Understanding the myths that need to be tackled

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I have now done some analysis on all the answers to the question I raised last weekend on the economic, and other, myths that need to be tackled on a persistent basis.

What I have tried to do is group them. My suggested groups are as follows:

Banking myths

  • Full reserve banking
  • Banks create 97% of money
  • There is a fixed quantity of money that we might have
  • Banks are intermediaries
  • Money is inherently valuable
  • Money has asset backing

The household analogy (the myth needing to be tackled most of all)

  • The government is like a household

Modern monetary theory myths

  • There is no magic money tree
  • MMT is indifferent to inflation
  • Tax can't contain inflation
  • We need unemployed people to control inflation

The party political myth 

  • The Conservatives borrow less than Labour

Borrowing and tax and spend myths

  • Governments borrow
  • Taxes and bonds raise money for the government
  • Taxes pay for spending
  • The government cannot run an overdraft with the Bank of England
  • The debt has got to be repaid
  • Our grandchildren will have to pay for this
  • We have to repay the national debt
  • Deficit = debt
  • We have to balance the budget
  • Government debt is bad
  • Governments can't print money
  • We need more taxes
  • We must live within our means
  • We have maxed out the credit card
  • We can run out of money
  • We're in hock to the bond markets
  • The government has to pay interest on debt that it owes itself
  • QE debt will be resold to the market
  • We'll go bust if the government borrows
  • We can't borrow all the money that we need
  • Debt is growing proportion of national GDP
  • We can't afford the interest on the national debt

Tax and spend myths

  • Governments spend taxpayers money
  • We tax and spend
  • There is taxpayers money

The inflation myth

  • We're going to be like the Weimar Republic

The austerity myths

  • Austerity was necessary
  • Tax increases are bad for the economy
  • Austerity stimulates growth
  • The state crowds out the private sector
  • The hard choice is we cannot afford to save jobs
  • We can't afford to be green
  • The benefits system is funded by taxpayers
  • Privatisation was necessary
  • The state cannot be trusted with our pensions
  • We can’t afford …. The NHS / pensions / social care / education / benefits etc

Governance myths

  • The central bank is independent
  • The OBR is independent
  • The Institute for Fiscal Studies is an objective commentator

Economic myths

  • Increasing interest rates controls inflation
  • Markets allocate money efficiently
  • There is no multiplier
  • The quantity theory of money is true
  • Economics is rational
  • Externalities do not matter
  • There is an invisible hand
  • Wages reflect a person's worth
  • GDP measures wealth
  • Migrants take our jobs
  • The private sector is more efficient than the state sector
  • Red tape is killing business
  • The market always knows best
  • The state is inefficient
  • There is perfect information
  • There is no asymmetry of information
  • There are no monopolies
  • There are no monopsonies
  • No one is a price maker
  • Equality does not matter, growth does

Green myths

  • There is no climate crisis
  • We have to grow
  • Growth isn't green

Rich myths

  • The rich pay for public services
  • The top 1% pay 25% of all taxes
  • The rich will leave the country
  • Tax cuts for the wealthy stimulate growth
  • CEOs need high pay

Abuse myths

  • Benefit fraud is rampant
  • Tax avoidance is the big issue in tax abuse
  • Tax havens are crippling our tax system

Pay myths

  • Low paid workers are not deserving
  • UBI is unaffordable
  • Income inequality is a good thing
  • The wage rate and unemployment are related

The Scottish myths

  • GERS is a fair reflection of Scotland's income
  • Scotland can't survive as an independent country

The development myths

  • Capitalism has lifted millions out of poverty
  • Outsourcing benefits those now on $3 a day

So, thoughts, yet again?

Suggestions for more, better groupings and where to start are welcome.

In the meantime, I am moving on to addressing some of these.