I have posted this thread on Twitter this morning:
Why does Johnson wants to take on the nurses? Is this his Union fight; a version of Thatcher's with the miners? Is the Battle of the Hospitals to be his Battle of Orgreave? And why? Thatcher wanted to break the unions. Does Johnson want to break the #NHS? A thread...
Even someone with the insensitivity of the average minister in this government must have realised that a 1% pay offer to the NHS would, after the last year, be treated as contemptuous, not just by the nurses themselves, but by many in the population at large as well.
We didn't clap for nothing. We have seen the exhausted faces. Few of us can really appreciate the trauma of going to work knowing we will see people die in greater numbers than we ever expected during that day. Nor can we imagine the feelings of helplessness that must induce.
I know the NHS is our religion. And there is this ‘nurses are angels' thing. But some myths are based on facts. And I want to add in all the others as well, from the porters who make the NHS move, to the consultants, to the cleaners, GPs, and receptionists. They all make the NHS.
The last year's been about keeping the NHS open. Lockdowns saved lives. But they were really about keeping the number dying to a level the NHS could, just about, manage. All the sacrifice was to ensure that we could support those we lost, and those who helped them as they died.
Was that worth it? I think so. Few of us want to think about death. In our society it is a taboo. But Covid made us face it. Unexpected, early, unjust, heartbreaking deaths became commonplace, but not normal. And everything done was to give those dying the support they needed.
On the way, and due to incredible care, some brave decision making and simple determination it's also a fact that many who went to intensive care units also came out alive. Many, maybe most, are scarred. But they got another chance. And that's a cause for celebration.
The cost has been high. Hundreds of thousand of jobs lost. Countless cost to mental health. Failed businesses. Lives disorganised. Many hopes dashed. But, lives were saved. And, as far as was possible (and I know the constraints) those who died were respected, and cared for.
At the most fundamental level what is important within our society was questioned. And what mattered was one of last rites of passage: the preservation of life was enormously important, but so too was supporting those on their final journey. They had to die as well as possible.
I am not pretending that was always achieved. I know that it was not always possible. The care hone scandal showed that the government really did not understand this need at first. They should be held to account for that.
But if anything, this failure to protect some people, and the reaction to it, supports my narrative. We were angry about the indifference shown to those in care homes, and rightly so. Deep down, we still believe in the final rite of passage. Dying as well as we can matters to us.
It matters so much in fact that we were willing to throw our economy into chaos. We were willing to lockdown. We were willing to accept the consequences. The shock to Dominic Cummings, very early on in this crisis, was that we cared about our grannies. He could hardly believe it.
There were those, Cummings and Johnson included at the outset, who believed Covid should be let rip. It should run through the population, do its worst, and leave behind the immune survivors. They eventually coalesced around something called the Great Barrington Declaration.
This was raw, market fundamentalist, survival of the fittest thinking. The natural winners should make it (no doubt motivated by a touch of eugenic thinking on who those winners might be). The rest were dispensable. More than that, they weren't worth the cost of saving.
Cummings and Johnson got this wrong. The cost of that was high. Their indifference to taking action early, because of their belief that simply letting the virus have its day was the right thing to do, has cost tens of thousands of people their lives in the UK.
But the fact was that in the end they knew people would not accept this. The indignity of letting people die in an NHS that was totally overwhelmed was something that they eventually realised would not be tolerated by people in the UK. We were willing to pay the price, and did.
I know that price has been very real. But, and I am back on economics now, in one regard there has been a shocking realisation. And that is that this price was not nearly as high as we were led to believe. Although we were told money was in short supply, it transpired it wasn't.
In the last year the government has had to spend around £400bn it did not have (the final cost is not known yet). And despite everything that had been said about taxpayer's money being in short supply, the money to settle the bills was available.
It was always going to be. There was never a doubt about that. And the government has always known the truth on this issue, even if there have been persistent lies about it. The reality is that the Bank of England has always been able to create money, on government demand.
This is simple to do. The government asks to borrow a billion from the Bank of England. The Bank agrees to lend it, which is pretty unsurprising given it's owned by the government, and simply records the loan in its books, and that's all it takes to create the money.
There is no printing press. No notes and coin are involved. Nor is any taxpayer. Least of all is any so-called ‘taxpayer's money'. The government tells its own bank to lend it money, without ever agreeing a repayment date or interest rate, and it exists. Money, from thin air.
There always was a magic money tree. All the denials by all the politicians from all the parties who ever queued up to assure us that we had to ‘live within our means' (which it transpired meant the money the commercial banks were willing to lend us) were talking nonsense.
We weren't constrained by the commercial banks. Or the money markets. Or the willingness of foreigners to lend to us. Nor did the government need to collect tax due before it spent. What a few of us knew, and most economists denied, was that the government creates its own money.
And it has. In the last year it's created more than £400 billion of new money. Costlessly. Without borrowing from anyone but itself. And it has injected that new money into the economy. It had to.
The Bank of England had to do this because private banks weren't creating new money, which is the only other way the money that keeps our economy going is made. And because many people were saving and paying down debt private bank created money was in short supply.
That's because saving and paying down debt takes money out of the economy. That's because all money is a promise to pay. So when a debt is repaid the money disappears. And when saving happen the money saved is not, by definition, spent and our incomes are other people's spending.
So, many people reacted to Covid in ways that were rational, but meant there was too little money in the economy. So, the government had to make good the shortfall, and it did, thankfully. And we don't need to worry about that.
Government created money is literally what makes the world go round. Once upon a time it was injected into the economy by increasing the national debt, but this time the demand was so big it was effectively spent directly. There is no real new debt as a result.
It's true that as a result of this money injection that the commercial banks now seem to have £400 or so billion more on deposit account with the Bank of England. But that means they are much less likely to go bust. That is a good thing.
And it's also true this new money does eventually end up as part of the savings of the already wealthy, because it pushes up asset prices (hence house price increases and a buoyant stock market despite Covid) and so taxes on the wealthy do need to increase to control that trend.
But is there any risk of inflation in normal prices as a result of this new money being created? I don't think so. There's a reason. It is that there are millions unemployed and underemployed in the UK right now. And that means there is no upward price pressure from wages.
So, back to nurses and their pay claims, where all this started. In my opinion the dispute to come on this issue is much more significant than the government has appreciated.
The government thinks there is no upward pressure in wages in the market right now. As a result their simple, dogmatic reaction is ‘why do we have to pay in that case?' To summarise this thinking, it's that of the person who thinks markets always get things right.
But markets don't always get things right. The old adage that an accountant knows the price of everything and the value of nothing is based on a truth (and I am a chartered accountant). Markets can get values very wrong.
I think markets have got the value of nurses, and come to that, all in the NHS and care workers and all in education, very wrong right now. I'd go so far as to say that we are at a pivotal point in the development of society at this moment.
For forty years we have lived in what might be called the neoliberal era. The term is not as important as what it implies. And that belief is that markets know best. As importantly, the logic says that governments definitely know second best.
The power of this logic has been seen throughout our society, and in our politics. What we have developed are a breed of politicians who when they see a problem then think that whatever they, in government, might be able to do to solve it the market could do better.
So, they outsourced track and trace. They brought in consultants to manage Covid. And they believed that people with literally no experience in PPE could somehow deliver better product at lower price than experts on the issue, working in government.
They were wrong, of course. Track and trace and PPE are all disaster stories, to join so many other outsourcing catastrophes. The massive overpayments were just part of the story. The waste is another. Markets fail, badly, when managed in ignorance.
But, the government does not believe this. They swear these are success stories. And they regret the fact that limitations in the NHS - created by a decade of austerity from 2010 onwards - have forced them to close the economy down, all because people care about their grannies.
And, they think nurses are not in the market, so they know second best what their worth is. In that case they can be given what they get because only markets know the true price of anything, and value does not matter.
Except it does. Value is why we shut down the economy. We valued people: those struggling for life, and those losing it. Value is what shaped the last year. Value justifies what we did. And the government still does not get that, because they don't put a price on value.
And nurses are valuable. We have proven that. The worth is established. All that isn't is the price, which is something very different. And that conflict of market price versus value to society is the core of the dispute that I think is going to happen now.
The nurses are rightly going to ask to be valued. I think others should too. And they now know that the money to pay them is available. That's beyond dispute. What we face is a choice about the future of life in thus country as we know it. All based on a 1% pay offer.
The decision to be made is about more than the nurses, important as they are. It is about who and what we value. Do we value essential public services? Or do we value the fripperies that some in society can afford because they pay less tax?
Do we value the claims of financial markets more than we value the right of government to decide how money is created for the benefit of us all?
Are we willing to tax the rich (who benefit by far the most from government deficits because the money injected into the economy ends up on their bank accounts at the end of the day) so we say have the services we need?
Are we going to accept tough decisions for the sake of the common good, common values, common wellbeing?
This is the most massive question, and yet if the nurses pursue their pay claim - and I think that they should - then these are the questions that will actually be asked of us.
And surely we know the answers now? If everyone has enough to live in (and that's a massive ‘if' we have not addressed as yet) then what we know now are a number of quite fundamental things.
The first is that we can't value a hug from a loved one. But we know how much we long for them.
And we can't estimate just how important friends are. But we do know we miss them, badly.
Dammit, we can't value a smile, and most of them are hidden now. Thank goodness they are reflected in our eyes, if we really mean them.
You get my point, I hope. There is no price for these things. But they are valuable.
As has as much dignity and care as possible for the dying been immensely valuable.
As was the sacrifice of those who had to deliver that dignity and care when no one else could.
The fight to come - for fight I think there will be - is about what is important. Is the claim that ‘there is no money' (when there is) or that ‘the debt must be repaid' (when none has been incurred, as the data shows) more important than caring?
I know the answer to that question. Deep down I suspect you do too. Deep down you might share my view of those who can't even understand that this is a question that needs answering, and who are willing to lie to deny it exists.
This, then, is a moment for political awakening. Not party politics, I stress. I don't much bother with them. But the real politics that determines the overall direction of our society.
From 1945 to 1979 the UK worked to recover and rebuild from war. From 1980 to date we have let markets decide how we live, and have deferred our interest to the interests of those who pursue money, wealth and profit as if these matter most. And now? What are we to do?
I do not want to go back to 1945. We have learned too much. We have moved too far. That's not where we need to be. And anyway, that was a world that did not respect the equality that markets have not stopped us embracing of late. So this time is different.
But what do we want? That's to be answered. But the message that I am getting loud and clear now is that we want what is valuable, and that is something way beyond what markets deliver.
We want a straightforward, honest, clean, accountable state that will act openly and transparently in the public interest. We are a long way from that.
We want a state that is willing to invest in and protect our futures. That is not just about the NHS, of course. It is about free education. It is about cradle to grave care. It is about climate change and what we know must happen.
And it is about economic honesty. Economics has been used, quite deliberately, and I have to say with the willing consent of far too many economists, to bring us to the point where a government is apparently unable to value nurses.
Economics has deliberately created the myth that ‘there is no money'.
And the economics that we have has been built on the idea that it is worth leaving people unemployed to keep inflation low, largely in the interests of preserving the wealth of the wealthiest.
This economics offends me. It is wrong, at every level. And there are alternatives that explain how the economy really works, starting from the core fact that the government can create all the money needed to create the society we want.
But, we have to choose to do that. The nurse's pay claim is about making that choice. Precisely because it is I expect the government to oppose it, vigorously. And then they will say that if they must pay then the NHS must be privatised. I am sure that will follow.
This then is about the very essence of what our society is about. Are we to put value above price? People before profit? Society over private wealth? Community over markets? The smile of a friend over the heartlessness of the financier?
I know my answer. I know this pay fight, and the fight for the NHS that will follow, might be pivotal. This is about the very core of what it is to live in society. That is what I want. You need to do so too if we are to recognise what is of value in the future.
This is an issue in which everyone will have to take a side. But there can only be one winner if we are to have any chance of a decent future.
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Hello Richard. You state that the government has created £400 billion in the last year yet if I go to the BofE website (https://www.bankofengland.co.uk/monetary-policy/quantitative-easing) it shows that £895 billion of QE was generated in November 2020 alone. Can you explain the difference?
£895 was the cumulative total to then
£450 bn had been authorised in the last year but not all has been used as yet
We have to re-learn the old truth, “man does not live by bread alone.”
Your post today is great written from the soul. It is not just a deep analysis, which it is, but a reminder of the fundamentals of life.
Thank you.
Fabulous post/thread. I am sharing it far and wide (already twiiter and FB, and plan to include a link to it in a blog post).
Thanks Thomas
Why has the Tory government’s Budget been met with opposition as being inappropriate to the situation the country faces. You need to go right back to 1694 and the creation of the Bank of England which not only resulted in an eventual surge of retail liquidity and this in turn helped launch the Industrial Revolution but ultimately led to money creation by private banks being based on future productivity with some collateral reassurance.
Why therefore does this wretched government (and I include Labour in this category) not see that government creation of liquidity for public goods and services has the same premise of being based on future productivity? Is improved productivity not required for the public goods and services the private sector cannot offer directly at an affordable price for all and make a profit on?
https://justmoney.org/c-desan-the-power-of-paradigms-in-histories-of-economic-development/
Very good point
Desan, however writes this in that article: “Soon after the Bank’s founding, the British government institutionalized markets for circulating public debt. Given the scarcity of currency, much of that debt issued in order to purchase goods, not to borrow existing money. The British then literally swapped the debt into equity, endured the debacle of the South Sea Bubble, and re-issued debt in ways that could be carried forward indefinitely at a relatively low interest rate. Unlike the Dutch, the British thus anchored new capital markets with national reach on the stabilizing medium of public debt”.
I take a slightly different line to Desan, because “endured the debacle” covers a multitude of sins and unresolved corruption. The South Sea Bubble shows what happens once the values of monetisation as the prevailing, unchallenged way of thinking takes hold; and although Desan smooth’s over the point, the South Sea Bubble was a blood-bath: and like the GFC, there was incandescent public outrage that arrived in Parliament with furious demands led by Lord Molesworth, a leading Whig, to change the law and hang the guilty (Molesworth was a shareholder, the Paymaster General commited suicide, the Chancellor of the Exchequer was expelled, and George I became embroiled). It was Walpole who fixed the problem through his deft political handling, delivered because he possessed precisely no political (or any) srcuples whatsoever – the values and had created the problem. The ironies are endless.
There are other profound insights to be gleaned from all this, rather than the conventional claim that these monetary innovations produced the Industrial Revolution, and all was (and is) therefore for the best. It is not an accident we are where we are.
You need to add the following to your analysis which Christine Desan doesn’t really cover in her historical perspective, monetisation of the economy ironically resulted in a split between Sovereign Credit and Sovereign Debt. Understanding the reasons why takes you right to last week’s Sunak Budget:-
http://financeandsociety.ed.ac.uk/article/view/3017/3999
Unfortunately the Great Barrington Declaration was not their last word, but merely the opening gambit. It reappears in suitable adapted and mutated form under the headings ‘vaccination’ and ‘herd immunity’. It neither admits nor acknowledges the concern of Public Health specialists: the importance of controlling borders; Taiwan is is the Gold Standard (if I may borrow a solecism!); and the endless capacity for mutation into new and dangerous variants of the virus, that thrives on local outbreaks that feed the volatile dangers of mutation. that are so difficult to control. We cannot possibly say that the vaccines protect against all exiting mutations, to say nothing of new ones; the known and unknown unknowns.
In summary, the only ‘values’ the British Government appears to consider absolute and inviolable – are Trade and Profit.
I think the “thinking” (I use the word advisedly) going on in many individual’s minds is that Covid vaccination will re-set many countries, including their own, back to a mild flu-like past where everybody just got on with their business and it was mainly some of the extremely elderly who became flu fatalities.
This personally reminds me of the time I was looking out of the window of a local Naples Bay train and seeing all the buildings skirting the base and sides of Mount Vesuvius that got constructed after Vesuvius erupted and destroyed Pompeii and Herculaneum with the loss of many lives in AD 79. I just couldn’t believe people would be so foolish to do such a thing but many human beings it would seem prefer to be eternal optimists at the expense of engaging in critical reasoning!
Here is an example of a seductive proposition that seems reasonable, but presents the reader with a ‘value’ that is difficult to parse, eludes precise quantification, or presents the actual nature of the ‘value’ being offered. It is just, somehow for the best. This is from Sky News quoting a SAGE member, Professor Andrew Hayward:
“I think given the societal trade-offs, we are going to have to live with a degree of mortality that will be substantial.”
“Substantial”. How big is “substantial”? How am I supposed to measure that, even if I think it appropriate to measure it as a value? It isn’t money, but it subtly conflates a money-like judgement with ‘value’. Since I cannot measure it, I cannot object if I find the result is worse than I assumed. I am accepting a suppressed, unquantified (unquantifiable) quantum as a ‘value’ (an oxymoron); but the offer comes with no way for me to redeem it if it is wrong. This is the problem with the monetisation of value.
Agreed
A fabulous thread, Richard, but it should be coming from a politician. Apart from Clive Lewis, the other day, no-one seems prepared to (or feels capable to) challenge the status quo.
Perhaps Ian Byrne or Zarah Sultana could be persuaded to?
Politicians always follow
They never lead
Perhaps we need different politicians then!
Very interesting read thanks and hope lots more see this.
Indeed – a great post.
I’ve just had to turn off R4’s Any Answers because I ‘ve just heard people who have swallowed the money is short paradigm and honestly, it’s awful to listen to society falling out with each other whilst this Government smirks behind the weekend.
Why does this happen – why do they fall for it? Why do too many accept so little?
This blog and writing elsewhere is unlocking the technical lies we have been living under for far too long. But what holds back progress seems to be more philosophical in nature.
Timothy Snyder ‘ ‘The Road to Unfreedom’ (2018, Tim Duggen Books, New York 9780525574460) Chapter 1, p15:
‘The politics of inevitability is the idea that there are no ideas. Those in its thrall deny that ideas matter, proving only that they are in the grip of a powerful one. The cliché of the politics of inevitability is that “there are no alternatives”. To accept this is to deny individual responsibility for seeing history and making change. Life becomes a sleepwalk to a pre-marked grave in a pre-purchased plot.
Eternity arises from inevitability like a ghost from a corpse. The capitalist version of the politics of inevitability , the market as a substitute for policy, generates economic inequality that undermines belief in progress. As social mobility halts , inevitability gives way to eternity and democracy gives way to oligarchy’.
p. 22
‘Like all immorality, eternity politics begins by making an exception for itself. All else in creation might be evil, but I and my group are good, because I am myself and my group is mine. Others might be confused and bewitched by the facts and passions of history, but my nation and myself have maintained a prehistorical innocence. Since the only good is this invisible quality that resides in us, the only policy is one that safeguards our innocence, regardless of the costs. Those who accept eternity politics do not expect to live longer, happier or more fruitful lives. They accept suffering as a mark of righteousness if they think guilty others are suffering more. Life is nasty, brutish and short; the pleasure of life is that it can be made more brutish and shorter for others’.
Snyder has studied fascism in detail and I think he has nailed it. I think the above sums up the world I live in now and also explains why MMT’s development and use will be retarded and difficult.
Apparently we live in a world where all there is to know is known!! Well, blow me!
Whilst I am here I would just like to congratulate the Labour Party on its aiding and abetting of inevitability politics by simply ignoring its own history. You must be very proud.
Great, Richard.
But forgive me if I am being naive in regard to nurses’ (and other front-line workers’) pay, but surely this pay is a flow not a debt. Supposing it would cost an extra £10 billion a year to pay them decently, I don’t think you are suggesting are you, that £10 billion extra should be printed every year and left on the books (as it could be for a new hospital in, say, Sunderland)? So every year £10 billion more tax revenue is needed (if cuts elsewhere are ruled out).
3p on the basic rate of income tax should cover that, and I would be happy to pay my share!
Until we have full employment, yes I am
Becase there is nothing to pay: this s government created money injected into the economy because – you may not have noticed – we are still in the most almighty recession.
@andyverity
exposes some the myths around government debt. He tells
@BBCSimonMcCoy
*92 per cent* of the money the UK government has borrowed since the start of the pandemic has been from the Bank of England. https://twitter.com/Ian_Fraser/status/1368221161516056576
Amazed to see this on the bbc,that should shut a few up. mro.
It was good
Andy Verity tweets in similar vein too, which suggests that there is no BBC ‘line’ among the economics or politics teams on this stuff and that his colleagues have been choosing to continue with the “government has to repay”.
I think that true
An NHS pay rise seems to be dividing opinion. I am fully aware that Twitter comments are not fully representative of the population, but there appears to be a lot of comments saying “I have been made redundant/furloughed/not getting any pay rise” (delete as appropriate)
All of these are of course not good, but it appears to be a race to the bottom, supported by stealth by the government.
Brexit and Covid-19 have already caused much division (just look at current lockdown traffic levels) the last thing we need is more division.
Human nature always dictates, unfortunately.
Can you really see a general strike happening?
Unfortunately I can’t.
Rosa Luxembourg had it that general strikes were the alternative to revolution
I doubt we are there
The race to the bottom is what the Conservative Party has been promoting since 1979.
They achieve it by pitching ordinary people against each other fomenting an orgy of jealousy and finger pointing.
Those who have been furloughed have been protected. But they haven’t had to risk their health almost daily for the last year.
So why not borrow 100%?
Because
a) That will create inflation
b) We need some national debt
The world is not black and white
It’s all nunance
Thank you Richard that was an excellent thread and very important in the context of how we value specific sectors of society and how their employment affects everybody. Also looking at Twitter George Eaton said that “Cutting public sector pay doesn’t help private sector workers”.
1. It reduces demand in the economy. 2. It reduces pay bargaining power.
3. It hits households with members from both sectors.
I think you said that the govt doesn’t have to increase nurses wages because with a rise in unemployment the demand for higher wages is low at the moment. My point is that the talking points of the last 40 years by the Tories are going to have to change now as you said. The market deciding has past both parties have to find policies that target specific groups that have been affected by the pandemic and how they can boost them at this particular time. In the US they have had specific bills which have given households a stimulus check. We have not had that here apart from businesses that need it with grants and loans but even something like that at this point in time would help many families in need. I know it is free money but timing is everything and as you say the money is there it is how it is targeted.
I read somewhere, maybe here, there’s a big multiplier effect paying nurses etc more. So paying them more would bolster the economy far beyond the £££’s spent.
Correct
They are massively productive in creating good health and a sense of wellbeing
What a high minded text
Should you not have left it to the Leader of the opposition to voice?
I write what I feel
I doubt the Leader of the Opposition shares my views
What leader of the opposition? You mean the the Radio Silence Operator?
The shortage of 40,000 nurses should make any neolibrial realise that they are not being paid enough or is the government only neoliberal when it suits them.
Paying the nurses more would be very unlikely to increase the “debt” as they are low paid and would be very unlikely the save any of it in which case the government would get all the money back in taxes.
The NHS in the UK could be considered as a subsidy to business and only 3.6% of GDP is spent on it.. Look at the USA they spend 17% of GDP on health care and 40% of the populations has no access to it. This makes USA workers more expensive and so almost all manufacturing has migrated overseas following the lowest wage. This does help business control workers by threatening to take away health care provision.
If I recall correctly, the multiplier for healthcare expenditure is one of the highest – certainly above one. That is, the government gets back more than it spends. Because the wages are taxed, and the employees spend most of the rest on rent and food and clothes and 1001 other things, and when patients get better many can return to productive activity and claim fewer social security benefits, and so on and so on. And that is without counting happiness or wellbeing, which are probably more important than the money anyway.
But of course this government would rather spend on defence, which has the one of the lower multipliers, certainly below one, and much is spent on items only intended to inflict misery and death.
Oh, I was reading up from the bottom. I see you said much the same thing above!
Good post.
While others have discussed the finances (which as you point out are available if there is a will) your important point which ought to be in bold and underlined is that as we emerge from this extraordinary year there should be thinking about what we as a society prioritise and the values that should underpin recovery.
Covid has underlined how important to us our health is, and in assessing national priorities that needs to be acknowledged and responded to. The only genuine justification for limiting NHS staff pay rises this year would be if the government had identified that the thing that would improve their lives most was investment of some sort in the NHS, and for this year that was where the money goes (e.g. re-incentivising nurse training through restoration of bursaries, ensuring hospitals have capacities that can cope with surges in demand).
We have an insult in Scotland reserved for those who value money above all else: “He would sell his granny.”
The crisis has shown thar Tories are literally prepared to sacrifice their grannies on the altar of “protect the economy.” Dominic Cummings et al do not share our values of decency and respect, hence their inhuman attitude to the deaths of our elderly and vulnerable.
If Starmer had any gumption, he would put these chisellers on notice that a future Labour govt will hunt them down and recover their ill gotten Covid windfalls. Alas, he has none.
I can’t believe that the Tories are still riding high in the polls in England. It doesn’t augur well for public sector workers as Richard points out.
An uplifting and inspirational piece Richard. Thank you. If only we had just one politician who was saying these things right now. But I am convinced that sometime in the future we will eventually have a Chancellor of the Exchequer who understands how the monetary system works and how it can be fully utilised for the public good. Maybe that person has just read your post and made a decision about what they want to do in their life.
‘Here is a truth, a truth by which to live: there is hope. There is always hope. If we choose to abandon it, our souls will turn to ash and blow away.’
John Connolly
True
As always a wonderful piece. Thank you Richard.
Few seem to consider why this government (I use that word lightly) would praise health workers so fulsomely, clapping for nurses for their sacrifice, but then deny even them the most miserable pay rise when they know full well there is no problem of funding. Of all the possiblities, the most likely is that the plan to privatise the NHS which began in 2010 and resulted in the wicked, unnecessary starvation of NHS funding (and much else) throughout the fake ‘austerity’ programme, is, like the ‘austerity’ programme itself, very much alive. And no doubt Boris will want to take credit for the bountiful injection of money that will kick off the privatisation.
Great post Richard.
I’m a big fan of Crypto currencies. The invention of Bitcoin will disrupt traditional banking services and many other professions.
Central goverments will also adopt digital currency giving them control over what we see as our bank accounts.
I would be very interested in your views on this
Crypto currencies are not currencies
Nor are they assets
They are environment abusing ponzi schemes
I agree they are a ponzi as are based for the most part on speculation with few who buy having much idea of the process or understanding what they own. However they are partially a reaction to a loss of faith in fiat currencies as they continue to print and devalue purchasing power. This is particularly true as they have become more “institutionalised”. Recently Ruffer investment managers invested heavily for this reason and by nature they are a very conservative organisation whose other main holdings are TIPS, Index Linked Gilts and physical commodities..I personally thought crypto currencies would have been regulated into oblivion by now but that becomes less likely by the day as they become more mainstream. Who knows if eventually they evolve into a means of exchange. It is certainly wrong to just write off the possibility.
I think that is nonsense re fiat currencies
I think it is pure speculation
“ I think that is nonsense re fiat currencies I think it is pure speculation”..
This is taken from Ruffer newsletter explaining why they own bitcoin. This is probably mirrored by other institutions and pension fund..I personally don’t trust bitcoin but that’s not important!
“The current macroeconomic environment is setup perfectly for an asset that blends the benefits
of technology and gold. Negative interest rates, extreme monetary policy, ballooning public debt, dissatisfaction with governments and printing of fiat currencies — all provide powerful tailwinds for bitcoin at a time when con- ventional safe-haven assets, particularly government bonds, are perilously expensive. And this in a climate where investors are hungry for safety.
Against that backdrop, we believe bitcoin is poised for a wave of mainstream institutional adoption. It seems set to move from being loved by the anti- establishment to being embraced by the dominant interests of the establishment. Since 2017, billions of dollars have been invested in the infrastructure needed to support this wave of bitcoin adoption; many of the impediments to institutional investors have been dismantled”. (Ruffer Inv Mang)
Madness
The whole point of currency is to be open and freely transferable to all who use it; and the trust it relies on to achieve this is supplied by the issuer’s sovereign’s stamp of authority on coin or notes, or medium supporting it. I do not think so-called crypto-currency could be further away from that concept. It seems to me that crypto-currency is self-obsessed with absolute individual liberty; it is an attempt to introduce a form of political solipsism to the concept of money; a contradiction.
Right on! Just to add:
1. Last month the King’s Fund warned us that NHS England is in crisis with a shortage of nearly 84,000 staff — a situation likely to worsen following the insult of the 1% pay rise.
2. Last year the wealth of the UK’s richest 1000 people was £743 billion— that’s 3.86 times the NHS England budget for 2020/1 (including Covid additions). It also works out as £619,166 for every one of the NHS England’s 1.2 million employees. Who can’t we afford? Our NHS workers or the rich?
Richard – you’re wasted.
Most of my supportive / concurring thoughts already covered by others here. Where is any leader of any opposition in England / Wales on this ? Why the silence ?
I suspect that there are more folk in Scotland who think along your lines – and is why they will go for independence. They can’t abide what is happening south of the border.
No escape for the rest of us…………unless we can mobilise an onslaught of folk who haven’t been subdued into submission by our appalling MSM.
No idea how you manage to pump out all of this this material – wish it had wider exposure.
Avoid burnout !!
A 1% pay increase seems deliberately provocative. Insulting even.
I have little doubt that this government’s strategy is to underfund in order to justify the old Thatcherite lie that the NHS needs injections of private cash aka privatisation to ‘save’ it.
A serviceable opposition should be making hay, but……….
Here’s the making of a slogan from veteran commentator William Keegan in his article today on Sunak’s Budget:-
“Chancellor Sunak made much of his attachment to fiscal prudence in the run-up to last Wednesday’s budget — so much so that balancing the books seemed to become a moral crusade.
This worried a lot of people. As that great Treasury permanent secretary of yesteryear, Sir Douglas Allen (Lord Croham) once observed: what matters is not balancing the budget, but balancing the economy.”
The slogan?
“Balance the economy not the books!”
The problem is of course most voters are now so brain-washed by a dominant right-wing media they don’t know what this means and therefore they’re not “worried”! You might though have hoped the Labour Party would be doing this explaining but given its leadership’s belief the government operates on a credit card there’s little chance of seeing the slogan adopted. Indeed Blairite “radio silence” is the order of the day despite the fact adoption of this slogan is a highly “moral crusade” and desperately needs articulating!
https://www.theguardian.com/uk-news/2021/mar/07/beware-rishi-sunak-small-state-ideologue-posing-as-big-spender
Very good
One for Labour
William Keegan made reference to Sir Douglas Allen in his Observer article today on Sunak’s Budget I thought I’d look him up. Here’s what the Guardian wrote in its obituary on Allen:-
“Douglas Allen was born in Beddington, Surrey. He was only three months old when his father was killed in the first world war and his early years were hard for the family. He was educated at Wallington county grammar school and the London School of Economics, where he got a first in economics and statistics. When he was appointed permanent secretary at the Treasury, he thus became the first incumbent to have studied economics — he was once described as ‘far the most economically literate permanent secretary [in the Treasury] ever’.”
I really like the last sentence!
Hi Richard.
I don’t know if it’s been mentioned before. What would the cost be to the treasury if the W.A.S.P.I. Women were paideia their pension. I think if these women were paid it would increase very much. Just my thought I may be wrong.
Sorry a few typos what I was suggesting that would be a fair amount of money being spent in the economy.
Richard
This article from Brave New Europe is worth reading on why this government is disavowing management and is happy to merely regulate and “govern”.
Any failure in the NHS is merely used as a further excuse to privatise and out source more.
https://braveneweurope.com/lee-jones-shahar-hameiri-covid-19-and-the-failure-of-the-neoliberalregulatory-state
One of the arguments used by Hancock and other ministers for the 1% offer is that all the rest of public sector staff are having a wage freeze.
This is a LIE.
HMRC has just offered its staff a 13% pay rise over the next two years. Admittedly they have had zero for several years, but if those who collect the taxes to partly fund public spending are given that amount then those who benefit from the taxes collected are worth even more and the argument that there “is no money” for pay rises for the NHS is a huge lie.
Agreed
@ Old Codger
MP’s have received pay rises for the previous six years to this but accepted a pay freeze for this year. What’s required is to look at the annual percentage increases plus the actual sums they received and compare them to pay rises other public sector workers received like themselves including nurses. I’m sure its highly likely MP’s have made sure to make themselves a special category of public sector workers that shouldn’t suffer. Of course, the predominantly right-wing media dominating the thinking in this country will not be interested in such an analysis!
https://news.sky.com/story/covid-19-mps-to-no-longer-receive-pay-rise-of-more-than-3-000-after-ipsa-u-turns-due-to-pandemic-impact-12158160
Old Codger –
Please don’t compare the HMRC offered rise to the NHS insult. You’re implying a few things which are just wrong, I’m afraid.
Firstly, HMRC don’t collect taxes which fund public spending. Taxes don’t pay for anything… that’s been well established now. It’s not really related to HMRC’s or the NHS’s pay situation, but it’s a drum I feel we should beat wherever possible.
Secondly, and more importantly, HMRC didn’t receive any more funding from Treasury to cover this pay award… it got the same pay remit as the rest of the civil service. The difference was that HMRC’s management went to the Cabinet Office and sought permission to re-structure the way it manages its pay and employment contracts. This alone identified enough in the way of savings to fund such a massive offer. They went to Cabinet Office for approval to do this last year, before any civil service wide pay freeze was conceived of… that’s why it can be implemented when other departments hands are tied over pay.
HMRC weren’t given 13% to pay its staff with. They got the same 1-2% increase in their paybill as every other government department… they just rearranged things to be more efficient and free up funds with which to pay their staff.
And as a final small point, the offer runs for 3 years (3%, 5%, 5%), not 2.
Hope this clears things up.
We have quoted extensively from your blog post in our National Health Action Party statement on the 1% “pay rise” in order to give financial context
With thanks
Veronika Wagner, co-leader of the NHA
No problem
Go well
Richard
Richard, this is a superb article combining humanity, a vision for society and brutally clear economic analysis. I congratulate you wholeheartedly.
When Brown opened the discussion about QE back in 2007, there was a momentary discussion about putting it directly into infrastructure development. It disappeared overnight, never to reappear until John McDonnell wrote it in to Labour manifestos, to universal derision about magic money trees. Have you written any analysis of this option for QE funds, which would presumably deal with your point that the ultimate destination currently is that the funds end up financing commodity bubbles?
Thanks, and try this
https://www.taxresearch.org.uk/Blog/2021/01/26/how-to-use-local-and-hypothecated-bond-issues-to-fund-the-recovery/
Richard
The NHS has already been privatised
The hospitals will be the last thing to go.
And everything is going according to the plan that was dreamt up and presented to Andrew Lansley in 2008.
Purchasing power was moved from PCT to GPs now 8 GP practices in Islington have been sold to an American health care corporation – everyone of these moves were planned the war with Hospital staff designed to cover the real sell off
But moving purchasing power to GPs and making hospital charge local GPs for services it has prepared the way for privatisation
Read here
https://www.nhsforsale.info/gps/us-company-in-takeover-of-network-of-gp-practices/
I have been following the budget announcement closely and have yet to hear one Main Stream Media Interviewer ask the Chancellor, of for that matter a Government Minister “Just who do we owe this money to?”
Andy Verity on the BBC has done that
Missed that, what was the response before it was cut?
I do not understand your question
The mainstream media appear to have a very big blind spot when it comes to the country’s currency creation. They are trained to be investigative journalists but avoid investigating currency creation like the plague. They blithely accept, without a raised eyebrow, the right-wing mantra the government must “balance the books not the economy.”
Six years ago much to the shock of individuals who follow MMT the Bank of England explained that a bank creates currency from nowhere. They explained this in the context of private bank operation but the basics apply to a government owned bank.
https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy
Because the purpose of a currency is to be used for exchange there’s a need to maintain the value of a currency for as long as possible. This is achieved by refluxing what is influxed. There is, however, another requirement for a currency and that is the private sector wants to save some of it. Only a government owned bank can meet this need by not refluxing all it creates. Private banks operate under a government “for profit” licence and obviously it’s counter-productive to also provide currency for savings.
The Billionaire media Helen.. what do you expect?
There’s a series of lectures by Jeffrey sachs at the LSE on youtube, as part of the Lionel robbins memorial lecture series. It’s in 3 parts, and talks about what Economics should be about. It is enlightening, i highly recommend it.
He deals more with the purpose of economics and what kind of virtues it should have.
Steve keen of course covers the more technical side of why neoclassical economics is so wrong (as have plenty of others, and all worth a read) but i’ve not heard anyone talk about Economics in the context of a moral science, as Sachs does in these lectures.
If we are looking at a 1945 style ‘reset’ of the economy or just the bigger picture
1. The share of GDP that goes on wages has dropped from about 65% in 1976 to 50% now, and
2. The distribution of wages has become more unequal, The share of national income captured by the top 0.1% rose from 1.3% in 1979 to 6.5% by 2007, and
3. The increase in Housing Costs. Despite building costs having risen in line with the RPI.
So, in one respect a reset so that we can all enjoy a decent standard of living isnt that hard, its just overcoming the resistance of the wealthy.
I don’t know if this is appropriate, but it’s been puzzling me all day. especially in view of Helen’s post at 8.09 pm
From the Observer:
“When such prominent bodies spice their verdict on the budget with almost hysterical warnings of lava-like costs waiting to roll down from the financial volcano, it is reasonable to ask three questions. Is inflation likely to rise? Would central banks react by raising interest rates? And why, after all the lessons learned during the 2008 financial crash, has the UK left itself so vulnerable to an increase in rates?”
“The answer to the last question is the Bank of England’s purchase of government debt through its quantitative easing programme. With more than a third of government debt on its books, the central bank has become a major mortgage lender to the UK government, and that debt is no longer on fixed-rate terms for 10 or 20 years, but refinanced overnight on the international money markets.”
“Many in the febrile stock markets have bet that a surge in demand from US consumers will trigger rising prices
At the moment that means a better deal for the government, reducing a 2% charge in the debt markets down to the Bank’s more favourable 0.1% base rate. The flip side of this benefit comes when the Bank, faced with spiralling inflation, increases the base rate and sends the UK’s debt servicing costs higher.”
What on earth is this commentator on about? Why would they think that the government has to pay interest on the money the BoE created for them? What’s the debt market got to do with it?
Just when I think I have a handle on it all something like this comes along.
I will see if I can get a blog out in this today
@ Maggie Downie
This really is nonsense after the Bank of England six years ago explained that private sector banks create loans from nowhere.
https://www.bankofengland.co.uk/quarterly-bulletin/2014/q1/money-creation-in-the-modern-economy
Do the private banks now have to borrow before they can lend? The only borrowing that takes place if required is for payment settlement purposes which is for a fraction of their loan book.
If you go back to the time the Bank of England was established it very soon was issuing paper currency in excess of its subscribed capital and and too boot additional private sector banks for a period were allowed to create their own paper currency with settlement through the Bank of England. In 1946 the BoE was nationalised so any theoretical notion the bank had to link its currency issue to subscribed capital disappeared but it had long since gone anyway. There is also no legislation that the government must balance its books.
Ironically, the Scottish Government has to balance its books; and the British Government then transfers huge additional costs for the “benefit” of being part of Brexit Britain, but principally to ensure Scotland has a permanent large deficit that it cannot fund. The British Government requires this not because of prudence, but simply to ensure the Scottish Government is permanently hamstrung, and Scotland is a permanent economic ‘basket-case’. It isn’t much of a recommendation for the long-term, proven consequences of Scotland being part of the Union, if this was true – but the British Government frankly does not care. This was the way “devolution” was deliberately conceived and implemented by everyone involved.
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