The FT has a long read today that has the title:
This, of course, is not true. There is money in the UK. National financial wealth exceeds £15 trillion. GDP exceeds £2.5 trillion, supposedly. Let's not pretend there is no money.
Let's also drop the pretence that there is no money that can be taxed. As I have shown in the Taxing Wealth Report 2024, there is more than £100 billion of tax that could be raised from the wealthiest in the UK if only a government wished to do so.
It is, then, straightforward nonsense that there is no money left in the UK.
Instead, what there are in the UK are a number of claims that are presumed to be true when that is not the case.
One is that there is no money left.
Another is the fact that we're burdened by the national debt. But, as I keep arguing, the national debt is neither a burden because it is simply a savings arrangement and nor does it need repayment - because the UK's financial institutional structure absolutely requires that there be a national debt.
Then, there is the claim that the cost of the national debt curtails all current spending potential. But this need not be true because there is no legal reason why payments on central bank reserve accounts held by commercial banks could not be cut by maybe £30 billion a year, whilst most of the payment of interest on index-linked binds which has increased the supposed cost is not due to be paid in cash terms for more than 15 years - over which period we have ample chance to put aside the sums required to do so. No current cuts are needed.
These, though, are by no means the only constraints we are dealing with. There is also a near-universal claim that we cannot have any tax increases - which is plain stupid but as much beloved of Rachel Reeves as it is of Tories. Of course, we can have tax increases. We just have to decide which ones we want. If we want to tackle the curse of inequality - which is one of the reasons why this country performs so badly, then we need to tax the rich more.
If we want to tackle climate change, we also need to tax the rich more.
And, if we want to deliver the public services we require we also need to tax more if we are to avoid inflation.
So, the decision not to tax more is itself a problem that we face. In fact it is one of the biggest ones.
At the same time, the argument that we cannot borrow more is absurd because, firstly, we do not borrow: instead, we have a government banking service. People want safe places to save. Second, unless we run bigger deficits, we cannot ever make good the shortfall in investment, which means that this country has literally crumbling schools and hospitals and decay on view everywhere. Third, we need to understand that far from so-called borrowing funding these deficits, deficits create the money that is deposited with the government - because that is the way money flows in an economy.
Last, we need to liberate the capital in ISAs and pensions for public use - but not for speculation in stock markets - which is the most destructive form of saving just about known to humanity - and the cause of much of our climate crisis - but instead to be used as the capital for our new national infrastructure. That saving can fund investment is something that financial markets have wholly forgotten in the UK, and yet it can.
Are any of these matters referred to in the FFT article? No, or they are only to the extent that they are accepted as constraints.
So, the FT is looking - like our politicians - for answers to a conundrum from which they have excluded all known solutions. Unsurprisingly, they think we are doomed to stagnation. That is unnecessary. But if you assume there is no role for government in solving the problems that we now face as a country, stagnation is what you will get. Until we liberate the state to act on our behalf, we are in deep trouble.
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All so true. It amazes me even how there is so much ‘received wisdom’ about this topic.
Yet the real facts are out there if only the media would do its job and go and find it!!
“One is that “there is no money” left.”
A simple line of questioning (where does money come from, what entity creates it) demonstrates that the statement above, in the context of governments and money, is a category error. The FT October 21st 2023 contained an article by Simon Kuper, which offers a rationale as to why the FT today contains such a daft phrase and why, for example, the Argentines elected what seems to be a Trump II.
I have a scanned copy of the article & I urge people to read it. In summary & as this blog has shown, money is a highly complex subject, but an interesting number of people (electors) are becoming functionally incapable of handling complex information – be that numbers or even large amount of text (e.g. a book).
.
As he said:
https://www.ft.com/content/421210aa-8a29-416a-8f52-f5510c30582f
People who lose reading skills also lose thinking skills. Their need for simplicity is met by politicians offering “simplism”: the ideology of simple answers for complex problems. Simplism is sold under euphemisms such as “common sense”, “moral clarity” and “telling it straight”. The chief simplist, Donald Trump, speaks at the level of a fourth-grader. By contrast, Jimmy Carter’s 11th-grade speaking level was probably too rarefied even in the print era.
Most people don’t read the Financial Times. You are being quite insulting.
If you want most people to understand about finance, perhaps you should write things more simply so that people can understand.
You have written 1,145 comments here.
I guess that is because you have understood quite a lot of what I am trying to say.
Then you come up with this.
I reckon I am just about the only person trying to explain things in the way I do. I am not saying that names me perfect, and I am not seeking compliments. But I am trying.
What is your sudden problem?
How do you suggest I simplify things and still address the complexity in them?
I didn’t say I didn’t understand, although there is a lot I don’t, but I try.
What I was suggesting is that if you want most people to understand what you are writing about finance, it might be better if you thought about the level of reader you want to reach.
I spent ten years trying to teach people to read and write in the 70s and 80s. Sometimes I failed. Skimming and scanning were methods taught then. I don’t know about now.
If all you want to reach are people who read the FT, that’s okay. The FT only reaches 36% of its target audience, so that’s not many readers.
The Mirror reproduces my work word for word quote often, even when not written for them in the first place
I would not write in the way I do here for the FT
I am not sure what more I can say
“Most people don’t read the Financial Times”.
As Sir Patrick Valance is demonstrating at the Covid Inquiry today, he struggled (it seems to the despair of everyone with an informed opinion attending critical meetings), to explain some basic information, using graphs, to explain basic scientific information to politicians, especially the PM – and that was not a rarity in Europe. The irony here is that graphs are essentially geometric (they represent often elusive and recondite algebraic formulae in the most literal way available) and are the simplest and clearest way of representing complex scientific ideas, and here the impact on public policy. Does anyone really think we can do without some capacity to understand among politicans, without courting catastrophe; or is that just fine? This is a PM who did not even bother to attend COBR meetings during January and February 2020. Presumably that was better for government policy,, since he wouldn’t be confronted by any graphs to confuse him.
Democracy really is overdue moving past the assumptions that passed muster in the eighteenth century.
Agreed
Responding to Jenw and
“If you want most people to understand about finance, perhaps you should write things more simply so that people can understand”
Much of what Richard writes is pretty straightforward. The 9 year old Ukrainain girl that lives with us can understand much of it. (she learnt to read English last year btw).
I mentioned the FT article because it highligted an important trend. I don’t care if 10 or 1000 people read it – it changes not one jot the validity & the points it makes.
I fail to understand the use of the word “insulting” in this context. (neither was the FT writer being insulting – he observed a trend and reported on it).
In my own area (energy and money) there is a very high level of complexity – and I am finding that a declining number of people (at a policy level) able to master such complexity, not just the numbers, but the understanding of how & why things link together and how changes in one area impact in another. This is a very unfortunate development. Lastly: simplisms (& the belief in them) are not limited to just ordinary citizens.
John, what is even more worrying is that Vallance said that they did not even understand the 2 metre rule.
I worked it out for my grandson, that if we stood with arms outstretched, fingertips touching, we would be 2 metres apart. We didn’t have to do that as we were in the same group of five.
Then Johnson does all his elbow touching as if giving people the idea that that was 2 metres.
I wonder how many politicians in the COBR meetings had any scientific background. Hancock’s was PPE then an MPhil in economics at Cambridge.
No scientistif input in the eat out to help out campaign, either.
And to think, only a few threads ago we were discussing the capacity to measure the value of education. I take this response from Jenw to mean that we do not need education in politics; not because we can’t measure its short-term benefits; but because we do not need education in order to from and make good political decisions.
I shall go now, and lie down in a darkened room. Someone let me know when the Dark Ages have finally passed over.
Sorry, John, but where did I suggest we don’t need education in politics? I think we need more.
I agree
It is worth focusing on the tricks of the trade. One trick of the trade used by whomsoever writes what passes for journalism in the UK (maybe journalists today, politicians tomorrow, journalists the day after, and media celebrities the day after that); is the use of inverted commas. Thye stand for quotation marks. ‘Journalists’ (see how it works – do I mean journalists or just ‘journalists’?), rarely tell you who is being quoted, or the context of its use.
Here is how it conventionally works. ‘There is no money’ does not mean that there is no money, or even that the writer (necessarily) believes there is no money. It means that whoever claimed ‘there is no money’ either believes or claims (even that distinction is not always clear), that ‘there is no money’. So when you read that there is no money, then you may presume that the writer believes there is no money; but if you read that ‘there is no money’ (in quotation marks), you really don’t know whether there is no money or not. If the source of the quotation is not given, clearly presented, and the precise context of its original use given; then you really have no idea whether there is no money or ‘there is no money’ (meaning maybe there is money, or maybe there isn’t, but someone I am relying on to be right, I believe, believes there is no money); or it may even mean ‘there is no money’ (there is money, but don’t expect me to say it, you aren’t going to hear it here, and we know that some people do believe there is no money, in spite of the evidence you may see elsewhere). So, work it out as best you may …. you are on your own.
That is what we mean by ‘information’ in Britain……..
Can’t understand this through skimming and scanning, John. In fact it needs to be read a few times to understand what you mean, and even then….
Jen
Sorry – buit you do not have the right to demand others write as you would wish
As I said earlier, you have been here for a long time – what is this about?
Richard
If you can’t understand it by skimming, then read it; or don’t read it. Move on (I am sure all readers here skip comments they do not care to read or think insufficiently well made …..). Forgive me (or not); I am, candidly insufficiently exercised by your particular problem to do much about it. Time is too short; and you are not the editor of this Blog, last time I looked.
Only I need to read every comment moment here….
Sorry, Richard, and John, I wasn’t criticising John for saying that about There is no money. I thought it very clever.
Skimming and scanning were taught as skills in the 70s and 80s and are still taught as part of functional skills.
I’,m loth to join this particular debate, but it looks like a misunderstanding of Kuper’s thesis. It is that ‘skimming, scanning and scrolling’ are inadequate for deep reading and understanding. (I have read the piece, being an FT subscriber)
“Online, says Maryanne Wolf of UCLA, we are “skimming, scanning, scrolling”. The medium is the message: doing deep reading on your phone is as hard as playing tennis with your phone. Recently, a bright 11-year-old told me I was wasting time on books: he absorbed more information faster from Wikipedia. He had a point. But digital readers also absorb more misinformation. And they seldom absorb nuanced perspectives.”
I thought that children were taught skimming and scanning for picking out discrete information. But deep reading is needed for real understanding.
I was a bit ‘meh’ at the idea that we lose literacy skills as we age, but the ‘losing thinking skills’ is pertinent. Thinking skills require a wide vocabulary to ‘think with’, this is only developed by sustained reading because only written texts contain an extensive range of vocabulary. This was established by research several decades ago. Every day speech, and even broadcast speech, doesn’t contain such an extensive vocabulary. The nearest one might get to a wide spoken vocabulary is in a college or uni lecture. People who can’t read (and there are a great many illiterate or barely literate, adults) or don’t read are going to struggle.
Thanks for bringing in the quotes. It was a good article.
I agree with Kuper: literacy has to be worked at.
So too does vocabulary.
Critically, so too does grammar: this is developed by serious conversation. I witness so many conversations now, and sometimes have to partake in them, where participants cannot move beyond the superficial. It is often hard to find a sentence structure.
If that is the case, understanding must be hard to achieve.
The Establishment as you imply don’t want the general public to think too much just in case they come to the correct answer, ie the wrong one from their point of view.
They particularly like to reduce everything to binary choices. “Do you support this or that, If you don’t support that then you must support this. Come on mr/ms Whoever, answer my binary question and stop considering the logic of the situation”.
I know what it is, it’s moronic, it’s pandering to the lowest common denominator and often makes me want to throw something at the tv, metaphorically of course.
The only thing in life that’s truly binary is “are you alive or dead?”.
I posted this (extract) in another thread. I have just been teaching Yr13 (17-19 yr old) who have never been taught even basic economics or politics. Some are just becoming voters.
“I work (still!) in a 11-19 school and the curriculum has been manipulated down to some STEM and a set of largely useless info that enables largely pointless filtering and selection to occur. Any useful info (like about politics, economics, living in the C21) is largely removed.”
This how the trick is done.