Politicians love to say the government must “live within its means” – just like a household. But this analogy is completely wrong. In this video, I explain why the household analogy is economic nonsense, how it misleads the public, and how it drives damaging austerity policies. Once you understand how government really works, you'll never fall for this trick again.
This is the audio version:
This is the transcript:
Lots and lots of politicians make the mistake of using the household analogy to explain how the economy runs.
So let me be upfront, the household analogy is the pretence that the government operates in the same way as your household does, and it's wrong. And the purpose of this video is to explain why it's wrong and what you can say about that when you come across people, including politicians, who you might be shouting at on the television, who are claiming that we can go bankrupt in the way that the household can, or we've got a maxed out credit card, like you and I are capable of having, and that is not possible for a government.
So let's talk about what the household analogy actually means.
It sounds horribly plausible that the country does, in fact, run like a household, because that's the thing we are all familiar with.
We aren't used to running countries because the vast majority of us, including most politicians, never do get to run a country.
And when they do, they don't seem able to understand that running a country is nothing like running a household, and they use phrases which are completely ridiculous.
One of the most common is that they say, "We must live within our means", without very clearly understanding what that might mean.
They also think that a country has to tax or borrow before it can spend, and that's not true.
And they make up things called fiscal rules, even though no such things have ever existed. They are simply things they make up for themselves and which they break whenever they want.
So let's talk about this myth, why it is persistent and why it is so damaging in UK economics.
The household analogy is dangerous because what it does is drive dangerous political and economic decisions. In particular, it creates the idea that the government is limited in what it can do in ways that are not true, and that has consequences for just about everything the government does.
So let me deal with those dangerous assumptions and what the consequences of them are.
First of all, it is entirely true that a household must earn before it spends. After all, where else is it going to get its money from? Okay, you could tell me it could live off the gifts from somebody else, and it could live off benefits, but that is income in this sense. The point is, there has to be something coming into a household before it can spend. It cannot create money. It cannot tax and nor can it set the interest rates that it is going to earn on the money it has saved. But the government can do all those things.
The government can create money, in particular because it has its own central bank. It literally owns it, and it can tell it to run an overdraft for it, which means that, of course, it can never max out its credit card because there is nobody who can tell it that it's run out of credit.
So the government can create money.
It can also tax us. It has the legal power to do something which nobody else has got, which is to basically collect money with a certain degree of menace associated with it in the sense that if you don't pay the taxes that you owe, you can be prosecuted, and you don't have that right with somebody else. If you try to extract money from other people and apply threats, you could well find yourself in prison. The government doesn't.
This is fundamentally why it is so different from you and me, and yet our politicians don't recognise that.
We can also borrow, but the government can't do that. The government can't borrow because the government creates the money that it borrows. So the idea that the government borrows is meaningless. In fact, what the government does is offer a savings facility to the City of London, and therefore the government's a banker.
People don't come to you to say, "Would you like to hold my money for me?", but the government is in that situation.
So, the government is in a situation which is unimaginable for any household in the UK, however wealthy they might be.
The government simply is different. To pretend it's the same, it's therefore dangerous.
There's another myth that we need to tackle within this household analogy. The myth of the household analogy is that the state is dependent upon the economy for its income, and of course, I've just dealt with that. It isn't.
The reality is that, the economy depends on the state to create the money that it needs to function.
Quite literally, the UK private sector economy cannot exist without money, and the only agency that's got the right to actually create the currency in our economy is the government. It is the only organisation that can create pounds.
I entirely accept that banks can lend money in pounds, but that's different from creating the pounds themselves. Only the government can do that, and therefore, if we are talking about who is dependent upon whom, is the private sector dependent upon the state, or is the state sector dependent upon the private sector, the answer is that the private sector is the dependent one.
The government is not dependent upon the private sector. The private sector is dependent upon the government because it is the government that makes economic activity possible. They do that by setting the rules.
Households are rule-takers.
They take prices.
They take interest rates.
They accept the conditions as given, because, let's be blunt, you haven't got a choice and nor have I.
Whatever the prevailing rules are with regard to financial markets, they are what we have to take. We don't have another choice. The government has.
It can create money, it can set interest rates, it can set tax rates, it can decide how much money there will be floating in the economy, it can even decide the inflation rate and how it wishes to control it.
They shape the entire economy as a consequence. We as households are simply takers of the situation we're given. They are creators of the environment in which we exist. To pretend they are alike absolutely ignores this reality.
And let's talk about accounting.
Households have income and spending, and they are not related.
In other words, the spending of a household can be cut without having any consequence for the income of that household, and this is true, by the way, for any company as well.
A company can, for example, shed employees and reduce its costs, and as a consequence, it will save money.
The same is true of a household. The children could be thrown out to go and get on with their lives on their own, and the household would save money.
But for the country, that's not true.
One person's spending within the country is another person's income.
In the country, we're talking around 68 million people in the UK right now, and the vast majority of what we do is actually with each other. Of course, there are imports and exports; let's not pretend otherwise, but most of our interactions are within the UK. So, one person's spend is another person's income.
The government can't therefore cut its spending like a household does and presume that there will be no consequence for its income, because in fact, there is.
If the government stops spending on benefits, for example, the amount of income in the national economy goes down.
If it stops spending on civil servants, the government's tax revenue goes down because people aren't paying tax as a result.
And this matters because austerity by a government - it trying to cut its costs to balance its books - has a totally different consequence to a household.
A household can do that, and it's entirely rational and sensible because if it's facing a financial crisis, it can, as the saying goes, cut its cloth to suit the circumstances.
But for the government, the absolute inverse is true. If the government is facing a financial crisis, the best thing it can do is spend more money, because more money being spent by the government will create more income in the economy, and more income in the economy will create more tax revenue, and that will create the virtuous cycle that will actually solve its crisis for it in exactly the opposite way to what will happen in a household.
So the household analogy is, in other words , total rubbish in this situation. And what we come down to is the fact that almost everything that is said by politicians about economics when they are using the household analogy is a representation of their complete failure to understand macroeconomics.
They say we're going to max out the credit card. Even John McDonnell did that when he was Shadow Chancellor for Labour, and the government can't because they own their own bank.
They say they've got to impose austerity, and they can, but it is totally counterproductive because it cuts their income and their tax revenues and therefore creates a worsening financial situation.
And they say that they are takers of interest rates and markets set them, when that is not true because we can see that what central bankers do with regard to interest rates almost and absolutely directly always influences the rates that apply in markets.
So this idea that the government is somehow a rule-taker and not a rule-maker is completely absurd.
The government is a rule-maker, households are rule-takers, and they're fundamentally different.
But the problem is that believing the household analogy locks us into ideas about artificial scarcity because we talk about money not being available, and therefore, there are things that we cannot do.
This is not a constraint on government.
Governments can do whatever they wish so long as resources are available to do them, and they can do so because they can create money.
Now, I stress the point incredibly strongly that there have to be resources available to do the things that they want. In other words, there have to be people to employ, there have to be resources available, there have to be buildings, and whatever else; let's not pretend otherwise. The government 📍 isn't completely free to decide to spend however it wants, because if it does and there are no resources to buy, it will generate inflation, and nobody wants excess inflation.
So I am not talking about government spending willy-nilly without constraint; I do not wish to suggest that any government can ever do that, because it's not true, because the availability of real resources is the constraint.
But when the government pretends that money is the constraint, they give financial markets needless power over governments, which is totally unnecessary.
So, if we reject the household analogy, we can ask different questions.
What do we want the government to spend on?
How is the government going to design tax to control inflation and simultaneously redistribute wealth? Because tax, just like money, can do more than one thing at once.
And how are we going to focus on creating the skills, the tech, the materials, and the environment in which we can grow the economy?
Because those are real questions that we can ask once we give up the household analogy and realise that there are things the government can do if only it understands its power to literally create wealth.
There are no artificial constraints on ambition if you are the government.
So the government has to drop the rhetoric of the household analogy.
It isn't an essential simplification to explain how the economy works because it totally misrepresents the truth.
The household analogy is like saying it's just safe to walk across the road, whatever happens, when we know that's not the case. Nor is it safe to run the national economy like a household; that's also not safe. In both cases, people get hurt because of a false and simplified story being told.
But even worse than that, the household analogy isn't even a simplification.
It's a deliberate political tool.
It's about deliberately trying to shrink the state and to weaken public services.
It's about benefiting the City of London through privatisation.
And it's about turning us, the public, into passive consumers rather than into active participants in the state, where we realise that we have a right to demand action.
The household analogy is fundamentally about undermining the role of government.
So we have a choice. We can keep the soap opera of balancing the books, or we can recognise the state's real capacity and responsibility, which is to balance the economy, and we can recognise that the state can do that for the common good.
That's what having a government is all about: delivering for the common good, and abandoning the household analogy would let it do it.
So what do you think?
Do you think the household analogy is a con-trick created by those who want small government?
Or do you think that it's something that works for you and helps you understand how government works?
Or are you just believing that all of this is very complicated and that you really don't want to get your head around it?
Let us know. There's a poll down below, and I'll be interested to see what you think.
What do you think of the household analogy in economics?
- It's a con-trick created by those who want small government (96%, 264 Votes)
- It works for me and helps me understand the government (3%, 7 Votes)
- I don't know still (1%, 3 Votes)
- I find all of this far too complicated to worry about (0%, 0 Votes)
Total Voters: 274
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[…] on believing that tax works in the way that the household analogy describes, and that is a myth, as I explain in this morning's video. It is vital that we get this right, and we cannot do so based upon inadequate explanations and […]
Yes, a fine post.
There seem to be three players in this “game”: elected politicians (1) , gov officials working in the finance ministry (2) , gov officiails working in the Bank of England (3).
The following has to be true: SOME (an unknown number) in 1,2,3, know the “gov-as-a-household” is utter nonesense and govs with a fiat currency follow quite different rules. No large org is monolithic in its thinking (I know from my interactions with the European Commission).
Thus within 1,2,3 there must be some that take a different line. Do we have any inkling who they may be? I agree with the rationalisation: “deliberate political tool”, “deliberately trying to shrink the state and to weaken public services” and “benefiting the City of London through privatisation”. Which leaves the open question: how does one find allies within 1,2,3 that could try to change the direction of the UK gov finance super tanker. I’d suggest one needs a combo of guile/cunning.
Good question
No answers
I had no expectation of answers, rather perhaps now is the time to ID potential allies – & there must be some in 1,2,3.
1. Clive Lewis MP.
Jacob Rees Mogg, I think, before he lost his seat (interview on Sky lunchtime, “The Bank of England could create the money to net off the National Debt”) , ditto Chris Williamson (but the Workers’ Party ignored his proposal for MMT-economy policy guidelines).
The manner in which Lewis gets shouted down by interviewers whenever he strays into the “not a household” facts always makes me wonder if the staff are afraid to challenge their own assumptions, or if there’s a central diktat. I know, from having raised a formal complaint, there is a central understanding of “borrowing” is not *necessary*, but whether they’ve slipped back into “must borrow” phrasing I don’t know.
There is a well known phenomenon “Group Think” which can easily be entrenched in an organisation something I have fought against as an engineer. Some times recruitment just reinforces this.
I suggest a similar explanation should be done on the “Government Debt”, quantifying the debt breakdown may be difficult but even just a list of the included items would be very enlighting.
I particularly like your use of the unequivocal phrase, “the government can’t borrow”, rather than just saying it does not borrow or or it does not need to borrow.
My wife thought I dropped that in without due warning
But it is true
She thinks it should be a video in its own right
To be a good government minister – and let’s honour those who have a go at it – requires quite a range of attributes: good human relationship skills, confidence, eloquence, memory, etc. To be a good finance minister requires extra knowledge and understanding and the ability to convince and lead, first the cabinet, then the parliamentary party and finally the electorate.
Otherwise seemingly excellent politicians can lead almost everyone astray. For example, by adopting a belief that a ‘small state’ would be better, logic like that expressed above was inconvenient to Mrs Thatcher. By promoting the household analogy, she detached herself a little from her integrity. Our nation has been blighted decades.
“By promoting the household analogy (Mrs Thatcher) detached herself a little from her integrity”.
She did.
She could have retained her integrity and pursued her “smaller state, lower spending, less taxation, destroy the unions” plan just as easily within the MMT reality.
But she would have had to admit that this was a political plan, rather than pretending it was an economic necessity to reduce a deficit.
She would have found it more challenging to justify contracting the economy, which in the true MMT world, is and was the outcome of drastic reductions in circulating working money (because of reduced gov spending) and selling off publicly owned assets, from council houses to British Gas, and ignoring the redistributive potential of taxation.
I think I just had a lateral thought?
What matters is not the money being (created) & spent out or taxed back (and destroyed) by the “government”, or the “balancing of the budget” (that annual work of fiction produced by the Treasury) – no – what matters is the amount of money circulating in the economy, and what that money is getting up to (creating employment, buying essential things, being saved, creating inflation, whether there is too much or too little).
The first (hpusehold) analogy has the government as victim reacting to powerful forces, unable to do much except limit the damage and make the best out of what it has available.
The second analogy, with the government as creator, destroyer, and redistributor of money puts the economy, and the quantity and activity and distribution of money within that economy firmly into the government’s hand, empowering it to “make the world a better place”.
In the first analogy, a budget is merely balancing the books to fill unavoidable black holes (spinning plates comes to mind), in the second, the budget is about a much more active and responsible “business plan” for the year ahead, creating new opportunities, fixing problems, protecting the vulnerable, maximising potential.
I think this might be useful on the omnibus.
Thise soet of work
But then, the second is about a very big hiusehold – the UK, in fact
ED NOTE
Your comments are not accepted because you post under an absurd name with no indication that your email is real.
I have talked about this with friends in the past and the immediate response was “what about the Weimar Republic hyper inflation”. I do think most politicians totally accept the household analogy. I don’t think they are knowingly conning us. They are amongst the conned.
I have done videos on that issue.
A search of the archives :
https://www.taxresearch.org.uk/Blog/2024/10/10/venezuela-the-weimar-republic-and-zimbabwe-prove-mmt-is-true/
https://www.taxresearch.org.uk/Blog/2025/07/20/hyperinflation-not-in-the-uk/
Dear Richard,
I think your channel is brilliant, and I think your explanations regarding the economic complexities and consequences for social problems that economic theory generates are second to none. I look forward each morning to viewing your next post – it’s become part of my daily ritual to be honest.
However, I wonder if it would be useful for your viewers to discuss austerity in relation to inflation, as the control of inflation has historically always been trotted out as a justification for austerity policies (this is one of the central tenets of Clara Mattei’s brilliant book ‘The Capital Order – How Economists Invented Austerity and Paved the Way for Fascism’, for instance). I know there’s a lot of people out there who think that the unrestrained creation of money (either by governments or commercial banks) will necessarily create an inflationary spiral, particularly where this concerns the expansion of government debt. Likewise, I think it would also be prudent to explain just how much government debt is sustainable (obviously the USA has a national debt of 37 trillion dollars and yet their economy continues to tick on unperturbed), especially where this relates to stagnant economies where debt accrues faster than the economy can growth. This is a particular problem in Finland (where I live) at the moment and the government has likewise justified its draconian austerity policies to tackle the debt problem, even though there’s not rally a problem with inflation (inflation remains at 0.3%). This has led to an extreme escalation in the unemployment rate (hitting 10.2 percent in March) and a massive fall in living standards for those at the bottom of the income distribution, with many economists in Finland saying that the purchasing power of the bottom 10% has virtually collapsed. In fact, in my view, Finland is very much in danger of becoming another Greece if growth is not restored to the economy soon. Or rather, like Greece, the ECB will make an example of Finland to discipline other countries in the eurozone with spiraling public debt. Exports have also declined as a result of these policies, making Finland nowadays a net importer in a country that has historically always been a net exporter.
Thank you very much again for all the great work you’re doing.
You are right:
There’s a lot of people out there who think that the unrestrained creation of money (either by governments or commercial banks) will necessarily create an inflationary spiral, particularly where this concerns the expansion of government debt.
But first of all, modern monetary theory has nothing to do with unrestrained creation of money, and never will have anything to do with that. What it is about is creating sufficient money to put all the available resources of an economy to use, without inflation arising.
For the same reason, though, MMT makes clear that austerity is unnecessary. Austerity necessarily means that there are unused resources within an economy, and therefore spending can take place to put those resources to use without a risk of inflation rising, and to be obsessed about debt in that situation is simply absurd. And in any case, the idea of government debt is a misnomer: government offer savings facilities: they do not borrow and that is this true of Finland as any other country even if it is in the Euro zone.
The Finnish government has all its economics wrong if they are as you describe.
I’m not sure this is the perfect blog post to post this under…
Regardless, perhaps Gary Stephenson has been listening to your work. I just spotted this short of his on Youtube https://www.youtube.com/shorts/gngU_kC6ZEQ
It feels like a glimmer of hope 🙂
Until you get your head round it though MMT is a little how might I put it odd in a way the Household analogy isnt .
The biggest issue though is a lack of curiosity about what money is and how it is created
Richard
I am enjoying your videos and theories, but my little brain needs to see a more realistic example of this in practice. How would you prepare the government budget and what would be the real repercussions if it were presented to the House? Printing money can be a recipe for disaster, so how would you manage this?
Tell me what this printing money is a disaster issue is when the UK goverment does £1.4 trillion of it a year?
What do you mean, because your framing makes no sense at all.
And nor does your claim that having a government created money supppy create a disaster make sense.
How would you have got though Covid, for example?
Did you not say that it can lead to hyper inflation? I appreciate the instant results being positive such as getting through Covid, but where does it lead to? Does it matter or not? And if so why? I’m not trying to shout you down, but there must be a good reason why MMT has not gained traction in mainstream economic thinking?
I see you have a few videos on the topic, so I will go away and educate myself!
It is pretty annoying to be accused of saying things that I have never said, and never would say, because I have always very consistently made it clear that MMT has never once, throughout its history, said that a government can spend without limit. It has always suggested the limit to spend arises when there is nothing for it to buy, and not spending beyond that point will result in inflation. Thi understanding is, in fact, critical to MMT. But, that said, the likelihood that this over spending would result in high or hyper inflation is also an absurd: you are assuming that a government that understood MMT would not, when the signs of the inflation emerged, not take action to control it when, if you actually understood MMT (which you clearly do not) you would know that MMT is obsessed with using fiscal balances to ensure that inflation is controlled. So, why don’t you go and do some reading about MMT before you ask more questions here? Then you might also know the reason why it is opposed by mainstream economists, who are dedicated to shrinking the size of government, when MMT makes it clear that it can deliver on behalf of the people of a country.
I switched to video for the end of this, and read some comments, including this: ‘Not living within your means = living off someone else. This is tantamount to socialism.’
Several viewers responded, and I wrote: ‘RJM is clear he is not a socialist, he’s a former business owner in favour of a mixed economy. Wealth doesn’t trickle down, it soaks up into the coffers of the super-rich, causing inequality to grow unless taxation is progressive and counteracts it. Who exactly is living off whom? If I have large inherited wealth and live off investments, I’m living off the work of those who have to pay their rent, mortgage, heating and other bills. My money is ‘working for me’ – extracting more money from people with jobs. I’m with RJM politically, and I see that this is unbalanced and destructive. Tax reform is needed, and austerity needs to cease, it is also destructive.’
A bit off-topic, but there were many appreciative comments and many trying to counteract negative comments. Many comments were thoughtful or asking for more information, and many were directed to your other videos and to your blog. Keep ‘em coming!
Thanks. We get about 98% positivity on YouTube.
The idea that there are no financial limits on the state’s ability to fund things (barring inflation) is a revolutionary idea and deeply threatening to the establishment.
If Richard is correct, people might start asking – How come there’s always money for the war in Ukraine, nuclear weapons and NATO but never enough for things that we urgently need such as a thriving NHS, decent affordable housing for all, free child care, clean rivers etc.?
Under new government guidelines, I think this might qualify as support for terrorism.
This video is first class. Nice steady pace, clear explanation with little jargon, nice bits of text to the left hand side. And the poll is a good idea.lf only everyone in the UK would watch it, or one of the main TV channels show it.
Thanks. I was quite pleased with that one.
Richard this for information In case you have not seen this
Several posters have suggested debates between you and Gary.
Here he says he doesn’t think they are useful. However the wider point he makes is valid I would say
https://www.youtube.com/watch?v=pbKttvJQaKc
have a good evening
He seemed to be referring to the crass left v right debates trying to create dispute, and I agree with him.
If we talked we would be trying to find commonalities, something very different.
I don’t know if anyone understands the term “vexatious correspondent”. I am one. I had an extended correspondence between June 2023 and October 2024 (16 months) with the BBC’s Complaints Department over Bank of England independence and about “borrowing” where I pointed out that the government cannot borrow, technically or otherwise, its own money. The last reply from them didn’t say “vexatious”, but I used to handle Civil Service correspondence. I recognised what I read. I can’t complain on this article any more.
The article is in its July 2025 incarnation. I give the BBC’s responses to my complaints here to indicate “where they are coming from”. Would anyone else care to pick apart the article and put in a formal complaint?
**How much money does the UK government borrow, and does it matter?**
https://www.bbc.co.uk/news/articles/c4g2rky498wo
“Firstly I would point out that our readers do not have expert knowledge and we have to bear that in mind that we are writing for a general audience.
“I have contacted the relevant team and they have since tweaked the article to remove the reference to government needing to raise taxes or borrow. The article now says: “But if it can’t, it will cover the gap by raising taxes, cutting spending or borrowing.”
“When we say the government is “borrowing” money we are simply referring to the sale of bonds, which we explain in the piece: “The government borrows money by selling financial products called bonds.”
“The House of Commons Library also uses the word “borrowing”. It also describes the “interest payments” as a “big cost” for the government.
“You say you are concerned with use of the term “borrow” because, as you say, the government is the monopoly creator of Sterling.
“However, after speaking with the relevant team, we have agreed that “borrow” is an accurate and appropriate term to use. Several reputable figures and bodies use the term borrowing, including the ONS.”
Thanks
And thanks for trying
Doing so is important
“Vexatious correspondent” – oh happy memories! The Home Office used that one on my very first FOI request during the NoDPI Campaign against now busted DPI crooks Phorm and their BT contractors. I got my information out of them eventually.
The BBC are much harder nuts to crack, and if they want to say that night is day, they can produce a whole catalogue of excuses. They also have their “journalist/editorial” getouts from FOI. Their Complaints department is a Kafka-esque self-justifying nightmare of bureaucracy.
I particularly like their justification for:
– Lying
– Repeating other people’s lies
(In BBC-world, its okay to lie to people who don’t understand the subject – obviously when your PSB remit includes the duty to “entertain and EDUCATE”, then helping the non-expert “general audience” includes keeping them ignorant and deceiving them on where money comes from).
Well tried!
[…] poll on the household analogy produced some pretty clear […]
You have finally undone 67 years of brainwashing with this video, which – with hindsight – was long overdue.
I get it now, but…
How does it explain the massive ‘loan’ we needed from the US after WW2 and why did the last government feel the need to cancel HS2 north of Birmingham?
Firstly, in 1945 we were on the gold standard, and as a consequence the relationship between the government and money was very different to that which is the case now.
And, secondly, the government did not need to cancel HS2 North of Birmingham except the whole of HS2 was always a dire idea when the money should havebeen invested into the improvement of rail infrastructure right across the country instead.
Thanks. I think Chat GPT has filled me in with the back story of the WW2 loans and how it was all so very different from modern ‘money’.
https://chatgpt.com/share/689dd2ab-2834-8006-99d8-a3afb6a91650
Thanks.
Richard
I hope you get to read this, even if you don’t publish!
I hope you are in a better mood today! I would like to sincerely apologise for annoying / upsetting you yesterday with my casual paraphrasing of what you had said. As someone who agrees with the importance of accuracy of language, I can understand your ire with my comment based on you saying …. “The government isn’t completely free to decide to spend however it wants, because if it does and there are no resources to buy, it will generate inflation, and nobody wants excess inflation”. I can see my error: excess is clearly not hyper, although it is still a bad thing. Your explanation in response was very clear and succeeded in moving my understanding forward, so thank you for that. The condescending put-down was a bit harsh, though, but I had clearly touched a nerve which I didn’t expect nor with malice intend, especially as I had also conceded that needed to read up a bit more – but surely I don’t need to know everything about everything (inaccurate exaggeration for the purpose of making a point) to be allowed to ask a question on your forum? I don’t want to fall out with the only person to present a political philosophy in my 60+ years that I can totally identify with – even if I’m not quite there yet on the economics – I would much rather engage in an atmosphere of mutual respect.
Thanks, Colin. And perhaps it’s also my turn to apologise. There were a lot of trolls here yesterday, some of whom appeared, and others who did not, and I also had the most almighty trolling on Twitter as a consequence of the article in the National, so it was a little hard to work out who was making a genuine comment through confusion, and who was just being vindictive. If I got it wrong, I apologise, but it is sometimes very hard to work out when somebody arrives for the first time whether they are here making a genuine enquiry or whether they are here to waste my time as part of the trolling exercise. I obviously got you wrong, and accept my error.
My stance on the observation that the government produces money and sets rules for its use etc. rather than having a simple numerical budget constraint, is that this is something like the fight club rules: There is a Sartrean reflexive consequence of admitting that there is far more possible freedom in choices – an anxiety or even a nausea of a felt absence of solid ground – provoked in those who recognise themselves as having to take those rules, knowing that their business could be disrupted by who knows what changes, and consequently, they seek to remove resources from such a jurisdiction, letting capital depreciate and literally wear down without replacement, leaving the country themselves, physically moving factories over which they have control, and so on.
Thus when we say that the people must just lump it, in terms of whatever rules the government decides, we risk exacerbating the real and fundamental constraint, which is the capacity of individuals to decide that their contribution to a country’s wealth is not going to be accompanied by a proper degree of attention to their capacity to develop their own lives within that country, including by building their own wealth. We do not wish to talk about people fleeing the country just as we do not wish to talk about runs on banks, and so we address the problem indirectly, with a rule that lets people know that such scenarios will never even be approached.
Now often course, austerity has also produced the same feelings, that the UK is declining, and so people should move to Spain or Australia, for example, (though climate change is improving some of those comparisons).
So if the constraint is not the budget constraint, but the willingness of people to keep resources in the UK, a budget constraint can provide that function by constraining the space of state action to something legible and plausible in which people can imagine themselves working. And an unless an alternative metaphor, or rather, an alternative set of principles can be established to which a government binds itself over the long term, and which articulate a clear domain for households, businesses and so on to develop themselves and understand the space of possible government actions as compatible with that development.. the correct response is to know but not talk about this truth, as its very openness undermines the real constraint it reveals.
Politely, I think this is nonsense.
The idea that we can know but not sopeak the truth is quite absurd.
That is what the totalitarian / authoritarian will say, of course.
Is that the idea you are truing to promote?
It certainly has nothing to do with theories of epistemology to which I subscribe.