Economics

The clean energy revolution

Published by Anonymous (not verified) on Tue, 19/06/2018 - 10:34pm in

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Economics

This video has just been published by Jeremy Leggett of Solar Century and the Green New Deal group. He has been at the forefront of renewable energy thinking for longer than I suspect he'd care to admit.  It was made at an investment forum he has been speaking at. The last three minutes may be the most telling - on what the executives of legacy energy companies should be doing now.

 

Stephanie Kelton in London

Published by Anonymous (not verified) on Tue, 19/06/2018 - 4:16pm in

Yours to enjoy, from last week:

The government is refusing to play its part in creating money the economy needs

Published by Anonymous (not verified) on Tue, 19/06/2018 - 3:18pm in

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Economics, NHS

The UK is expected to have GDP of £2,054 bn this year (table 4.1 here).

In current cash terms that is expected to grow to £2,116 bn the following year. That is a nominal increase of 3%. 1.5% of that is real growth. The rest is forecast by the Office for Budget Responsibility to be the result of inflation.

In April this year M4, which is the broad measure of UK money supply, was £2,356 billion. That M4 is greater then GDP is normal. It had risen by £45 billion over the previous year.

I make the point for a reason. That reason is to note that we need new money creation each year. Money can only be created in two ways. Banks can lend it. Or the government can create it by running deficits.

Right now the government is aiming for and achieving a current fiscal balance: it is balancing its books on day to day spending. It is borrowing for investment, but not to cover current spending.

The aim of Chancellors for almost a decade now has been to reduce borrowing to zero: in other words, to withdraw from new money creation.

That means the private sector has to go increasingly into debt to fund the creation of the new money the economy needs. The risk of a private debt crisis is increasing as a consequence. This is the Office for Budget Responsibility forecast on debt from March 2018:

Debt stress is growing because the government will not be sharing the responsibility for creating the new money the economy needs by refusing to run the deficit that is necessary to create it. The result will be increasing financial vulnerability for millions of households.

Government financial irresponsibility does not get much bigger than that.

Deficit funding the NHS by £20bn a year could help rebalance this equation and help maintain the solvency of millions of households at the same time.

That is what a responsible government would do. But we don't have one of them.

The NHS is a efficient as it gets, except on health outcomes, and we just don’t spend enough to get them

Published by Anonymous (not verified) on Tue, 19/06/2018 - 2:43pm in

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Economics, NHS

This graphic is from the Guardian:

And this one is from the US-based Commonwealth Fund in 2017:

When you hear the right wing say the NHS is inefficient, it isn't. Nobody does it better with the resources they have got. To claim otherwise is to talk nonsense.

On the other hand, they can't work miracles and the reality is we don't get the healthcare we need, and that is down to money. We just don't spend enough to get gold standard care.

Is £20 billion enough extra? It helps. But it only helps.

And let's be clear, if all these other countries can find the resources then so can we. And we still don't need to raise extra tax to do so. This country needs to run a deficit.

Can Saudi Arabia prevent the next oil shock?

Published by Anonymous (not verified) on Tue, 19/06/2018 - 7:41am in

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Economics

Some insiders have, however, been opening up some doors, indicating that Aramco could have hit a possible production ceiling.

The government is like the Football Association – there is no limit to the number of points it can issue

Published by Anonymous (not verified) on Tue, 19/06/2018 - 2:10am in

Commentator Stephen Fergusson has written this on the blog in response to the discussion on the ‘household analogy’ of the economy. It reflects comments made by other MMT commentators, but is none the worse for that. I think it works:

Q: If a government is not like a household, then what is it like?

Having got their attention, we then fill that void with a CORRECT metaphor. What could that be? Might I suggest one almost everyone is familiar with: Football. So the response to the question would be something like….

A: Government is ‘like’ the FA. Firstly, the UK government, like the FA vis-a-vis league points, is the ONLY entity that can issue £ sterling. Secondly, the UK government, like the FA vis-a-vis league points, CANNOT ever run out of £ sterling.

The metaphor is equally apt for many other aspects such as the FA will ONLY accept its OWN points (not EUFA Champion’s League points, not gold, not Bitcoin, not anything else) in ‘payment’ for the ‘tax’ collected at the end of the season – when it zeros all the teams points in the table.

From there the message can be rammed home by contrasting and comparing the ludicrous ‘household’ model vs the ‘FA’ model.

For example, we might point out that that never in the history of Association Football has a sports reporter ever asked the FA “You've issued 350 league points this season, how on earth are you to going to afford issuing yet more points for this Saturday’s fixtures?”

Similarly, never in the history of the game have football fans lost sleep over the FA’s possibly going ‘bust’ and being unable to sustain its ‘deficit’

Quite so. 

Dimbleby Resigns as BBC Propagandist on Question Time

Yesterday, Mike put up a piece commenting on the resignation of former Bullingdon boy David Dimbleby as the host of Question Time. The man Private Eye dubbed ‘Dimblebore’ has been presenting the show for 25 years, and now considers it the right moment to leave. Dimbleby is another BBC presenter, who is very biased towards the Conservatives. Mike’s photograph of him accompanying his piece shows him raising two fingers, with the comment that it’s probably to a Socialist. Mike also cautions against feeling too good about Dimblebore’s resignation, as we don’t know what monster’s going to replace. He wonders whether the secret of human cloning has been found, and whether the next biased presenter of the programme will be Josef Goebbels.

https://voxpoliticalonline.com/2018/06/17/if-david-dimbleby-is-leaving-the-bbcs-question-time-what-horror-will-replace-him/

Last week Dimblebore was off in Russia, presenting a documentary about the country under Putin ahead of the footie there. He wasn’t the only, or even the first person to go. The comedian Frankie Boyle got there over a week earlier, presenting a two-part show about the country, it’s people and football on Sunday evening. Dimblebore was rather more serious in tone, presenting Russia as a country in the grip of a repressive autocrat, and mired in corruption which was strangling the economy.

Dimbleby first explained that Putin was most popular with young people, the generation that everywhere else is rebelling against autocrats, dictators and tyrants. He puts this down to Russians’ experience of economic collapse under Yeltsin. Yeltsin ended communism and dismembered the economy of the Soviet Union, privatising whatever he could. The result was chaos, and massive employment. At one point it got so bad that some factories were paying their workers in the goods they produced. Putin has restored order and economic stability to the country, and so has the support of the younger generation.

He spoke to a great of young professionals, an advertising branding team who were supporters of Putin, working to promote him through images and slogans. He stated that most of the media was controlled by the Russian president, with a few exceptions. He then went to speak to someone from RT’s Moscow branch. Dimbleby explained that some of the staff were British, and asked one of the Brits there whether he was presenting propaganda. The man denied it, said that there was no one watching over him, telling him what to do, and that his conscience was clear. Dimblebore then gave a knowing smirk into the camera.

He then talked to a female presenter on one of the few dissident broadcasters Putin had allowed to remain open. She said that she had not received any threats, but she knew that she could be killed for what she did. But she was still determined to carry on.

He then talked about how those, who criticised the government were arrested and jailed, interviewing a human rights lawyer, who defended them. When asked what people could be arrested and jailed for, the lawyer explained that it could be criticism of the government, or a non-traditional understanding of the Second World War. The other year Putin passed a law criminalising the view that Stalin was partly responsible for the Nazi invasion of eastern Europe and Russia through the Nazi-Soviet pact. From what I remember, I think you can also be arrested for promoting gay rights.

He then spoke to a woman, who was protesting her treatment by the state. She had already been jailed for criticising Putin, but was determined to do so again. She had not been able to get a permit to organise a protest, and so held her own, one-woman demonstration outside the court. This is permitted under Russian law. If you can’t get a permit for a demonstration, you can still protest, so long as there is only one person involved. As she stood with her placard, she was joined by an increasing number of counter-protesters determined to disrupt her protest, and possibly send her to jail. They moved closer to her, and she moved away, telling them to keep their distance. They kept coming, and their numbers kept increasing. Then the cops turned up, and started filming things as they’d been told foreigners were involved. And someone else from one of the TV companies materialised to film the protest as well. Eventually it all ended, and the police and counter-protesters disappeared.

Dimbleby then did a piece about the police’s brutal suppression of dissent, complete with footage of the cops beating what looked like a feminist protester from Pussy Riot.

He also touched on gender roles. He talked to a hairdresser, while having his haircut, who told him that Russia still had very traditional gender roles, in which women wanted a strong man to provide for them.

Putin has also succeeded in reversing the declining Russian birthrate. Instead of falling, it is now rising, with medals and benefits given to couples who have large families. He showed one woman and her husband, who were being presented a medal by Putin for having ten children.

He also went off to talk to a youth organisation, that was set up to get children, including boys of junior school age, interested in the army. The group’s name translates as ‘Net’, and is run by army officers. The children there wear combat uniforms and learn to shoot using air rifles, which they are also taught how to strip down. They were shown blazing away at targets, and competing with each other over who could reassemble a gun while blindfolded the quickest, with Dimblebore cheering the winner. And it wasn’t all boys. One of the youngster there looked like a girl. Dimblebore asked them if they wanted to join the army, to which they gave a very enthusiastic ‘Yes’.

He then went off to speak to a prelate from the Russian Orthodox Church about its support for Putin, where he described Putin as an autocrat attacking human rights and threatening peace in Europe. The prelate responded by saying that there were those, who did not agree with his view. And that was that.

He then went off to discuss the massive corruption in Russia, and how this was undermining the economy as more and more investors and companies left the country because of it. Russia has 144 million people, but it’s economy is 2/3s that of Britain, or about the size of Italy’s, and is declining.

Now all of this is factually true. John Kampfner, in his book Freedom For Sale discusses Russia as another state, where the population has made a deal with its leader. They have absolute power, in return for which they give their people prosperity. Except that, according to Dimbleby, living standards and wages are declining. Putin has passed laws against the promotion of homosexuality, there are massive human rights violations, including the jailing of the type of people, who would have been called dissidents under Communism. Journalists, who haven’t toed the Archiplut’s line have been beaten and killed.

Other aspects of the Russian state, as revealed by this programme, would have been immediately recognisable to the generation raised by Communism. Like the corruption. It was rife under Communism. The Bulgarian journalist, Arkady Vaksberg, wrote a book about it, The Soviet Mafia. And Gogol took a shot at official corruption under the Tsars back in the 19th century in his play, The Government Inspector. So no change there.

As for the Russian Orthodox Church supporting Putin, it was always the state church under the tsars, to which it gave absolute support. The watchword of the tsarist regime was ‘Autocracy, Orthodoxy and the People’. And its support of autocratic leadership didn’t begin under Putin. After the restrictions on religion were lifted in the 1990s, the BBC journalists interviewed some of its clergy on their shows. And the clergy had the same preference for absolute state power and total obedience from the people. Putin made the relationship between the Church and his government closer by granting them a sizable share of Russia’s oil.

The youth groups designed to get children interested in joining the army are also little different from what already went on under the Soviet system. Secondary schoolchildren did ‘military-patriotic training’ to prepare them for national service as part of the school curriculum. It was led by retired army officers, who were often the butt of schoolboy jokes. They were taught to handle weapons, complete with competitions for throwing grenades the furthest.

And let’s face it, it also isn’t much different from what used to go on over here. I’ve known young people, who were in the army and naval cadets. And the public schools used to have the CCF – the Combined Cadet Force – which the Tories would dearly love to bring back. And boys, and some girls, do like playing at ‘War’, so I’ve no doubt that if something like the Russian group was set up in this country, there would be many lads and girls wanting to join it.

Russia has also too been a very masculine society with very traditional ideas about gender and masculinity, despite the fact that most engineers were women, who also worked as construction workers and many other, traditionally masculine areas. One of the complaints of Russian women was that the men didn’t do their fair share of standing in queues waiting to get whatever groceries were in store.

And the medals and rewards to the women, who gave birth to the largest number of children is just another form of the Heroic Mother Awards under the Soviet Union. Putin’s Russia continues many of the same aspects of the country’s society from the age of the tsars and Communism, although Dimblebore said the country was going backward.

I’ve no doubt it is, but the programme annoyed me.

What irritated me was Dimblebore’s knowing smirk to camera when the guy from RT denied that he broadcast propaganda. Now I’m sure that RT does. There’s videos I’ve seen on YouTube from RTUK, which could fairly be described as pro-Russian propaganda.

But what annoyed me was Dimblebore’s hypocrisy about it.

The Beeb and Dimbleby himself has also broadcast it share of propaganda supporting western foreign policy interests, including imperialism. Newsnight has finally got round, after several years, to covering the Fascists running around the Ukraine under the present government. But the Beeb has emphatically not informed the British public how the pro-western regime which was put in power with the Orange Revolution, was created by the US State Department under Obama, and run by Hillary Clinton and Victoria Nuland. Far from being a grassroots movement, the revolution was orchestrated by the National Endowment for Democracy, which has been handling the US state’s foreign coups since they were taken away from the CIA, and one of George Soros’ pro-democracy outfits.

Putin is also presented as the villainous aggressor in the current war in the Ukraine, and some have compared his annexation of Crimea and invasion of eastern Ukraine to the Nazi annexation of the Sudetenland. But Crimea had been a part of Russia before 1951, when Khrushchev, a Ukrainian, gave it to that state. And Putin is not looking to take over the country either. The population of Russia is 144 million. Ukraine’s is a little over a third of that, at 52 million. If Putin really had wanted to annex it, he would have done so by now. And under international law, as I understand it, nations are allowed to intervene in foreign countries militarily to defend members of their ethnic group that are being persecuted. That was the pretext for the Nazi annexation of the Sudetenland, and it’s also the reason why Putin’s invaded eastern Ukraine. But it’s legal under international law. And I don’t doubt for a single minute that Russians, and Russian-speaking Ukrainians, were being persecuted by the new, pro-Western government.

In his documentary, Dimbleby met a very angry, patriotic Russian, who told him that the British had tried to invade Russia three times in the past three centuries. Once in the 19th century during the Crimean War; then in 1922 during the Russian Civil War. And now we were preparing to do the same. He angrily told us to ‘get out!’. Dimbleby looked shocked, and said to him that he couldn’t really believe we were ready to invade.

This was another continuation of the Soviet paranoia and hostility towards the West dating from the Communist period and before. Russia has always felt itself encircled by its enemies since the tsars. But the man has a point. We did invade Russia in 1922 in an effort to overthrow the Communist regime. Pat Mills has talked about this in his presentation on comics he gave to the SWP a few years ago. He tried to get a story about it in Charlie’s War, the anti-war strip he wrote for Battle. This is another piece of history that we aren’t told about.

And when Gorbachev made the treaty with Clinton pledging the withdrawal of Soviet troops from eastern Europe after the collapse of Communism, Clinton in turn agreed that these state would not become members of NATO. He broke his promise. They now all are, and NATO’s borders now extend to Russia. At the same time, western generals and NATO leaders have been predicting a war between Russia and NATO. One even wrote a book about it, 2017: War with Russia. Thankfully, 2017 has been and gone and there has, so far, been no war. But with this in view, I can’t say I blame any Russian, who is afraid that the West might invade at any moment, because it does look to me like a possibility.

And there are other matters that the Beeb and the rest of the lamestream news aren’t telling us about. They’re still repeating the lie that the invasion of Iraq was done for humanitarian reasons, whereas the reality was that western corporations and the neocons wanted to get their hands on Iraqi state industries and privatise the economy. And the American and Saudi oil industry wanted to get their mitts on the country’s oil reserves.

The civil war in Syria is also presented in simplistic terms: Assad as evil tyrant, who must be overthrown, and Putin as his bloodthirsty foreign ally. Assad is a tyrant, and one of the causes of the civil war was his oppression of the Sunni majority. But we are constantly being told that the rebels are ‘moderates’, while the fact is that they still have links to Islamists like the al-Nusra Front, the former Syrian branch of al-Qaeda, and ISIS. Nor have I seen the Beeb tell anyone how the Syrian rebels have also staged false flag chemical weapons attacks against civilians in order to draw the west into the war.

And objective reporting on Israel is hindered by the pro-Israel lobby. Any news item or documentary, which shows Israel’s horrific crimes against Palestinian civilians is immediately greeted with accusations of anti-Semitism from the Israeli state and the Board of Deputies of British Jews. I’ll be fair to the Beeb. Some of their presenters have tried to give an objective reporting of events, like Jeremy Bowen and Orla Guerin. But they’ve been accused of anti-Semitism, as was Dimblebore himself when he tried to defend them. In this instance, the bias isn’t just the fault of the Beeb. But it is there, and newsroom staff have said that they were under pressure from senior management to present a pro-Israel slant.

Domestically, the Beeb is very biased. I’ve discussed before how Nick Robinson in his report on a speech by Alex Salmond about Scots devolution carefully edited the SNP’s answer, so it falsely appeared that he had been evasive. In fact, Salmond had given a full, straight answer. Salmond’s reply was whittled down further as the day went on, until finally Robinson claimed on the evening news that he hadn’t answered the question.

And numerous left-wing bloggers and commenters, including myself, have complained about the horrendous bias against the Labour Party and Jeremy Corbyn in the Beeb’s reporting. Dimblebore himself has shown he has a very right-wing bias on Question Time, allowing right-wing guests and audience members to speak, while silencing those on the left. Not that he’s alone here. Andrew Marr has done exactly the same on his programme on Sundays.

Dimblebore is, quite simply, another right-wing propagandist, with the Beeb backing current western imperialism. His smirk at the RT journalist’s denials of doing the same is just gross hypocrisy.

‘Exorbitant Privilege’ Under Siege

Published by Anonymous (not verified) on Mon, 18/06/2018 - 10:00pm in

Frank Lee It was the French politician Valery Giscard D’Estaing who first coined the phrase ‘Exorbitant Privilege’ – a reference to the many advantages enjoyed by the US ownership and control of the world’s reserve currency. This was a situation dating back to the agreement reached in 1944 between the allied powers and established in Bretton Woods a town in New Hampshire; it was to become known as the Bretton Woods Agreement. During the conference key negotiators, most famously John Maynard Keynes for Britain, and Harry Dexter White chief US delegate, hammered out a blueprint for a new global and currency and trading system. Keynes was not entirely satisfied with the outcome and White mostly got his own way despite JMK’s misgivings about possible problems further down the road. But then the UK in the shape of Keynes, was also angling for a sizeable US loan in the not too distant future which circumscribed Keynes’ room for manoeuvre; and the loan of course came with strings – viz., the ending of British imperial preferential trading …

There are three ways to deliver funding of £20 billion for the NHS, and tax is the worst of them

Published by Anonymous (not verified) on Mon, 18/06/2018 - 5:33pm in

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Economics, NHS

Papers are filled with talk of the Theresa May's NHS Brexit dividend this morning.

Thankfully, it appears that no one buys the story.  Not one serious media outlet believes there is a Brexit dividend. The UK will still be paying the EU after Brexit. And because Brexit will shrink the economy there will be less tax paid.

So, Theresa May is lying.

And then most in the media come to the question ' how are we going to pay for it?'

I took part in a broadcast on this last evening on LBC Radio. The presenter very clearly did not believe me when I said that we did not have to.

I patiently explained that there are three ways in which government spending impacts the economy.  First, I said that the government could simply create the money in question.  I pointed out that over the last decade the government has created £435 billion to,  in effect, bail out our banks. That is more than  £40 billion  of new money a year and there has been no inflation as a result: any inflation we have had is because of changes in oil prices or because we have left the EU.  I did, therefore, argue that we could as a consequence create new money for the benefit of the NHS as well.

Alternatively, we can let more people save with the government. That, after all, is all that government bond issues are: they are the creation of new savings accounts managed by the government for people who want to save with it. And, as I  explained, as more and more people come to retirement age, more and more of them want more and more government debt to underpin their pension payments and as a consequence the demand for government savings accounts is growing exponentially.  So, I argue, why not let them have what they want, especially when it has the benefit of having almost no net interest cost and providing funding for the NHS at the same time?

Third,  I suggested that we could tax to recover the spending that the government had promised to make on the NHS.  But, I argued, this would be a particularly bad idea because right now the economy is quite vulnerable because of Brexit, and we are suffering lower growth than most countries in the EU, and in the USA.  Raising tax will only exacerbate this:  it will take money out of the economy when what the economy needs is a cash injection.  So, I argued, this was the worst option available and it will create alternative hardships that can only increase demand for the NHS.

I could tell that the presenter was not convinced.  His whole preamble had been about ' having to pay for the NHS'. Although I had very clearly explained how we could do that all that he wanted to hear was what additional taxes would be levied and on who.

It's pretty depressing that the state of national comprehension of the issues involved with funding our government are so low, but we have to face the reality that education on this issue is going to be a long haul. And the biggest obstacle to overcome? As the  presenter put it to me "If it is  as easy as you suggest why aren't the government doing this?"

I  offered three explanations.  First,  it may be that the government does not understand.  Second, he had to understand that the government wants to shrink the size of the state and therefore do not want to use the capacity that the government has to create money to increase public services.  And third,  he also had to understand that the government does want to privatise the NHS, whatever they say, and as a result they do not want people to believe that it could be free at the point of delivery without penalty.  Imposing a tax would be deliberate to make people feel that privatisation could be a better option.

Again,  the presenter sounded incredulous. Politial reality and LBC Radio  do not always mix.

Why the euro cannot be saved

Published by Anonymous (not verified) on Sun, 17/06/2018 - 9:20pm in

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Economics

The euro may be approaching another crisis. Italy, the eurozone’s third largest economy, has chosen what can at best be described as a Euroskeptic government. This should surprise no one. The backlash in Italy is another predictable (and predicted) episode in the long saga of a poorly designed currency arrangement, in which the dominant power, […]

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