Gordon Brown, the former Labour Prime Minister, had an article in the Guardian newspaper yesterday that plumbed new depths for the Labour Party.
Brown acknowledged that the UK has a poverty crisis, with vast numbers of people having insufficient income to meet their needs. As he noted, one million children now live in what might properly be called destitution, because absolute poverty does not seem an adequate description.
Having wrung his hands over this, and inevitably seeking to blame the Tories, he claimed to have a plan to address the issue.
There were two parts to this plan. In the first, he suggested a tiny pruning of the amount of interest paid by the Bank of England to the UK's commercial banks each year on the deposits that they supposedly hold with our central bank. These sums actually represent the new money supply created by the Bank of England on behalf of the government during the 2008/09 financial crisis and 2020/21 Covid crisis, which the commercial banks did, as a result, do literally nothing to earn.
Approximately £40 billion will be paid in interest on these accounts this year. Brown suggested that between £1 billion and £3 billion of this sum might be redirected towards addressing extreme poverty in this country.
Having made this totally feeble gesture when the opportunity to do so much more with this wholly inappropriate enrichment of bankers was available to him, he then added his second suggestion. He did not, as any reasonable left-of-centre person might have expected, suggest that companies and people with higher levels of income might pay more tax to address the inequality that we now face as a country. Instead, he appealed to their charitable instincts and suggested that if only they donated a little more to food banks, the whole problem might be solved.
I have already suggested today that Labour's frank admission that it does not intend to do anything about the power of the private sector, or the inevitable fact that the private sector does not allocate rewards appropriately within society, is recognition on its part of creeping fascism, about which it very obviously has no intention of doing anything.
Brown reinforces my opinion that Labour has altogether given up on challenging inequality, the power of the private sector, and the power of private, wealthy individuals within our society. Instead, it does now seem that it will tolerate any outcome that the market now dictates, however, undesirable that is for the people of the UK as a whole.
You could describe this as Labour giving up on its fundamental purpose, and you would be right to do so.
You could alternatively suggest that this is Labour tolerating the creep of fascism into our society, and again I think you would be right to do so, although I am sure that Labour itself would disagree. But, when it is doing nothing to stop that advance of fascism, what right have they got to do so?
As I have said before today, and will no doubt be saying many more times over the months and years to come, I have shown that none of this is necessary. The Taxing Wealth Report demonstrates that the money required to tackle the problem of poverty in the UK could be raised by simply reforming some of the existing taxes within this country. This would be easy, especially for a party in power possessed of a massive majority, which Labour is likely to have. Quite literally, nothing could stop them from reshaping the way in which rewards are shared within our society for the benefit of that society as a whole.
If Labour are not willing to do that with the power that they are likely to have then what are they for? Apart from enabling fascism, that is.
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Brown is part of the financial establishment. His charity idea falls into the same class as Hunt and his charity run for the NHS. Both are performers – who don’t want to rock the financial boat, and provide copy to the MSM – which is incapable of anything but adoration.
Given that even right-whingers such as Tice/Reform are now saying it is bonkers the gov paying £40bn/year to bankers to hold money – given to them by……..the gov, the time has come to regard Brown and LINO as irrelevant. They have nothing constructive to say & no role to play. Indeed, their past role was wholly destructive – in the sense that Brown under LINO paved the way to the current hyper-mess.
Brown’s comments show that LINO is wholly unfit to form a gov – the UK deserves better and needs to vote ABLINO (anything but LINO) and ABC (anything but conservative). The two main parties need to be broken up. The next election provides a chanceto do that. The next parliament needs to start a dismantling process. The first step is putting the BoE wholly under political control. The next is determining how to pull back into state ownership a whoie range of critical infrastructure. Large-scale disconnection of private companies from state functions needs to take place. etc etc. I have been speaking to some candidates (not LINO or tory) – there is considerable appetite for fast reform of parliment and how it functions (days/weeks – not years) followed by high speed reform of, for example, ownership of critical infra.
Brown et al – not so much “has beens” more “never weres”.
Pathetic is the correct word. Starmer’s treatment of Corbyn and others over the blatant exaggeration of antisemitism I would describe as disgraceful, but this merely pathetic.
That said it’s either Sunak or Starmer. Let him win first then we’ve all got to pile the pressure om.
“Starmer’s treatment of Corbyn and others over the blatant exaggeration of antisemitism”
Richard this is surely a red card? .. or are you deciding to turn a blind eye?
The accusation was of blatant exaggeration, not that there was no anti-Semitism.
I think that accusation of blatant exaggeration is fair.
Mr Voce,
it does not have to be a choice of LINO/Starmer or Tory/Sunak – the electorate could decide – neither. Piling on the pressure? LINO/Starmer will shrug it off – much like warmonger Bliar did (e.g. million people march). This is a cross-roads election for UK citizen-serfs. I know some candidates that are already campaigning. What is clear is that the Tories are dead. Support (even in Tory held seats) has collapsed. But, support for LINO is also very weak. I trust the people I speak to, known them for years. If they say it is like this – then…
It would be nice to think of LINO with perhaps 200 seats, tories with 80 or so & the rest scattered amongst regional parties (SNP), Lib-Dems (a mixed crew) and the rest. I also know that there is a great deal of horse trading going on (between the smaller parties) which should terrify LINO. On a positive note, if Starmer loses the election then he will last days.
I believe ‘neverwozzers’ is the term. Do I remember it from Deighton – anyone?
All reinforcing the case for PR. We’d almost certainly see a more left wing group split off from Labour. Who knows how many the Tories would split into. Greens and LibDems would get more seats strengthening the centre- centre left. If Reform/UKIP get a few seats do be it. Better than them taking over the Tories.
Labour’s imminent GE success is almost entirely due to the fact that it is not the Tory Party, which is now so despised that Brown could have proposed almost any policy without damaging his party’s electoral prospects.
When I consider the warnings that he and Labour gave to us Scots in 2014 of the dire consequences we faced if we voted to leave the union – no state pensions, no EU membership, rising prices, economic collapse etc. – it beggars belief that he still has the nerve to speak in public. He has neither shame nor, apparently, recollection of his past lies.
He could follow the lead of Keir Hardy and his party would win. That he chooses to support the continued decline of the UK into a charity case, while the hoarded treasures of the obscenely wealthy increase disproportionately, is no more than I would expect of this charlatan.
About a dozen years ago Richard, you included this quote in your blog:
“Charity is a cold grey loveless thing. If a rich man wants to help the poor, he should pay his taxes gladly, not dole out money at a whim.” ― Clement Attlee
How sad to see in Brown and the rest of them what Attlee’s great Labour Party has reduced itself to –
something even more morally bankrupt than Blair’s New Labour.
Agreed
“Brown reinforces my opinion that Labour has altogether given up on challenging inequality,”
I’ve just discovered Gary Stevenson, who gives a good description on various aspect of the economy, including the importance of wealth inequality.
He also has a new book out, The Trading Game (5 March), which is No.1 on the Sunday Times Best Sellers list for non-fiction.
How Wealth Inequality Affects The Economy
https://www.youtube.com/watch?v=mv2hx7wjdiA
#Q&A1 – How did Wealth Inequality Improve after World War 2?
https://www.youtube.com/watch?v=bmogfHcLnV8
#Q&A2 – What will it look like if we don’t fix Wealth Inequality?
https://www.youtube.com/watch?v=sQvrei7LhEk
The Trading Game (Book)
https://amzn.eu/d/dKR7joa
The Trading Game by Gary Stevenson review – cashing out (Guardian review)
https://www.theguardian.com/books/2024/feb/22/the-trading-game-by-gary-stevenson-review-cashing-out
Thanks
I have watched a number of his videos
He’s good but I am not wholly sure he really gets macro
I think he thinks it is micro cubed
Agreed, I think his viewpoint is very much from a trader’s point of view.
I don’t know how familiar he is with modern monetary theory.
Not very, I think
While, as Richard says, his heart appears to be in the right place, certainly about inequality, nothing Gary says indicates that he knows about, understands or is sympathetic to MMT. He repeats the usual old nonsense about governments going bankrupt, the burden of national debt, government debt and private debt being equally burdensome, tax as government income, equating households finances with those of government etc.
As an aside, Simon Wren-Lewis has recently written an interesting series of articles on his Mainly Macro blog about national debt not being the bogey it’s usually made out to be. Actually making many of the same points that Richard has done ad nauseum for years!
Thanks
And I will take a look at what Simon is saying
I tend to every couple of weeks
He wrote about MMT in November 2020, and he isn’t keen.
https://www.opendemocracy.net/en/oureconomy/who-should-pay-covid-crisis/
He states “it is still technically true that governments fund their spending from taxing and borrowing”. He talks about MMT and Stephanie Kelton misleading the public by saying we can have endless money printing. He believes that the extra money from government deficits and from QE ends up with the rich and they spend it on property and other assets, pushing up the value of these, which drives inequality. He believes the pandemic QE was essential because of the circumstances but he it was inevitably going to end up with the rich and so there should have been a plan from the start to take it back from the rich via taxation and so there should have been and should be more tax on the rich to take that money back from them and bring about a net transfer of assets from the rich to everyone else.
He doesn’t see QE or deficits as a bad thing, but rather the issue he has is with QE and deficits being used but without taking that money back from the rich via taxation, so on this he has a similar position to Richard. Without taking that money back from the rich he sees deficits and QE as inflationary and increasing inequality. His issue with MMT is that he thinks it doesn’t address how the extra money goes to the rich, which drives property and other asset inflation, which leads to inequality, but I think that Richard’s version of MMT does address this (as demonstrated in the Taxing Wealth report). He sees taxing the rich as something that is a separate idea to MMT and does not see that you can have a version of MMT that does tax the rich. I think that Gary is looking more at how MMT has been implemented (in the sense of using QE to finance the government), rather than how those in MMT like Richard say it should be implemented. I think that Richard’s version of MMT is actually quite similar to what Gary is suggesting, it’s just that Gary doesn’t see that as being MMT.
His recent interview with Novara was good but I thought the one he did in October 2022 was better (this was during the Truss premiership). He covered a lot of similar ground, but went into more detail on QE, deficits, inflation, and the economy. The whole thing is worth listening to, but specifically there was discussion of deficits and MMT at 1:15:23-1:19:09. They start off talking about deficits, then Aaron Bastani mischaracterises MMT, and Gary gives a more nuanced response, seeing the issue being more with the message that has cut through that you don’t need to tax the rich.
https://www.youtube.com/watch?v=ViY-zI3b5JQ
But he is confusing QE with MMT and that is q very basic error
What he’s actually doing in that case is dismissing MMT without undertsanding what it is
I too suspect that Gary Stevenson doesn’t fully “get” MMT but some of us who have been paying attention to what he has to say for himself surely have to acknowledge that has indeed done an outstanding amount of studying (at the LSE etc.) and has proven himself to be something of a wizard when dealing in money markets – in the real world. He clearly knows where much of the nation’s money has been transferred to in the last decade, how they managed that process and he knows what he would like done about it.
I’m all for giving the guy a break.
I think you might overstate your case
”I’m all for giving the guy a break”.
Me too! He is reaching out to and influencing a lot of people who maybe wouldn’t have otherwise taken notice, with his message that inequality is destroying society. It’s just a shame that he is not (yet) using his platform to help undermine deeply rooted views such as the equivalence of government and household finances, which are part of the problem.
Having read his book and listened to him I’d want him on the ‘team’. He is a rare whistleblower on the utterly immoral and destructive nature of City trading and of the economic thinking that lies behind it. Which too many politicians are still wedded to. His heart is in the right place on inequality and poverty, and the death spiral that implies.
It is a tradition on the left to dismiss people because their views and analyses are not 100% aligned, which leads to the fragmentation we see. If the Right and the likes of Tufton Street are going to be beaten, with an alternative narrative, that means working with people who bring key parts of that narrative.
That old joke about the right looking for converts whilst the left are always looking for traitors.
He and I should do a podcast…..
That would be worth a listen!
He’s good on the rottenness of the City trading world. Also on spiral of increasing wealth and asset prices. Rentier economy though Ive not heard him call it that. Needs pushing on what to do about it.
Tom Burgis’s Kleptopia also good on the wider City. One huge vampire squid on society and the economy.
Wonder what the Colonel thinks?
Meanwhile, the headline in the Telegraph reads:
‘There is no magic money tree’, Starmer tells cash-strapped councils.
What point Labour?
To be fair he did say it was a temporary measure. Although, as the Russians say, there’s nothing more permanent than a temporary solution!
Does it matter if the Labour Party’s “top brass” are either grifters or ignoramuses they are definitely not the answer to leading this country out of the mess it’s in!
I agree wholeheartedly with the observations of both Mike and Ian. There are, consequently two rhetorical questions that arise.
Firstly, to what depths has the economic thinking of both major parties plunged, that it takes an outfit like Reform to point out the £40 billion annually paid out in interest on money that the government gave to the banks in the first place? Why aren’t Hunt and Reeves talking about this?
Two cheeks of the same fundament indeed!
And secondly, doesn’t it give charlatans a bad name to associate Gordon Brown with them in this context?
This rather self aggrandising proposal is no more than short term tinkering through an appeal to charity.
That there is no sign of robust anti poverty policy from SKS is hugely depressing, and angering.
I assume the aim is merely relief of the TCP’s conscience.
It is an apologia for the lack of substantive Labour anti poverty policy.
It is not a serious attempt to solve a massive human and social problem, and its scale is risible.
It actually works against future action, by seeking to provide a finger in the dyke stopgap, thus reducing the impetus for providing a genuine set of effective social policies.
Possibly worst of all is that underlying there is a stink of 19thC workhouse thinking.
According to Brown the UK led the world in saving the banking system. No mention of such global mastery regarding Labour’s famous ‘light touch financial regulation’ which was a central cause of the financial crisis in the first place.
As for the house of commons, it looked like a public (ie private) school debating room full of childish spoilt grifters. It still does. All that can really be done is to expose their actions and consequences. Their words are almost always literally worthless. Voting based on what they say has become like playing Russian Roulette.
https://www.youtube.com/watch?v=7iPaiylUYW0
“Their words are almost always literally worthless.”
Indeed because they’re so amateurish yet they utter them with such arrogant pomposity!
You have to be pretty much a clueless person to believe them!
Reform is showing already that stealing the left’s ideas (socialism) though with no intention of actually doing them, and linking it to nationalism, is a very good position to hold for the future. That position has a history.
@John Griffin
I wonder what they might call that ?………. National Socialism ?………… Has a certain resonance to it as you suggest.
Very disappointing from Brown. He should know full well that charities only ever have a tiny fraction of the resources need to tackle issues like poverty, climate change, homelessness. Its why the advocacy and campaigning activities of those charities are so important. They help pressure governments to do what they should be doing. Its also why governments resent that campaigning and advocacy and try to suppress it.
(And yes there are pleny of charities working on dodgy causes as well)
If Brown (& his ideas) is “the answer” then we are asking the wrong question.
For those thinking of voting LINO – this video is most interesting, ditto the comments underneath (many relate to “I’m voting Independent”). In fairness to the LINO foot soldiers – they do seem to be doing a very good job recruting people to vote for other parties (but not tory). Request to LINO foot soliders: please keep up the good work for other parties.
https://www.youtube.com/watch?v=KTPi0cLd1VU
It’s concerning that, as shown in this video, it’s not just the upper echelons of the Labour Party that is prepared to leave behind basic notions of democracy in their quest for power. How alarming that canvassers for the LP see people asking them questions as harassment! How easily the norms of decent behaviour are overturned! Somehow the whole LP machine has gone over to the dark side. It does not bode well for a Labour term in office.
Brown and the rest of Labour are really missing the issue here: wealth inequality and the lack of proportional taxation on passive income wealth.
Passive income is not taxed the same as income earned from work, as we saw in Richard’s excellent article about our current PM’s tax return.
Until they address that, no amount of charities in the UK will solve the problem.
Let’s look at what happened during COVID, QE was used to print vast amounts (in the region of 700 billion I think?) to support workers to pay their bills. All right and good, but who do the workers pay the bills to? The people who own the mortgages, the utilities and the food production and distribution. Wealth of these people rose to record level due to the fact luxury spending was illegal during COVID. People saved money. When the economy re-opened inflation roared as a result. There were articles saying that “it’s a new era of roaring 20s for Britain”. Yeah, for the wealthy, maybe…
Will Labour fix wealth inequality by taxing the rich? Probably not. What happens then? The people will look for an alternative, maybe a more extreme voice that is blaming immigration and benefits claimants. The people will look for someone to hate. And that is dark train of thought, as the history of 1930s can repeat itself a century later…