Rachel Reeves thinks people want deregulation, growth and big infrastructure from government, She's wrong. They want government that works, better jobs and lower interest rates.
This is the audio version:
This is the transcript:
People do not want what the government is trying to offer when it comes to the economy.
The evidence is clear. Rachel Reeves is going to talk today about how she's going to unshackle the UK economy and deliver growth, and much of her thinking will be based upon the idea of letting businesses have looser regulations so that they can grow faster, and by spending more money on big infrastructure projects like an extra runway at Heathrow when that is not what the people of the UK want.
Now, I'm a big believer that people actually know the truth when it comes to economics. My friend Danny Blanchflower, based in the USA and a former member of the Bank of England Monetary Policy Committee, calls this the economics of walking about. If you ask ordinary people, that's you - and that is, to some extent, me, although I have a little more economics education than average - if you ask ordinary people what they really want from the economy, they give answers that are more accurate than politicians and many economic experts do.
Why's that? Simply, it's because they are more in touch with reality. Economic experts deal in economic models, and they really are out of touch with reality. We won't discuss that here; it's the subject for another video to come, but economics as a theory and the real world almost do not overlap with each other.
Politicians believe what they want to believe, and they try out their own ideas in focus groups and, by and large, get reassurance that what they think is right.
But when you go and look at what an opinion pollster gets back from the public when they ask questions, they tend to come up with ideas which are very much closer to those that I happen to think the public want.
I really do believe, based upon the conversations I have with ordinary people, from Chris, my barber onwards - and I think I'll give him an honourable mention - those people who I talk to, and plenty of others who pollsters talk to, have to deal with the economy on a day-to-day basis. Politicians and economists are, to a very large degree, removed from it.
And this is evident in an opinion poll that has come out in the last week from Ipsos Mori, the pollsters. Now, admittedly, the questions and answers were posed later last year and not in January this year, but I don't think that has a significant impact on the massive difference in perception between ordinary people and politicians on what is really required now to improve the UK's economy.
Look at the data that we're now putting on the screen, and I know it's a bit small, but I'm going to talk through it, so we're going to leave it there for a moment.
If you look at that screen, politicians, or at least 64 per cent of politicians, think that the way to solve the problems in the UK economy is by building big new infrastructure projects like a new runway at Heathrow. That's despite the fact that they have, of course, just abandoned HS2. That's why, interestingly, only 17 per cent of the public seem to share the opinion of MPs on this.
In contrast, what the public think would do most to create a better economy is to improve the quality of services in the NHS. 36 per cent of people think that, but only 28 per cent of politicians do.
Instead, politicians think that getting closer to the EU is very important. 46 per cent think that. But only 26 per cent of the public do. So again, there's a massive disparity.
What else is there a massive disparity on? Well, MPs don't put much emphasis on creating jobs or opportunities, but the public most definitely do. Almost twice as many of the public think that that is important than do MPs.
And when it comes to actually simply putting money in people's pockets, 30 per cent of people think that improving the wages and rights of people of workers is really important if we're to boost the economy, and I'm sure they're right, and only 10 per cent of MPs did. We are seeing very marked differences of view as a consequence.
I think the MPs have this wrong. They're looking, as ever, at the vanity projects that they can wave before the electorate when what people really want are quite small things that make a very big difference to their own well-being. That includes most particularly, better pay, better conditions, better jobs, more opportunities, and so on.
The disparity is also seen when we talk about what are the key economic indicators that people look at and what they are, therefore, most concerned about.
When we look at MPs - and we've got a chart on the screen again - the level of inflation is what worries them most. 85 per cent look at that above all else.
Now, I'm not saying the public doesn't worry about that; 66 per cent of the public does. But it is not as important to the public as it is to MPs.
Growth, and national income, which Labour MPs are obsessed by, is only of concern to 28 per cent of people in the economy as a whole, whereas it's 68 per cent of politicians who think that's the key driver of change. I think the politicians are wrong.
The level of unemployment worries MPs more than it does the public. Again, I'm not particularly surprised by that. People don't tend to worry about unemployment. unless they feel they're at risk of it or actually are unemployed.
But something that does interest me is that MPs think that interest rates matter in 62 per cent of cases, but in practice, the public thinks they matter in 52 per cent of cases, which is actually the second most important issue for the public of all. This is much more important than things like national income or the level of unemployment to the public. This is what they're really worried about and that's really interesting.
The public is also really worried about the value of sterling, although I have to say I am really not quite sure why. I think that's based upon misunderstanding.
But house prices definitely do matter to the public, and again, they don't seem to matter very much to MPs. Is that because MPs are all rather comfortable because they've got one and maybe two houses that they're sitting on? Whereas, of course, members of the public know how difficult it is either for them to afford their houses, or for their children to buy houses. There is a different perception.
But the one thing that it does seem that both MPs and the public are agreed upon is that the level of public debt is not very significant when it comes to our economic future. 21 per cent of MPs are worried about it, and only 24 per cent of the public. It's way down the list of concerns. In fact, of the questions that were asked, this is the bottom amongst the public. They don't care, because perhaps they understand that owning the public debt is owning a part of private wealth, and that must be a good thing. They aren't worried about this.
But there's another chart that I want to show you, which Ipsos Mori put out. And it's this one, that's on the screen now.
This one is quite interesting, because what it shows is the difference between Labour MPs and Labour voters, and Conservative MPs and Conservative voters, and the one I'm probably more concerned about is the Labour column, but we will look at the Conservative one, because they are the official opposition.
Labour MPs have very different priorities from Labour voters, which is incredibly important at this moment.
Labour MPs think it is much more important to build new national infrastructure projects than Labour voters do, who don't make it a priority at all.
Getting closer to the EU matters to Labour MPs. But Labour voters put it third.
Labour voters put improving public services, including the NHS, as top of their list of priorities, as I would, and as I believe people really are doing. But according to Labour MPs, that's only third in their list of priorities.
Whilst improving the wages and rights for workers is second in the list of priorities for Labour voters, it doesn't appear at all amongst the highest priorities of Labour MPs.
The same is true also of supporting the creation of jobs and opportunities. Labour voters think that's really important; Labour MPs don't.
And this is quite significant because if you look at the priorities of Labour voters, they are Labour priorities. These are the things that people vote Labour for. It's what the party should be all about. And yet, this is not what Labour MPs are prioritising.
Let's look briefly at the Tories. The Tory MPs want to encourage more investment in business, which only comes third on the list for Tory voters.
They want to improve access to high-quality skills training as their second priority, and that appears nowhere in the list of priorities of Tory voters.
They want to make it easier to build infrastructure projects. And again, this appears nowhere in the list of priorities for Tory voters.
And they want to attract investment from overseas companies as their fourth priority, which does, in this case, happen to be the fourth priority of Tory voters, who do, however, put the creation of new jobs and opportunities as their top priority, which is only fourth priority for Labour voters.
And improving public services is their second priority, which is top priority for Labour voters.
In fact, what we see here is a remarkable similarity in some ways between Tory and Labour voters. What they want most of all are better public services, and more jobs, and better jobs, and better paid jobs.
That is what the people of this country want. It's the sort of thing that government could and should provide. It is possible to do this. The government can, of course, create jobs. It can spend to create those jobs. It has pushed up the minimum wage, which is great, but it's not doing anything for people above that when it comes to pay. And all of these things are failures by a Labour government to act on behalf of the people of this country in a way that the people of this country want.
I genuinely believe that these are the priorities of people in the UK.
They want bigger government.
They want it to deliver better services.
They know that is what is going to actually help them meet their needs for education, for health care, for social care, for better social housing, for green energy, and good transport, and justice, and so on.
And that's what we need, what they make their priority.
And they know that delivering those things will create the long-term secure job opportunities that people really want if they're to be able to afford to live in the UK with some degree of comfort.
They're being denied those opportunities by politicians who don't understand what the public want, who still want vanity projects which the public are not interested in having, and who are more interested in things like getting closer to the EU than the nitty gritty of on the ground reality for people in the UK.
The politicians of the UK need to wake up and smell the coffee. They're not delivering what people in this country want. But it's time that they did. And it's time that they did a bit more walking about and listening to what the people of this country really want. Because that's what I do, that's probably what you do, and that's why you know these people are out of touch.
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On reflection after your posting yesterday in regard to the AI tool Deepsink shouldn’t Stephanie Kelton have been seeking Deepsink’s determination of whether MMT’s view of how a fiat monetary system works is correct or that of the Neoliberals that government has no money creation powers of its own? Is AI going to destroy Neoliberalism or will the billionaire/millionaire funders of AI rig it to avoid mention of MMT explanations just like Deepsink is rumoured to avoid explain whether the Chinese government is actually Marxist? Given Starmer and Reeves keep cheer-leading about the benefits of AI then surely they must practice what they preach and determine what understanding of the UK’s monetary system is correct!
I asked Deepseek, as you rwquested:
Is MMT’s view of how a fiat monetary system works correct?
This was its response:
Modern Monetary Theory (MMT) offers a perspective on how fiat monetary systems operate, emphasizing that governments that issue their own currency can never “run out of money” in the same way a household or business can. This is because they can always create more money to meet their obligations. MMT also argues that such governments are not financially constrained in the traditional sense, but rather are limited by real resources, inflation, and the productive capacity of the economy.
Key Points of MMT:
Currency Issuers vs. Currency Users: MMT distinguishes between currency-issuing governments (like the U.S. federal government) and currency users (like households, businesses, or state/local governments). Currency issuers can always create money to fund spending, while currency users cannot.
Taxes Drive Money: MMT posits that taxes create demand for a government’s currency by requiring that taxes be paid in that currency. This gives value to the currency and ensures its acceptance.
Inflation as the Real Constraint: MMT argues that the primary limit on government spending is not debt or deficits, but inflation. If the economy is at full capacity, excessive spending can lead to inflation, but if there is unused capacity (e.g., unemployment), spending can stimulate growth without causing inflation.
Functional Finance: MMT advocates for using fiscal policy (government spending and taxation) to achieve full employment and price stability, rather than focusing on balancing budgets or limiting deficits.
Criticisms of MMT:
Inflation Risks: Critics argue that MMT underestimates the risks of inflation, particularly if governments overuse money creation to fund spending. They contend that MMT’s reliance on controlling inflation through taxation or other measures may not be effective in practice.
Political Feasibility: Some economists question whether governments can reliably implement MMT policies without succumbing to political pressures to overspend, leading to hyperinflation or loss of confidence in the currency.
Exchange Rate and External Debt Concerns: For countries with significant external debt or those that rely on imports, excessive money creation could lead to currency devaluation or balance-of-payments crises.
Central Bank Independence: MMT’s approach to fiscal dominance (where fiscal policy drives monetary policy) could undermine central bank independence, which many economists believe is crucial for controlling inflation.
Is MMT Correct?
MMT provides a useful framework for understanding the operational realities of fiat monetary systems, particularly for countries that issue their own currency and borrow in that currency (like the U.S., Japan, or the UK). Its insights about the nature of money, the role of taxes, and the importance of real resource constraints are valuable.
However, whether MMT is “correct” depends on the context and how its principles are applied. While MMT accurately describes the mechanics of fiat money creation, its policy prescriptions (e.g., using deficits to achieve full employment) are controversial and untested on a large scale. Critics argue that MMT underestimates the risks of inflation, currency devaluation, and loss of confidence in institutions.
In summary, MMT offers a compelling and largely accurate description of how fiat monetary systems work, but its policy implications remain debated among economists and policymakers. Its validity depends on how well governments can manage the trade-offs between spending, inflation, and economic stability.
In summary, yes it is.
I asked Chatgpt the same question as above:
“Is MMT’s view of how a fiat monetary system works correct?”
“Modern Monetary Theory (MMT) presents a distinctive perspective on how fiat monetary systems function. Its key premise is that a government that issues its own currency can never “run out” of money in the same way a household or business can, because it can always create more currency to finance its spending. According to MMT, the government’s primary constraint isn’t the availability of money but inflation, which occurs when demand exceeds supply.
Some of the core ideas in MMT, such as the idea that governments can finance deficits by creating money rather than relying on taxes or borrowing, are controversial. Critics argue that it underestimates the risks of inflation and currency devaluation, particularly if money creation is not matched by corresponding increases in real goods and services.
Supporters of MMT, however, contend that it offers a better understanding of how modern economies work, particularly in relation to the use of fiscal policy. They argue that it challenges traditional views which focus too much on budget deficits and the balancing of the national budget, a perspective informed by older economic models.
In short, whether MMT’s view is “correct” is a matter of debate, as it depends on one’s economic perspective and the assumptions they believe hold in real-world economic systems. Critics argue that MMT oversimplifies the potential risks, while proponents believe it provides a more accurate and practical framework for understanding and addressing the modern economy.
Would you consider yourself more in favour of MMT, or are you more sceptical of its approach?”
That is not an answer to the question you claim you posed, not least because it makes claims about MMT that are untrue, and which are promoted by its ill-informed opponents. I suggest you either a) did nit ask that question or b) you should learn to read AI output critically.
In answer to Richard:
“That is not an answer to the question you claim you posed, not least because it makes claims about MMT that are untrue, and which are promoted by its ill-informed opponents. I suggest you either a) did nit ask that question or b) you should learn to read AI output critically.”
I posed exactly the same question as you – I copied and pasted it into CHatGPT. That is the answer, in full, it gave.
I only wanted to see if there were differences. I have my own opinion as to what the quality of each answer is.
You also troll here Sean
Richard thank you for asking the above question of Deepseek. With AI its limitation appears to be the content and wording of the question you ask. For example, in the above response by Deepseek there is no mention that absent an export surplus the non-government sector in a country relies on continuous government deficits for its ability to save net of any debt.
It would seem to me that MMT supporters need to use AI in a clever way to fully expound MMT beliefs. A compendium of AI statements in regard to MMT can then be assembled and forwarded to politicians and mainstream journalists to help stop their mindless Neoliberal monetary system arguments.
Are these individuals going to turn round and argue that the use of AI as a tool is worthless given the huge investment that’s been made so far in its development? On what grounds are they going to reject AI because it supports a compendium of MMT explanations in regard to the use of a fiat monetary system whilst pointing out the dangers of too much money creation by licenced banjs and government in relation to real resources.
I could redefine the question – and would have done myself, but I used your wording.
Writing the right question is key to AI
I note when the following is stated:-
“Criticisms of MMT:
Inflation Risks: Critics argue that MMT underestimates the risks of inflation, particularly if governments overuse money creation to fund spending. They contend that MMT’s reliance on controlling inflation through taxation or other measures may not be effective in practice.”
Nothing is said about the dangers of licenced banks creating too much money particularly in regard to causing an inflationary house price bubble and as we saw with the 2007/2008 Great Financial Crash it was government’s failure to rein in this money creation which got securitised into mortgage bonds that was at the heart of the crash’s cause. Ipso facto any money creation automatically requires a government to monitor and regulate. Deepseek has therefore failed to present the full story!
Richard have you any concerns about using Deepseek; about downloading it?
Given my general scepticism of BigTech, I have not downloaded it. For me it represents a dilemma.
I have not downloaded it. I am using it on the browser.
Do I have concerns? Of course. About lots of things. I also live in the world as it is, and have to if I want to change it.
The response for me from Chat varies depending on quotations marks, and it’s assimilated history of my interactions, sonI got slightly different answers with and without quotation marks around Richards original question, and no where near that Sean’s.
Just saying.
I am not surprised
[…] all for the purpose of delivering utterly pointless, environment-wrecking, value-destroying growth when that is not what people want from the […]
I remember some years ago Carlsberg did a series of ads about what it would be like if Carlsberg did holidays
Following on from that as the owner of an 18 year old car with 155K on the clock my thought might be what would things be like if the team from Kia that designed and built it, and the dealer that services it provided public services? The answer would probably be not that exciting but reliable and pretty much indestructible.
Given that something like 75% of journeys are less than 5 miles and in terms of numbers of passengers buses are way ahead of everything else in terms of public transport use its hardly surprising that HS2 doesnt wow the electorate but if the Ely Zipper bus service starts to deteriorate they have things to say about it.
Perhaps if modern politicians thought more in terms of Nye Bevans comment about a dropped bed pan in Tonypandy reverberating through the corridors of Whitehall it might mean much better services for all of us.
You appear to know the bus servide that runs about 50m from my house.
And I agree with your sentiments.
Well it seems to illustrate the point better than the D2 that goes past mine
🙂
Power bewitches; and absolute power bewitches absolutely.
Great video and much to agree with in there.
As an ordinary member of the public myself, I totally agree that government needs to actually, well…..govern. For too long, businesses are being allowed to exploit the public (let’s put aside the fact that for some reason many of public have a form of Stockholm Syndrome and defend predatory business practices). Examples are private car parking firms, nearly all retail parks now have a strict parking time limit which if you go over, you will receive a fine for £100 – but this is OK as apparently you entered a contract when you drove past the ineligible signage. Phone and Broadband companies being allowed to increase their prices by inflation + more mid contract and so on but this is OK as you agreed to this in the contract (but there is no choice to disagree!).
The UK, in my opinion goes out its way to make those who play by the rules get caught out. For example, if you have a registered car and accidentally drive into a congestion charge road without realising it, there’ll be a fine sent to you in days, if you don’t register your car and write off someone else’s car, the same TfL won’t be able to share the CCTV footage as it gets auto wiped after a number of days.
Functioning public services and transport systems along with the feeling of safety is all the public want. Sadly, most of those in government don’t use these service – they likely expense their utilities so don’t care about those costs, I don’t see them using public services such as the NHS – they are as you say, totally out of touch. It is time the public stop voting for people that they feel “fit the mould” of a politician and start actually voting in people who will actually represent them.
Artificial Intelligence (AI) is only as good as the models forced upon it.
I guarantee that certain people will train AI to model their agendas.
@ Ian Tresaman. Ian what I liked about the response of Deepseek to Stephanie Kelton’s question about the effect on Canada’s GDP if tariffs were raised even further by Trump after Biden’s rise is the detailed level of argument Deepseek came up with to justify the range of GDP reduction. In regard to MMT if MMTer’s carefully phrase their questions to Deepseek and other AI tools there should be detailed arguments that Neoliberals will find hard to refute. This makes it hard for Neoliberals to argue that the AI tool isn’t worth bothering with as an important development for the human race’s well-being and of course the planet!
AI as a tool would appear to answer the anthropologist Ian Hodder’s argument that human beings need to recognise we need to think much more carefully about our entanglement with things:-
https://static1.squarespace.com/static/53568703e4b0feb619b78a93/t/5367981ce4b0124f24031674/1399298076240/the-entanglements-of-humans-and-things-a-long-term-view.pdf
Who controls AI (writes the algorithms) controls opinion…. much like the mainstream media now I guess.
I think that’s right. A friend told me that Deepseek was asked why the Tiananmen Square massacre happened and it could only say it had insufficient information to answer that question. I have a book by Isabella Weber published in 2021 called “How China Escaped Shock Therapy” which points very strongly to Deng Xiaoping insisting on pushing market price reform through too quickly which triggered high inflation with ensuing protests which Deng Xiaoping decided to brutally repress rather than moderate the speed of market price reform.
“And when it comes to actually simply putting money in people’s pockets, 30 per cent of people think that improving the wages…..”
This the main reason the Democrats lost the US Presidential election. Many people, who had NEVER considered voting for Trump, vote for Trump because Biden’s Inflation Recovery Act had not, to date 05 November 2025, produced direct tangible financial benefit(s) for THEIR household. The Democrats did not offer an alternative for going forward to put more money in people’s pockets.
The News-Entertainment Industrial Complex, can say whatever they wanted to say but Trump conjured (and I really mean conjured) a narrative that deporting immigrants and high tariffs would put money in people’s pockets.
This is not any different than Boris Johnson conjuring (and I really mean conjuring) the idea in people’s heads that if the UK did a BREXIT then £442 million British Pound Sterling extra a week could be spent on the NHS or that their children (grandchildren) could get a “place” at the school of their choice because of all the “Boat People” would be deported freeing up seats
Agreed
So, the plan to raise growth is to take a bunch of people – engineers, construction workers, etc. and have them spend the next decade building a runway at Heathrow.
I have a list of jobs that these folk could do that would be far more useful – build hospitals, repair schools etc….. even do a proper job with HS2! All of those would deliver better growth and be more useful.
Completely agreed