The Tax Research glossary seeks to explain the terms used on this blog that refer to more technical aspects of economics, accounting and tax. It recognises that understanding these terms is critical to understanding the economic issues that affect us all the time.
Like the rest of the Tax Research blog, this glossary is written by Richard Murphy unless there is a note to the contrary. It is normative approach and reflects post-Keynesian, heterodox economic opinion with a bias towards modern monetary theory. The fact that many items in that sentence are hyperlinked shows that they are explained in the glossary.
The copyright notices pertaining to the Tax Research blog apply to this glossary.
The glossary is designed to achieve three goals:
- It seeks to provide a short, hopefully straightforward, definition of what a term might mean.
- It then seeks, when appropriate, to explain what the term means within the context in which it is used. This is meant to elaborate the definition to add to understanding.
- It then critiques the term, explaining, if appropriate, what the weaknesses inherent in the term or the situation it describes are. The aim here is to empower the reader to understand the issues behind the nonsense that most professions create around their activity to provide them with a mystique that they rarely deserve and which often hides what they are really up to.
The glossary is not complete. It will grow over time. If you think there are entries that need adding please let me know by emailing email@example.com. Please also feel free to suggest edits. The best way to do this is to copy an entry into Word and then send me a track-changed document indicating the changes that you suggest.
Because of the way in which it is coded this glossary automatically cross refers entries within itself and to the blog that it supports and within the glossary itself but if you think a link is missing please let me know.
Finally, if you like this glossary then you might like to buy me a coffee. It has required the support of a fair few to write it. You can do so here.
The term ‘Washington Consensus was coined by economist consensus John Williamson in 1989 to describe the ten broad policy recommendations imposed by the Washington based World Bank and International Monetary Fund on countries seeking their financial assistance (mainly in the global south). The consensus required
- The imposition of strict fiscal policy requiring the avoidance of large fiscal deficits relative to GDP. This restricted the size and role of government in these countries. .
- Redirection of public spending toward broad-based provision of basic services and infrastructure investment.
- Tax reform, usually requiring the adoption of sales and other indirect taxation with low marginal tax rates.
- Low, market based, interest rates.
- Competitive exchange rates that tended to favour developed country trading partners.
- The removal of tariff, customs and other trade barriers that as a result opened these countries to imports from western economies.
- The permitting of foreign direct investment, undermining local capital and ownership.
- Privatisation of key industries, tending to favour owners from outside the country.
- Widespread deregulation of working conditions, environmental protections, financial services and local companies.
- A legal bias towards the protection of property rights favouring overseas owners of property in the jurisdictions involved.
These conditions were widely resented and led to significant exploitation of these countries by multinational corporations based in supposedly developed economies.
The approach of these institutions is now more relaxed and they have a much stronger awareness of the importance of inequality now. However, there are still occasional signs that the principles noted above still sometimes guide their work, and that is worrying.
See tax justice consensus for a response
Ways and Means Account
A traditional term used by the Bank of England to describe the bank overdraft facility that it can provide to the UK government. This overdraft facility was used extensively before the financial crisis of 2008 but has been left dormant since then, being largely replaced by quantitative easing. There is no reason why the facility could not be revived, and it was suggested that it might be at the start of the Covid crisis, but that did not eventually happen.