I gave a talk to a combined meeting of Oxford for Europe and Cambridge for Europe last night entitled 'The State We're In'. These were my speaking notes. As usual, I did not follow them precisely, but in half an hour I covered the ground they referred to and then fielded questions for another 50 minutes:
The state we are in
We are in crisis
- Brexit
- Austerity
- Mismanagement of Covid
- The impact of war
The result
- Crushed GDP
- Falling living standards
- Growing inequality
- Inflation (for now)
- The risk of recession
- Massive risk of a personal and business debt crisis
- And so a banking crisis
The required response
- Increased government spending to support the economy
- A cut in taxes for most people
- A reduction in interest rates - or holding them near zero in our case
- That is what a responsible government acting in the interests of its population would have done to keep the economy going
We got
- Tax increases for almost everyone
- Real interest rate rises that will be crippling for business and millions of households
- Austerity that is fueling the crisis in our public services and denying people the income they need
This would not have been inflationary
- Our inflation came from two external shocks
- Covid supply chains (now solved)
- War
- And the relative price increases that fuelled inflation are now going - raw material prices have already fallen to pre-war levels
- Neither interest rate inceases or any pay restraint had any impact on this
But this policy is economically crippling
- Frame these comments on the basis used by Huw Pill
- The profits of small businesses - most of them highly geared with debt - will be crushed
- Removing fuel support will exacerbate that
- Businesses are going to fail en masse
- And households will be thousands a year worse off - £2,000 on average it is said but those with serious debt by much more
It is also intensely socially destructive
- Economic, job, social, housing, childhood and other insecurities are all rising
- So is stress as a result
- Of course we have a physical and mental health crisis
- And things are only going get worse
So the question is, why has the government declared economic civil war on the country?
- Our debt is wholly manageable
- The stories about its increasing cost are largely lies - with the cash due on average in 18n years' time
- The claims about inflation are lies - it is bound to fall
- The claims that we are short of labour is down to Brexit and so instantly soluble
- The idea that we are overtaxed is because we insist on taxing the wrong people and the wrong things
- The idea that we cannot pay our way is absurd
- We cannot go bust
- And all the money we need is as readily available now as it was in 2008 and 2020 - at the click of a few keys on a computer
- Which will be no more inflation are now than it was then i.e. not at all
What is this all about then?
- Economic ignorance?
- Fear of the right-wing tabloids that have us Brexit?
- The same dire economic thinning that said Brexit would be a success?
- The desire of the Treasury and the Bank of England to restore the return to capital in society at cost to labour - the ‘Treasury View of the Right-Ordering of Society' as it is called?
- Gross incompetence
- Or just the household analogy
The household analogy
- The idea that governments are like households
- They must cut their cloth to suit available resources
- They must save the pennies
- They must pay the debt
When the government
- Is not like a household - it has its own bank for a start
- It's the job of the government to put available resources to best use using all the resources abatable to it
- The government has the job of creating money in a recession when falls in borrowing mean that commercial banks are not doing so
- And government debt is the private saving that always increases in recession because people look for a safe haven
In summary we are in a state
- Because of economic policy that is based on myths, lies, economic circumstances that ended with the gold standard, and total ignorance
How to get out of it
- Educate politicians
- And journalists
- And people
- None of whom want to learn
Alternatively
- Watch the country sink
- Those are the options
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
There are links to this blog's glossary in the above post that explain technical terms used in it. Follow them for more explanations.
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
Buy me a coffee!
A tour-de-force, Richard. How was the reception? Did the questions suggest the audience had understood?
If only the wider public could see all this, as you suggest in the penultimate section. But, of course, they rely on the mainstream media to guide them, and the media almost entirely fail to do so. Whether through ignorance, incompetence, corruption, or a combination of these, I’m not sure.
It seemed to be very well received and the questions showed clear understanding and were demanding – which I enjoyed
Congratulations that your talk was well received but considering the title of the group I think that this not surprising.
This is the talk that needs to be given to the right wing Tory voting muppets that still consider that Brexit is great and those who still believe in the absence of magic money trees.
Sadly I don’t see any willingness to change by them and no desire to even consider alternatives including the Cabinet.
Excellent!
But tell me – was this correct?:
‘So the question is, why has the government declared economic civil war on the government?’
Did you mean declaring economic civil war on the country? Having said that, I’ve always seen the Tories and their anti-state position as anti-government and declaring war on the very institution they seek to control – they destroy government from within – so it struck me as still valid.
Definitely wrong – and you are right
I will edit it
If you’re doing corrections:
“Removing fuel support will execrable that” (exacerbate?)
Excellent but depressing talk by the looks. I worry that folks will forever fear the scale of the costs needed to address UK problems. Strange in a way that people are so drawn to the idea of the nation’s finances being like those of a household when the one thing British folks certainly understand is…borrowing to invest in a home. Maybe the analogy can be used against itself like that?
Thanks
And corrected
As I said, these were rough speaking notes
Well, at least you know that I do read your blogs.
On behalf of Oxford for Europe, can I say how impressed we were by what Richard had to say. It was thoughtful, wide-ranging and clear. Many of us will be following this blog with redoubled interest.
Thanks Peter
I would be happy to do it all again in the future
A question keeps buzzing around my head and won’t go away.
When the reckoning?
When will the country finally demand answers from all those who have lied about the economy and who promised much and deliver little?
Watching John Harris’s ‘Anywhere but Westminster’ what I mostly saw was
despondency and a certaom amount of self delusion.
I was asked that question last night
My answer was that it is down to ‘events’ that will create a tipping point, but I cannot say when
I viewed a cartoon the other night showing two throngs of people marching along a street. Those on the left (obviously) were displaying placards with ‘US’. Those on the right(ditto) had placards with ‘ME’. The centre ground was far too dangerous.
Now into the mix comes two new groups of players:-
a) Not mentioning any names but you know who you are. Those that describe themselves as ‘US’ but act as ‘ME’
b) Those who started of as ‘US’ but have been so sickened by those in category a) that they’ve migrated to ‘ME’.
In a similar vein Robin McAlpine hits the nail firmly on the head once again.
http://robinmcalpine.org/the-shape-of-23-part-two-the-toynbee-cycle/
Good article by Robin
I share his frustration with Polly, who I also know a bit, and who I agree is well-meaning, but really does not help
Mcalpine link doesn’t work and I get ‘bad gateway’ error message.
It did work for me….
Sorry
Try again
http://robinmcalpine.org/the-shape-of-23-part-two-the-toynbee-cycle/
I found the McAlpine article to be spot on about the general mentality/mass psychology of the ‘UK’. Only a major shock and it will have to be an enormous one will bring a ‘breakdown’ and restructuring of this mentality.
The problem is that the ‘programming’ has been going on for centuries as in other countries and beneath this programming is the primeval authority of the Alpha male aka ‘we need a strong leader’ mentality.
Look how the Levellers were betrayed by Cromwell and Fairfax and their leaders hanged. This was only possible because ordinary Leveller soldiers hadn’t really undergone a real ‘intellectual’ revolution in their heads – they were still mentally peasants, same can be said for the ordinary French who through hunger rebelled but didn’t really create a revolution in 1789 – they killed a king and made an egoist an emperor who went on to get 1.5 million Frenchmen killed.
All here can see clearly that Starmer has no intention of creating real change. The only difference between the purges started by Lenin and continued by Stalin and Starmer is that the real Socialists in the Labour party were not killed but ejected from the party.
Consumerism has fundamentally changed the mass psychology of populations everywhere – how can you get the majority of people to – discard hope and grasp reality (taken from the Tao). Only if the elite/Nasty party make the fundamental mistake of introducing real hunger into the equation, then and only then is there a chance and without that real fundamental head change it will still be a waste of time.
Richard you ask “How to get out of it?”. But your answers are somewhat non-starters as indicated by your point “none of whom want to learn”. Those in power do not want to be educated; they are not interested in truths because their vested interested do not align with those of the British People. They are anti government because governance might govern them, a key driver for Brexit.
There is an alternative to doomed to fail strategy of educating these fundamentalist or watching the country sink. That is replacing them with people who want to learn, who are open, collaborative, and democratic – they believe in government. The UK must have PR. It is it incumbent on all those addressing fundamental issues of our economy to proffer this as part of the solution. Like all things in UK politics its not going to be easy, but we have to march this viewpoint through the institutions until the majority of the British people see it as a no brainer.
On fire again sir.
Excellent summation of where we are, what is wrong and what we need to do to fix it, but probably won’t do, which is so infuriating
Thank you