We are, at present, in the very early stages of the worst recession that this country will have seen for almost a century. No one who will have any responsibility for managing it will have ever witnessed anything like it before.
We might have unemployment of 20% or more.
Maybe one-third of UK businesses might go bankrupt.
Without government intervention the prospects of massive hardship, including life-threatening hunger, are very real.
And in this situation what are the questions that are being asked by the media?
No, and they are not 'what is the scale of the planned spending programme?'
And nor are they 'Where are the jobs to be created?'
Or "How is the training that is going to be required to be provided?'
Let alone 'Is there going to be a job guarantee for all young people, at the very least?'
Those would be the questions that a caring media representing the real concerns of many in society would ask. But that is not what our media does. Most of our media is dedicated to the interests of a small part of society whose concern is with shrinking the size of government, keeping taxes low, and ensuring that inflation never happens.
That is why you get the question asked, for The Times I believe, as to whether the government deficit that the recession will give rise to should be tackled with either spending cuts or tax increases, without ever considering the possibility that the deficit will, in itself, simply not be an issue of concern in the coming years.
And so, the media feeds the deliberate line to the public that there must be either spending cuts or tax increases when the government makes an announcement on this issue. But both will be catastrophic in the current circumstances.
Cuts will increase unemployment: that is like night following day.
And cuts will reduce the essential services that people will need to rely on in this crisis, the scale of demand for which will be unprecedented.
Whilst every single overall net increase in taxes will take money out of the economy and so reduce spending power at a time when that is essential if jobs are to be preserved.
That said, there is a case for the redistribution of tax liabilities, so that the wealthy who do not spend all their income are taxed more whilst those on the lowest income, who spend all they earn, are taxed less, because this will stimulate recovery. But overall tax rises will simply increase the scale of the devastation that the coming recession is going to create in the UK.
Nothing, and I mean literally nothing, can justify either cuts in spending or overall increases in tax in the UK at present when every single penny that is required to meet the demand for services from the government can be created at will by the Bank of England to ensure that no one has to go without and everyone who wants a job can be put to work.
If we suffer extreme hardship in the years to come it will be the result of government choice, and not from need.
And I will say so time, after time, after time. And sometime this will be believed.
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But according to “someone”:-
“Taxpayers have been meeting the wage bill for 8.4 million workers, at a cost of about £14bn a month, since March.”
https://www.theguardian.com/politics/2020/may/29/rishi-sunak-confirms-coronavirus-furlough-scheme-to-be-gradually-withdrawn
Helen, this article annoyed me too, so I sent the following by email:
Dear Richard and Frances,
I was reading your article when I was stuck by the sentence “Taxpayers have been paying the wage bill for 8.4 million workers.”
Unfortunately this statement is inaccurate, it is the Government that has been paying the wages.
Taxpayers do just that, pay tax, and once it is paid it becomes the government’s money.
Taxpayers do not pay for Government spending!
Every time the Government spends into the economy the Bank of England creates the funds required electronically and credits the account of the payee.
Funds thus created circulate around the economy until such time as they are taxed out by the Government, but it should be noted that the funds first have to be created into the economy by the Government before they can then be taxed out as Tax Revenue and returned to the Government (revenue – to return).
I think that this is a very important point. The perpetuation of the myth that Government spending is funded by taxation is the classic neoliberal economic line which feeds into the lie that money is scarce and that Austerity is necessary along with all its consequences.
I do hope you don’t mind my pointing this out.
Here are a few links to assist your understanding:
https://www.taxresearch.org.uk/Blog/2020/05/20/funding-government-spending-an-explanation/
https://www.youtube.com/watch?v=1FglZyBcFyQ&feature=youtu.be
http://www.progressivepulse.org/economics/is-world-leading-nhs-healthcare-an-affordable-proposition
I do not expect a reply but thank you for your time.
Regards.
Eddie, IMHO those central paragraphs (“Taxpayers do just that, pay tax, …taxed out as Tax Revenue and returned to the Government (revenue — to return).”) put the whole ‘where does [the] money come from’ business concisely and very well. The final three words especially – they triggered one of those slight shifts in perspective that turns the merely logically true into something nearer understanding.
It’s almost an instinctive reaction. Govt. spends. Response – how do we pay for it.
It’s demoralising. We appear to be heading for a huge car crash and pressing hard down on the accelerator.
Out of interest, are there any UK politicians who understand MMT? Any ray of hope, no matter how small?
Craig
Caroline Lucas
Angus MacNeil
Only another 648 MPs to educate then!
Count the upside – 2 down….
Thanks.
One further question – have either Caroline or Angus ever been interviewed on any medium (e.g. TV, radio, internet, social media, print etc.) by the mainstream media?
I was surprised when Stephanie Kelton (I knew who she was courtesy of this site) was on Channel 4 news a few weeks ago as that was the first time I had ever seen anybody talk about this subject on the mainstream media.
Craig
Not that I am aware of
Caroline supports this but I am not sure she would be confident on it
Angus may well be – he has read a lot on it
Richard
I hate social media.
But is it worth me joining twitter to talk up MMT?
I routinely look at your tweets there.
Yes
Can I please suggest you start posting on Reddit.com/r/Ukpolitics there are a few MMT voices there, slowly growing in a sea of neo-liberal thought. I occasionally link to Richard’s salient blog posts.
Think we need an official petition started for this one Richard.
3.5 – 4 day working week.
Looks like the ‘right’ people are starting to see the light & sense.
https://www.independent.co.uk/news/uk/politics/coronavirus-four-day-week-poll-rishi-sunak-corbyn-a9595201.html