Economics is all about choices, but when most economic discussion is focused on almost irrelevant day-to-day minutiae and political tittle-tattle, who is there asking the questions that could really make a change right now?
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This is the transcript:
We really do need some grown-up economics these days. We don't get it. We see economists, politicians, journalists and others obsessing about micro details of changes in tiny indices, when they do not seem to be in the slightest bit concerned about how they're calculated and claim as a consequence that the world is going to hell in a handcart or that Rachel Reeves is now delivering an economic miracle. And neither of those claims is true based upon the analysis that they have to offer.
What I'm suggesting to you is that right now, in the UK, the economy is stagnant. Nothing is really changing. The monthly change in the rate of inflation, it's neither here nor there. It's the consequence of minor differences in the calculation of the inflation index over time that are inconsequential to any policy decision that anybody might need to make as a result.
The same is true, for example, with regard to growth data, where if the figure is 0. 1 percent positive, there is, well, a party in Downing Street and celebration in the High Street, supposedly. But actually, nobody can tell the difference between 0.1 per cent growth and zero percent growth because it is literally one tenth of a percentage point, which is technically neither here nor there, and probably a rounding error in the statistics.
But if there had been a 0.1 per cent decline in GDP, heaven forbid, we would be in the most terrible state and Rachel Reeves would have to deliver austerity and everything else.
Look, all of this is nonsense, is the point that I'm making.
Many of these statistics are based themselves on an enormous number of estimates that are made by the Office for National Statistics in the UK. Those estimates can vary in their reliability from time to time. For example, labour statistics at present are extremely poor in the UK, because very few people are replying to the request for data when it is made of them.
And we are also seeing problems with regard to data on the indices for inflation, because this has proved to be erratic on a monthly basis, producing unreliable information when month by month comparisons are made as a consequence.
And when it comes down to it, the fact is that the differences we're seeing are within reasonable parameters, literally inconsequential to decision making.
So, what I want are journalists, politicians, commentators and others who can literally look beyond the horizon of the next news bulletin and whether or not they can announce that Rachel Reeves is in trouble or not and instead talk about what's really happening in this country?
What's really happening in this country is that we are not making the things that people want and therefore we are not growing.
We are, however, concentrating wealth ever more intensely amongst a smaller group of people, and therefore inequality is rising.
We are not managing to deliver the public services that matter.
We are not collecting tax that is owing because the government is not investing in the process.
We are cracking down on supposed benefits cheats who actually cost us a lot less than tax cheats do, even though the net outcome of doing so will be inconsequential for the overall government finances. But this does make the journalist feel so much better because beating up people who are in poverty is apparently a great pastime.
And we have an economy that is leaving people utterly dissatisfied. T
here is no index we have that addresses that fact, and this is the curious point, unless you want to talk about, I guess, the poll ratings of all the major political parties combined, which are declining because fewer people vote election-by-election as a whole, because they are so disenchanted with what the mainstream political economists of the UK can supply, we have no way of telling how disenchanted people are.
And again, this is why I want to talk about grown up economics. The economics we've got so massively misses the point because it focuses upon these desperately micro issues of inconsequence so that nobody is actually looking beyond them to ask the questions of, what should we be doing?
Should we be tackling climate change? Should we be literally making people's houses more resilient, street by street, house by house, window by window, employing people to do it?
Should we be talking about real financial and economic security by providing a food system that actually doesn't poison us as ultra processed food does?
Should we be talking about how we can improve education by stepping back and asking, “Are we teaching the right things that people need to know to be able to partake in the world that they will eventually live in when it's very obvious that we are not doing that at present?”
Should we be asking why it is that we are not funding our tax authority to collect the money owing to it, when doing so would protect honest businesses who are struggling to survive because they're being undermined by tax cheats of whom there are hundreds and thousands, and even hundreds of thousands, in the UK economy?
Those are big economic questions. What we should do, why we should do it, are the questions that need answering. But instead, we get economic analysis that focuses on the fact that last month, things did not quite work out as budgeted even though nobody has ever worked out why the budget was set in the way it was in the first place.
Should we be going back to these fundamental points? This would be grown-up economic analysis.
We don't get it. And that worries me, because without it, how are we going to hold our politicians to account?
And how are they going to know the questions that we really need answers to? We rely on the commentators, the thinkers, the economists, the people within newspapers and on the media, to ask such relevant questions.
If they won't, who will?
That is what I'm worried about.
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We seem to be going backwards don’t we?
We are certainly very deferential – reverential even – to wealth and power, again. And, as we are all supposed to be (what’s that word?) ‘aspirational’ and thus happy it seems to rely on the same dogma that worked for the already rich it comes as no surprise to me that we accept more and question less. Because we think it can work for us too. That is the ‘magic’ of capitalism.
Yes… but for some “backwards” is forwards. That is the problem.
Yes we are very deferential.
Today’s piece in FT “Ministers plan to block investments tax hit”. The figures as quoted, refer to a £1.43 Trillion industry which it seems is unable to bear a £147 Million VAT hit. Percentage wise it would not even show up on performance of a large fund let alone across the whole industry. However, the government is looking to intervene and stop HMRC applying VAT to the sector.
Might it be that “nit picking with hyper magnification” is being used as a most effective distortion and deceit?
Might it be greatly aided when the audience aka. marks/victims are deliberately educated and “officially informed” so as to be gullible?
Lets try and identify measures that might really capture whats going on in the economy.
I gather that the one Librarians use is the number of Christmas Cards they get!
Possibly another job for Mass Observation?
But my measure might be road markings
Reeves terrifies me with her wish to cut benefits. I get PIP, which is one of the ones she wants to cut. My income is zilch – I don’t even get the full amount of the old old age pension scheme. I don’t pay income tax as my income is so low. If I lose PIP I’ll lose my Motability car. I won’t have enough money to clothe myself (though I should admit my taste is somewhat expensive… But my feet are such a strange shape I need to buy expensive shoes!). I used to love shopping in charity shops and at jumble sales for clothes, but I’m not capable of managing to do that now – I can barely leave the house. (Thank goodness we can go to caravan and stay there for months at a time! Eliminating a lot of travelling time that is very difficult for me.)
Husband does all the housework and cooking as well as helping me in other ways (doctor, dentist and optician trips for example). I pay towards some of my food and drink. I pay for my dental treatments. Why should he have to support me more than he does already? My other share of our expenditure is birthday and Christmas presents for our kids and grandkids – usually books. And I like to give them random book presents too. I hardly ever see them, so it’s my way of keeping some sort of contact with them. But I guess my expenditure on such frivolous things is something that LINO doesn’t want me to be able to do.
Oh, and the testing from DWP to get PIP is cruel and degrading too. Not helped by their interviewers telling lies about claimants, which I think I have spoken about here before.
Go well, Maggie
I read your post Maggie and am wondering if you could apply for Attendance Allowance to help boost your pension. It’s just under £300 per month and might help a bit. I thought PIP stopped when you get a state pension? I hope you have a blue badge disability sticker too ?
@Pat M
If you are already claiming PIP when you reach State Pension retirement age you carry on with PIP until a) you no longer qualify for it for whatever reason, or b) you die.
AA (Attendance Allowence) is the equivilent of PIP for pensioners; it what pensioners claim instead of PIP if they’ve never claimed PIP before, or used too but then stopped before becoming a state pensioner. But with one major difference between the two: AA does not have a Motability componant.
As Maggie Wallace already has the Motability asspect of PIP she’d actually be worse off under AA. She’d receive the same Daily Living Componate under AA as with PIP but would no longer have access to the Motability Scheme or even the £60+ she’d get instead if she decided to longer have a car provided by the Motability Scheme.
However, if Maggie Wallace doesn’t receive the full amount of State Pension then perhaps she could claim Pension Credit (PC) as well?
She says that she pays for her dental treatments; this leads me to supect that she does not claim Pension Credit as she would then automatically qualify for full access to free NHS dental care & optician care.
Of course, it could be that her husband claims PC for both of them as happens with an octoganarian pensioner couple I know. But if that was the case, she’d still be able to get free NHS dental care.
Being on either PIP or AA (you cannot claim both at the same time) has no bearing on claiming PC as both PIP/AA are disregarded as income when the DWP makes the calculations for PC.
There are very good benefit calculator websites where you put in all your details and it calculates for you what you can/cannot claim and how much (if anything) you can claim. It takes about 5 minutes to complete and info of where to go from there.
I use the entitledto website as it’s the most straightforward one in my opinion, but there are other ones. It certainly can’t do any harm to find out if Maggie Wallace can claim PC. Even if she has tried in the past and was turned down, that may not be the case now.
Thanks
Thank you Pat and Sandra, I really appreciate your kindness. Smile!
I don’t claim pension credit – have too much in savings – bequest from my Mother (and there’s a long story about that too – took 10 years to get it all sorted out!!!), what was left from it after we renovated our current house. Not a lot compared to some people, but hopefully it’ll keep me going if my husband pre-deceases me as I would have to move into a nursing home at that point. I live in hopes that doesn’t happen!
As to the dentist, I’m on DenPlan, as years ago the practice moved from NHS to DenPlan so seeing as they were the best dentists that I’d ever had I decided to pay. Back then my teeth weren’t too bad, so payments were low. Nowadays my teeth are horrendous, so it costs an arm and a leg. But my lady dentist is lovely, and has been looking after me really well since the 4 tooth extraction of nearly 2 weeks ago. I think that the the practice may still do free care for pregnant ladies, and maybe children too. They did when I first moved to DenPlan myself, but haven’t had the need to find out since then as my daughters are Mums themselves now. Younger to teenage twins! Now that really does make me feel old! (Laugh)
Gary Stevenson in ‘Gary’s Economics’ ( YouTube) and ‘The Trading Game’ (Penguin) is asking the big questions.
He seems to me to be asking one question. A good one but not the only one.
Grown up is the right phrase. Why do governments pretend there is an account that first is filled with one number, the spend contained in the red briefcase. They they posture a predicted number, the tax return, for that financial year which for some reason doesn’t correspond to the calendar year, then pretend that the returns come over the year when everyone knows final taxes are settled during the following year.
The year isn’t a year.
The budget is a promise to spend regardless of tax returns.
Cash flow has nothing to do with any of this directly, seems to be more like the spinning plates circus act. In Sweden the debt office employs 500 people to keep the cash flow up between last year’s taxes coming in and this year’s expenditure going out, by issuing government paper of varying time frames that they cannot possibly know the cash situation at maturity.
AND at every turn and twist of this faery tale the budget to spend and claw back takes no account of the actual real resources – the draw down of metals and minerals, and the emission of pollutants and the effect of doing the working hours on people etc – that all of this economic activity that will produce the returns during the 12 month period.
And as we want economic growth, the tax returns will never equal the money to be spent in the next year coming so either we tool up with debt from the get-go or we actually just give that account massive drawing rights equal to the budget in the red box.
Forgive me for the rant, but this all looks more like theatricals where the plot doesn’t quite hang together but we go along with it as we paid for the ticket and everyone seems to be having a jolly good time. Punch and Judy really.