{"id":84722,"date":"2025-08-07T07:21:54","date_gmt":"2025-08-07T06:21:54","guid":{"rendered":"https:\/\/www.taxresearch.org.uk\/Blog\/?p=84722"},"modified":"2025-08-07T07:21:54","modified_gmt":"2025-08-07T06:21:54","slug":"my-concerns-about-gary-stevensons-economics-of-wealth","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2025\/08\/07\/my-concerns-about-gary-stevensons-economics-of-wealth\/","title":{"rendered":"My concerns about Gary Stevenson’s economics of wealth"},"content":{"rendered":"
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In a recent video<\/a>, Gary Stevenson said:<\/p>\n

\u201cGovernments are running out of money, just like a person running down their savings.\u201d<\/p><\/blockquote>\n

Gary Stevenson has become a significant critic of inequality in the UK today. His video this week is no exception<\/a>. It is urgent and angry. And it is right about some things. But it is also deeply wrong in ways that matter, particularly when it comes to how government finances actually work. That matters because if we misdiagnose a problem, we inevitably come up with the wrong cure.<\/p>\n<\/div>\n

I have summarised some of my major concerns in another post already today<\/a>, but let me explore them further here.<\/p>\n

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First<\/span>, Gary is absolutely right that we are living through a class war. The very rich are undoubtedly increasing their share of wealth within our economy. This is not happening by accident or through merit. It is happening because government policy \u2014 on taxation, regulation, labour rights, and public services \u2014 has been systematically designed to favour capital over people. This is how neoliberalism was intended to work and does work.<\/p>\n

As a result, the poor have already been impoverished. Millions of children in the UK now live in poverty, wholly unnecessarily. The welfare state has been cut to the bone so that the wealthy might have ever more saved uselessly with their investment managers. And now, as Gary rightly points out, the middle class is under threat. The coming budget might well raise taxes on those just affluent enough to be visible, but not in any way rich enough to resist. This is unjust and politically dangerous, although I would add that his definition of the middle class as those earning more than \u00a3100,000 a year is way out of kilter, and a sure sign of a wealthy man who has lost touch with reality. Those people are exceptionally well paid, as the data I have explored in my series on the wealthy shows.<\/p>\n

Second<\/span>, Gary is also correct that taxing the rich is not only possible; it is necessary. The UK, like many countries, has a vast untaxed reserve of private wealth. Governments that claim \u201cthere is no money\u201d are lying. There is money. It\u2019s just in the wrong hands. But, and I have to stress this, we really do not need a wealth tax for all the reasons I explain in the Taxing Wealth Report<\/a>.<\/p>\n

But third<\/span>, and this is the key problem, Gary\u2019s central metaphor used in his video is not just wrong; it is false. Governments are not<\/span> like households or individuals, as he makes clear that he thinks they are. The household analogy that he uses to explain his ideas is intellectually bankrupt: governments and households work in diametrically opposed ways, and he suggests that they are the same.<\/p>\n

Governments do not run out of money the way a person depletes savings.<\/span><\/p>\n

They do not<\/span> depend on prior wealth to spend.<\/p>\n

And they do not face the same constraints as a borrower at the mercy of creditors does, because they create the money in our economy, meaning those constraints cannot exist. They guarantee people's loans precisely because they do not need to borrow.<\/p>\n

When governments spend in their own currency, as the UK does, they create the money that they spend. Every time the Treasury tells the Bank of England to make a payment, new money enters the economy. This is not controversial. This is what has happened since 1866.<\/p>\n

In that case, the idea that the government must finance its spending by \u201cselling assets\u201d or \u201cearning passive income\u201d from its past wealth, as Gary suggests, is wrong. That may be how households function, but it is not how states like the UK work. Mistaken politicians might think that to be true, but that does not mean they are right, and nor is Gary.<\/p>\n

Of course, governments can issue bonds. And, of course, they tax. But these are macroeconomic policy tools to balance the fiscal cycle. They withdraw government-created money from circulation to control inflation. They fund nothing at all. Most particularly, what is called borrowing exists to manage interest rates and to meet the needs of the City of London and those facilities are offered as a favour by the government, which cannot then be dependent upon them, whilst taxation exists to shape society, reduce inequality, and control inflation. But money is never a scarce resource for the government<\/span>. The constraint is not running out of pounds; it is running out of real capacity in the economy to acquire so that the government might achieve its goals, whether those resources be people, energy, land, or materials.<\/p>\n

Fourth, in that case, framing the problem as a government \u201crunning out of wealth\u201d leads to dangerous conclusions. It encourages a politics of fear. It lends credibility to the idea that the government must \u201ctighten its belt\u201d and deliver austerity when what we actually need at present is bold public investment.\u00a0 In effect, such framing endorses everything that neoliberalism has to say about the funding of government, all of which is wrong.<\/p>\n

Worse, it obscures the true mechanisms of exploitation<\/span>. The rich are not gaining because the state is poor. They are gaining because the state is complicit with the narrative that ensures they are poor. The transfer of power from the public realm to private wealth has not been a natural decline. It has been a deliberate act.<\/p>\n

So, where does this leave us?<\/p>\n