The government announced its new ‘rule of 6' yesterday. It is illogical.
At the same time it announced it's £100 billion ‘moonshot' plan to deliver mass coronavirus testing in the absence of a vaccine. It is utterly implausible.
Or rather, it is implausible barring one thing. Boris Johnson did not look in the Piggy Bank to see if he had £100 billion for this deal because the one thing he knew was that the money could be created to deliver the deal. As I noted in a tweet this morning:
I'll just make the quiet observation that no one is asking where the £100 billion for Johnson's ‘moonshot' testing programme is coming from. That's because without fuss or rancour modern monetary theory is at work. Indeed, it's the only part of the plan that will deliver.
— Richard Murphy (@RichardJMurphy) September 10, 2020
Let me add a note if caution though. MMT does, of course, say that the funding for this programme is available.
MMT also says that the spend will not be inflationary because we are facing mass unemployment.
But MMT does not say that the project will work.
Nor does it say that this might not just be a giant scandal to divert money to the government's friends, yet again.
The risk of corruption in this plan is enormous. MMT is good, but it cannot prevent abuse. And I have to say that I smell something pretty rotten in this plan. I can't prove it. But £100 billion of spending plans on something totally unproven has the risk of potential corruption written all over it.
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What I dont understand though is what the medical justification for this decision is, and if you wanted to reduce or eliminate the disease what are the potential costs and benefits of the various options
“MMT does, of course, say that the funding for this programme is available. MMT also says that the spend will not be inflationary”
What is all this “MMT says stuff”..As if it the holy doctrine of economics?… listening to you you would think Governments have never created money before..well they have.. you would think they have never initiated fiscal expansion..well they have. A rehash of Keynes for the most part and that is taught to every economics undergraduate in the country.
MMT of course thereafter throws a number of implausible suggestions which are unproven and have no historical precedent.. that’s the fun bit that no one takes seriously and why “the MMT community” spends most of the time at each others throats.
First, Keynes is nt taught
Second, as the Bank of England has noted, Keynes is still taught as if money is not created by spend
Third, Keynes is taught as if there is a functioning IS/LM curve
And fourth, MMT changes the automatic stabilisers, and has an entirely different relationship to inflation
But carry on with your fantasies if you wish
That’s what Keynes as taught is, and probably always was
Keynes as he wrote it is different of course
But that’s almost never mentioned
@ Tess
Japan would like a word…
“MMT…throws a number of implausible suggestions which are unproven and have no historical precedent.”
You really should read what actual anthropologists and historians say on the matter (such as the late lamented David Graeber) and you’ll discover that MMT matches exactly with how economies worked across ALL societies throughout the entirety of recorded history.
The big irony though is that no anthropologist or historian ever found a shred of evidence for the ‘fantasy history’ that economies developed out of markets propounded by mainstream economics.
“And fourth, MMT changes the automatic stabilisers, and has an entirely different relationship to inflation”
Yep.. that’s the really scary part
Which as usual you cannot justify but just troll about
Richard do you know what the ask and implications of this are ‘Trade unions are preparing to sign up to a list of demands including: a legal obligation on the Bank of England to promote jobs; launching apprenticeships and genuine youth training; extending the furlough scheme; and taking public stakes to save struggling but otherwise viable companies.’
https://www.mirror.co.uk/news/politics/gordon-brown-launches-radical-campaign-22657300
In a word, no….
The US Federal Reserve is required to maintain policy such that it promotes:
1) Full employment in the USA
2) Price stability with around 2% inflation.
So requiring the Bank of England to consider something other than preserving the value of the wealth of the very rich and creditors is not radical (inflation is pretty good for debtors), even if it is seen as being so in the UK elite.
Agreed
But that far lefty Gordon Brown called for it yesterday so in the eyes of some it will be
“The government announced its new ‘rule of 6’ yesterday. It is illogical.”
Says the self-appointed Coronavirus expert who predicted 10,000 deaths a day two weeks into lockdown and only a few weeks back that a further 600,000 Coronavirus deaths would occur in the UK.
The government have introduced this new rule after consulting with their experts. Who are you consulting with? You claim you are making your doom-laden predictions after yourself speaking to experts but it’s funny how you never name them. The obvious conclusion is that you’re just making stuff up.
The government announced this and the ludicrous moonshot scheme to cover for failing track and trace
The only experts it consulted were PR ones
The rule makes no sense when. children are being sent back to school and people are being urged to return to work
I live in one of the least Covid affected areas in the country, West Somerset. The official death toll for the postcode is 1. However, my wife and I know personally of 3 otherwise healthy people who died suddenly of an undiagnosed ‘respiratory illness’. The BMJ cite England’s performance as the worst in Europe and point to thousands of excess deaths not from Covid but because they could not access treatment for other conditions because of Covid precautions. Cancer treatment faces at least two years of delay, there will be unnecessary deaths. Johnson still claims the NHS was not overwhelmed, Perhaps it’s just a matter of perspective. The Westminster Government have chosen to discount (or not count) care homes. They removed 10,000 excess deaths from the statistics they use. Test and Trace is, even by official figures, operating at sub-optimal levels after 6 months. Mr Johnson is placing his faith in a test for which the science does not exist and for which a programme of research has yet to be established. Looks like another world class cock up in the making.
Richard’s prognosis may have been on the gloomy side but given this Government’s ineptitude and dishonesty I would forgive that. Reports in 2010 (Hine H1N1 report), 2011 (EU experts group) 2015 (Journal of Infectious Diseases & Gates Foundation) 2017 (Report in Time magazine) in March 2019 (WHO), September 2019 (Global Preparedness Monitoring Board) October 2019 (World Economic Forum warned us. One of these stated that a zoonotic, respiratory virus would emerge from China, it would be spread through aerosol transmission. But the Government still claims they could not know it was coming or what it was like as justification for reducing PPE stocks by £300m between 2015 and 2018. Believe the propaganda, accept the manipulated figures, applaud the wilful ignorance if you wish but if Johnson tells me the sky is above me I’m going to continue to check.
There are 1,000 excess non-Covid deaths at home a week now
That is Covid related
Where do you get your statistics from Richard?
The ONS is showing total deaths, all causes, in England and Wales for the last 6 weeks as 54,837 against a 5 year average for the same period of 53,673. That’s 1,164 over 6 weeks. Not 1,000 a week. And of course the 5 year average can be misleading as some earlier years will have been worse than others. The same period in 2016 saw 55,428 deaths for example. So more people died in 2016 over the same period than this year. No excess deaths at all this year compared to 2016.
I will file your claim in the ‘made up’ category.
It is data on deaths at home
They are 1,000 up
Others are below expectation
This is the point
It’s nit just totals that matter
It is only Vivid related because of the insanity of all the paused treatments and diagnosis of illnesses.
I have mentioned before and still believe that there will be more deaths due to things like mental health, undiagnosed cancers etc… than Coronavirus over the long term.
A good friends neighbour has not had any mental health service visits since March, he has been causing problems for his whole street because of this, this is not something that makes the headlines.
At first, when I read about the emergency powers relating to the virus early on, I did dismiss it as nothing to worry about, but the more I read and yet more legislation passing through parliament without any scrutiny, (or from the opposition)
The more I think some sensible opponents may have been correct.
(And no, I don’t mean the conspiracy theories, 5G, Bill Gates etc…)
Personally I think that this winter will be the decider on what happens, if genuine Covid-19 deaths and hospitalisations stay low, it may be time to look again at restrictions.
It will be an interesting nine months ahead for all the wrong reasons.
I imagine this is just another headline grabbing scheme of Boris’s, the latest in a long line, from Boris Island to the Ireland Bridge. Like the others, it’s fantasy. They always have been and they always will be. I don’t suppose he gave any thought at all to where the money would be found as he knows it will never be needed. he just needed a big figure to make an impact in the media.
It is true the government can spend another £100 million on a particular project with no problem.about balance sheet fussing.. The real question is have we the resources, laboratories, trained personnel, training capacity and other resources etc. to access. No time frame is mentioned for the moonshot. It could be than even if by dint of extreme planning and promotion the scheme will take so long to bear fruit that other remedies such as an effective vaccination programme will have become available, thus “wasting” this £100 billion moonshot moonshine effort.
Just a head’s up really.
Netflix has a really good documentary you should watch called ‘The Social Dilemma’ about social media. It interviews Jaron Lerner as well as many others from the digital community who are deeply worried about social media’s affects on the world.
It touches on much of what gets discussed here – from the problems we have of penetrating received wisdom about economics and macro fiscal policy with MMT for example and I would heartily recommend to all of you if you have the time and a bit of cash to sign up for just a basic service. The message at the end encourages critics of all disciplines to keep speaking out (that I think includes you too Richard).
As for this post, you only have to look at the near complete silence in the media as the £100 billion is pulled out of the hat – agreed.
But expect later on for it to to be added to ‘Project Debt Fear’ later on when they start talking about more austerity and tax rises across society at some time.
Agreed
Steve Keen provides a perfect double twist to “Project Debt Fear.”
First he asks why is private bank creation of money from thin air for loans not regarded as deficit spending.
Second he asks why it’s not seen as the worst to fear from the historic data showing it the primary cause of two global deflations in the last hundred years.
http://www.profstevekeen.com/2020/09/05/the-mathematical-model-of-modern-monetary-theory-3/
Exactly Helen. Why?
Because it makes money, that’s why through interest. It’s OK to make profit out of debt – but not go into debt to help people without profit. It’s sick.
I think it is also related to how the rich keep the the value of their cash – by offering it to The City for loans.
I am a pubic sector housing development officer – every time I get planning permission for a scheme I get a deluge of investment vehicles offering me money (at interest) – little groupings of ‘investors’ (cash rich folk) looking to get a return and make their money work for them.
Keen was one of the first economists to show me how blind the Neo-libs are to the source of money – money is just money to them – whether it is debt or real cash – they are not interested and as a result even more dumb that even we think they are.
Same argument today that those with money or the private bank ability to create money will happily send it abroad to create jobs overseas to make profit and then expect the government to increase bank rate to prop up the value of the pound which of course helps deter investment in jobs in the UK. This, of course, was the idea of the Gold Standard to keep currencies stable but as soon as the UK began to suck in imports and run a trade deficit up went base rate along with austerity cuts which reduced demand and workers just blindly expected to take wage cuts to lower the value of exports! A circular nonsense!
Of course complexity of life forms, including us, can only take place because of a bias to “club-ability” so setting up rules for equitable global trading requires the giving up of some sovereignty to the other countries in the world. Likewise on the domestic trading front control over capital has to be a shared arrangement with those who need an adequate income from the labour they invest in working. In short we know about the effects from applying Sectoral Balances Accounting but we now have to move on and add in a moral compass!
Here’s what the British Medical Journal has to say about the £100b Moonshot plan:
https://www.bmj.com/content/370/bmj.m3520
As you’ll see they’re not very impressed and Devi Sridhar makes the case for sanity thus: “…. I’m concerned about the reliance on the private sector to deliver this. The evidence so far is that involving local NHS capacity is more effective than outsourcing. There is a case for giving the extra billions to the NHS and asking it to deliver. I have concerns around the bidding process for these contracts. The procurement process isn’t clear, and it allows for a lot of people getting rich off this crisis.”
She’s right