I just posted this thread on Twitter:
The Tory leadership election is offering the party faithful an image of a land about to flow with milk and honey, so good are the prospects arising from the so far unspecified benefits of Brexit. The reality is about as far from that is it can be. A thread...
In reality, this morning we have news of drought, hose pipe bans and even outright water shortages.
There is also a warning of power cuts to come this winter as electricity supply will not meet demand.
Avanti has just axed two-thirds of its train services on the West Coast mainline.
Now there is news that the funding deal for London Transport has run out and it may be cutting services, severely, as a result.
Meanwhile, six million people are waiting for NHS treatment.
A & E has broken down.
Trials of those charged with criminal offences are taking several years to come to court.
Schools and hospitals face impossible choices due to their increasing energy costs this winter.
Hardly talked about, but something I fear greatly is the risk that many care homes - which have to be warm - will simply be unable to afford to carry on trading this winter as those they provide for cannot pay increased bills, creating a massive care crisis.
And we already have a social care crisis, of course.
Meanwhile, half the UK's households do not know how they will pay their fuel bills when the average energy price increases to £4,200pa this winter. The likelihood that many will simply be unable to pay is very high. Massive poverty is coming, very soon.
As a consequence, the rest of the economy is under severe threat of recession. Hospitality, leisure and some parts of retail are going to be under very severe strain soon. Unemployment is going to increase, a lot, as companies fail through no fault of their own.
And to cap it all, a banking crisis is possible as rents go unpaid and landlords fail to service their debts, joining those mortgage holders who will be in the same boat. That also means we get a homelessness crisis as well.
Meanwhile, and until the bubble bursts and they are engulfed by bad debts, banks and energy companies are going to make record profits of many extra billions of pounds a year, all because the government is getting them do so.
Without radical action our economy is heading for a meltdown on a scale beyond current human experience.
And why is all this happening? Because the Tory leadership hopefuls say that a) they can't borrow money to prevent it happening b) direct help to those suffering is not possible because welfare support is not 'Conservative' and c) tax cuts must go mainly to the rich.
This is absurd. Households facing energy cost increases of £3,000 and other inflated costs that are bound to push the pressure on budgets to well above £4,000 in a year cannot make this work when 60% of households in the UK have disposable income of less than £31,000 a year.
It's even harder for those on lowest pay: the lowest earning 20% in the UK have household income of less than £15,000 a year.
How much do these households need? Much more than the current offer, which is of no more than £1,600 a year for many low-income households, and much less for those on average pay.
For the sake of refusing to provide support not only will services fail in the UK - because that is already happening - but so too will very large number of UK households do so.
We can solve this. The government could create all the money required to keep the UK economy going in this crisis just as it did during Covid, but it would have to tax the very best off and larger companies a lot more to stop the inflationary impact of that.
And then it could create the money, jobs and decent pay to solve the crisis in our services too - although that would also require more tax to be paid as well - which people would willingly do for a functioning economy and the good jobs it would provide.
It's Tory dogma preventing this. Every crisis we are facing can be solved. But that is not going to happen. And we are going to pay a massive price for it.
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Money printing to deal with inflation, genius. If you don’t fix supply and you increase demand via newly minted money, what do you think happens to prices?
You may have noted I already addressed that in my comments
Richard,
Pleased you are feeling better.
You make the funding of government responsibilities sound so plausible and yet all sides of the political debate are still wittering on about the money tree and government debt.
Even the opposition (the Labour Party) seems to insist on the reality of the King’s new clothes. Bring back Gordon Brown. He seems to be the only Labour person with gravitas speaking sense right now.
Personally, i am third from the top of the NHS waiting list for open heart surgery. I have a small benign tumour in the left atrium that needs to be removed. My surgeon of choice does no private work, so I am content to wait. I am in awe of the service I have received from the NHS. My experience is of care and attention in the face of numerous challenges – from COVID and elsewhere.
You are like the proverbial voice crying in the wilderness. I live in hope that I will see real change in what is left of my lifetime. We should all hope that at some point, someone’s voice will rise above the rhetoric to announce ‘the King has no clothes, he is naked’.
The King does indeed have no clothes
But more important, good uck with the op
A pedantic point, but I assume you meant “until the bubble bursts”, rather “until the Bible bursts”? Interesting analogy though! The neo-liberal Bible, perhaps?
Corrected
Thanks
What we are witnessing is the consequences of tax avoidance, which has been carefully managed along with deliberate methods of increasing our costs, to arrive at the suggestion that the welfare state is economically untenable.
Quantitative easing or any other measure that increases the amount of money in circulation, will decrease the value of the goods in the economy.
This then increases inflation as our exports suddenly lower in value, whilst imports increase in cost.
The greatly reduced systemic redundancy leaves inflation rocketing as the economy tries to invent spare room to move (systemic redundancy).
The only thing we need to do is declare, as immediately as possible, an end to tax avoidance in any form.
I dislike tax avoidance but let’s be clear that this is about very much more than that
The issues are structural degradation of the tax system itself plus structural degradation of services
So tackling tax avoidance is not nearly enough to solve this and I have spent a lot of time campaigning on the issue
a quote from ” Post Growth ” by Tim Jackson
” The care of human life & happiness – & not their destruction- is the first & only task of good government ” Thomas Jefferson ( 1809 )
More Gordon Brown economics than Liz Truss conservative values
Might it be that the “Deficit Myth” is such a powerful tool for managing an under-informed citizenry and remaining in power, with all its goodies, that the Conservatives cannot/will not currently change their views?
Hi Richard,
A pensioner on the old state pension plus pre 97 additional State Pension =£10,013.64
Warm regards……JF.
Much to agree with.
It is clear to me that we are still even now living in the shadow of Thatcherism.
‘There is no such thing as Government money’ – that trope has cased us a lot of problems.
We have privatised utilities because politicians and voters wanted to avoid higher taxes to pay for better drains and energy infrastructure. The promise of extra resources through privatisation was never delivered. Instead we’ve had and still have extra extraction instead.
We have a care funding and NHS service funding crises because of this lie and some of the highest costs in Europe for travelling and housing.
It’s amazing how powerful and destructive a few words can be.
Until someone in politics has the minerals to fully expose and repudiate this lie and others, things will not change in my view.
We have to confront this Thatcherite bullshit once and for all and state simply that she was wrong.
And that ‘we’ were wrong too.
None of it has worked – from crappier TV to crappier infrastructure and services this a country of Thatcherite failure.
I freely admit that I’m a bear of very little brain, but I think my heart is in the right place… so here’s what grinds my gears about all of this.
Inflation = Stuff Costing More. Regardless of the cause, Stuff Costs More. In response to the energy price crisis, the noises being made in mitigation all seem to revolve around how we can help people with paying the increased costs of gas and electricity, rather than the bodies responsible for raising the price of stuff.
Why can’t the government just say to companies “You may not increase your prices beyond what they were 12 months ago without a really good reason, backed up by evidence. When it is proven that supply costs have increased to the point that a price rise is completely necessary then you may increase prices subject to a fair cost cap, but you may not engage in profiteering.”
Or somesuch.
And then police it by imposing a levy on companies who report inflated profits (beyond an inflationary increase on their supply costs) to recover 100% of those profits.
I know this would require a level of international co-operation, but given this is becoming a global problem is it really beyond us?
Seems sensible to me, but there a probably a million reasons why we can’t do that – not least of which is that we are completely in thrall to capitalism and that any suggestion of curtailing trading freedom will be shouted down as heresy.
Your sentiment is appropriate even if it’s not quite that simple
But the essence is that our price regulator, Ofgem, heavily biases companies and their profits, as I and Mike Parr have explained here before, meaning that your sense something is wrong is well placed
Richard
Does Simon Jenkins know that you and Danny Blanchflower exist?
https://www.theguardian.com/commentisfree/2022/aug/08/truss-sunak-cost-of-living-crisis-economist
‘Who knows if Truss or Sunak is right on the cost of living crisis – where are all the economists?
The profession seems to have gone AWOL, just when we could do with a bit of modelling on tax cuts v handouts’
Cut taxes? No, give handouts. Go for growth? No, fight inflation. Increase debt, curb debt. Raise interest rates, lower them.
Two members until recently of the same cabinet seem at opposite extremes of the economic spectrum. Both studied economics at Oxford. They must have attended similar lectures and read the same books. What’s their problem?
During the financial crash of 2008, the Queen made a rare visit to the London School of Economics. She turned to its professors and asked the question consuming the nation: why did no one see it coming?
The economists were aghast. This was not their job. It was all very complicated. The maths was awry. When they later wrote to the Queen, they confessed to “a failure of the collective imagination of many bright people” and “a psychology of denial”. If the Queen had been a real monarch she would have sacked the lot of them.
It seems not
Danny Blanchflower did see it coming did h not? But was ignored.
The economics are there to change matters, it is the political will that is lacking. As my Notyourtypicalbeancounter blog will say today, it feels like Rome burns whilst Nero fiddles
Yet people still not voting for labour. Keri Starmer cares as little as Truss and Sunak which is a total disgrace. I don’t think there has been an opposition in this country since 2010
An opinion poll had then on 48% this week
Richard, you are on song but I think we have to accept that those in the decision making roles, or their witting/unwitting political puppets, are acting deliberately. This is all just a continuance of the enclosures, eventually there will be no commons left.
Another excellent article.
One thing I’ve noticed, and correct me if I’m wrong, but there appears to be no real competition anymore between energy companies. Very difficult to switch where it used to be easy.
True
So we probably have a sort of cartel scenario. So why isn’t it being challenged as its probably illegal?
the best would be the GREEN NEW DEAL AND THE CITIZEN INCOME STARTING AT ABOUT 20,000 again with TAX AT POINT OF SALE
MIRIAM
Sorry, but that just does not work