I have already mentioned being on the Jeremy Vine Show today. Just about the last comment Jeremy made was that as far as he could tell Labour had no answer to what the Tories were doing, or appeared to agree with it.
There was rare unanimity for that studio when Mark Littlewood and I are in it. I had to agree that Labour appears to be on precisely the same wavelength as the Tories.
I wrote about the in The National in Scotland today:
'My fear is that Labour will be stupid enough to follow Hunt's plan' // @RichardJMurphyhttps://t.co/Fv6p1Qvxyv
— The National (@ScotNational) November 17, 2022
The link in the Tweet is live and access to the National for a whole year need cost no more than £1 right now.
My conclusion in that article was:
Having written this I heard Pat McFadden on the BBC's Politics Live being intensely questioned by Faisal Islam who tweeted this as a result:
It would seem that my assumption in The National was right: Labour is planning to follow the Tory plans if they get into office and accepts that there are the wholly artificially manufactured constraints the Tories have created to impose austerity as if they are real.
I despair.
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Sorry to be off-thread, but I am still focused on debt; and wish to direct attention to the OBR Fiscal Oulook Report today on the Autumn Statement. In particular I wish to draw attention to the strange metaphysics of the PSND, which is fairly clearly revealed in the OBR Report’s Para., 53-55 (p.46-7), which I reproduce below (for reasons I think regulars here will understand). I would also draw attention to the referred Chart 22 and Table 6, which express the issues in graphic or tabular form. In addition it is clear that the OBR considers Bank or Treasury policy has sharply increased the risk profile of Government bonds; which is now exactly the predicament the Government has now created, going forward. This, frankly means the Conservative Government has made a complete and utter, gratuitous mess of the nation’s finances.
OBR Fiscal Outlook today:
Para 53 (excerpt). “Public sector net debt (PSND) on the headline measure that includes the Bank of England rises from 101.9 per cent of GDP this year to a 64-year peak of 106.7 per cent next year.”
Para 54. “Public sector net debt excluding the Bank of England (PSND ex BoE) – the underlying measure that is targeted by the fiscal mandate and whose yearly path is not distorted by the Term Funding Scheme – rises to a peak of 97.6 per cent of GDP in 2025-26, stabilises in 2026-27, then falls by 0.3 per cent of GDP in 2027-28. As shown in Table 6, underlying debt is 17.7 per cent of GDP (£420 billion) higher in 2026-27 than forecast in March. The largest contributor to that rise (accounting for 14.6 per cent of GDP) is higher cash debt, around half of which is explained by higher cumulative debt interest spending (and the higher interest rates that have driven that upward revision). A lower level of nominal GDP thanks both to lower outturns and to the impact of the energy crisis on cumulative growth accounts for the remaining 3.1 per cent of GDP.”
Para 55. “Alongside PSND and PSND ex BoE, we also produce forecasts for public sector net financial liabilities (PSNFL) and public sector net worth (PSNW) – broader measures shown in Chart 22. These provide a more comprehensive picture of the public sector balance sheet than PSND. PSNFL and PSNW both peak sooner and fall faster than PSND ex BoE reflecting the build-up of financial assets (in both measures) and non-financial assets (in PSNW only). Cuts to departmental capital spending plans announced in the Autumn Statement reduce PSNW relative to PSND by 0.8 per cent of GDP in 2027-28.”
I do not want to make too many comments, but leave the statements to speak for themselves. I would merely draw attention to the importance the OBR gives to PSNFL and PSNW: “These provide a more comprehensive picture of the public sector balance sheet than PSND”.
An exercise in “pick the number that best suits you”
In a July, 2021 Treasury Statement (12th July, 2021) Sunak as Chancellor defined PSND ex BoE as “underlying debt” which was then (ironically), falling. In a published footnote, this was defined as: ” By ‘underlying debt’ we mean public sector net debt (excluding the Bank of England) as a % of GDP. PSND ex BoE is the amount of debt the public sector owes to private sector minus the amount of cash and other short-term assets it holds excluding the liabilities and the liquid assets held on the Bank of England’s balance sheet”.
The OBR seems to be confirming in a roundabout way that “underlying” actually means ‘real’ Government debt (on consolidation, presumably).
I will be doing some more thinking ion this today John
Great you are getting these ideas onto mainstream radio.
Labour seem to have the fatal combination of being cowards both intellectually and politically.
Intellectually they are too scared to even discuss or contemplate ideas for their own plan, which arent already ‘balance the books’ conventional.
Politically , they are a revolving planet around the Tory sun – only talking about what Tories have and havent done, rather than Labour’s own ideas and plans.
This has been the case for the last year – so that 90% of political news, and 90% of politicians and commentators on the media are Conservative – the natural party of governement.
I’m currently on the last Chapter of Michael Hudson’s ‘The Destiny of Civilisation: Finance Capitalism, Industrial Capitalism, or Socialism’ (2022). It’s Hudson’s best book yet, very well written and edited. Chapter 9:
p.162 ‘ Fascism emerges when other parties demur from reforms that the population wants and is ready for’. Hmm………………..
He also lays the blame at the feet of the party system – John Warren is in good company.
And then there is another issue he raises that is very interesting:
‘The middle class aim of prosperity without an alliance with labour’ (p.154).
“Much of the explanation is to be found in the role of political parties in electoral politics. To win elections, labour parties usually have had to join with those in the middle class, whose ambition is to rise to rentier class. Fearing socialist threats to property rights and wealth, much of the middle class has shied from making common cause with labour and fears radical reform as threatening and intrusive. At issue therefore is how much of a compromise needs to be made with ‘centrists’ meaning voters who fear disrupting existing trends even those these are polarising and stifling economies and hence ultimately their own interests. Insecurity, coupled with hopes for upward mobility , leads centrists to support the status quo, fearing that left wing reforms would squeeze them.”
From one of the more mature and measured Marxists, some might find Hudson’s comments a bit disappointing and even flirting with identity politics but it resonated with me. The paragraph above could be describing Starmer’s Labour party.
I had a discussion with my very southern middle class brother in law recently, private school educated and now a millionaire property developer who effectively retired two years ago at 57. He hires out his expensive home as a holiday let and has a flat in Richmond, London. He was telling me how important it was to vote when I said that – since no one represented my interests as a working person in our political system – I would not be taking part in further elections. The middle class won’t align with labour because work is just an intermediate thing these days in an ‘aspirational’ society on the road to rentier nirvana.
My view was that to my BiL, work was a just a transitional thing – a highly paid means to an end (he worked in IT) and I know he hated it. He was not happy at work nor fulfilled – he went into it for the money. It was transitional – a ladder to early retirement and profiting from flogging his house and other property. Work was temporary – retirement and not working was the goal. As long as he got the cash, that’s all he wanted.
For me, work has been vocational and something I have and still do enjoy and get a lot of satisfaction from as well as enabling me to sustain a decent lifestyle and have a family. This last 12 years, that has become harder and harder to do.
The difference could not be more stark between us. He was telling me politics was still important even though he had the power not to need it anymore and I and many others still needed politics yet were being failed by it. The financial system enabled by politics had actually helped him more than me. But it just seemed to chime with what Hudson has written above.
Anyhow Richard, I hope this has not kept you up – sleep well.
Another book to read….
Thanks
I read it last month. A good read. I need to read again
‘Free markets for the wealthy lead to oligarchy and that oligarchies are literally the road to serfdom.’ p275 A reference to Hayek’s book.
He thinks there is a conflict between a mixed economy with a government strong enough to prevent rentier interests from dominating the state AND economies where they do dominate the state. Hudson sees Putin and China as resisting the dollar domination and being more attractive as a model to the developing world.
There is something in that but the ‘resisting American hegemony’ is constantly quoted by people who are, IMHO, Putin apologists. That is not the reason for the invasion of Ukraine.
Genuine positions can be used by people who don’t believe in or understand them, as sticks to beat others with.
Hudson’s treatment of Russia is interesting Ian. He seems to steer clear of of the corruption that other accounts point to about Putin and his ‘regime’ but talks about kleptomaniac Western capitalism.
Instead he points the finger at his own country’s hegemony and how it helped create the Russia we see today. I actually do not have a problem with that at all. Everything Vladimir has done he has learnt from the West in my view – the Neo-liberals taught Russia how to make its own reality and Putin is doing exactly that right now. For Ukraine see Iraq and countless other invasions by the West – led by America. Gore Vidal once did a long list of them.
I still firmly believe that the West had a marvellous opportunity to help bring Russia in from the cold and blew it – Hudson mulls over this too.
This is not to be an apologist in my view at least – although I apologise f this causes offence. All it is about is acknowledging and accounting for history. Facts. If we don’t do that, then we are ripe to be exploited by vested interests and end up deceiving ourselves that we are superior or under threat and then we are on the road to Fascism for sure.
I think that Hudson is on more stronger ground concerning China although anti-Chinese rhetoric has been growing. Watch John Pilger’s ‘The Coming War with China’ is all I can say or read Isabella Weber’s ‘How China Escaped Shock Therapy’ (2021).
https://lefteast.org/how-china-escaped-shock-therapy/#:~:text=Political%20economist%20Isabella%20M.%20Weber%E2%80%98s%20astonishing%20new%20book,had%20first%20cut%20their%20teeth%20in%20the%20country.
The Chinese view seems to be that Western capitalism is not a good system – and the Russians saw through it too (although a little too conveniently, but through a power vacuum created by a Western influence that abhors a strong state).
This blog is full of evidence about that sentiment – we know its not working too, and we are facing increasing crackdowns on voicing our opposition as well, whilst we highlight what we know about China’s behaviour in Hong Kong and its mainland.
It’s all getting very interesting – we are hemmed in by a number of faulty viewpoints – a rampantly highly individualised and aggressive U.S. capitalism that promises freedom for all that just enables rich individuals to rule and undermine real democracy; an avowedly nationalist kleptocratic State like Putin’s model and a Chinese system that is redolent of early Western capitalism with a strong element of good old fashioned communist repression.
Take your pick! I’m not happy with any of them. In the case of China however, a plea: in a growing economy and increasing wealth how do you contain the money power that leads to U.S. and English democracy that tends to service the needs of the rich? How do you make sure that the wealthy don’t get wealthy by sucking out everyone else’s wealth in the name of profit in sectors like banking and real estate?
China is taking people out of poverty AND putting them in political re-education centres. But the UK and U.S are putting its people into tents and debt slavery and curtailing the rights of those who want to save the planet whilst telling everyone they promote ‘freedom’.
p.162 ‘ Fascism emerges when other parties demur from reforms that the population wants and is ready for’.
Oddly, I just posted on the Indy (it might be owned by a Russian oligarch – but the BtL is not bad – much superior to the Guardian) that:
given the current trajectory of Liebore & Reeves (with her tory-(sh)lite finance policies) the scene is set for major dissapointment amongst those that think that Liebore will “do things”/make things better. Perhaps is will do some odds & ends, but at heart is it a B.Liar/Broon retread & soon enough, like all re-treads it will peel. Reeves has already put on her financial straightjacket that guarantees failure.
This leaves space for “populist” parties which blend nationalism with socialism etc. So indeed, P162 is spot on and Liebore is paving the way to it, with Reeves and Starmer fully to blame. You really could not make this up. Give it 3 years and we will be in “I told you so” territory.
Please consider voting for the Green Party. They are looking to the future and have many policies that are aligned with socialism as well as trying to take action to address climate change.
Just think the voters chose this catastrophe over the Corbyn Manifesto that offered fundemental change. Real recovery. Who was responsible for the political assassination of a decent man – the Right Wing of the Labour Party
What your article talks about is the lack of an industrial strategy.
That is innovative enough to not require much in the way of money, since that of course is yet more debt. Hence why your green energy strategy won’t be enough on its own to save the day.
The way successive governments have mis-managed our assets – human, natural, cultural etc etc – to focus on the one that tie the Tories and Labour together, which is money.
We need to wean ourselves off a system that does nothing but take, to one that does nothing but give.
A new and locally issued token of community credit would soon put a value on a lot of undervalued and underused resources but it needs to be systemised and standardised.
Local infrastructure to produce social capital, there’s real value in that as an approach.
I am sorry, but that is economic nonsense
The fundamental building block of economics is money, and money is the problem. Both need an update.
I think it very clear you do not understand money
Oh dear, “Keir Starmer accepts £55bn ‘black hole’ calculation”, BBC News, 18 Nov 2022.
https://www.bbc.co.uk/news/business-63681941
Why, oh why?
I have seen it too
It’s no surprise. Keir Starmer would never have admitted leading Labour down the austerity garden path before he was elected Labour leader; but, that was then this is now!
I must admit to some pleasure in seeing Starmer experience discomfort in Parliament at being challenged about his continually shifting positions. Before the 2019 election it was “Corbyn would make a fine PM”, and later now he was purging the left of the party “Corbyn is not even fit to be an MP”.
If there is any comfort to be had it is in just not knowing what he will do in the event he does become PM. His views are all over the place. He could even be a secret MMT enthusiast who doesn’t want to say so just at the moment.
PS. I do have to add I think this is unlikely!
So do I, unfortunately
He’d need to sack Rachel Reeves