I have been reading Prof John Weeks' book 'The Debt Delusion'. I should say, upfront, that I know John, and enjoy his company: he is a fellow member of the Progressive Economy Forum. The book would be worth reading without that association.
In essence, John uses the book to tackle six myths, which he identifies as:
1) We must live within our means;
2) Governments should balance their books;
3) We should tighten our belts to achieve this objective;
4) Debt is always bad:
5) Government debt should be avoided by reducing expenditure and not raising taxes;
6) In combination, these mean that there is no alternative to austerity.
Readers of this blog will be familiar with such claims and that I, like John, have no time for them. For this reason I recommend the book. But I also do so because it is intensely readable. This is an economics book that uses the odd graph and table, but most certainly not formulas. Instead John uses an easy narrative flow to make his argument.
I take this example to prove my point. When dealing with the first myth, which is in many ways the most economically dangerous John opens his chapter saying:
Perhaps the most difficult of all the austerity myths to pin down is the injunction that "we must live within our means". The message deeply embodied in this phrase has little relationship to the words. Rather, it serves as the apparently definitive answer to the question "Can our government spend more?" We can imagine a politician speaking at a meeting of constituents, and a concerned citizen asked, "Why is it necessary to reduce spending on school meals?" And the elected representative answers, "The overall government budget is in deficit and we must live within our means."
If the constituent retorted with "Why must we live within our means?" the assembled group might break into laughter, because every sensible person knows " we must live within our means." If the constituent instead went to the heart of the matter and ask "What do you mean by 'means'?" the politician, if a patient person, might say, "I mean that the government obtains its money from taxation and we cannot spend money that we do not have." That would probably induce affirmative nods from the audience.
What are our "means" water or who determines them? What does " live within" convey? A dictionary provides no enlightenment. Equally vacuous is the closely related phrase, often applied to household budgets, that " families struggle to make ends meet." These cliches serve as emotional entreaties rather than practical guidelines, like "emojis" at the end of an email.
Starting in this way John gives himself the chance to explain that the constraints that we face are not financial. "Our means" very clearly is not defined by the relationship between government expenditure and taxation. If the term has any relevance at all, then it definitely refers to the capacity of an economy to meet the real needs of those who live within it. The finance follows.
For those looking for an explanation of this fact I recommend John's book.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
The arguments though are used by right wing to justify cuts in spending to welfare, health, education, etc, thus maintaining or even reducing taxes for the better off. Thus the neediest citizens have even less whilst the better have more. Hence the current increases in child poverty, homelessness, food banks banks etc. Remember Portillo’s efforts to show to manage a poor families how to manage their budget?
Thanks for the heads up, Richard. I seem to have missed it. I think you may be right that the style will ‘sell’ the book.
Another book!! Just in time for Christmas – thanx Richard.
Thanks for the recommendation Richard. I was inclining towards buying the book anyway (John Weeks endorsed Corbyn’s campaign for leadership in 2015), but your endorsement has convinced me further. Ta.
I enjoyed it
And liked the approach
It’s not heavy but worth it
Ok we all know taxation does not fund government services. We all know that the £ comes before anything, it is spent by the government into existence via the bank of england.
The question is though, if austerity continues, and i have no doubt it will if bojo gets in. What happens next? We have austerity, no investment into society and its infrastructure, and Brexit. People who are poor will be hit further, homelessness and food banks will rise. It saves the government money right, well that is the thinking. So they do not care if thousands live off food banks, or homeless. Why? Less money to pay out in benefits, and saving in housing benefits. After all if your homeless and die you do not need food or a home.
So eventually we will get tent cities, just like in the US. Look at Manchester city centre it is awash with homeless people. So the point is, when it gets worst, how bad can it be before people say NO. Will it ever happen? Oh i have no doubt it will but the question is how long is a piece of string. Once we get a hard brexit, the tories will suffer, but will blame parliament, labour, the aliens but not them.
The point I am making is tories love to cut, once they cut the homeless, the poor to the point there is nothing left. Then they move on to the middle classes, if they have not done that already with tuition fees et al. I remember in 1997 or something like that the tories were postulating giving loans to parents to send their kids to school from 4 – 18.
That is how low the tories had gotten and their lack of ideas was astonishing. Now they have one idea and that is to get brexit done by january 2020. Boris said on Preston tonight, no one will want to talk about brexit after the end january, because he said it’s all over. We know that is rubbish – so when will things unravel for the tories and the people say no?
[…] By Richard Murphy, a chartered accountant and a political economist. He has been described by the Guardian newspaper as an “anti-poverty campaigner and tax expert”. He is Professor of Practice in International Political Economy at City University, London and Director of Tax Research UK. He is a non-executive director of Cambridge Econometrics. He is a member of the Progressive Economy Forum. Originally published at Tax Research UK […]
[…] By Richard Murphy, a chartered accountant and a political economist. He has been described by the Guardian newspaper as an “anti-poverty campaigner and tax expert”. He is Professor of Practice in International Political Economy at City University, London and Director of Tax Research UK. He is a non-executive director of Cambridge Econometrics. He is a member of the Progressive Economy Forum. Originally published at Tax Research UK […]