The FT reported last night:
Boris Johnson is preparing to spend billions more on health and social care, including a hospital building programme and a far-reaching plan to ease the costs of care in old age as he seeks to lay out an expansive post-Brexit reform agenda.
They added:
But questions are likely to be raised about how new PM will fund the required spending.
So let's come down to what this is all about.
Let me say it loud and let me say it clear. Boris Johnson does not care how he is going to fund these promises. And that's because he knows he has a central bank. And he knows it can create money. And he knows he can use that power to guarantee he wins an election. And that is exactly what he intends to do.
So whilst Labour has been going round writing fiscal rules that it knows are meaningless because they could never apply and at the same time they have been rubbishing modern monetary theory when they know that it describes how the economy really works Johnson has been absorbing all this. And like the Republican glove puppet he really is he has decided to do what every GOP President has done in recent decades, which is ignore all financial constraints. That is because he knows, first of all that, he can because deficits can be covered by quantitative easing, and second that buying the electorate is the result and that's what he wants to do.
And if Labour loses as a result of falling into this trap they have only theselves to blame because some of us told them to change their ways long ago and they did not. Now they'll have to instead present themselves as the austerity party. Which is a sure fire humdinger of an election strategy against Boris Jo0hnson and a promise of lots of new hospitals.
Of course I am annoyed with Labour. For a long time it's been known that ‘How are you going to pay for it?' is stupid question. The answer has always been ‘By putting people to work to do it' and now it is the Tories who are going to exploit that fact for populist gain, with outcomes that will overall most likely be deeply prejudicial to many in the UK. But Labour has never had the courage to break the austerity narrative and now Johnson will. It's deeply discouraging.
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I agree Labour should have been spending the last 3 years explaining why austerity was never necessary. However the rightwing press will hardly challenge Johnson on this whereas they would have crucified / will still crucify Labour.
Alas Labour lacks courageous politicians and at least half of them are still signed up to the household budget theories.
Indeed.
The Tories play politics on easy mode.
I think the absence of a decent communicator has been part of the battle for Labour. That and not being to agree on what policy was actually going to be. Boris seems to be able to attract a team around him that support his weaknesses and play to his strengths. How long that will last is anyone’s guess but at the moment people will be in awe if he makes it past Halloween.
«explaining why austerity was never necessary»
Austerity actually never happened: millions of southern property owners have had booming lifestyles thanks to ballooning housing costs, and finance executives and traders have hugely benefited from lots of credit at 0% from their best mates at the BoE.
Austerity used to be when both credit and fiscal policy were tights to reduce consumption and this imports. This has not happened for many decades, the combination since 1997 has been right fiscal policy with extremely loose credit policy. With an inflation target of 2%, if the government tightens fiscal policy to create a permanent semi-recession, the BoE is “forced” to loosen credit policy to drive up asset costs to create a “wealth effect” that increases private spending.
G Osborne himself explained this very succintly:
“A credible fiscal plan allows you to have a looser monetary policy than would otherwise be the case. My approach is to be fiscally conservative but monetarily active.”
Please don’t be ridiculous
Austerity emphatically happened
Its targeting was just very selective
Blissex says:
“Austerity actually never happened……..”
I’ve been hearing this from the finance sector for nigh-on a decade. If you haven’t seen it it’s because you are feather-bedded where you are ….lucky you; living in the artificial world of government benefits which are readily available to the select few.
Most of us have known for the 10 years of it, Austerity, was a political decision.
It kicked off with the love note left by Brown (nulabInc) that there was no money left.
Which allowed Cameron and Cleggs famous Rose Garden alliance to inflict it.
With the support of the Blairite PLP.
These rump of the MP’s have NEVER defended THEIR record in Office, everytime May, or the tories brought up the record of the PREVIOUS Labour government! Why don’t they?
How will the hospitals be staffed if doctors and nurses are being deported/refused admittance?
Good question….the sort Labour should be shooting back
That does of course presuppose that all those spending promises survive the next General Election.
This is a Prime Minister who tells the truth only by accident. I’ll believe in the new hospitals when I see the cement mixers queuing up at the building sites
Roy Gillett says:
” I’ll believe in the new hospitals when I see the cement mixers queuing up at the building sites”
Oh I expect they’ll happen. Big wins for the property development folk, and how is Boris going to flog-off the NHS to the Americans without a decent property portfolio. An unstaffed hospital still in its cling film wrapper will sell much better than one which is struggling.
Boris could make this happen easily enough and he’s making the ‘right’ noises.
I’m wondering if the tories will be hoist by their own petard here, though. Having played the ‘household economy myth’ card vigorously from Thatcher onwards and convinced the electorate that public spending is profligate and bankrupts the country will this volte face work for them?
On the other hand, had this spending been proposed by Labour it would have provoked screams of horror in all quarters and I don’t notice any horror at Johnson’s proposals. So perhaps the other myth, that the tories are best at managing the economy, has proved to be more potent?
Shouldn’t you be applauding the fact that the Prime Minister appears to accept MMT? I agree it’s a terrible shame it’s not a Labour Prime Minister who has seen the light, but isn’t this a game changer anyway?!
Maybe…….but in the wrong hands it is a danger
Dangerous in the short term, yes, but in the long run this may free all future governments from the shackles of pre-MMT economics, which could truly transform the county’s fortunes.
Absolutely dangerous in the wrong hands – no doubt about that.
Johnson is known to be hostile to detail – it does not augur well.
So, Labour now has repeated, or mimicked by different means, the mistake the Two Ed’s made in 2010.
The Two Ed’s didn’t spend at least the first 18 months of leading Labour in attacking the nonsense that Labour, rather than a global recession, caused the Great Financial Crash, allowing Cameron in 2015 to pin the whole blame on Labour – using Byrne’s asinine handover letter to deadly advantage.
Now we have Corbyn and McDonnell writing fairy tale fiscal stability rules and holding their noses over MMT, when they should have been educating the public about how the “spend and tax” economy really works, leaving Johnson to introduce PQE, and even the Green New Deal!
Am trying to keep the faith, but it’s increasingly hard work!
I agree…
The response from James Meadway on Twitter is pretty depressing
Apparently Labour can revive Clause 4 and that will answer the problem…..
I despair
Thank you, Richard. I’ve been making the same point (less eloquently!) btl on Aditya Chakraborty’s article in The Graun this morning because, in an otherwise pretty damning and dispiriting (and fine) piece, he missed the very point you highlight.
Whether Johnson believes MMT or not is neither here nor there – he knows the truth is that he can spend, and worry (as if!) about it tomorrow. And, as I think I may have asked earlier, if he builds hospitals, pays nurses, recruits coppers, creates jobs/invests in infrastructure, sorts out social car and gets rid of food banks, then WHAT is the point of Labour?…
He will, I suggest, consign the Labour Party to the ruin which, until very recently, looked like being the fate which awaited the Tories. He will be feted, and lauded…and ‘loved’ as his ego demands.
The worst…the very worst…thing Labour did was to ditch Corbynomics (remind me – whose ideas were those?!) It looks like Boris has now picked it up…and is running with it!
Alan Moore,
I read the Chakrabortty article too and the many comments it has garnered and the very many ‘commentators’ who are using it as an opportunity to play the man and not the ball as is usual now (an old Campbell ploy). Aditya knows that the aging ‘silver backs’ need chasing off! He also is not unaware of the army of trolls unleashed – as his personal responses to many attest.
Of course the Brexiteers sailing into government promising a hard brexit and blatantly dressing up in a sheepskin in full view is a danger. If the voters really are that impressionable! The technocratic Cummings (the Strangelove of Brexit) has done his calculations and knows that it is still possible they are!
If the dying embers of his lies can be conflagrated with a dose of petrol (mega spending pledges) for one last flash.
I personally think that the voting public has changed since the referendum and many will know they were played. That does not mean they will admit it and suffer the ridicule of having their decision ignored. It is matter of respect. (Mark Twain noted it)
The tory coffers are brimming and they are splurging – is it actually as a precursor to an early vote? Or is it an attempt to get Labour to splurge their limited election funds? As well as reveal their election strategy?
For all the talk of public spending – it does not turn into actual results within weeks and months – how is that Liverpool Hospital going after the Carrillion collapse? How are the various other pfi failures and council failures being sorted? What funds are schools hoing to get in a months time? All these ate the local issues that will matter in a GE. Not just the msm media narrative and vox popped ‘opinions of the people’.
Yes the hard and clear lined arguments need to be made so that the voters have that clear choice – once an election is underway – which is not yet. In any major battle it is important to not let the lines fall apart by reacting to rushes and ruses from the opposition (if you understand what i am clumsily implying)
Aditya is brilliant, and consistent, as is Professor Murphy. I expect the apparatchiks are not unaware of both their warnings of complacency. Only a election will show.
So your invention of, and strong advocacy for, MMT has enabled the Tory party to gain the electoral upper hand in terms of benefitting from its implementation ?
Congratulations, real proof of your lack of political allegiance.
You must be over-joyed ?
Since it’s glaringly obvious that I am not why post such a ridiculous comment?
Apologies, I appear to have inadvertently misrepresented your aims. I thought that your previously stated lack of allegiance to any political party, and simple wish to see your desired policies implemented, would make you happy with whatever party decided to do so ?
Surely you should be applauding plans to deficit finance spending on social causes ? I don’t understand how your much advocated plans for MMT can suddenly be ‘deeply prejudicial to many in the UK’ simply because it is not the Labour party implementing them ?
I equally don’t understand that you now appear to be expressing political bias at the expense of your support for MMT. You can understand people’s confusion ?
If you think Tory policies aren’t deeply prejudicial to most in the U.K. you are deeply mistaken
Perhaps Johnson doesn’t care about funding his spending promises because he doesn’t intend to keep them.
Perhaps immigration will not be reduced because UKIP (as a bosses’ party, with the bosses benefiting from immigration) never intended to reduce it. They certainly backed away after winning the referendum. And May didn’t get the memo that it was only a facade.
After Brexit, sterling is collapsing. No-one’s complaining. Yet the scare-mongering in ’97 of a sterling run in event of Labour victory led Labour to make the Bank of England independent.
Bottom line: the Tories are good at politics, Labour are rubbish at politics. Partly because left-wing politics is about solving problems, while right-wing politics is about marketing. And maybe private school education helps.
The irony is not lost on us. Not sure how Boz is going to bat down …. But how your going to “Yawn, sorry” pay for it type of questions. At least my Singapore passport holding spouce had not yet been deported or lost her post in the NHS. But she is thinking if having a full English just in case.
Richard, I fear your “loud and clear” paragraph is exactly right but I simply do not believe Labour would get the same free ride from mainstream media that Johnson will get over fiscal easing/MMT/magic money tree/call it what you will. The magic money tree was put to work to buy off the DUP and to create the no-deal war chest. I don’t recall MSM getting as exercised as they did over Labours fully-costed 2017 manifesto spend and tax plans.
Mike is correct – Labour are rubbish at politics, the Tories are great at bulls**t marketing and the confidence/arrogance purchased through the private school system has a great deal to do with that.
And as for Hugh Cornwell (hopefully not from The Stranglers) MMT is not the silver bullet. Context is everything and against a background of imported inflation due to the weakening of sterling, possible wage inflation due to EU and non-EU workers moving abroad or not coming here, and Johnsons expansionary public spending plans and tax cuts (that far exceed anything Labour planned in 2017) you might find yourself deeply prejudiced by a serious dose of inflation.
Mr Johnson is robbing Labour of all its policies and calling them his own. He is ending austerity. He is loudly planning on building or investing in hospitals, education, police, social services, infrastructure, boosting consumer spending, and so forth. All policies long called for by Labour. Now all Labour can do is peevishly argue for strict fiscal rules and financial responsibility, and appear the mean minded nasty party of negativity. Labour had its chance of opposing the Tories — and blew it. Too much fence sitting and internal bickering and nastiness has left the party weak and impotent and despised by the electorate, and following a leader whose idea of storming the Bastille or Winter Palace and inspiring the angry and disaffected to fight fiercely manning the barricades and storming the Tory fortresses was to grovel miserably around in the corner of a railway carriage and whine pathettic insipid complaints.
What will be interesting will be to see how far the free market, low tax, minimal state ultra Thatcherites will be prepared to give Mr Johnson the support he needs to continue as PM, while he embarks on a supposed one nation money splurging Keynesian maximum state expenditure policy totally at odds with the state and tax minimalist philosophy of the likes of Messrs Rees Mogg, Redwood, and others. My assumption is that they will go along with his policies for so long as he will get the UK out of the EU, and then either they will force him to revert to Thatcherism, or silently knife him. Mr Rees Mogg, good conservative Catholic that he is, is quite happy to give his support to a serial adulterer, several times unmarried father, living in sin at number 10 with his girl friend, a man rumoured to have suggested an abortion, if it means winning Total Brexit. Likewise, Mr Rees Mogg will pack away into safe storage his Thatcherite economic philosophy for so long as the extravagant golden hero enthusiastically blasts away with his Brexit artillery. Then perhaps, the knife in the back. This would be easier after Brexit, more especially if there is economic chaos that can be blamed on this blond latterday Henry VIII. It could yet be Jacob Rees Mogg (Esquire) as PM in twelve months time, and we shall all be using biblical measurements, calculating lengths and distances in cubits and leagues, and weights by the shekel and ephah. Plus double spaces after full stop.
Meanwhile, it would not be surprising if Mr Johnson threw the DUP under the bus by agreeing to NI being in the customs Union and even the Single Market and having the EU border down the Irish Sea, so to solve the insoluble border question. It would satisfy the many Unionist Remain voters of the 6 counties and keep the EU and Mr Varadkar happy. His own Tory Unionist supporters in England — Rees Mogg etc — might be happy with this solution, for the six counties would still legally be in the UK, and the Backstop issue would be removed, clearing the way to happier negotiations with Brussels, or No Deal, or some other wondrous moment of fulfilment. He would be gambling on winning a high enough majority in the next election to be able to rule without depending on Arlene and Dodds and co.
Despite what many of us believe in terms of MMT it is a fact that the majority and especially the Tory press do not. I seem to remember incessant questions about how labour were going to fund a few thousand police being rammed down our throats during the last election by The Mail, Ferrari and countless other gleeful Tories at the expense of Diane Abbott. And yet now a deafening silence from the same mouthpieces who seem totally unconcerned by their normal fixation as to how things will be funded.
Laughable if it wasn’t so depressing how they get away with it.
Surely if Boris were to end austerity and unleash massive expenditure along the lines suggested, the basic reason for it would not be to improve the lot of the ordinary people of this country, it would be in order to provide more assets that the Conservative state could flog off to corporate interests from the US, the Middle East, China [their money is money too, no matter how much blood might be on it…], et al? Then, hey presto, large tax cuts to bribe a gullible electorate with, but more significantly, massive privatisation by the back door. If he’s promising to spend money on the National Health Service, my money would definitely be on that as his end game.
I thought you were non party political Richard? Or is that only when applying for grants from charitable trusts?
I am not party political
I criticise all parties when I think it appropriate
And that is quite often in the case of the Tories
But you may also notice Labour seems to have little love for me
So your comment is just wrong
Bryan Law
(Excuse me for butting in here RM)
That comment is aimed below the belt. You are shown up for making it.
This blog and its owner is independent in my opinion. He writes his own opinion on his own site. He is clearly not a political partisan. Your accussation is risible.
I don’t know why it was published.
I published it because it is risible
The big concern has to be that in Johnson’s hands, MMT could end up being thoroughly discredited. That would be a disaster in itself in addition to that of the effects on the economy in my view.
Do we believe him? Unfortunately, Johnson, although he is many things which I regard as abhorrent, he is certainly no fool. He is not stupid. His whole strategy, from the commencement of the referendum, is to see which way the wind is blowing, and then to make all sorts of promises, no matter how outlandish or impossible to keep so as to gain the approval of those who are easily swayed by “charisma” and “talking up” the possibilities. After three years of dull and dismal, robotic “dancing” May, who managed to depress just about everyone, he has breezed in as the man who will fulfil all our hopes with is Alice-in-Wonderland promises – most of which he cannot possibly keep.
But the key is to make the promises, not to keep them, and find those who can be blamed for his failures. The second key is to move on, before his past catches up with him and there is no escape. He may have miscalculated on that one, especially if the EU point to who is actually to blame.