I admit that I have found the last week difficult, and I have no doubt that this has been reflected in the blogs that I have written. I'm usually optimistic, and it has been very hard to feel optimistic of late. That remains the case today.
There is news of councils warning that they face bankruptcy. What we now know is that society is utterly dependent upon the social care that they provide, and yet the funding that they need is, so far, not forthcoming.
I have already suggested that hundreds of thousands of businesses may fail and that millions of their employees may face unemployment.
And now there is speculation that other sectors will also be decimated. Some theatres have already gone bankrupt, and many more are likely to do so. Orchestras are under threat. The whole model of live music performance is at risk, whatever type of music that we are talking about, and that is how most performers must make their living.
I could go on, but I won't. This appears like a litany of woe. Of course, it is. But what I find depressing is that this is also deeply unnecessary.
Nothing has changed the ability of this country, or many other countries come to that, to work, excepting the current need for social distancing. I am not suggesting for a moment that social distancing is not significant: it very clearly is, particularly since we have not, at least in the UK done nearly enough to beat coronavirus. But, although it is clear that our labour productivity is impacted as a result, most of our ability to deliver what is required in society is unimpaired if sufficient imagination is used, and (critically) sufficient funds are provided to enable the process of transition to take place.
I'm not going to talk about the processes of transition: those are for others to design. What I do know is that when we face the risk of massive unemployment with an associated overall risk of falling prices because of rapidly declining demand, then the last problem that we face is a shortage of cash.
Of course, if it is claimed that only the private sector ‘makes money' then we do have a problem. That problem will not only be that the private sector will be operating at way below its normal capacity, but that the way in which it is usually claimed that the private sector ‘makes money' is by generating profit, and there is going to be very little of that around right now. This claim, which is always untrue because the claim refers to profit and not money, and the two are only loosely related, is going to be even more untrue than ever now.
Nor, as a matter of fact, are banks going to be inclined to make many loans to those whose incomes are now at risk, meaning this normal sort of injection of cash into the economy is going to be severely diminished. And, when surveys show that business is massively constraining its investment plans, which are the other major cause of borrowing and so cash injection into the economy through the private sector, that avenue to money creation is also disappearing.
We are, then, only left with the government as the source of the cash that we need to deliver the transition that our society will require. There is, literally no point in pretending otherwise. The hope of anything else is utterly forlorn. But, despite this, as has been seen in recent days on this blog, there will be those who will claim that for the government to create money in this situation is simply to guarantee inflation, and to ruin our economic prospects.
Such claims are, of course, entirely wrong. As a matter of fact the government does create money, although such people claim otherwise. The Bank of England is quite clear that quantitative easing is a process of money creation. They are also quite clear that all money created in the private sector does come from bank loans, and nothing else. And they are just as clear that loan repayment cancels money. As a consequence, although they have not stated it as boldly, it follows that government spending does, necessarily, create money, and tax does consequently destroy it. And with regard to inflation, whilst this is always possible as a consequence of events outside the monetary system (for example, Brexit) within that system it is readily apparent that the drivers of inflation can only exist when there is excess money in proportion to the available supply of goods or services, and we are very clearly facing the exact opposite situation at present, providing enormous capacity for money creation at present.
What is depressing in that case is that it is very clear that there is a solution to our liquidity crisis if the government is willing and able to understand these simple facts. All the money that is required for the transition that we must make to a different economy from that we had in February 2020 can be available now if only the government is willing to create it.
I stress, this will not stop some businesses failing. That, unfortunately, is inevitable. Those businesses were designed for a different era, and will not make it into a new one where priorities, needs and wants will be different. This we have to accept.
But, at the same time the capital for the new businesses that will be required to meet the new needs in society could be provided. And the necessary training that is required could be provided. As could all the other support services that are necessary be put in place. Instead of treating this as a disaster, which I fear will be likely, this could be seen as an opportunity.
Simultaneously, the necessary reappraisal of the relationship between the state and private sector, redetermining who most appropriately does what, and with what priority within society as a whole, which is a necessary precondition of building a new, stable and sustainable society for all to live in could take place if we had a government with sufficient vision to understand that the resources to make this possible are entirely within its grasp, and should be created. That need could also be readily explained. The money to be created is, in effect, the capital on which this new society could be built.
What has been depressing is realising all this and appreciating that at present we have a government that is nowhere near doing any of these things as it ever more obviously flounders in the face of its debt paranoia which will, almost certainly, deliver a new austerity of a type unseen since the 1930s.
I have had to tell myself that it is quite reasonable to feel anger, frustration and outright despair that for the want of money that is readily, and instantly, available to make these things possible we will have to suffer so that the ideological delusions of right-wing economists and their political followers can be maintained. It is pretty tough to realise that this is what we are facing. It would be quite easy to give up. But I'm dammed if I'm going to.
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Hang in there, my dude!
Your pessimism is uplifting, in a funny way. It seems all too common for people to be in denial about the dark side of modern civilisation. It’s impossible to criticise modern industrial capitalism without a vein popping response from almost anyone. “But you’re using a smart phone,” they scream.
It’s better to be in a place of “real” understanding, surely, to have a clue about what we might do about it. The ecosystem is screwed, the economy is screwed and the government doesn’t care if you live or die. Actually, they are happy for you to die.
Can we derive an optimistic roadmap out of that? That would be strong.
Please keep it up. It’s appreciated.
I don’t do down very often. I know how incredibly lucky I am in that regard. But I did in the last week. A bout of really bad hayfever induced hedaches did not help!
It will feel better when we have an opposition party offering a positive alternative vision.
….a vision of a possible future that is, not some imaginary recreation of a past which never existed.
I see no way we will get that opposition until we reform the voting system away from FPTP which locks us into a conservative duopoly. Failure to grab the opportunity to redraw the electoral system in the 2011 referendum is the single biggest cause of our present malaise. I had to resort to Google yesterday to persuade someone that we had even held a referendum in 2011. It had THAT little impact at the time. And sadly I think only a very small minority of people think it important now.
So I’m afraid, Richard you will have continued reason to experience occasional feelings of despair, but I’m sure you’d have given-up long ago if you were susceptible to despair. If you keep producing the bullets someone will eventually have the wit and the means to fire them.
🙂
Interesting. I had an argument not that long ago about the referendum to change the voting system. They so vehemently denied that it happened and I even started wondering if I’d imagined it.
As I remember the choice of an alternative was hardly inspiring.
Spoken like a true leader if I may so.
Stirring stuff.
Thank you
More a reflection of the fact that I’m not immune to finding the current situation bloody tough
And the amount of work it suggests I should be doing a little overwhelming on occasion
There are always bad days, especially in a pandemic, a lockdown and a major economic crisis, and for individuals such days come from nowhere. Your site is a great centre and stimulus for discussion of economic, monetary, tax and political ideas, that keep us fresh for new insights; well regulated to aid civilised debate. You are providing an important service at a critical time. This is a very, very rare time when there is even the possibility of real change; for the better and for all, including those too long forgotten.
The truth is, in ‘normal’ times, which have not been ‘normal’ at least since the Crash and Austerity, and many would plausibly say since neoliberalism arrived in strength; democratic government has not done a great deal beyond tinkering, kicking the can down the road, and maintaining a somewhat down-at-heel, unedifying status quo; which in the last thirty years has meant the slow impoverishment and descent to dependency for large swathes of the delibarately forgotten, marginalised and exploited population; which proved only too convenient for the ideological designs of major vested interests who are only interested in rent extraction, and who discovered they could even rely on the people themselves, quietly, democratically and obediently to bail them out when the rentiers failed catastrophically even to save themselves: the Crash was a Colston moment that failed – we put them back on the pedestal. Ever since, they thought they could ‘get away with anything’, even a Boris Johnson, Dominic Cummings government, and really it does not come much more awful, comic (but not funny), and absurd than that. Until the pandemic: but even now, change is not guaranteed, but a glimmer of an opportunity has presented itself.
Even Scotland, ever conservative (small-c), cautious and suffering from longterm, chronic narcolepsy; has suddenly woken up. Nobody is more surprised than me.
Tomorrow is another day. The future is waiting for us.
Great line
“the Crash was a Colston moment that failed — we put them back on the pedestal”
Well of course that was your motive, but us readers can choose to allot our own importance to your words whether you intended them in that way or not. Such is the risk of talking in public. But a lot of your commentary is for the public good.
BTW – you do enough. And remember not to overdo it.
Please keep going – one of the best blogs around – you are also becoming quite influential (albeit via intermediates such as The Guardian). Somebody needs to call out BS.
But I think it is important to focus on how we can move forwards, and influencing public opinion in that direction. For now it seems we are planning to do more of the same, just worse.
Thanks
Richard, you’re too hard on yourself sometimes. There are very few visionary progressives. You also spend a huge amount of time clearly, simply explaining economic and social issues. There are many people in society who want a better society but don’t really know what to change, or how. The way I see it is you and others provide these people with a voice, with ideas, with hope. Also you make us question our point of view, which can only be good. The sheer amount that you blog is astonishing. It’s understandable that sometimes you might feel you carry a burden, or feel you’re out on your own. Metaphorically speaking maybe you should take a moment to be welcomed back into the body of the kirk, where you’re appreciated.
Thanks
Appreciated
I am harsh on myself
But dammit, I am taking Saturday to go birdwatching because Weleny WWT is open again – with limited access (i.e. book a ticket) and I can’t look through binoculars and think economics at the same time
I can do most things and think economics, but not that….
I’m holding you to that Richard. I expect very little blogging on Saturday (you never do none) and afterwards a quick blog saying you went birdwatching.
🙂
This is a moment, Richard, when the “pessimism of the intellect” must be subordinated to the “optimism of the will”
Your concluding paragraph serves to remind us that the delusions of the right wing economists you refer to, have almost certainly run out of road.
In any sphere, history runs in periods and paragraphs, and the current ideological dispensation, established by Jim “You can’t spend your way out of a recession”Callaghan and his chancellor, Denis Healy, then set in concrete by Margaret Thatcher and her first chancellor, Geoffrey Howe, has had at least 43 years to prove it’s general worth, and it has failed.
Change occurs when sufficient numbers of people decide to embrace it.
My worry is that too many people are so propagandised into the false belief that “there is no alternative”, that crucial understandings could be diverted down the wrong path.
The opposition is already being softened up to be a can-carrying patsy for our government’s total incompetence across the entire field of response to the pandemic, as evidenced now, by the aggressive demands for solutions from Labour spokespersons, who are obviously kept out of the loop, like the rest of us by the government. Nick Robinson excelled in this approach on the subject of school re-opening this morning, when interviewing the shadow health spokesman!
However, from such evidence, I conclude that our rulers are aware that the tide of public awareness is clearly turning against them.
It’s time, perhaps for that “optimism of the will”.
I agree, that is what we need
I just have to accept that I am finite
And it is bloody annoying
So much of what you write seems to converge, from ecological collapse, inequality and poverty and so on, onto understanding what money is. I recall thinking, when Greece and Spain had unemployment rates over 20% or even 25%, that the number of people available to work and who desperately wanted to had not changed but that an absurd conceptual system literally stopped them from doing so. I thought then that money isn’t so much a thing in itself, but either a lens or a window through which we look at other things. I recall a billboard ad for a bank saying “Your money should work hard so that you don’t have to”. We encouraged to see money not as a proxy for work done, but as the thing doing the work, which is delusional. This splits us off from what is most important: our connections to each other. Money erases the work done by others and for many of us is just numbers on a Bank’s website. How can we see all the work done by people represented by changes in those numbers? As I learn more from your work and the comments thread on your blog, I also feel increasingly saddened that seemingly the only thing standing in the way of a better life for everyone is, in a way, what we believe about money. Our collective understanding of money seems to be utterly self-defeating. No wonder we have psychological theories of self-sabotage, negative self-fulfilling prophecies, self-destruction and the death wish. The one thing we can never run out of is the one thing that is made scarce in most people’s lives, simply because a minority choose to make it scarce for others. I’m glad you’re not giving up, your blog is an oasis of sanity and a source of education. The comments threads (I realise they’re moderated by you) are respectful and knowledgeable and the commentators understand the difference between facts and opinions, how values give meaning to facts and form the basis of opinions, and how opinions allow us to infer the values of the person expressing them, which is seriously lacking on comments threads elsewhere.
Re the comments – the vast majority get on for a while
I give almost everyone (99.5%) a chance
I only block when I realise they are here to waste my time
I do not have time to waste
“Simultaneously, the necessary reappraisal of the relationship between the state and private sector, redetermining who most appropriately does what”
Sums it up for me – thank you!
A little bit of Eeyore is always welcome.
When you’re up to your arse in crocodiles it can be difficult to focus on emptying the swamp.
I have little doubt you already prioritise but is this an occasion when taking a step back and doing exactly that is the priority?
If you are overwhelmed perhaps you are allowing the wrong priorities from others, to dictate your mood?
There’s huge incompetence on display from our elected leadership, that’s evident, and they seem to have little grasp of the world most of us live in or they way the system they govern actually works, except for it’s continuation, but they do have huge influence in shaping our lives and that’s why I despair. The ideology they have and which they force on us all, is to be despised, and sadly, constantly challenged, something we all have to do.
Thank you for sharing your despair Richard, I think most of those who follow your blog are completely with you in this.
Geoff
I might need to do that
I wanmt to react
I also have a pile of work on
Two submissions have gone to parliament in the last two days (they do not like you publishing them before they do) and a third is being done plus one project has come out of lockdown and a new grant submission has gone in and a Tax After Coronavirus (TACs) website is under development whilst another report is nearly out…
So sometimes priorities are hard to spot
Richard
IDuncan-Smith has just said on the BBC;
‘If we don’t get the economy moving we will be unable to afford any of the things we need to do to support the public’
This was on at about 11:15 this morning.
I won’t despair…
It’s just so deeply ignorant
Ian Duncan Smith manages somehow to become increasingly repellent. I can’t believe it is just down to stupidity….
I should have added to the end of my last comment that IDS seems to be saying the government are going to run out of money.
Of course he is
It very much suits his agenda to say so
Mr Willets,
I just wanted to say, I really like this. It has something of the maxim about it, although perhaps without the polemical word ‘delusional’ to close.
“I recall a billboard ad for a bank saying ‘Your money should work hard so that you don’t have to.’ We [are] encouraged to see money not as a proxy for work done, but as the thing doing the work, which is delusional.”
Thanks, that makes sense, the final “which is delusional” doesn’t really add anything, except a moment of satisfaction for me in writing it!
‘oasis of sanity’ – exactly Richard.
Appreciate very much what you do, but do try and look after yourself, as has been noted.
Thanks
You sound like you’re writing with tooth or gum ache. The pain gets into the whole of your jaw, then the rest of your head, and everything in and out in the world seems to be getting worse.
I hope that dentist appointment comes round soon, and we can have back the RJM who has mixed emotions and outlooks.
Part of the problem is that you seem to be a lone voice crying in the wilderness, I know you’re not but you do need collectively a louder voice.
Is there a growing band of like minded economists that could lobby government The Bank of England?
No point screaming from the outside especially with this bunch. Need to infiltrate!
If you looked at my twitter feed today you’d see most heterodox economists are linking up to be deficit fetishists
Start with Ann Pettifor, who thinks debt is a sign of failure that should be eliminated (and seemingly to hell with the consequences), and go from there
It’s lonely out there
I heartily endorse all the sentiments posted above.
I strongly believe we’re experiencing the early stages of a major paradigm shift, similar to the stages that transitioned western ‘civilisation’ from slavery to feudalism to capitalism … with all the intervening blood, sweat and tears that have brought us to present day neo-liberal disaster capitalism. And while there’s much speculation as to where we will go from here, I think (hope) it’s becoming increasingly clear that Generation Z envisages a very different outcome to the status quo, embracing a radically new set of values to provide sustainable livelihoods for all peoples and regenerative protection of the planet.
It has already become a journey fraught with conflict and complexity which, if it is to be successful, will require the wisdom & guidance offered by progressive thinkers and activists such as yourself. There’s a lot at stake. So, please do take time out whenever you feel below par or cease to enjoy the challenge. No pressure!
In the meantime, a little retro music to soothe you through the rest of the day – https://www.youtube.com/watch?v=iP6IUqrFHjw 🙂
Very good….. 🙂
Hang in there Richard.
We are living through crazy times.
Just running this blog is a full time job on its own. You are spinning s lot of plates.
These are unsettling times but change will take time. Not until Neoliberalism is utterly bankrupt will change happen. There are too many structure propping it up at the moment. They have to fall first.
We are at the begining of the upheaval that climate change is bringing about.
It going to be a rough ride. Strap yourself in!!! Your voice needs to be heard. (Those people at Novara Media not replying still?)
Regroup then go again.
Remember James Meadway deepy dislikes MNT
NEF does
Some in the Green New Deal Group
Many on the Progressive Economy Forum do
IPPR at best do not get it
The RF does not
Frankly, the left wing would, it seems to me, prefer austerity rather than admit MMT has any merit
Depressing
Oh God don’t give up! When I get pissed off with the mainstream media news and views I come here for a voice of sanity and pragmatism. You’ve no idea what a precious national resource you are. I may not always agree with you but 99% of the time I do. For me that’s a very rare phenomenon! If I had to pin it down to a few things that make you a rare talent I’d say it’s the ability to see things in a balanced way and express this well, these plus amazing energy. Long may these last!
Thanks
I won’t give up
But the last week has been hard
Technically I was made redundant at City, and I knew that was going to happen but it was emotionally harder than I expected
And I’ve been dealing with a great many supposedly left of centre economists who appear to hate debt, think it essential we have ‘sound finances’ i.e, no debt, hate MNT (I think calling it a cult a good sign of that), and who would rather argue angels on pinheads than worry about dealing with an economic crisis. No wonder the left never gets anywhere
But my mood is recovering! And I cannot imagine a reason to give up
Your work educates thousands of people and leads the way for a better future. There’s a direct chain between your ideas -> Corbynism -> Rishi Sunak’s leftist economics which may bring about some of the outcomes we would hope to see.
Writing means that your work is also a legacy with the potential to influence people long after you and I are no longer around. Your sincerity, clarity and keen analysis are “improving” in that old Victorian sense of an improving books.
In this era it’s morally wrong to do nothing. You are the polar opposite, an inspiration and a hero.
So I do hope you keep writing and talking and working for a better world. Someone has to.
I will
But I am no hero
I’m just an angry guy wanting to do something about this f**king mess we’re in
It is appalling how cynical the ‘establishment’ really is.
I have been busy on several fronts – including setting up swab testing; volunteering with self isolated peoples needs; advising these who have to tackle the benefits system for the first time in their lives and fear their private landlords; and most perplexing of all – an organisation, lobbying the HMRC to change its rule on ‘Furlough’ for newly employed, to not maximise furlough payments!
( because the Organisation pays a whole month in arrears and won’t count the ‘earnings’ of freelancers in March upto furlough date, as the basis of the calculation. This having been confirmed as they should by the HMRC itself! They claim their tax year ends in February!
Any accounting body I can refer that to? )
The swab testing is a gigantic joke – a orgy for private companies (including US) to feast on government funds and fail to deliver at every level.
The cowboy sales based platforms, the thrown together make it up as you go along systems and visit organisations, the complete failure to privide adequate testing equipment and guidance – for under 3 year olds? over 2 year olds? Or as eeported today only over 5 year olds?
The use of a SINGLE swab for the participant to poke themselves in the back of their throat and then stuff the swab uo both their nostrils and than fit in a bottle – by themselves away from the sight of testers! It is insane, including the rigmarole of consent forms which can’t be filled prior to visits and must be uploaded on apps at the visit… never mind actually finding some random carpark to pass the samples on to an equally untrained dispatch person, in a one hour window, from where they are taken to god knows where to be processed by god knows whom!
It is totally un-professional and vastly wasteful, because of the various errors of administration at every stage and the bunch of disperate cowboy companies employed to deliver the project.
I cant say anymore – for obvious reasons of confidentiality.
Yeah I have felt the depression of the absurdity of all the good work going to waste with the conflicting messaging by the government, which has resulted in xmas type crowded streets and seperate groups occupying whatever spaces they can to get together and have a social – thinking its all over!
Let me say at the outset that in no way whatsoever can I claim to have even a rudimentary understanding of macroeconomics and how they are supposed to work. So much of what comes out of the mouths of what passes for leadership in uk (and other) regimes in relation to economics is imo tantamount to mince and I find it annoying in the extreme. I have in the past tended to put this unflattering assessment down to my unforgiving lack of knowledge in this particular discipline. However as time passes I am convinced that it is at least in part due to the fact that my (apparently unusually high) iq demands a certain common sense and underlying logic when it comes to debate – of any kind. Then I came across your blog and I realised that there are other, more sensible, paths to economic enlightenment.
Thank you for restoring my faith in my own thinking processes.
Re. pessimism – pace yourself. It works.
Many thanks
I will try to pace appropriately
And not just up and down when angry!
PussinBoots,
You may be coy, but your predilection for pantomime, and your use of the term “mince”, in context, may betray your location of origin ……..
Please forgive my unwarranted sleuthing.
“…But I am no hero…”
Your persistence and consistent output is verging on heroic. I’m not keen on the term hero either, but certainly your output is admirable. And it is informative and influential. You wouldn’t get the trolling and the brickbats otherwise.