I admit to feeling tired this morning. But the dog woke me wanting to go out quite early, and so I have been up and have been reading, as is my normal morning routine. A thought for a blog occurred to me, and normally I would have started writing. But I didn't need to write an early morning essay today, so I turned the microphone on my iPad on instead, and offer this as an alternative:
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Hi Richard.
I like the overall delivery and content.
Can I suggest that the bit about tax could do with a bit more of an explanation.
I know what you are talking about when you refer to tax, so am able to fill in the gaps. I’m not sure that if I didn’t already know, I would be able to grasp the jist of what you are implying.
If government wants to have an ambitious spending programme, taxes will need to be high.
This is not because the government needs to RAISE the revenue it needs for the spending programme through taxes. It can just create the money.
The high taxes are needed to remove existing (previously government spending) money from the economy to create the “space” for the new spending.
A better word than “SPACE” may be needed to describe what is happening, but the distinction needs to be made between taxes “raising ” money and taxes destroying money. It’s a bit if a “chicken and egg” scenario but is vital to the understanding. (Or at least it was for me!)
Noted
Accessible, clear, necessary and timely. Thank you.
Thanks
Seems the govt want to make money and send the kids back to school. Workers should go back to work but keep 2 metres apart and do not be irresponsible by using public transport. Oh and do not go to nice seaside resorts you will spread the virus. So to recap the govt wants kids back at school, workers to work, but not go on the bus. Workers should stay too metres apart and wear a fact mask. THE GOVERNMENT IS NUTS, THEY ARE BONKERS. Meanwhile the British Medical Journal lays into the government for the handling of covid 19, the BBC et al ignores this and parrots the govt line. https://www.bmj.com/content/369/bmj.m1932. Welcome to the machine, we are all set for a round 2 of mass deaths of covid 19. This is beyound party politcs, this is beyound politics full stop, this is people lives esp kids the govnment is playing with . Mean while Eton et al stay close till september. This govrnment needs to get its act togther or resign so a new govt can take over.
It’s basically a matter of distinguishing “means” from “ends”. The dominant ideology has money as the “ends”. What you are talking about here is the need for us to decide what we want…. our “ends” and then use money as a “means” to achieve them. Another excellent piece Richard… that you could just sit down, talk and record this even when tired demonstrates a deep grasp of the brief. 🙂
If I am honest, I was just sitting in bed…..and turned the mic on
Undoubtedly the walk fuelled your creativity. I assume the dog settled back down in its basket and gave you some peace to produce this recording. 😉
He sleeps for England!
Love it.
I was tempted to say… “you could say this or that, too”…. but on reflection it is best as is. It is a simple statement of a profound truth……. no doubt you will elaborate on various aspects on your podcast series.
The challenge is to get it widely understood.
Given it was wholly unscripted – literally I turned on and began to talk – it works as is, I hope
Issues will definitely be developed – clearly tax needs to be addressed in depth, most especially as it fits into MMT
“[The dog] sleeps for England!”
Out and out nationalist or unionist dog ? 🙂
He’s also been known to sleep for Wales and Scotland
I suspect a nationalist
Not a capitalist running dog, then.
🙂
Mr Murphy, I can’t quite figure out where you are politically and maybe that’s a good thing. But I feel that you are one of the most profoundly radical people in the wild at this time. Presenting this perspective is so important. Despite me having lost any hope that people are capable of adjusting their perspective, your communications leave me with a sliver of optimism.
This recording is brilliant, it cuts straight to the point and I think everyone should listen to this and try to understand what you’re telling them.
I am not party political, if that helps
My awareness of the power of inequality was created by the 11+ in 1969
I campaigned for comprehensive schools when 12 in the 1970 election
I was aware of green issues – and the danger of nuclear power – as a teenager in the very early 70s and read Schumacher before university
I began working as an accountant when 17 – in school holidays – and prepared accounts before going to university at 18
That made me realize that the economics I was being taught was pure drivel written and taught by those who had never seen the uncertain real world
I remain reddish / green, socially liberal, but opposed to that form of liberalism that says wealth has rights independent of humanity
I loved creating jobs
I think private business can be deeply creative
I am a democrat
I believe that government is usually a benign force for good but i can be corrupted
I hate injustice
I like truth
Deep down inequality still offends me as much as it did when I first encountered it
That does not mean I am committed to sameness
Loathing inequality means respecting our differences – in all their glory
I’m flawed
I know it
I want the world to be better than it is.
That’s it
Thanks. That really gives a good picture. There’s not much I disagree with except I think that governments are usually malignant insofar as they facilitate abuse of their own subjects and others more often than not. But society has to be managed somehow and government will have to be transformed to be a force for good if chaos is to be avoided (and I consider myself an anarchist).
It seems absurd to me that striving for equality is equal to wanting everyone to be the same. And I agree that private enterprise can be a creative force. Wealth can have it’s place but not be given power to influence how society works.
I admit I have never seen the appeal in anarchy
And I am awaremof what it is….
But this is a place where difefrences add flavour so long as offerred respectfully
Whgat irritates me is when they are not
Good stuff. Lucid and from the heart.
As well as the false ‘there’s not enough money to…’ argument that you address, I thought David Graeber made a really neat point today that challenges those who make that claim by turning the argument on its head and throwing it right back at them…
“what precisely do people mean by “getting the economy up again”? If the economy is how you keep people alive, fed, clothed, housed, etc, the economy was still running during lockdown. So in what sense is “the economy” coming back when lockdown is lifted?”
…Guess you call it the ‘there are enough real resources to…” argument 🙂
https://twitter.com/davidgraeber/status/1261648880321662976
He’s right
What we’ve not had is the froth
They mean, to paraphrase a reply in that thread, to enable the rentier the wealth extractor to get back to capturing an unequal share.
Time to move on from GDP and productivity and rich lists as measures of success. Endless growth is so 20th Century.
Excellent… You have a very good ‘Radio voice’…
Please continue with this format….
I intend to do so, and both the mire scripted and ad hoc ones
It may be true that most politicians, like most people, do not understand that the government can produce money, but it is not credible that Chancellors and BoE governors have not understood that for maybe 100 years. What is going to happen if and when the general populace realises that the money absolutely can be created for useful things like the NHS and care homes, just like that? Might the country become ungovernable? How are the limits to be explained? What ARE the limits? Is there a real danger that, just as the nasty Right Wing says, that millions of people might become shiftless, idle layabouts? How should the populace be educated and prepared for this wonderful change?
The limit is what we can do
Sustainable (I.e. green) full employment
Every time I read/listen to something on your blog/something you recommend, my foggy erroneous picture of the financial system clears a bit. However I guess I have lived too long with the idea that money is something real and is in fact an asset in itself; not debt. So I have a continuing problem understanding the crucial transaction in its minutest detail as to HOW Gov. creates money/debt. I hear that when the Gov. needs money it produces bonds; presumably computerised entries of a certain value bearing a certain time frame and interest rate. It then sells/gives? these computerised entities called bonds to.. the Bank of England/ financial traders/pension funds etc etc..who? And why does it need to do that when it could just spend the created money directly into the economy ..to someone it wants to build a bridge for example or to provide funds for those who have lost their job during the pandemic? I just need a slow clear explanation of the actual tiny transactions required to facilitate money creation at the moment of conception as it were!
I will try to do it…but the above ordering is wrong I am afraid…
This is high on my list to do
I’ve just been reading a piece in the Guardian, that stated that “The government has to start funding its deficit with “perpetual” bonds, never to be repaid…” In reply to which to which I commented:
“The Government is funding its deficit with bonds that not only are perpetual, but also zero interest. Otherwise known as money. Which will be accepted as payment for taxes. And hence repaid.”
Hopefully I’ve got that right.
You have – it may be a blog tomorrow…
Bravo
sorry not to have been in touch for a long while
what about :
a lot less froth via
A) perhaps lets use as an example 20% of pre-lockdown levels of consumption as essential – a line in the sand i.e. there could be many fewer cars on roads, fewer planes in air, etc going forward – by quite a margin. then Everyone with a job can save something. Richer people can save a bit more.. [ Lets get a floor on depositors’ savings rates of, say 5%.. At least for ages up to 30 to assist house purchase deposits to build up – and perhaps over 70s who have pension pots perhaps. perhaps only up to £100k savings levels on deposit, helping liquidity for banks
B) As lockdown ends allow pubs, etc, allow services to push consumption up to double the 20% – so that is 40% of pre-lockdown.. Or Perhaps just aiming for half. everyone aiming for half their ‘normal’ spending if they can.
C) I applaud your emphasis on green, even if it means as you have said before, green QE money.. that could be 20% also on top of the 40%, so a total of 60% (or 70%). As Martin Wolf said in Financial Times 29th February 2020 on Carbon Trading – almost everything has a carbon use factor which we need to get down. I’d put a figure of at least 1lb weight of CO2 for every £1.00 money used.. £50k = ~ 20 tonnes OUCH!
D) a good chunk can be what i call eco-fit of homes and buildings and with low-cost money- can then be done – an Ultra-insulating envelope, which then needs solar-collecting and warmth storage under the building. Could amount to a greener deal without the payback if ’20-year money’ term can be introduced for the created money (fee-based at discount 1.5% means the cost equals the savings expected – end-of-term) – at 1 million homes and buildings per year at average £40k per unit that would be £40 billion p. a. cycling thru the economy. i.e. non-repayable on these special purposes not unlike your MMT – but essentially – with a lid on the ‘borrowing’.
E) further to my previous submissions a charge on created money if commercial-issued could be collected by the central bank and after a 10% handling charge by them deducted, returned to the exchequer. At 0.5% out of the 1.5 that would build year-on-year from £200m (180) to £400m (360m to exchequer) and so on building to £4bn after 20 years then stabilising for the next 20 years. for banks building similarly to £8 bn to the issuing banks p.a. What do you think?
best regards, Ian G
I regret I am struggling to find time today…..