I have a column in The Sheffield Star this morning because of my links with the university in the city.
Having analysed the problems with the Spring Statement I move on to the issue that it still astonishes me that almost no one is referring to, which is that there are obvious consequences of choosing to extend poverty, considerably, saying:
But that's only the start of the problem we face. That's because when people stop spending – and even Sunak acknowledged that is likely in his scaled-down growth expectations – then businesses begin to lose money, and in turn people lose their jobs. That's going to be most especially true in the leisure and travel sectors. People without money don't go out. Bars, takeaways, cafes, restaurants, cinemas and more will close as a result. And holidays are not going to happen. People will lose their jobs as a result.
When that happens this crisis will just get deeper. In fact, it's all too easy to see this becoming a full blown recession. It may even create a banking crisis as those with mortgages default through no fault of their own.
Sunak could have prevented this. He could have cut fuel duty by 50p, or more so people could still travel. And he could have fixed the price of fuel for an average house at 2021 prices, only letting larger houses pay more. He could also have increased benefits. Sure there would have been some debt, but the national debt is just the UK's money supply – even bank notes are included in it – and with inflation happening we need more of that money anyway.
Sunak chose not to help. He chose to ignore people's real plight. The cost of that in every community around Sheffield is going to be enormous. I am so sorry to be the bearer of such bad news.
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Travel? Does this include commuting?
Yes
How long before the 36% who would still vote for these oafs notice what is happening.
Is this the group that is so full of hate that they don’t know that it is being poor that is killing them?
Or is it made up of those doing quite nicely thank you?
Probably a bit of both.
I also think there are still some who see voting Tory as an aspirational thing – a sign that they’ve ‘made it’, that they are better than others.
Craig
Why is the UK unable to protect its citizens from the immediate impact of a spike in fuel prices, like they can in France?
Because it’s Chancellor has chosen not to
That’s all
Strip away money from the thinking for a moment.
You can’t have a major public health crisis and a war without some sort of impact.
Our resources (human and natural) are unchanged so, domestically, it is all about a reallocation of those resources rather than “having less”.
Of course, we do import some of our food and energy and for whatever reason (scarcity/profiteering) the “exchange rate” between “food/energy” and (say) “financial services” (emblematic of UK exports) has moved sharply. We will be poorer as a result but not as much as some may think.
It is the reallocation domestically that will make us think we are much poorer. We will allocate more to defence, more to halting/ameliorating climate change, more to health and care…. so there will be fewer people to do the other things we would like. Chefs and bankers will become soldiers, poets and accountants will become construction workers, academics and lawyers will become care workers. We might not miss the bankers/lawyers/accountants but our lives will be poorer with fewer chefs, poets and academics.
This reallocation MUST happen and it is the duty of government to make it happen. This cannot be left to the market.
The key elements to achieving this national transformation are;
(1) Trust. We must trust that our government “knows what it is doing” and that the plan has a reasonable prospect of success..
(2) Sacrifice. History shows that people will put up with an awful lot of hardship IF they feel the sacrifice is fairly shared. Once unfairness creeps in the wheels fall off.
Right now, I am afraid that the current government fails on both counts… the weakest are bearing the greatest burden and there is no plan. More worrying is the failure of the opposition to offer an alternative vision.
You get it
Well said Clive.
Or we could just work toward a post capitalist future.
If money is ever allocated toward climate change it won’t be toward it’s amelioration. It will be to benefit Tory donors and likely dodgy oil producing regimes elsewhere. Yet to earn international opprobrium
Once people understand MMT then they also understand that government spending (or the lack thereof) is a political choice.
Therefore it is the choice of the Conservative and Unionist party to financially assist those who require no assistance and to leave the rest of society to fend for themselves. And the crunch will happen very quickly IMO.
Next month there will be a 10.44% increase in the rate of National Insurance, along with a massive increase in energy costs. Neither of which the government has chosen to mitigate and the Bank of England has chosen to exacerbate by needlessly increasing the cost of money.
People will soon realise that they cannot afford to live in the United Kingdom, and the reasons for this are entirely a political choice on the part of the Conservative and Unionist government in London.
People will become angry, Sunak will return to the dispatch box with more trinkets for the masses. None of which will alleviate the current situation.
I suspect that there will be summer of discontent as those who are punished the hardest hit out at their situation.
In truth it is neoliberalism which has failed, capitalism has failed and our monarchist society has failed.
Vive la revolution.
If the tenor of the audience on Question Time last night is anything to go by, many people are already very angry, and we could easily see that discontent spill over into protest or more. Disorder may suit the government, if they can pull on their law and order uniform. But like the Russians in Ukraine, it is difficult to hold down unrest in an entire country this size without literally millions of people to hold the line. People who cannot feed their own children have almost nothing to lose and will do something about it. It won’t take much to tip desperate people over the edge.
I think making public transport free would be a better choice than reducing fuel duty by 50p.
It does not tackle inflation
As such it misses the short term point
A lot of people would have more money to spend plus it would make a contribution to the climate problem which 50p off fuel duty wouldn’t.
Sorry, but you are missing the short term reason for what I said
Long term is different
Beating inflation is the issue you are dismissing, in error
Can you tell me if I’ve understood the inflation aspect right: MMT says you beat inflation which is based on the cost of a basket of goods and services by making those things in the basket that matter cheaper. And with govt able to print any amount it desires to buy things available in its own currency, it can then subsidise those things that people need to buy, thereby making the cost of living come down.
Econ101 – basic elynomics
Am I close?
Why not read some MMT?
Why not even try to follow what I have argued?
Can you advise if I’ve understood the inflation aspect right: MMT says you beat inflation which is based on the cost of a basket of goods and services by making those things in the basket that matter cheaper. And with govt able to print any amount it desires to buy things available in its own currency, it can then subsidise those things that people need to buy, thereby making the cost of living come down.
Econ101 – basic elynomics
Am I close?
I take your point but unfortunately there is limited access to public transport outside cities in this country, so making it free would only help a proportion of the population. This has been the case for a couple of generations, since the Beeching rail cuts and the deregulation of bus services.
Agreed
While I disagree with Sunak’s economic philosophy, there are some current issues that make the optimum approach less obvious.
First, any sanctions that are hard enough to create difficulties for Putin in Russia will almost by definition also have an adverse effect in the UK. They create an inflationary pressure which isn’t going to be reversed soon. Second, there is a benefit in reducing fossil fuel use, both in the longer term to reduce CO2 emissions and in the immediate term as an action to reduce global demand. Russia knows it will continue to sell oil while demand is high, there isn’t an alternative producer. The necessary shift in individual behaviour may be facilitated by people’s response to higher retail prices.
So for me, I am not sure concentrating action on vehicle fuel prices generally would be the right answer, since it is poorly targeted and would help maintain consumption and hence global oil markets. However there should have been immediate action to reduce the impact on households least able to absorb further expenses; Sunak was able to act quickly during the first Covid lockdown so it could have been possible. In parallel there should have been action to reduce reliance on personal vehicles generally, there could have been an immediate reduction in bus and train fares as suggested above plus investment in increased public transport capacity that would help a medium to long term shift away from fossil fuel imports and towards the reduced CO2 emissions we need.
As you have pointed out previously, even if Sunak insisted on “balancing the books” he could easily have the funding for such an approach from a windfall tax on the unexpectedly high profits of fossil fuel companies.
It bemuses me that the task of beating inflation is being ignored as it it won’t matter