I was in discussion with old friends yesterday on what might happen over coming months and even years. Like me, they're deeply troubled by the current lack of any clarity, vision or leadership from the government. This blog summarises my thinking. It was to be a Twitter thread but got too long for that. That has, however, dictated the style.
We agreed that the government had been hoping for two things. The first was a short, and rather sharp, hit from coronavirus after which there would be herd immunity. They had the same hope for the economy: a short hit and then full recovery. Neither is going to happen.
Whether we get a second coronavirus wave is unknown, but that there's a risk of it is a fact, so we have to stay in semi-lockdown. And Covid 19 is endemic now: even a vaccine is unlikely to erase it. So everything will be different. There's a long term socio/medical impact of this.
On the economy, the bad news has hardly begun. The government is now passing the buck to businesses. Vast numbers of them remain vulnerable. Few can now operate at the scale they did. But high overheads remain and many tax bills are only deferred. Failure rates will be high.
With high failure rates, and even the fear of it, will come substantial redundancies. I think we're already at 2 million plus unemployed. Add one in three of those furloughed or on self-employed support and there could very easily be six million unemployed.
Sudden unemployment at anything like this scale will become a crisis in months, at most. The middle classes are about to learn about the Tory approach to benefits and the reality of universal credit.
People will really face a crisis when they can't feed their children. Some already can't in the UK, but this is going to become widespread. And other bills - from the mortgage to the credit card and then the utilities will all go unpaid. From furlough to financial meltdown is a matter of months.
The government has already said it is not interested in helping. It will not swap debt for equity in small businesses, it says, condemning many to businesses to extinction, and it claims that furlough is bad for people's morale. How unemployment without hope is better is anyone's guess.
The critical point is that unless there is a very rapid change of attitude - which requires a complete change in the Tory (and widespread) fear of government debt - then intervention to prevent this disaster will not happen in time. And once the jobs have gone, that's it.
Other consequences follow quickly. A massive increase in child poverty is my big concern - and is unavoidable right now. General physical and mental ill health will follow. But the spiralling impact also worries me. Unpaid debts are going to cause a major banking and then housing crisis in 2021.
Unpaid rents are going to lead to many evictions of tenants as unemployment rises. Landlords hate those on benefits. And mortgage failures are going to lead to more evictions as a result of repossessions and then to forced housing sales. That will result in property price falls.
Property price falls lead to banking crises in the UK (although by no means everywhere else). The UK banking sector is really just a property financing scheme, wholly dependent on rising prices to ensure its own survival. I'm not convinced banks have anything like the capital required to get through 2021.
And at that point meltdown at a level we still can't imagine is possible. Effectively, the ability of the finance system to pay will disappear without intervention.
On top of all this there is Brexit. I needn't add any more on that issue, except to note that its timing could literally not be worse.
I don't see these outcomes as possibilities right now. I see them as likelihoods. In fact, without intervention from the government I see them as near certainties.
This government is banking on us being ‘back to normal by Christmas' when even the Office for Budget Responsibility says there will be 3.5 million unemployed then. I think this wildly optimistic, but that would by itself be enough to trigger much of what I am suggesting.
So what can be done? There have to be alternatives, and there still are.
The first essential is to accept the reality that millions of jobs are at risk. The government has got nowhere near close to accepting this as yet.
The second essential is to accept business can do nothing to prevent this risk by itself. There is no possibility of a market based solution to the coming problem of mass unemployment. This requires a change to forty years of thinking that markets hold the solutions to all problems government face.
The third essential is to make job preservation a priority. So, loans to business have to be turned into capital, with serious conditions on future corporate behaviour, tax payment, accounts disclosure, pay policy and governance attached. There must be a price for support.
The fourth essential is support for business overhead cost reduction. Statute imposed rent reductions should be required. 20% is the minimum. For some types of business / property it may need to be more. Landlords have to take the next big hit in this crisis.
Fifth, bank loan repayment holidays must be granted for up to two years, with loans being automatically extended thereafter and with interest rolled up, but with a ceiling on the rate due. There must be no penalties for this.
Sixth, unpaid taxes must become further equity loans for businesses unable to pay them. The price must be worker representation on the board - with statutory liability protection for those nominated. Worker directors must be the enforcers of government bailout conditions
And seventh, Brexit must be postponed: there is not a business in the country that can withstand the pressure, cost and chaos it will impose now. I am not saying it should be cancelled: I know there was a referendum. But the negotiating period has to be extended.
And what after that? Furlough has to remain for vulnerable sectors. There are many of them.
For those already made redundant UC and child benefit have to increase significantly.
Then steps have to be taken to keep people in their homes. Rent holidays must be a statutory right. Landlords must be able to claim matching mortgage payment holidays. And banks must no be able to foreclose. Shared equity arrangements must be offered instead.
Because of the risk of falling house prices negative equity traps must also be avoided: it should be made illegal for any mortgage repayment on sale to ever exceed the sale value of a property.
Bank accounting rules must be change to keep property loans on these arrangements on balance sheet.
But all this only plugs gaps. Then action to rebuild is required. And yes, of course that is the Green New Deal. That's because there is simply no other plan. And nothing else that meets the long term needs of our society as it does.
So we need to start as soon as possible. Repair roads to make them safer for cyclists. Build safe cycle parking. Explore how to turn redundant engineering skills into bike manufacturing capacity.
Start insulation programmes, as quickly as possible. And encourage double and triple glazing where it does not exist.
Plan new, sustainable social housing. Plan local transport transformation using electric or low carbon vehicles. Put a hold on HS2 and major road building: redeploy the resources to create the local improvements that might transform communities.
Abandon Hinckley point. Build renewables instead, from roof top panels, to better wind, and finally really harnessing today power.
Create the business to support all this, including the heat pump, solar panel and wind power equipment that we need.
Invest in water. That is, improving existI got delivery systems, as well as flood defences to make sure it doesn't go where it is not wanted. Dam the Wash to preserve large tracts of eastern England. Build tidal lagoons to deliver power.
And reform agriculture to reduce our dependence on imports and chemicals: both are entirely possible. All that is required is the pump-priming and some vision, plus cash.
And don't presume that everything is about building. It isn't. Invest in care as well, of all sorts. And deliver the flexible education for a new world of entirely different work that our children (and we, as lifetime learning) are going to need. Then, and only then, might we have the economy we need.
How to pay for this? A number of thoughts follow. First, imagine the cost of the alternative. It's bigger. Paying for this is going to be cheaper than allowing economic meltdown with a decades long recovery, at best. I'm laying out the cheaper option here.
Second, there is no shortage of money in the UK: we can have as much of it as we want at the touch of a Bank of England computer keyboard. The supply of money is limitless.
Third, unless we go for disaster aversion and then employment creation now the impact of the resulting financial meltdown - which will be larger in the UK than most countries - will be much worse for the value of the pound than money creation might ever be.
Fourth, if there's no market for debt don't worry: Japan suggests we could do more than £2 trillion of QE right now without inflation risk arising.
Fifth, forget tax rises: facing a crisis like this they should be off the agenda for a long time. Any tax reforms should be solely about making society fairer e.g. by tackling wealth inequality, with no net increases.
Sixth, savings - and especially tax incentivised ISAs and pensions - must be put to work to support this programme. Unless they are invested in new sustainable jobs the tax reliefs must go.
Seventh, if the Bank of England objects scrap its independence. This is not the time for the City if London to be dictating terms. The reason for this fiasco has long gone.
Eighth, watch the rest of the world. Everyone will end up doing programmes like this. We'll only be financially punished if we don't.
And how does all this happen politically? Johnson's power is already slipping away. The Grayling fiasco proves that.
Soon Johnson's control of his own party will end: no MP wants to realise just how much their own career hangs by the thread of Johnson's wholly unpredictable whim.
The Tory party has an instinct for power. But it has a problem. There is no heir apparent. And don't say Sunak. Chancellors who deliver many millions to unemployment do not go on to take the top job.
So if they realise Johnson is beyond hope who could they choose, given Gove is also tainted by this? I cannot now see anyone who would appease the anger there will be in the country.
And anger there will be because it will be very apparent that if there is unemployment it will be by government choice. After all, the government locked down, the government furloughed, and then the government will have left people unemployed. They will be the only people to blame.
That blame will be very real, very pointed and very direct as this crisis grows. I'll be candid and say I cannot see how mass protest can be avoided. And if it happens I could only hope that it is not violent - because I would hate to see that happen. But people living in fear have nothing left to lose.
Can a government that has chosen mass unemployment and made it worse by its own choices survive? I doubt it: whatever the electoral system I cannot see that happening, unless of course democracy is suspended. But I think that will make things worse, not better. Which doesn't mean it won't be tried.
In which case I sincerely hope there are others - preferably in coalition, because that is what this demands - who might be preparing to take over and deliver the government we now need.
There is no sign of that as yet. And that also worries me. There is no real sign even of deep concern at the consequences of the unemployment to come as yet anywhere much in the political spectrum. It's all as if almost no one can believe it's going to get this bad.
But it is. We are heading for an economic breakdown of a type we have never seen before. It's going to be of the sort that can only, and forever, change the society we live in. And no one wants to seem to want to recognise the fact that it's going to happen.
Politics is still playing around the edges of issues - talking about school reopening and arguing over the definitions of A Covid death when we're heading for collapse.
And the route to that collapse is very short. It begins next month as furlough begins to wind down. The mass redundancies will begin to be announced in September when the end of furlough is imminent. And by then the corporate failures will be rising.
The road from furlough to financial failure is a very short one. We are on it. And no one is saying stop. Let alone, do a U turn.
We don't need to fail. We will because we have a government that does not think it can stop what is going to happen. And that's because It believes that it cannot create the money needed to tackle the massive problems that we are going to face.
The government is wrong: it can avert this crisis. It can saves millions of jobs. It can prevent child poverty. It can save the blighting of hope and health for vast numbers of people. It could direct the economy out of this crisis.
But it won't. Because it thinks balancing its books more important than caring about people.
And the price we're going to pay for that is going to be staggering.
I have just one hope: it is that I might be wrong. But I wouldn't be writing this if I thought I was.
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It’s Reign of Terror time if they don’t redistribute wealth, a mass of people pushed to the brink
You said early in your piece that “Whether we get a second coronavirus wave is unknown, but that there’s a risk of it is a fact”
I’m just wondering where you get that idea of the risk being both unknown and factual from, and what leads to you the conclusion that the scientists that contribute to SAGE are mis-staken about whether we get a second wave being an unknown.
Epidemiologists are by no means agreed that we will have a second wave
We may well do
But we do not know
I know senior epidemiologists who think it very unlikely
I am reflecting uncertainty because it exists
“Epidemiologists are by no means agreed that we will have a second wave”
Can you cite evidence for this claim please?
The reason I ask is that you are promoting a narrative that the risk of there being a second wave is something that is unknown.
Can you tell me what the risk is with certainty?
If not, I’m right
So are the epidemiologists who say so
And as a matter of fact, I think that has to be true
You asked:
Can you tell me what the risk is with certainty?
The answer is Yes.
Do you want that answer.
The answer means that the question of risk is negated. The outcome is certain. Nobody would talk about the chances of the days getting shorter in winter being a risk. Apart from you, it seems.
So please answer the query. What’s your evidence that there is a risk of a second wave? Because so far you have provided no numbers, and no evidence, and are implying that serious numbers of scientists are wrong.
Politely, your answer makes not the slightest sense because the risk of a second wave cannot be negated
And no one – including Independent Sage, who are the most pessimistic epidemiologists – sayS it is certain we will have a second wave, but they think there is serious risk of it
And I know professor grade epidemiologists who say that statistically it is unlikely we will
And that’s as good an estimate as anyone can make
So why are you demanding what no one with any real knowledge can say?
I hear reports of near-empty pubs but last night my local was rammed (looking through the window in the dark) – there was not much social distancing I can tell you.
We might get a really mixed picture for a long time yet.
An interesting article and one that brings in to sharp relief the problems we potentially face. I like the ideas, but being honest there is no way I can see either starmers labour of any Tory gov. Performing.
Morning Richard. Re the referendum….. It has no democratuc legitimacy at all because
1) fraud and lues were allowed
2) unlike in the Scottish referendum, 16/17 year olds – plus 3m EU residents – were disenfranchised
Why don’t we tackle the Tax evasion by the very wealthy including MPs and the royals?
We’ve tried
But the serious tax evasion is by people in white vans
That’s where the bulk of the problem lies
What? I read this three times. “The serious tax evasion is by people in white vans”. I presume you are being sarcastic? Or are you being pedantic and suggesting that most of the serious money goes in to tax avoidance schemes? I imagine that the post which prompted this meant avoidance and evasion, because, in reality the line between the two is blurred (not legalistically, but morally). Surely we want to redraw that line in a very different place, so that the majority of avoidance becomes illegal and that is where the money is. That said, it’s a matter of justice, not financial necessity, as you indicate in your writing on MMT. What is required is a concerted redistribution system, whether based on tax or not, to reduce the spread of extreme inequality and reverse the suction from poorest to richest which currently operates at full speed. In a system where behaviour is constrained by law, we need to reframe the law to prioritise the need to nurture and maintain the environment we depend on, and to encourage and uphold a healthy, balanced society where all are valued and supported. We have a skewed, dysfunctional system which incentivises damaging and destructive action and exploitation. That can only end in collapse.
I have researched tax abuse for a very long time
At most around 15% of total tax losses come from avoidance: you can push it to 20% maybe in the UK, but that’s it
The real loss is from unrecorded sales, and big business Does not do that. Small business does
80% of the tax gap is from straightforward falsified accounting
That’s the facts as I find them – why would I want to pretended otherwise? I wish other tax campaigners would not
Of course MNC tax abuse is important. But it’s not nearly as abuse as flaming to collect tax from cheating small businesses who make it very much harder for the honest ones we need to succeed
I’m also surprised that you’re saying that the bulk of the serious tax evasion is by the white van man brigade. They may well be guilty of tax evasion, but I doubt it adds up to the billions “legitimately avoided by sleight of hand” by the likes of Google and Amazon. I can only speak anecdotally from personal experience, but the “white van people” I come into contact with are not millionaires, nor even close to a six figure bracket income. And they have to pay VAT on their materials which they may or may not be claiming back. So yes, it’s possible they’re deliberately evading tax, but they’re certainly spending most of their earnings back into the economy. They’re not the enemy – they’re not even a worthwhile target if revenue generation was the game. But they’re certainly an easy target and one that readily distracts the eye away from where the real crimes are being perpetrated.
Until very revetly about 10% of UK VAT was not collected
That was not all Amazon etc
And Google always paid its VAT
That means we have a large shadow economy – at least of that scale
And that means that’s where the major loss is
How else do you explain it, when large companies (I suggest) almost never evdade VAT?
I realise you have been working on tax issues for a long time, Richard. That’s why I bother to read your stuff, because I assume you have a level of expertise and inside knowledge. However, are you saying that what I have read about in Nicholas Shaxson’s “Treasure islands” and Oliver Bullough’s “Moneyland” is insignificant compared to the vast amounts that white man van hides away from the tax man? I feel I must be going insane. Seriously? The trillions of dollars that go through off shore trust funds, shell companies and all the vast apparatus of secrecy jurisdictions across the globe is as nothing compared to what Dean the Plumber gets up to with his VAT dodging? Is that what you are saying? I honestly am totally flabbergasted.
I have been saying this for 2010
There is no way I am wrong
I helped create the offshore stories
They were true, but we are beating them
And their cost to the U.K. is now relatively small compared to the total tax gap – maybe 10% at most
Again I have said that for a long time because the evidence cannot support anything else
It does not suit all to agree
I have to say I am astonished. I would love to believe that secrecy jurisdictions were a thing of the past, that trust funds were diminished to insignificance, and that all these elaborate shell companies nested and registered in empty buildings across many UK dependencies, certain US states, and countries from Cyprus to Luxembourg, are closing down or opening their books. You truly are a miracle worker in that case and it is remarkable. Why aren’t we hearing all this positive news? Surely the headlines would be full of it? But don’t the Irish and Dutch (and numerous others) still have special tax rates to attract foreign businesses? Aren’t huge amounts of money still being routed through HQs in such places? Or are you confident that CbCR has cracked the problem and essentially eliminated corporate tax dodging? What about all the hidden wealth outside corporate accounting structures, held by individuals or family trusts and similar? The sort that is so deeply hidden, under so many layers of secrecy, that it can’t be tracked to its origins. How many trillions must that add up to? CbCR won’t touch that, will it? And just to be clear, you are saying that Shaxson and Bullough are deliberately misleading their readers because they have some sort of vested interest in maintaining a false picture? What exactly?
Every report I have issued ion the tax gap has always said this
I’ve been doing them since 2006
Of course the tax dodging in tax havens has not gone away
But it was never the big issue. It was just the only way to get publicity for the issue. I know; I was involved in making the choice to publicise it for that reason
I’m not saying tax avoidance and offshore are over: they’re not, although i strongly suspect they are better than they were, and by a reasonable margin, which is why the overall tax gap is going don
But the domestic evasion issue is, and has always been, the big problem. And I (maybe alone in tax justice) have always said so
They may not have a plan to deal with U/E or COVID as that wasn’t on their agenda, and they are not fleet of mind, but they certainly have a plan to destroy democracy using COVID and Brexit as their opportunities. Look at the COVID bill that has allowed millions of £ to be contracted to extremely dubious organisations.
Then look at this: the Parliamentary Constituencies Bill that has just had its second reading in the Commons. …… this is just one of the conditions — “Recommendations of the Boundary Commissions will be no longer require Parliamentary approval and government ministers will have no power to alter recommendations.”
http://truepublica.org.uk/united-kingdom/week-in-review-july-12th-18th/?utm_source=newsletter&utm_medium=email&utm_campaign=TruePublica+Weekly+Newsletter
And the Brexit Trade bill being pushed through & Henry VIII powers – parliament is being dismantled in front of our eyes and the MSM appears completely , or willfully blind.
you can’t destroy a democracy tha never was.
Could you clarify what you mean by this point?
> Because of the risk of falling house prices negative equity traps must also be avoided: it should be made illegal for any mortgage repayment on sale to ever exceed the sale value of a property.
Perhaps the situation in the US would be good. As I understand it in the US you’re allowed to walk away from a mortgage if the value of the property is less than the loan. It becomes the lender’s problem.
But it isn’t here
You can be liable too make good
That’s my point
I think this is an interesting idea. The US offers both “recourse” and non-recourse” regimes depending what state you are in but I haven’t seen any research about how the two regimes compared after 2008. Do note that the bank does need to give permission for a sale price below the level of outstanding debt… although this is rarely withheld.
Being able to ‘walk away’ from your mortgage once you have sold your house certainly helps home owners respond to changing economic circumstances and probably makes banks a bit more conscientious when making loans so is probably a good idea.
I have not seen that research either
I’ll go hunt…
Called ‘non recourse loans’ – if adopted during normal times I think they would help dampen the housing market a bit:
http://www.progressivepulse.org/economics/non-recourse-loans
Agreed
I hope your scenario is on the pessimistic side, but I have to agree it is within the central range of possibilities.
I do worry about all your suggested solutions though. Suggesting borrowers can default on negative equity and leave the bill to the building society surely will just have the effect of new borrowers requiring huge deposits. With a domino effect on house prices which as you point out seems to have a dramatically negative effect on banks which – love them or loathe them – will be needed during recovery. And suggesting projects like a tidal barrage across the Wash which would take years just to assess for environmental and engineering viability is not particularly helpful when what is needed is jobs now.
In fact what I think is needed are government decisions now to fund public sector jobs which will be advertised in August and recruited in September/October. But I am not holding my breath.
Big deposits are required anyway now
Depends who your bank is. Coutts are still giving large mortgages with relatively low deposit requirements.
All right for some….
In the Conclusion of Zachary Carter’s book “The Price of Peace” (pages 524 to 525) he states during the Obama administration Congress had approved $75 million to stop banks foreclosing on workers’ homes. Obama’s administration spent a little over a quarter of that money. It wasn’t interested in the “little people.” Many workers’ families lost their homes to foreclosure as a consequence. You can bet the same is going to happen in the UK during this pandemic which may become endemic. The Tory Party is also largely in the pockets of the finance sector including the banks.
“Because of the risk of falling house prices negative equity traps must also be avoided: it should be made illegal for any mortgage repayment on sale to ever exceed the sale value of a property.”
That makes all mortgages non-recourse. Which also, obviously, makes all mortgages more expensive. As happens in the US, where some states have non-recourse mortgages and others don’t.
Oh, it also makes speculation in housing a one way bet for the investor. That’s just what the country needs, right? Are you sure this is what you want?
No, it makes banking more responsible
You have a problem with that?
ANd you honestly think home buoying is speculation?
That’s a very warped mindset
Well Andy c given that government could substantially extend the supply of home mortgages at a low simple interest rate just sufficient to cover running costs that would get the corrupt and venal private banks out of the situation. (Ratio between average house price and average gross annual income between 1970 and 2019 nearly doubled and many parents both having to work to keep bankers in the lifestyle they’re accustomed! 80% of private bank lending is house mortgage based!) And why shouldn’t it? It already provides deposit guarantee insurance for savings. Administrating such mortgage loans through local authorities would be the best approach. A tiny few already do under the 1985 Housing Act.
I think it an excellent idea
In the absence of mutual savings entities it is the obvious way forward
Have been involved this week in virtual conference involving players in business finance (private equity/ angel groups not banks). Major focus was on the risk environment and appetite for investment in current climate. Rankings of country by country risk by the participants put the UK at the bottom (with Northern Ireland the worst region). This type of thinking is toxic to the post Covid landscape.
Indeed
Your outlook is depressing…. I wish I could pick holes in it but I can’t.
I read your policy suggestions and feel a bit better…… until I realise there is virtually no chance of this government following your prescriptions.
Sorry
And it was such a fun time out with my friends….
My concern is that this will be used as an excuse to further undermine the public sector – a sector that if properly funded and used strategically and constructively could help in a lot of the problems you anticipate.
The thing is though, I think that Covid-19 has revealed to me exactly what the original anti-democratic Thatcherite aim was: it was to simply create a mega wealthy constituency that would feed and sustain Neo-liberalism and just help it replicate itself time and time again because there is simply the money to do so. And New Labour did not get in the way – in fact Blair certainly has his nose in the trough too. Thus, British politics becomes more American in flavour.
It’s bad news.
Brexit cannot now be “delayed”. Even if the UK wanted to reverse course this is now impossible. It can seek to mitigate the impact but instead shows every sign of wishing to maximize it. The only upside to this is perhaps the prospect of justice after the revolution. Sadly, there will be a lot of collateral damage to the lives of millions.
In the EU everything is negotiable
And Scotland, seeing nothing to lose, will walk away.
If only Scotland could ‘walk away’ from the stranglehold of Westminster and remain in the EU! Sadly BoJo appears to be travelling north to visit us tomorrow. It’s very unlikely he’ll receive a positive reception.
Overall the article is both angry and hopeful – which represents my usual demeanour. I fully agree the EDF nuclear power plant at Hinkley in Somerset ( not Hinckley, which is in Leicestershire, which is what the blog states) should be cancelled despite the £billions sunk, as it will save even more by not completing.
I see you advocate extensive mmt.
Well the uk has already left qe far behind and moved into monetization. We get no assets for that printed money just long dated treasury notes that will never be paid. Its correct to say the money supply is limitless however what you are trying to exchange it for isn’t.
So…
1) if what you say is true why not print a quadrillion pounds today and use it to buy the world. Money is either limitless or it’s not.
2) if this worked why would anybody ever do anything else.
3) why do countries in say Africa put up with terrible poverty and infrastructure when they could simply print trillions and solve.
4) seriously money printing has no effect on inflation?
It’s been tried several times in history with an epic fail every time
Why not read what I say and not make up drivel that is a million miles from what I and MMT argue for?
No one thinks we can create money without consequence
We say you can until full employment is reached
And with regard to the inflation that a government can control within its own economy please show how that’s wrong
And then show why the case of Japan does not prove it
I suggest you give up the nonsense and talk about what happens in the real world, as those who do MMT do, all the time
Really Beetlejuice in your world do you believe people work for nothing to create things?
At the risk of repeating myself, people who appear gratuitously to use pseudonyms in order to make statements that they do not dare to stand behind in their own name, deserve the ridicule that their remarks warrant.
The elimination of pseudonyms (save in carefully approved circumstances) would enhance the standard of discussion on social media, overnight. Sorry if that is controversial but it is also obvious (even where people used false names, because if found out their position would be excruciatingly embarrassing).
For example, we wouldn’t have to read such rubbish as Beetlejuice’s comment. I never thought I would ever feel the need to respond to someone with that name (especially here!).
My difficulty is some use such names for professional reasons
It takes time for me to spot the difference
Beetlejuice
The assets you get are shared or socialised – you get wages (debt free money) which are an asset as they contribute to generating an economy for people and businesses; you get to make the most out of one of your biggest and best assets a country has – its people – MMT will help unleash their potential and their productivity as we head towards fuller employment; new assets and new asset classes can be created from a Green New Deal or investment in infrastructure or now technologies that will certainly be more sustainable than some are now; you’d have a well funded health and care service plus a much healthier population as well.
Society (not just investors) would get a hell of a lot out of MMT.
Why has it not been done?
Because quite simply the private sector – and we are talking about big corporations here – are threatened by it, because apparently it makes them feel crowded out because it threatens their monopolistic tendencies and their profits.
Added to that are the banks – driven by the already rich who want to maintain the value of their money by turning it into loans that earn interest. If there is more real money – well, people rely less on loans don’t they? The banks don’t like this either.
It’s very simple.
The bigger question posed by MMT to me is ‘Who governs the country?’ Producing your currency for your people proves who Governs – and it ain’t no private sector who just really move it around. And not fairly either.
The problem is we have too many politicians pretending to be representing us when in fact they represent the vested interests of business and banking and the rich. That is why too many Governments don’t do MMT. Because their well heeled funders don’t want them to or the politicians are just ignorant of it anyway.
The biggest tragedy though is that MMT has potential to help everyone – the people AND business.
Have a think about it.
[…] wrote yesterday about my fears for the UK economy, and the apparent lack of awareness there is amongst the UK political class that we are heading for […]
Difficult for most people to grasp, you lay it out well and with some practical measures. Sadly, blinded by ideology and greed and ruling via PR as our government is and does, no chance of most of this happening.
“existI got” – typo, I presume.
Typos happen – sorry
In the many words I write I don’t always see them – and I do use IT aids to help
Richard. The best way to avoid much of your scenario would be to get covid down to as near zero as possible – as in NZ, Korea, Vietnam,China etc et. Some of us have been saying this for months – as do now ‘Independent Sage’ – link below. Trying to operate the economy while dodging thousands of infected population – not feasible for thousands of businesses, services etc.
A pity you seem to have accepted the Government’s ‘let it drift’ strategy.
https://www.independentsage.org/wp-content/uploads/2020/07/A-Better-Way-To-Go-FINAL-proof-copy-1.pdf
I am presuming that the government is not going that way – and if it does not now it won’t succeed: endemic, managed risk is the best we can hop for in that case
Not, I trust in Scotland: ever.
Herd immunity? Do the math: you need 70% of the population to be infected. Death rate is reckoned to be 1%. UK population is 66 million, and so deaths would be 460,000 and hospitalisations a lot more of course. Not even this Government can be hoping for that!
Let’s suppose everything you forecast is accurate and every solution you suggest is correct.
We’ll call this “The Right Way Forward.”
Now let’s consider lobbying. The paradox of lobbying is that it’s generally bad guys that lobby. (The paradox being that it’s part of the democratic process while being fundamentally undemocratic). A bio-friendly company that treats its staff well and makes sustainable products has nothing to lobby about – everyone wants them to do their thing. A horrible polluter that wants to turn a river toxic has an interest in persuading politicians to vote for legislation that lets them keep getting away with it.
We’ll call the collective aims of the lobbyists “The Wrong Way Forward.”
How do we politically achieve the right way forward against the interests, power and money of those who want the wrong way forward?
Historically the Left’s theoretical answer has been education but I don’t think that will save us this time. It didn’t save us when Osborne wanted to introduce austerity and all those myths are still firmly the common sense of the voting public.
I glumly suspect that we need to make the case, as you have done here Richard, while accepting that our role is essentially to be Cassandras. Perhaps we need the collapse before we can begin the rebirth.
Mass lobbying
People demonstrating
Taking the long view it’s ironic that a pandemic may induce widespread support for MMT whereas the UK’s National Strike in 1926 petered out after nine days because there was insufficient understanding of the financial mechanisms that both create deflation and get a countries out of it and raise employment. It’s no wonder all the Hayekian dogma driven outfits like The Institute of Fiscal Studies and the Financial Times are all now working over-time to flog Hayek’s dogma the rich are getting fearful about their hegemony being usurped!
Interesting point
“Ditch Hinckley Point”? Give up lots of jobs for it? If climate change gives us some long periods of grey calm weather we shall be short of electricity. Nuclear can cover for that. It is not easy to start and stop nuclear generators so invest in hydrogen production and use it to even out production and consumption. The hydrogen can be used to power generators already in existence and could be used for transport too. Lots of green jobs could be made. Hydrogen is a lovely gas – just gives back water when burnt.
All this has been discussed before
Yes, but circumstances have changed, thanks to Covid; maybe it might help belief in the Green Deal. Now there is more emphasis needed on employment so why sack engineering builders. Instead and plus, embrace green R&D and construction. We have gas mains, why not fill them with hydrogen? Heat pumps suck in many situations! Science and engineering ruined the environment; it is now time they corrected the problems.
I am struggling to find a coherent argument here
I really don’t understand why anyone in their right mind would support nuclear power. It’s a massive. toxic, accident waiting to happen – and that’s before we even talk about the waste…
You have expressed my own thoughts but in a such a well ordered fashion.
I feel there is little time to get this perspective out there before we descend into a rabbit hole of retrenchment and recrimination – for which history offers lessons nobody seems to really hear.
Right now I see Starmer weekly demonstrating that Johnson is a liar and a fool, but I think his voters regard that as a strength, and while it’s comforting for folk like me it isn’t changing any dial.
We desperately need a voice in politics with a new vision. So far I have only heard that from you!
Good interview on LBC – even if it was undermined by a subsequent call-in ‘expert’ given the opportunity to ‘decode’ your points into nonsense. . Go on the warpath Richard.
That’s my aim…..
This follow up on the Global Health Index report makes it fairly clear where the fault lies.
The Global Health Security (GHS) Index was the most comprehensive global study on pandemic preparedness to date. It was a collaboration between the John Hopkins University, The Economist Intelligence Unit (EIU) and the Nuclear Health Initiative (NTI).
There is quite a good write up in the Huff Post (read the article in full, the meat comes at the end) https://www.huffingtonpost.co.uk/entry/uk-coronavirus-pandemic-preparedness-what-went-wrong_uk_5f105b86c5b6d14c3363e8d2
“The US And UK Were Ranked Top For Pandemic Preparedness. What Went Wrong?
In October 2019, an extensive report two years in the making placed the US and the UK first and second respectively in a global ranking of countries’ pandemic preparedness.
Even more impressively, Britain led the world in a sub-section on a country’s ability to respond rapidly and halt the spread of of devastating diseases.
Nine months later, the US and the UK have been crippled both physically and economically by coronavirus.
So what went wrong?
In short, everyone did what they were supposed to when Covid-19 hit — except the politicians.”
“Asked about the biggest factor in the current situations facing both the UK and the US, Jessica Bell (NTI’s co-lead on the project) said: “If I was going to put my finger on any one large influencer, it would be the political leadership.”
[…] I have gathered from Twitter, rather than from comments here, that people want to know what they can do to draw attention to the fact that we are facing mass unemployment in the UK, with multiple further consequences to follow, as I have laid out in recent blog posts. […]
Agree!
MMT+GND+Job Guarantee
Let’s hope Labour ditches the Hayekian obsession too. The People’s Assembly plus Momentum at this stage would do a better job.
Is there any possibility of a US-UK trade deal making it impossible to implement any of your suggestions? [I hope not, but I don’t know enough to judge].
Quite probably