this and social media outlets are at least opening a discussion about this previously unchallenged premise on which much that is frankly evil is built. For if that premise is accepted it is easy to build a logical castle in the air on that foundation. This emperor has no clothes, but the more little boys there are the more those who benefit from it bellow how beautiful his outfit is.
Thanks for your comments. I started reading his article and didn’t get to the end of it. It leaves me rather frustrated that nowhere in the media does MMT get a mention. I get the feeling that the only MP who understands MMT is John Redwood based on some comments he made a few years back. Actually, maybe the entire Tory Party understands it but won’t let on because they like to play the blame game on Labour for the financial crash. If they admitted that MMT was how it all worked austerity could end instantly. Shame the Labour Party allows the media to frame their message.
There are others, but they are limited
I think Caroline Lucas might
Angus McNeil of the SNP emophgatically does
Dr Phillipa Whitford, SNP Shadow Health Spokesperson, is I think another or at least close to accepting MMT as valid.
Have you considered sending a copy of The Joy of Tax to every MP? It is not too long or complicated for them and at least a few would hopefully read it? I thought about buying more so I could send one to every MSP in the Scottish Parliament, but that is a luxury I can’t afford just now. 🙁
That would cost several thousand pounds – and I do not have that budget
I for one would gladly chip in £10 for one copy of The Joy of Tax to an MP. A crowdfunding campaign I think would easily hit 600.
Any thoughts anyone else?
I am sure copies could be secured at less than £10 each but there would be a cost to sending them…..and a need to organise it
Anyone keen?
“……emophgatically….”
This could yield the perfect adjective to reinforce ‘clusterfuck’
An Emophgatical Clusterfuck. Brexit in a phrase. (Apologies for drifting off-topic) 🙂
Oops
Rod
Yeah I’m convinced anyone working at a senior level or in a treasury/BOE facing technical capacity in commercial banking or investment banking fully understands how our money system operates and that their understanding is broadly the same as MMT.
Similarly anyone working in the BOE or at the treasury cannot really avoid understanding MMT.
Given the ranks from which Tory MPs are drawn it’s very hard to believe fewer than a substantial number have direct experience of MMT in action or are close friends with people who have such experience.
This is largely why the radical progressive left is so disastrously ineffective: mostly they have no clue how the real world operates and yet are locked in a political battle with people who know exactly how it actually is.
When I attempt to enlighten such progressive radicals they brush me off and even accuse me of being a conservative sent to dupe them or a simpleton who has himself been duped by conservative arguments.
To some of them taxing the rich is the next best thing to the real vengeance that only a violent revolution can bring. Obviously they aren’t keen to hear the existing system is actually pretty excellent and just needs to be utilised to its best effect by honest representatives of an informed electorate and via a competent and unbiased civil service.
And don’t even go there with them that the free market can deliver if it’s made to be actually free via judicious and fair regulation…
Hi Richard,
The other part of this article that alarmed me was that it seemed to be going down the path of blaming people for their ailments/refusing treatment for lifestyle-related problems . Whilst all the while food companies are free to push unhealthy food onto people in a consequence free environment!
It’s disappointing that an article of this type/tone was published in The Guardian.
Neil Robertson says:
“It’s disappointing that an article of this type/tone was published in The Guardian…”
Yes. I agree. It’s come to the point where it needs to be read only as one used to read the Mail; in order to see what the current line in establishment BS is.
Sad indeed. Should never have left Manchester from whence some perspective was possible.
I’ve seen it suggested that balanced budget orthodoxy should be regarded as the new gold standard.
In many ways it is more insidious than gold because it seeks to prevent governments creating money and put at the centre of the economy instead money creation by credit at interest . Which puts all the power with the private sector of the City and the state simply in a role of passive acceptance.
That it seems to me is why balanced budget orthodoxy has become so well entrenched in the neoliberal narrative as it too is fundamentally and by definition anti-democratic.
When money is permission to use resources then who creates it is a question that goes to the heart of democracy.
You would have thought that would be meat and drink for any politician and you can see how badly captured the democracy has been when it isn’t.
Well said
And its because I dont understand economics nor finance that I dont waste people’s time here by commenting on it. I’ll leave that to others infinitely better qualified
Thanks Steve,
That is very considerate.
Steve, stick with it and you will learn a lot.
Thanks Ian,
My partner, for some reason, watches Daily Politics, to me a typical BBC upper-class twit show of people I wouldn’t invite for a drink. It’s not them having their say that offends me, but the regular absence of people with something interesting and perhaps novel to say. The Guardian and most main media are stuffed with these stuffed people. Richard is opinionated. Thank goodness. I’d be listening if I disagreed. In fact, a few months just commenting here has changed some of my thinking and directed some reading. Anyone needing reminding what an ad hominem toad is could watch Chris Grayling’s performance today. The paucity of our public debate and those controlling access is plain.
I think Behr’s piece falls into the same category of verisimilitude as the latest scam calls from HMRC advising people that they owe tax and that the debt can be paid by iTunes gift cards.
@ Graham Hewitt
I definitely get the humour – but when you’re indebted as lots of us are, then any way out seems like a great salvation.
Please don’t reply that I’d make a better con-man than you – even if it’s true. But it does suggest there are unscrupulous but clever people who actually understand how the society our governments have created works.
Rafael Behr is a Blairite jackass and that is his allotted role at the Graun, to be the resident Blairite jackass. He is ably assisted in that role by Jonathan Freedland who is disadvantaged in that capacity by virtue of being one shade smarter than Behr.
It is no surprise that Behr is ignorant of the multiplier and circulation of money or the implications of such for taxation and revenue. For the likes of him the misunderstanding of money and government finances isn’t a disqualification its a prerequisite.
Then again we could look on the bright side. I wouldn’t necessarily want a smarter person occupying his allotted role. Would you?
I want to get this off my chest. I am old and pretty well qualified numerate and quasi literate. I commented on a Guardian subject about the ability of people like myself to pay more tax. Someone perhaps from here, simply replied “Governments spend and then tax.” It has changed the way I think and I am grateful. My research led here and to other places. I believe that the myth that is Mrs Thatcher and her grocery shop analogy hid the truth from me for 3 decades. I accept that. Now to do something about it. My friends still glaze over when i witter but it must be done. Do any persons have any strategies to try on the unconvinced? I do not even see this as being either left or right it is just knowledge. Knowledge is very powerful and has been used to create a society which misunderstands money. Rant over and thank you all for your contributions to my understanding.
Denis
I wish I knew the answer to that
I am being encouraged to write another book linking all my themes – but how it gets into mass understanding I do not know
Richard
Behr has formerly been with that hotbed of financial and economic progress The Financial Times and the chief leader writer for The Observer when it used to come across as overly self-conscious about any thing it published was too far to the Left.
He is a generalist really in my view and his viewpoint on purely political and policy issues can be quite illuminating at times.
If anything, he is a mirror to the real world about how badly understood MMT is and that means that in this context he is serving the role as a useful idiot pointing out that there is still a lot to do as far as MMT is concerned.
Its not strictly MMT that he is missing Pilgrim,
Its not even strictly Keynesian, not any more, It just basic national accounts. Income earned from the govt. spend gets taxed, the remainder is mostly spent (earnt by someone else) then taxed again and so on on etc.
Indeed
One third of almost government spending comes back immediately in tax
And a fair amount more very soon thereafter
And that’s without considering anything very much in more sophisticated multipliers
Richard Murphy says:
Any thoughts anyone else?
You can lead a horse to water, but you can’t make it drink. In my experience if you give people books they never read them unless they asked to borrow them.
Parliaments have libraries and members are (highly) paid. They can use Amazon aswell as their constituents can, and almost certainly reclaim the cost as necessary expenses. If they want to read stuff, they have access to it. They know it is there to be read and they (many of them) simply don’t do it
The only solution (and I admit it’s a longterm solution rather than a quick fix) is not to elect mentally lazy, illiterate and wilfully ignorant representatives.
I’ll not be sending a tenner. I haven’t got one actually, and if I had I’ve more pressing things to spend it on.
Disgusted. (Not of Tonbridge Wells)
That’s sort of my sentiment too
I have a pile of books I have been sent that are worthy and unread
The transfer of learning is extremely difficult to describe. The standard model is this chain: courses – reactions – learning – changes in individual behaviour – changes in group behaviour – changes in organisational behaviour – improvements in society. There is allegedly a stock of evaluation knowledge that can be used to intervene at any stage, and a feedback loop. Sadly, this is facile nonsense that can be made to look intelligent.
Most of us, and teachers and academics are particularly culpable, barely examine textbook material we use and treat it as somehow basic material when much of it is misleading dross already. Deep codings in the classroom, university and management training concern the hidden teaching of discipline, class-based civility and non-ideological politics (clearly a weird fantasy). We know the core of this as surely as we know MMT (or positive money) allows spending before taxation, but still use the evaluation techniques the research demonstrates as inadequate (happy sheets etc).
Let’s say Richard writes a really concise green way forward MMT plus down-line fiscal control through tax plan. I’d likely be convinced before he laid finger to keyboard. We crowdfund copies for all 650 MPs. This actually gets nowhere near the needed intervention to change their minds, 90% of them didn’t know banks create most money when polled by Positive Money (the activist group rather than the principle). To shift people’s beliefs you really need to surface their existing world-views. This is tough as we know most people don’t engage in deliberation but dig in to denial (and retribution) very quickly. We know a lot about this at much the good sense level of positive money as descriptive. I’d put my mortgage on being able to demonstrate with a few multiple choice questions that our MPs are as economically illiterate as chimpanzees poking their ‘answers’. I don’t mean this as an insult. We are up against skilled incompetence.
Your last points are key
And yet tipping points happen…..
Tipping points happen. Oh yes, they do.
Consider the tipping point in the fight against plastic waste.
Consider the countless years you used to hit a brick wall trying to convince family friends, even strangers — anything with a pulse in fact- that plastic waste was the issue it is. Consider the small actions you took that you thought came to nil.
Consider now how everyone from your uncle Bill to your neighbour’s cat Picasso are collecting plastic to fill eco-bricks and using straws made out of camel’s hair.
What is the equivalent of The Blue Planet in the world of Spend First Tax Later, in the world of MMT?
The consequences of plastic waste can most easily be seen in the sea. What are the consequences of not exercising MMT/Green New Deal? What is the MMT equivalent of the sea?
What is more, what if tipping points coalesced, and the occurrence of one increased the likelihood of others…
In such fertile and feverish times even the smallest action, conversation, gesture, sentence can (and does) create a myriad of connections and possibilities our brains cannot know, triggering micro-tipping points we may never know happened…Until the tipping point actually does.
Fortunately the Guardian has good people too
https://www.theguardian.com/global/shortcuts/2017/oct/29/how-the-actual-magic-money-tree-works
… as Tony Benn said… “It’s the same each time with progress. First they ignore you, then they say your mad, then dangerous, then there’s a pause and then you can’t find anyone who disagrees with you”…