I hinted in an answer to a comment on here yesterday that I am thinking of working on a new book explaining how government funding really works. This will be the foundation of the work I plan with Colin Hines on funding the Green New Deal, but very obviously has broader application.
The reaction of my sons to this news was amusing. They groaned, noting that in their opinion I hate every aspect of writing a book excepting thinking about it and saying ‘I wrote that' when it's done. There is some truth in this, but I have to admit this one has been developing in my mind for a while.
The aim will be to explain everything from what money is, to how it is created, to what it's relationship with tax is, before then going on to the much harder stuff. That will look at debt, deficits and, of course, quantitative easing. Inflation then comes into the mix, but before that the true nature of government accounting - both the income account and balance sheet - will need to be addressed. The latter is particularly important and may be a focus of this work.
The relationship between the government and the rest of the economy will also need consideration, of course. That will then bring in a discussion of fiscal and monetary policy, with multipliers and interest rate issues in that mix.
Description will not be enough though. This work will be quite explicit about the fact that there is never anything neutral about the economics of government funding. Always, and without exception, government funding decisions have a policy objective. What those objectives might be will clearly need to be discussed, but this book would have the aim of explaining how to fund the economic transition we face. The aim is to in that case explain how finance can be aligned to policy, rather than policy to finance.
I do not suggest this is anything more than an outLine at present.
There is also no publisher in mind. Maybe it will just be an ebook to make it as readily accessible as possible. It could be a printed work. In either case partnerships with others with concern on this issue might be welcome.
But right now I am interested in reactions, and requests for what needs to be included, explained or otherwise addressed.
Suggested titles might also be interesting.
Comments please!
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Richard, A great idea …the book I mean….and sorely needed. The more publications we have going out from the perspective you champion the better.
I know you will have dozens and dozens of suggestions but. here is mine:
Suggested title…. The Myth of “Taxpayers’ Money”
and a strapline/subtitle underneath: ‘How Public Finance really works’.
Hope you are having a peaceful Christmas break and thanks for all you have done this year and all the years before that.
Alan
Retreated to my study after too much to eat and drink!
First, “Making Money” is, I think, a great eye catching title with a “double meaning” that might engage some that might not otherwise care. It’s short and to the point….. and a further explanatory subtitle could be added if you wish.
Second, I love the Keynes quote “Anything we can actually do, we can afford…” and I think that this should drive the narrative of the book. I don’t think we need a dry academic text… it should be factual but with a clear agenda.
Third, it should be short. If people want more then they can look for it (Kelton et al.) but it should not turn anyone with a short attention span (me?!) away.
Fourth, the number of comments already made make it clear how much this book would be welcomed…. so, please bump it up the “to do” list.
Fifth, I am happy to assist where I have technical expertise (but without interfering with the story that you want to tell).
Good luck.
Now, time for a snooze!
PS My Christmas present this year was a biography of Frank Ramsey (by Cheryl Misak). Only half way through but I think you might like it, too.
Clive
Apologies
Even I turned the blog off yesterday….
Thanks for the suggestions
Making Money would be good, but already used
Creating Money?
Richard
M.M.T. ‘People have a Magic Tree’
If ‘Making Money’ is taken, ‘Generating Money’ is perhaps nearer the double meaning of ‘Making Money’.
Or you could add something to it – possibly ‘How Government Makes Money for the Public Good’…
(It might get all the Neolibs buying it convinced that it would tell them how government can sit there like a large corporation just making money and whilst collecting no tax! )
A further thought about this topic, following on from our exchange above over whether explaining government money should be directed towards “citizens” or “taxpayers”.
This morning I read an interesting article by someone called Andrew Percy, linked from Larry Elliott’s piece today in the Observer, proposing a model of what taxation would look like in the UK if earned and unearned incomes (of all sorts) were subject to the same rates*. His model suggested that it would allow a much higher income tax threshold than currently – and it prompted me to wonder whether that was entirely desirable. If the role of tax is wider than simple revenue generation, might it not be best for as many of the population as possible to have an obvious “contractual interest” in their government’s financial decisions – as well as sharing in validating the currency? (With that rationale, the actual bottom tax rate could be very low).
I’m asking because it seems to me that the book you are proposing isn’t just about the theoretical explanations of government finance, but really about the underlying philosophy of how a government does things and its relationship to its citizens/taxpayers/voters.
[*No doubt this is the sort of thing you will blog about another time in relation to tax. I find it interesting how it translates the thought-experiment about what aligned tax rates would look like, which I am sure I have not been alone in having, into actual numbers and models. It isn’t actually so relevant to the government finance topic of your proposed book since he has a strict accounting model which rigidly assumes increased government expenditure – he models improved social benefits and investment aimed at zero carbon – has to be exactly balanced by increased tax income].
You are right – I believe people need to appreciate that they pay tax as part of the social contract
Many economists just view tax as a revenue raiser of varying efficiency
That wholly misses the point of tax
Sorry about the late response. Family of twenty over Yuletide.
Have you read Dr Frances Hutchinson: Understanding the Financial System (2010) and What everybody really wants to know about money (1998 – terrible cover)? Really draws non-economists and accountants in and introduces social credit/national dividend (Douglas). Also, the irreverent and utterly brilliant Eimar O’Duffy (1930s).
Both authors put political economists and politicians and their economic incoherence in their place.
Not read any of them!
I will take a look (second hand copies on order…)
Here’s my tuppence,
Tax and Fiction…The private life of the public purse
Thanks