Health is the capacity to heal, by which I mean the ability of a person, a community, or an ecosystem to move towards wellness. It is not a static state of perfection, nor the mere absence of disease. Health is a process; a direction of travel. It is a verb, not a noun.

First, health is dynamic. Bodies repair themselves, minds adapt, communities support recovery, and environments regenerate when conditions allow. To be healthy is to have the resilience, resources, and support to return to balance and to then flourish after things go wrong. Illness is part of life; the question is whether healing is possible.

Second, health depends on context. Nutrition, housing, income, education, clean air and water, meaningful work, and social connection all shape the ability to heal. This is why the language of “lifestyle choice” so often misses the point. Health is a social condition as much as a biological one. Social security, strong public services, and decent living standards are therefore key to health policy.

Third, health is collective. One person's well-being depends on others, whether they be carers, clinicians, families, neighbours, or public institutions. A health system focused only on managing disease without addressing poverty, inequality, or environmental damage treats symptoms but neglects causes. Care, prevention, and community resilience are essential.

Fourth, health has an economic dimension. An economy organised around insecurity, pollution, and stress weakens people's capacity to heal. Underfunded health services, precarious work, poor housing and a lack of social security support all increase illness and reduce the likelihood of recovery. Investment in the five forms of capital – environmental, human, social, physical, and financial – is therefore investment in health.

Finally, defining health as the ability to heal changes policy. It shifts attention from treating disease alone to creating the conditions that enable recovery and flourishing. It asks whether our economy supports care, stability, and dignity, or undermines them.

Health is a movement towards well-being. It is the lived expression of a politics of care in an economy and society organised so that people and communities can heal, adapt, and thrive together.

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Otherwise known as HNWIs (pronounced hen-wees).

Generally categorised as individuals with more than US$1 million of financial assets (i.e. worth excluding the value of their main home) available for investment.

The proportion of HNWIs within an economy is a measure of:

• Inequality
• The concentration of economic power within it.
• The likelihood of low multiplier effects as the savings ratio  is likely to be high.
• The likely exposure to offshore tax abuse within the economy as HNWIs are must likely to undertake such activity.

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Rational Economic Agents (Homo Economicus)

Neoclassical economics begins with a myth that sounds scientific but isn't, which is that people behave as perfectly rational decision-makers.

According to this story, each of us calculates costs and benefits like a computer, acts only in our own self-interest, and never lets emotion, the influence of others, or habit intervene. Economists even gave this imaginary species a name. This person is called Homo Economicus. He or she has become the invisible protagonist of most economic models, despite never having been observed in nature.

Assumption

The theory assumes people maximise their “utility”, which is a technical word for satisfaction or well-being, while firms always maximise their profits and have no other objectives.

Everyone is assumed to have perfect information so that they understand all options available to them, and that they then act solely on the basis of the logical calculation of the best possible outcomes for them alone.

Emotion, uncertainty and power are excluded. Economic life is reduced to a series of tidy equations describing how idealised agents interact in markets that always balance.

Reality

Real humans are not calculating machines. Behavioural economics and psychology have shown again and again that we act through shortcuts, hunches and habit, or heuristics as they are called. We are influenced by peers, advertising, culture and fear. Far from possessing perfect information, we are often misled or overwhelmed by too much of it. Biases, such as overconfidence, herd instinct, and loss aversion, all shape decisions far more than rational analysis ever could. Financial markets, which are supposedly driven by reason, repeatedly fall prey to collective euphoria and panic. The 2008 crisis, crypto bubbles since then, and housing manias are all examples of herd behaviour dressed up as rational choice.

Why It Matters

Building economic policy on this false psychology has serious consequences. It leads governments and central banks to believe, or at least pretend, that markets will always allocate resources efficiently because everyone acts logically. This then blinds policymakers to instability, exploitation and crisis. Meanwhile, social security systems are designed as if people respond only to incentives without consideration for need or dignity, whilst tax systems assume compliance depends purely on self-interest, in the process ignoring morality and social trust. It is only when we accept that humans are social, emotional and cooperative that a different economics becomes possible; one that values care, community and fairness as much as calculation.

Summary

Economics must start from the realisation that human beings are fallible, relational, and creative, and not from the assumption that we are the robots that economists wish us to be.

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Horizontal tax equity requires that all incomes of similar amount be taxed the same sum irrespective of where that income comes from.

As example, this would mean that three people with an income of £30,000, one generating that from work, another from rents, and the third from capital gains, should all pay the same amount of tax in the year despite those differing sources of their wellbeing.

The UK is a very long way from having horizontal tax equity at present.

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Hot money refers to short-term, speculative financial flows that move rapidly across borders in search of the highest immediate return. These flows are not invested in building productive capacity, creating jobs, or supporting long-term development. They exist to exploit interest rate differences, currency movements, or sudden changes in asset prices. Their presence can transform a country's financial system within days; their departure can crash it just as fast.

First, hot money has nothing to do with real investment. Saving becomes productive when it is used to fund new assets, whether new factories, new infrastructure, or new technologies. Hot money does none of this. It buys existing financial instruments that can be easily sold at the click of a button. It is inherently footloose.

Second, these flows amplify instability. A small shift in market sentiment, a rumour about a central bank, or a sudden political scare can trigger huge movements of funds. For countries without strong capital controls or with fragile currencies, this can mean soaring interest rates, collapsing exchange rates, and emergency interventions by central banks. Hot money is, in effect, an economic accelerant: it magnifies whatever spark the financial markets generate.

Third, hot money is a symptom of a flawed global financial architecture. When governments deregulate capital, promise free movement of funds, and build tax havens and secrecy jurisdictions into the structure of the international system (as the UK has done since the 1980s), they create a world in which speculative flows dominate over productive ones. Money becomes a global tourist, not a long-term resident. That is a political choice, and not an inevitability.

Fourth, the supposed benefits are illusory. Advocates claim that free-moving capital keeps governments disciplined and forces efficient allocation of resources. In reality, it undermines democratic decision-making by threatening elected governments with destabilisation if they pursue policies that speculative investors dislike. Hot money, therefore, substitutes speculation for accountability and coercion for democracy.

Finally, hot money can be tackled. This requires:

• Policy choices that put the real economy first.
• Capital controls to moderate destabilising inflows and outflows.
• Strong regulation of the banking and shadow-banking sectors to reduce the leverage that fuels speculative cycles.

A state that issues its own currency and is willing to use both fiscal and monetary tools to stabilise its economy is always better placed than one that defers to global finance, if it so chooses, but those (like the UK) that are dedicated to the interests of finance rarely, if ever, make that choice.

Hot money is not a force of nature. It is the product of neoliberal assumptions about markets, mobility, and state passivity. If we want finance to serve society rather than threaten it, curbing the influence of hot money is an essential place to start.

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The household analogy is the claim that governments must manage their finances like a household: living within their means, balancing their budgets, and paying down debt before spending more. It is one of the most persistent myths in modern economics, and one of the most damaging.

First, a household is not a currency issuer. Households use money that they cannot create. Governments that issue their own currency, like t in the UK, create the money that the rest of the economy uses. When the UK government spends, it creates sterling; when it taxes, it withdraws sterling. A household cannot do this. Treating the two as equivalent confuses fundamentally different institutions.

Second, households must earn before they spend; governments spend so that others can earn. Public spending creates income for households and businesses. Taxes are then paid out of that income. The sequence is reversed. If governments try to behave like households and cut spending during downturns, they reduce national income and deepen recessions.

Third, households cannot stabilise the economy. Governments must. When private demand collapses, only the public sector can maintain employment, invest in infrastructure, and sustain essential services. The household analogy denies this responsibility and justifies austerity, even when that austerity is economically destructive and socially unjust.

Fourth, the analogy hides sectoral balances. If the government runs a surplus, someone else must run a deficit. Usually, that means households or businesses must borrow more. This is unsustainable. Government deficits are often simply the mirror image of private saving. Ignoring this accounting reality creates policy errors that we then blame on individuals.

Fifth, the household analogy is political rhetoric disguised as common sense. It is used to frighten voters into accepting cuts to public services, attacks on welfare, and underinvestment in the future. It shifts attention away from real constraints, which are labour availability, resources, and environmental limits, and onto false financial ones.

Finally, abandoning the household analogy does not mean governments can spend without limit. The real constraint on public spending is inflation arising from resource shortages, not an imaginary household-style budget. Responsible fiscal policy, therefore, requires planning, taxation to manage demand, and investment that maintains the five forms of capital:

• financial,
• physical,
• environmental,
• human, and
• social.

The household analogy survives because it is simple and emotionally persuasive. But it is wrong. If we want an economy that delivers care, security, and sustainability, we must stop pretending that a currency-issuing government is just another family with a credit card. It is not, and policy based on that myth will always fail.

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See household analogy and balanced budget glossary entries.

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Human capital is the embodied capacity of people to participate productively, creatively and socially in economic life.

It includes:

• physical and mental health,
• knowledge,
• skills,
• experience,
• emotional resilience,
• creativity, and
• the ability to care for oneself and others.

Human capital is not an abstraction: it resides in bodies, minds and relationships.

Human capital is not self-renewing. It must be continuously maintained through:

• healthcare,
• education,
• nutrition,
• housing security,
• rest,
• meaningful work, and
• social inclusion.

Human capital is consumed by:

• ill health,
• stress,
• burnout,
• insecurity and
• exclusion.

This is the case even when these phenomena occur alongside rising output or profits.

Orthodox economics often treats labour as a variable input and wages as a cost. This obscures the reality that income only exists after the costs of maintaining human capability have been met. Where wages, working conditions or public services are insufficient to sustain human capital, apparent profits represent extraction from people rather than economic surplus.

The degradation of human capital has predictable macroeconomic consequences:

• falling productivity,
• rising healthcare costs,
• social alienation, and
• political instability.

These are not side effects; they are indicators of systemic economic failure.

Related posts:

• Capital
• Capital maintenance concepts
• Financial capital
• Physical  capital
• Human capital
• Social capital
• Sustainable cost accounting
• Income

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