John Redwood admits it: there never was a reason for austerity

Published by Anonymous (not verified) on Tue, 06/03/2018 - 5:44pm in



I think this is worth reading:

I have not been worried about the state deficit for sometime, ever since Mr Brown found out that the UK state can literally print money to pay its bills. Mr Osborne, originally a critic of this in opposition, then discovered its charms in office as well. It turned out to have no adverse consequences on shop price inflation, though of course it caused massive price inflation in government bonds, because it was accompanied by severe pressure against bank lending to the private sector to avoid an inflationary blow off. I always adjust the outstanding debt by the £435 bn the state has bought up, as this is in no sense a debt we owe. So our government borrowing level (excluding future state pensions which some here worry about and which have always been pay as you go out of taxation) is modest by world standards at around 65% of GDP, and at current interest rates is affordable.

Most of the state debt we owe to each other anyway. The government owes it to taxpayers who own the debt in their pension funds and insurance policies. The state can always raise enough money to pay the domestic bills backed by the huge powers to tax, and as we have just seen when credit expansion and inflation are low it can also use liquidity created by the monetary authorities.

To many who read this blog that will be unsurprising stuff. Except, that is, for the fact that it comes from far-right Tory MP John Redwood, who put it in his blog yesterday. He follows it with some usual xenophobic comments on the EU and aid, meaning the man is not reformed in any way, but what he has done is let an enormous cat out of the bag.

He has admitted there is no need for a government to balance its books.

He has admitted QE cancels debt.

He has then admitted the whole ‘passing debt to the next generation’ phobia is wrong.

And he has admitted as a result that there was no reason for austerity, the imposition of which served no economic purpose.

As a result he has, in two paragraphs, shredded the whole economic rationale on which he has been elected to Parliament.

And in so doing he has driven coach and horses through all those who still say that austerity must continue, because what he has done is make clear that if this is economically unnecessary then  it can only be driven by incompetence, or a hatred of government, or class warfare, or all three.

He is right on this. Deficits do not matter if there is less than full employment. And governments can cancel debt, at will. Debt, in fact, only exists as a favour to financial markets, who desperately need it but have no hold over government as a result.

What does matter is that people like him do not want to use this knowledge for the good of people in this country and elsewhere.

It is time others did.

Channel 4 Report into Italian Hipster Fascists

After the Fascistic policies and behaviour of the Israeli state and its advocates over here, there’s the return of Fascism proper to Europe. I found this Channel 4 report into the Italian Fascist party, CasaPound, on YouTube. CasaPound is a miniscule Fascist party, which takes its name from the American Modernist poet and Fascist, Ezra Pound. Casa is Italian for ‘house’, so I suppose you could translate the party’s name as ‘Pound House’ or ‘House of Pound’. They seem to have been founded by an extreme right-wing rock singer, shown growling out his wretched songs at one of his concerts. The party holds rallies, at which their squadristi respond with the Roman salute. And the iconography of Italian Fascism – the Fasces – the bundle of sticks with the axe projecting from it – and Mussolini’s ghastly fizzog are everywhere.

The reporter is shown round their headquarters by a woman. On one wall, when you go in, are the names of various prominent Fascists, written in different colours and sizes. The reporter’s guide tells him that they have this put there, as their counterpart to the Roman household gods that guarded their homes. One of the names on the wall is that of the notorious British Fascist, Oswald Mosley. The building also acts as a hostel, putting up the homeless – but only if you’re Italian. By which, presumably, they mean ‘White Italian’. The party also runs food banks and provides free medical care, such as health check-ups and electro-cardiograms. Again, only for Whites. As the woman explains in the video, only full Whites can be members of the organisation. A White person married to an immigrant cannot be a member, each of whom pays a subscription to the organisation. Along with the names of prominent, infamous Fascists, there’s also their flags and insignia, including that of the infamous Golden Dawn, responsible for the beatings and murder of immigrants and leftists in Greece.

The reporter comments that the place is very military, like a barracks. And it almost goes without saying that Casapound is viciously anti-immigrant. There’s a clip of a rally at which one of their speakers states he wants two ships in the Mediterranean to intercept the migrant vessels and send them back to Libya. The reporter also makes the point that they are trying to exploit the death of a young girl for their political gain. It’s not certain whether the girl died of a drug overdose, or was murdered, but three immigrants were arrested in connection with her death after her dismembered body was found deposited in two suitcases. The next day, a man with very extreme right-wing views opened fire and killed six migrants. The stormtroopers of CasaPound state very clearly that they don’t want immigrants coming to Italy bringing drugs and crime, and that if they had been in power, the girl would still be alive.

At the moment, CasaPound are politically negligible. They need to get three per cent of the vote before they get anywhere the Italian parliament, and there are many other Fascist parties. But the video does show the return of the blatantly Fascist right into Italian politics, even though it’s currently at the fringes.

The video’s important, not just for showing the re-emergence of proper Fascism in Italy, but because it also shows and confirms some of the observations the American radical journalist, Chris Hedges, has made about the way Fascism returns after the liberal elite abandon the working class. Hedges stated that the new Fascism in America took the form of complete little worlds, in which a person could become completely immersed. He was talking about the religious right, and the megachurches, which provide a more-or-less complete environment separate from the secular world outside. CasaPound offers much the same. It’s a lifestyle, as much as a political party.

As well as watching the emergence of Fascism in America, Hedges himself saw it appear during the civil war in Yugoslavia. He states that when the liberal elite abandon the working class to pursue neoliberal policies, which benefit only the business elite, the working class not only turn against them, but against the liberal values of multiculturalism, anti-racism, feminism, gay rights and so on. And again, you can see that here. The welfare services provided by CasaPound for the racially pure show this clearly. Healthcare has been cut, so that many Italians cannot get a doctor. So CasaPound provides one. The party’s squadristi state that the Communist party used to do this, but they don’t appear in the communities any longer. And so their place has been filled instead by CasaPound. Again, the organisation is providing a total social environment, including welfare support, that the state and the supposed parties of the Left have retreated from under the assault of neoliberal free trade dogma. This also affected the Communist Party in Italy, which in the 1980s began to explore other paths to power rather than the methods dictated by Russian experience. In doing so, they became much less radical, despite their Marxist ideology. I can remember the Financial Times in the 1990s stating that they were no more left-wing than the SDP in Britain, the right-wing Labour splinter group that amalgamated with the Liberals to form the Lib Dems.

I don’t know how much of a threat Fascism actually poses in Italy. It’s certainly there, at the margins. But CasaPound are nowhere near as powerful as the Alternative fuer Deutschland, who are also real Nazis with a bitter hatred of Jews and immigrants, and which have just managed to get themselves into the Bundestag. At the moment the major populist force in Italy seems to be Beppe Grillo’s 5 Star Party. But this does indicate the way the country could move, if something is not done to bring down the rise in xenophobia and anti-immigrant hostility on one hand, and destroy the neoliberalism that is impoverishing people across the world, and creating such anxieties on the other.

Wren-Lewis’ bizarre critique of MMT

Published by Anonymous (not verified) on Tue, 06/03/2018 - 3:55am in



Now we can see why MMT is so popular … We are in an MMT world, where we should be using fiscal policy and not worrying about the deficit, but policymakers don’t understand that. I think most mainstream macroeconomists do understand this, but we are not often heard. The ground was therefore ripe for MMT. […]

A Phenomenological Observation on The Capitalist Way of Life

Published by Anonymous (not verified) on Tue, 06/03/2018 - 2:22am in

Critics of market capitalism often emphasize the exploitation, coercion, alienation, worker (lack of) safety, sheer misery in employment. In a broader, less individualistic perspective one may add distributional unfairness, environmental catastrophe, corruption of the political system, the socialization of (speculative) risk by the well-connected rich at the expense of the rest of society, and the lack of responsibility of the for-profit (social) media which generates destabilizing cycles of anger and misinformation. More conservative critics will add that capitalism undermines craftsmanship and that its incessant adaptive-ness/change destroys local community and social order (and desirable forms of hierarchy/authority) and that it promotes cosmopolitan lack of rootedness. Even if one can debate to what degree all of these are all problems or essential to capitalism, and to what degree these are products of political interventions in the market, these are not negligible problems that are natural byproducts of really existing capitalism.

When one reads defenses of capitalism, one often encounters instrumental or consequentialist arguments: the system is praised for the relatively efficient way of organizing the economy, the material goods, technological innovation, and wealth it generates (including means to tackle environmental damage). Defenders of capitalism praise the reduction of famine and poverty it promotes and the diversity of lives it permits. Adam Smith hoped that capitalism would undermine servility and that it could promote more pro-social forms of interaction. Hayekians will also emphasize the epistemic functions of the market. Sometimes one even encounters the argument that market capitalism undermines the racist’s ability to promote his preferences without cost. I do not mean to suggest there are only consequentialist defenses of market capitalism; on certain (somewhat Lockean) conceptions of freedom and even justice, market capitalism follows naturally (say, from the right to contract, right to property, etc.).

Obviously, critics and friends of market capitalism are divided over the content and evaluation of the claims in the previous two paragraphs. These matters are often contested all the way down. They are also divided to what the degree the system promotes peace and international brotherhood. After all, networks of trade create increased interaction and friction, but they also increase the costs of going to war.

Even so given the enormous costs associated with market capitalism one may wonder how come it has lasted as long as it has. Obviously, the answer to that question will involve questions of power, ideology, and morality (of the sort I have just suggested are contested). But I would like to add a modest phenomenological observation that is the result of some recent (completely unscientific) discussions with a wide range of business-people from my own generation (again this is not scientific). By business-people I mean entrepreneurs, the self-employed, and what we may call management types. (So if I were a sociologist I would make important distinctions here.) All of them had some higher education, but not beyond Masters and generally focused on 'practical' degrees (accounting, business, law, etc.)

What struck me is that while income to buy stuff -- and not negligibly being able to help provide for others -- and authority, status (due to the jobs, goods, or role in the community) were all very important for all of them, a lot found intrinsic and highly motivational pleasure in their jobs. That is to say: my point today is that making money and organizing of the making of money can be fun. It's fun not primarily from avarice or from what can be done with money; but rather because in a global, capitalist economy, making money is both a creative and social activity. Sure, everybody complains about bad service from airlines, travel exhaustion, and the challenge of juggling meetings, family, and leisure. But the bottom line is that for certain kinds of people, business just is fun.

It is worth reflecting on why this is so. Here I ignore the joys of accumulation or what can be done with one’s income. In what follows, I make no claim to originality (although I do suspect the point is under-appreciated). I think the lure of business -- when one is doing it! -- consists of two facets: first, business-people have to solve lots of tactical and strategic problems on a day to day basis; this means that their activity is intrinsically creative. By this I do not mean to refer either to the kind of (mock-Nietzschean) heroic, Schumpeterian agent of creative destruction nor to the images of latte-sipping hipsters embodying the so-called ‘creative’ industries to be found in glossy magazines beloved by city-planners and urban boosters. But rather the more mundane activities involved in planning, allocation, satisficing, prioritizing, winging it, networking, etc. All of these take place under relative intense time and resource scarcity. These are challenging even stressful activities, but it also involves considerable agency and ingenuity.

Second, business people have to engage with a whole range of other folk. Obviously, there is a class of CEOs and rich and famous business-people that primarily interact with the 1% (and would-be-1%) and their enablers in the service professions. But the vast majority of business people are not part of this class, and generally do not aspire to be in it (even if they read about them and may admire them). For, business satisfies the all-to-human-needs of recognition, sociability, haggling, collaboration, team-playing, desire for power, and coalition-formation. (Again, all of these involve ingenuity and strategic creativity.)

In both facets there is a real uncertainty about outcomes and frustrated ambitions. But precisely in virtue of these, the satisfactions of achievement make the creativity and sociability worth it regardless of the further rewards (of accumulation, status, material comfort, etc.) that follow from one’s job.

Let me wrap up. I am not suggesting that the pleasures associated with business activity are the initial draw or main justification for these activities. Nor do I suggest that these can address the challenges that emanate from the moral and political critics of market capitalism. I do not even suggest that these satisfactions are central to the moral justification of market or even explain the attachment to capitalism by the propertied classes. But rather I suspect that these unnoticed, quiet daily satisfactions, help explain why for a few centuries now a capitalist way of life has survived and managed to sustain allegiance from ordinary individuals despite the collapse of Protestantism, the planning and destruction associated with several world wars and the despair and loss induced by stock-market crashes; this way of life has thrived despite enormous social transformations in the nature of the family, technology, and the political landscape. Maybe this is the effect of ideology, but the more likely explanation is that it satisfies many daily, fundamental psychological needs.

What is all this suffering and poverty for, exactly?

Published by Anonymous (not verified) on Mon, 05/03/2018 - 9:23pm in



From Phil McDuff in the Guardian this morning:

Perhaps the one upside of finally achieving the ludicrous goal [of the government balancing its current budget] is that we will now see there was no reason for it. Maybe at long last, when this meaningless balance-sheet position turns out not to be the gateway to the sunlit uplands of growth and prosperity, the media will stop simply accepting deficit hysteria as a given, and start asking the questions it should have been asking from the beginning: what is all this suffering and poverty for, exactly?

Quite so. And Phil, generously quotes me saying (from here):

A growing economy requires general price increases, or inflation. Except under unusual circumstances, a general increase in prices requires an increasing money supply. A fiscal deficit is the only way in which money can be injected into an economy continuously. It follows that governments must run a near perpetual deficit or face the risk of creating a liquidity crisis due to a shortage in the money supply, which would then create a risk of deflation.

What's good about this? Simply the fact that it is being said in the Guardian, which remains too wedded to the false log of tax and spend: that's what's good about it. On this occasion the right question is being asked.

The ten commandments of AI

Published by Anonymous (not verified) on Mon, 05/03/2018 - 7:15pm in


Economics, Ethics

The Bishop of Oxford, who sits on the House of Lords artificial intelligence committee, has come up with a ten commandments of AI:

AI should be designed for all, and benefit humanity.

AI should operate on principles of transparency and fairness, and be well signposted.

AI should not be used to transgress the data rights and privacy of individuals, families, or communities.

The application of AI should be to reduce inequality of wealth, health, and opportunity.

AI should not be used for criminal intent, nor to subvert the values of our democracy, nor truth, nor courtesy in public discourse.

The primary purpose of AI should be to enhance and augment, rather than replace, human labour and creativity.

All citizens have the right to be adequately educated to flourish mentally, emotionally, and economically in a digital and artificially intelligent world.

AI should never be developed or deployed separately from consideration of the ethical consequences of its applications.

The autonomous power to hurt or destroy should never be vested in artificial intelligence.

Governments should ensure that the best research and application of AI is directed toward the most urgent problems facing humanity.

I like them; they provide an essential dimension to this debate.

Now, for ten commandments of tax....

MMT and tax havens

Published by Anonymous (not verified) on Mon, 05/03/2018 - 6:34pm in

A few days ago a commentator asked on the blog:

I am not an economist so hopefully my ignorance can be forgiven. I find myself confused by your oft repeated view that governments spend before taxing, and tax merely removes inflationary pressures from the economy, and your criticism of secrecy regimes for preventing governments from collecting tax due. If governments don’t need the tax in order to spend, and companies and individuals are removing the tax which should be due from the economy, doesn’t this have the same anti-inflationary effect as if they were paying tax? Am I just being to simple or is there a bit in the argument I’m missing?

Clearly there is a moral argument (with which I completely agree) against secrecy regimes and the inappropriateness of comparing government finances with a private households also makes complete sense, but there seems, from my imperfect understanding, to be a paradox here?

It's  a good question and one that has been worth waiting to answer. I apologise to the commentator in question for the time it has taken me to do so.

If we look at MMT  What it says is that there is no reason for a government to raise tax to pay for its spending. In fact, that spending must  come before tax can be paid, because if that spending had not taken place the currency in which the tax was due would not have been created to let that tax payment happen. Tax, then, in MMT  has two  obvious and immediate functions out of the six reasons to tax which I have identified.  These are:

  1. Reclaiming the money the government has spent into the economy. As already noted, it may appear that tax revenue is being used to pay for government services supplied but that is not true: government spending always comes out of funds the government borrows from its central bank. Tax, in that case, reclaims the money spent to prevent excessive inflation. The amount reclaimed is that which is considered sufficient to leave the desired rate of inflation in the economy.
  2. Ratifying the value of money. Because a government requires that tax be paid using the currency that it creates (simply because that’s the currency it bills in) that currency has for all practical purposes to be used in the economy for which it is responsible, assuming that tax forms a significant part of people's total liabilities. The payment of tax does, therefore, give a currency its value in exchange and as a result passes control of an economy to the government that charges that tax. This makes tax an absolutely fundamental component in macroeconomic policy.

But these are not the only reasons to tax. One of my criticisms of MMT,  and over time I have had them, just as Steve Keen has had,  is that the other four reasons to tax are, too often, ignored by those who promote MMT. Those other four reasons are:

  1. Reorganising the economy. Fiscal and monetary policy are the two fundamental tools available to a government to manage its economy, assuming it has its own currency. As the explanation already offered has shown, money creation and taxation are the flip side of each other. Tax is then an integral part of macroeconomic policy and so of reorganising the economy to meet social and economic goals.
  2. Redistributing income and wealth within the economy. Experience has shown that market economies are very good at concentrating income and wealth in the hands of a few people in a society. At the same time economics makes clear that this is harmful to the prosperity of a society as a whole because it seriously reduces overall levels of demand in the economy. Redistribution of income and wealth is then an essential function that any Government must undertake and appropriately designed taxes are a proven and effective method for delivering this policy.
  3. Repricing goods and services. Markets cannot always price the externalities of the goods and services they supply or reflect social priorities. Tax permits repricing of goods and services to reflect these facts.
  4. Raising representation in a democracy. The fact is that if people know they pay tax they vote. This only seems to be true, however, for income taxes. That's why it is important that people are in that tax system. When they are they want a say on how the system works and democracy is enhanced as a result.

The critical point to make is that once it is apparent that tax does not fund government revenue then tax  takes on another wholly appropriate, but different  role in the economy. That role is to be the most powerful instrument available to government  for the delivery of its economic, social, environmental, industrial and other policies. This is the  idea that lies behind my book 'The Joy of Tax'  where I argue that the joy in question is the fact that taxes provide the single most powerful instrument  available to government to deliver these strategies.

These points have been ignored by many in MMT: it is one reason why Neil Wilson alienated me from it for a long time because he appeared quite indifferent to tax evasion so long as sufficient tax was raised. I may well have the same issue with Bill Mitchell, but I think Bill has issues with almost everyone. In my opinion that indifference is quite wrong.

MMTis in itself a description of what actually happens in the economy. Its strength is precisely that. Unlike neoclassical economics, which has no adequate theory of money and tax or the function of deficits, debt and even inflation control (or it would not rely on interest rates) MMT has answers based on fact. This makes it very powerful. But it would be absurd to claim that this means it is morally superior. Being right is a technical claim, not an ethical one. Ethics have to be added to MMT to taste. But, as I note below this is unavoidable in the case of MMT. Whereas neoclassical economics is designed to suggest the government has no role in an economy, MMT says (not by design, but because it is a fact) that government choice is implicit in macroeconomic management and so too then is Tax and related policy issues. In that case it's my argument that MMT supporters cannot be indifferent as to how tax is collected in the economy.

Let's take one core MMT argument  and my first reason for tax as a starting point, which is the fact that tax is the main mechanism available within an economy for the control of inflation.  When doing so let's recall that the wealthiest gain most from controlling inflation. It is their wealth that is preserved in that process, and the creditors’ obligation that is upheld by controlling inflation,  at cost to them. And it is also the wealthy person's businesses that benefits from the stability low inflation provides. It is, then, also in very many cases the wealthy who benefit most from the good ordering of a market economy that a government backed currency based on the price stability that sound taxation provides.

My point, then,  is that the wealthy are the greatest beneficiaries of  of the most important use which to which tax is put i.e. the controlling of inflation. Logically then you would think that they  would be the greatest exponent of tax compliance, which is seeking to pay the right amount of tax (but no more) in the right place at the right time where right means that the economic substance of the transactions undertaken coincides with the place and form in which they are reported for taxation purposes.

What we actually know is that they do the exact opposite. Gabriel Zucman has suggested the wealthiest evade the most tax.  I am not quite as persuaded of this argument as Gabriel is, but I think it has merit.  The consequence is obvious.  Inequality is increased.  Demand is reduced. The prospect of full employment  is diminished.  The need to run government  deficits  grows.  The consequent demand for tax revenues to potentially control inflation will, in the long term at least, increase,  and so the cycle continues.  Tax evasion in this context  is, then, not a micro economic issue of concern only when appraising the efficiency of the tax authority and when considering the culpability of a particular taxpayer; this is an issue of macroeconomic concern.

Tax evasion does not  simply mean that the government has greater difficulty in reclaiming these expenditure that it has injected into the economy, and so has to make greater demand of those with less capacity to pay; the entire structure of the economy is distorted as a consequence and we cannot be indifferent about. If anyone  thinks MMT is then only about the quantum and not the profile or quality of the tax collected then, I think, they have seriously misunderstood the fact that whilst MMT  might be descriptive, it is  within the process it describes an economic theory that demands  macroeconomic management in a way that is the precise opposite of the neoclassical economic  prescription which suggests that governments must leave everything well alone.

Matters do, in fact, go further than that.  Presuming  the we are looking at something beyond the quantum of tax collected (T in the formula for national income accounting I describe here)  and think that tax does have a social purpose then the failure to collect tax, whether as a result of poor tax design; a failure to resource tax collection, or because of tax evasion and avoidance,  is not just a technical economic issue  but is instead about  the delivery of government policy across the whole spectrum of issues. Once more,  this suggests that the  concern is not a micro one, but is instead at the heart of macro policy,  including macroeconomic policy.  I will be publishing more theory on this point soon. For now  let me suggest that this puts tax, and its payment or non-payment, at the core of the social contract, democratic process and the rule of law. Or, to not be too unsubtle, it makes it central to the right ordering of society that is, dare I say it again, the central underpinning of the system that preserves the property rights of the wealthy in all societies.

So what has this to do with tax havens and so potentially the broader issue of tax abuse? And is the claim that tax havens remove funds from the economy in the same way that tax does, and thereby deliver a similar inflation control mechanism, of any merit? I have to make it clear that  the resounding answer is 'no'. Let me offer three reasons.

The first  is that tax havens do not in any way  take funds out of the economy.  The suggestion that they might do so assumes that money does, in some literal physical sense, have a tangible existence, and that when money goes to a tax haven it is then removed from use. This is not true. Money may be deposited in tax havens but that does not mean that the money is then removed from use: it remains  wholly available to those who sent it to an account in such a place or, of course, they would not have made use of such places. So the money is not taken out of the system.

The second reason is that  because the primary reason for sending  the funds to a tax haven would be to circumvent an obligation to pay tax then we can be fairly sure that tax is not paid as a consequence.  But, if the total sum that has to be collected to ensure that inflation is controlled remains constant  despite these funds moving to a tax haven then the wrong people will end up paying tax as a consequence  with the results outlined above, and a consequent increase in inequality.  That is socially harmful and subversive of the intent of any government likely to introduce MMT.

Third,  because tax havens exist to undermine the authority of a government outside their own domain (and I stress, they have no other purpose) then is activity means that the delivery of democratically chosen policies is harder to fulfil, and the action is, then, inconsistent with the rule of law, the social contract, and democracy itself,  all of which are implicit in the reasons for paying tax in an MMT system in my opinion.

In other words,  within MMT we cannot be indifferent to tax havens:  they are in fact antithetical to MMT in just about every way that can be thought of.

But I am open to other suggestions.

Project Brexit

Published by Anonymous (not verified) on Mon, 05/03/2018 - 5:26pm in


Economics, Europe

The following comment was posted by David Kelly on the blog yesterday. It has, apparently, appeared as a comment on another couple of sites but never as a post in its own right, and I thought it worthy of that status, so I share it now.

Project Brexit

I have spent much of the last forty years in the world of major project management. Largely in the oil and gas industry out of Aberdeen, but in other parts of the world as well and in other industries where projects get very big, such as nuclear power, defence and the largest of civil engineering jobs. My specific discipline – the software techniques used to understand and control these projects – is common across all of these industries, as are many, indeed most, of the theoretical frameworks we use to describe and manage these largest of jobs. I am flattered to be described as a “subject matter expert” by my clients in the oil and gas industry, however even SMEs have been quiet of late in the oil industry, and so I turned my attention to the largest project ever undertaken in Britain, Brexit.

The important distinguishing feature of a project is that it stops. This is not manufacturing or running a shop. We make something, deliver it, and the job is over. Brexit is a project. But if we examine it that way without any consideration as to whether it is “right” or “wrong” to do, it is doomed to failure.

In order for a project to be successful, there are some important ingredients. Brexit lacks all of them, except a “Project Must Finish By” date, the only information that we have. In March of 2019 the project finishes.

Let me painfully go through just some of the missing ingredients:

A scope of work. Famously, there isn’t one. It is as if a shipbuilding company had accepted a contract to deliver a ship in March 2019, but nobody knows what sort of ship. All we know is the launch date. This in itself makes the project to build the Holyrood parliament seem well founded in comparison.

Budget. There isn’t one. This project will go ahead no matter what it costs.

Contract Management. We have started this job without knowing what the terms and conditions are. Any of them. I cannot think of an analogy that expresses my horror at this strongly enough, other than to repeat it. We have started this job without knowing what the terms and conditions are. We are going to negotiate the T&Cs as we go along. How many times has that worked?

Benefit analysis. If you believe £350m a week for the NHS, you will believe anything I suppose, but in fairness there was a benefit analysis available this June from the proponents of the project. I do not think I am being too partisan if I suggest it has not stood up to scrutiny. In essence – there isn’t one.

Deliverables. All projects of this size have a list of deliverables, rather than a single event. The channel tunnel for example had operational parameters of availability, running costs, number of passengers, there will have been more I am sure. There are no quantified deliverables for Brexit. “less immigration” “more manufacturing jobs” are aspirations, not numbers. This inflates dramatically the impact of my next heading:

Expectations. When we spend this much money on a project, there are expectations which have to be met. If, for example, our shipyard successfully builds two new ferries, but the service to users on the routes they are deployed on does not improve, then it is likely that the expectations of the users of the project will not be met and the project may not be deemed a success. What do people expect from this project? Everyone has been allowed to invent their own expectations. Madness must ensue. For some it is control of immigration, for some it is leaving the single market, for some “taking back control” whatever that means. One could argue that with no scope of work, no budget, no benefit study and no deliverables, expectation management is impossible. I do argue that. And that means we have no way to measure:

Success. There is no way to measure this. The project must then fail.

I could carry on for a few thousand words more about what is wrong/missing with this project. Can I see the risk register? I thought not.

I am often called in to project control environments to help improve them. I certainly have plenty experience of projects that could have gone better. The simple truth I have observed is that success or failure is determined at or before the start, not the end of a project. Project success is a function of how ready we are to start the project. In more that forty years I have never seen a project less ready to start.

At the risk of tautology, this is technically the worst project I have ever experienced, and I’ve been parachuted into some lulus. It is hardly started and we are at the Supreme Court already.

All of the above just spells failure. Indeed I suspect Brexit cannot be done at all.

All I can think of to make it better, is comfort eating.

Bring on the doughnuts, I say

Oil market fears: war, default and nuclear weapons

Published by Anonymous (not verified) on Mon, 05/03/2018 - 8:52am in



The US is one of the few areas of the world in which there is an energy investment boom underway, a development that could smooth out the uncertainties of geopolitical events around the world.

Wren-Lewis and the dangerous MMT

Published by Anonymous (not verified) on Sun, 04/03/2018 - 9:26pm in



Professor Simon Wren-Lewis recently wrote: “The dangers of pluralism in economics: the case of MMT” … Wren-Lewis argues that MMT concepts can be explained using mainstream terminology. Since I tend to use fairly standard terminology, I cannot disagree with that argument. However, I would phrase it differently. Mainstream discussion of fiscal policy is almost invariably […]