{"id":30776,"date":"2015-09-27T10:14:42","date_gmt":"2015-09-27T09:14:42","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=30776"},"modified":"2015-09-27T10:14:42","modified_gmt":"2015-09-27T09:14:42","slug":"government-surpluses-destroy-private-wealth-as-a-matter-of-fact","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2015\/09\/27\/government-surpluses-destroy-private-wealth-as-a-matter-of-fact\/","title":{"rendered":"Government surpluses destroy private wealth, as a matter of fact"},"content":{"rendered":"<p>John McDonnell correctly<a href=\"http:\/\/www.theguardian.com\/politics\/2015\/sep\/25\/john-mcdonnell-labour-will-match-osborne-and-live-within-our-means\"> said this weekend <\/a>that running a surplus on the government's budget makes no sense.<\/p>\n<p>He is right. <a href=\"http:\/\/www.taxresearch.org.uk\/Blog\/2015\/07\/09\/george-osbornes-planned-budget-surplus-requires-some-heroic-and-wholly-implausible-assumptions\/\">In a clear indication that he understands sectoral balances he said<\/a>:<\/p>\n<blockquote><p>There is an economic illiteracy about this. If you have a surplus in that sense you are actually taking capacity out of the economy.<\/p><\/blockquote>\n<p>Let me elaborate a little. What a government surplus means is that the government is not borrowing anymore: it is repaying debt.<\/p>\n<p>There are two consequences of this. The first is that because government debt is a private asset its repayment necessarily reduces private wealth. You cannot interpret this any other way: it is a fact.<\/p>\n<p>And if the process goes on for too long cash is cancelled: in fact, we would have no money left and there would be no functioning economy.<\/p>\n<p>The reality is that government debt is the basis for private welath.<\/p>\n<p>And that government money has been the foundation on which the the rise of capitalism has been built.<\/p>\n<p>So, if you want to ensure the economy has cash it needs to function and you want growing stocks of private wealth the last thing you do is run a government surplus.<\/p>\n<p>And John McDonnell did make that clear. And he was right to do so.<\/p>\n<p><em>PS There is, of course, more on this in The Joy of Tax.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>John McDonnell correctly said this weekend that running a surplus on the government&#8217;s budget makes no sense. He is right. In a clear indication that<br \/><a class=\"moretag\" href=\"https:\/\/www.taxresearch.org.uk\/Blog\/2015\/09\/27\/government-surpluses-destroy-private-wealth-as-a-matter-of-fact\/\"><em> Read the full article&#8230;<\/em><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35],"tags":[],"class_list":["post-30776","post","type-post","status-publish","format-standard","hentry","category-economics"],"_links":{"self":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/30776","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/comments?post=30776"}],"version-history":[{"count":0,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/posts\/30776\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/media?parent=30776"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/categories?post=30776"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.taxresearch.org.uk\/Blog\/wp-json\/wp\/v2\/tags?post=30776"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}