austerity

COVID-19 and THE NOAH’S ARK PROBLEM

Published by Anonymous (not verified) on Fri, 01/05/2020 - 2:09am in

One of the things the COVID-19 lock up  got me thinking about was Noah’s Ark. Remember the original: God vowed to destroy mankind with  a great flood  because of its wickedness, but told Noah and his family to self-isolate themselves  in an ark – a substantial building with three stories – with enough food for a long stay; to bring in  two specimens of every living and creeping  thing;  and to  stay put till  the flood had subsided. Noah and his clan isolated themselves seven days before the flood started. The  flood peaked in 40 days. As the waters receded the lock-up instructions were gradually relaxed and in a further two months it was safe for Noah and his family  to go out again and resume their normal lives.  Everyone and everything on land  that had the ‘breath of life’ had  died.

Leave aside the striking parallels  which will convince all Jehovah’s Witnesses, religious fundamentalists  and omnes gentes that it’s ‘all in the Bible’.   Leave aside also one big difference, which is that so far at any rate the corona virus is much more forgiving that the biblical deity. Most of us will survive this particular flood of germs.

Nevertheless, the Noah’s Ark problem arises whenever rising demand presses on a fixed supply. In the biblical story the shortage was in the supply of salvation, which was strictly limited to the righteous Noah and his family.  

In today’s secular version, there is a fixed (in the short run)  supply of  medical goods, notably protective clothing, tests, ventilators, hospital beds, and so on. So these items have to be rationed.

On what
principle? The free market solution is to ration by price. The price of goods
in short supply goes up, leaving only the rich able to afford them. If we had a
free market in health care, they would be able to buy up  the lion’s share of  scarce medical goods. Eventually the quantity
of medical goods would rise to meet the increased demand, but in the meantime
the poor would have to do without.  

The
socialist solution is ration books or queueing. In the first case everyone is
allocated an equal share of the scarce resource; the second works on a ‘first
come first served basis’:  the people at
the heard of the queue get what’s in the shop, and the rest get nothing. Long
queues with nothing in the shops to buy was a well-known feature of late
communism.

But as
soon as we think of the problem in terms of life-threatening viruses and
medicines, we see that neither the free market nor socialist solution can be
made to work.

Any attempt to apply the free market  solution would lead straight to revolution. Socialism has severe problems too. Some medical supplies, like masks, can be successfully rationed, with everyone getting a fixed number. But hospital treatment can’t be rationed like, say, meat  and eggs  were in the war,  because it  can’t be divided up into individual portions. For example, it would make no sense to allocate a tenth of ventilator to everyone. The bottom line here is that though testing can be done on a random basis, treatment cannot be random.  

Evidently some different principle of selection  is needed. This takes us back to the biblical story.  God saved the virtuous; we have decided to prioritise the economically useful.  The old, the sick, the infirm, those with ‘underlying health issues’, will be left to live or die as they may under conditions of lock-up; the giant share of scarce  medical supplies will go to those with a viable future. Utility  replaces virtue as the highest value.

Given
that we have got ourselves into this particular shortage trap, it is hard to
see what other principle of selection is available. Allocating scarce medical
supplies to the medically and  economically
useful  is clearly the only sensible
thing to do.

But it
sits very uncomfortably with another principle to which the liberal world   is
committed: that each life is of equal value. 
It is in the name of equal rights to ‘life, liberty, and happiness’  that we ban all kinds of discrimination
against particular individuals and groups.  But in the situation we face today, someone is
going to have to decide that some lives are more valuable than others. Some
people will be selected for the Ark, and others will be left to face the future
as best they can till we develop a vaccine or  the virus has done its work.

The
conclusion seems clear enough. Given that we have no ethically accepted
principle of choosing between who is to live and who to die, we should take
exceptional pains to ensure that we do not face acute shortages of life-preserving
equipment.  It is a scandal that the
developed world was caught so short of tools to deal with the latest pandemic,
some countries more than others. For this there are a number of reasons.

The first is the policy of austerity, which now shines forth in its full wickedness. The evidence is strong that ‘pandemic planning became a casualty of the austerity years’. (Sunday Times, Coronavirus/Insight 19/04/39). As a result our government faced a very poor trade-off between medical intervention  and ‘herd immunity’. It may even be worse than we think as recent research has questioned the degree of immunity, so there may be more deaths than expected. Broadly speaking, the shorter we are of medical resources, the more drastic lock-up will need to be.

But
austerity is by no means the only culprit. A second, and more fundamental,
explanation for our lack of preparedness, is the business philosophy of ‘just
in time’. As health expert Alanna Shaikh, put it:  ‘Just in time ordering systems are great when
things are going well. But in a time of crisis it means we don’t have any
reserves. If a hospital or a country runs out of face masks or PPE equipment,
there’s no big  warehouse full of boxes
that we can go to, to get more. We have to order more from a supplier, we have
to wait for them to produce it, and have to wait for them to ship it, mainly
from China’.

This
criticism applies to much more than medical procurement. It challenges the
just-in-time orthodoxy generally prevalent in business.  Reserves, the argument goes, cost money.
Efficient markets don’t require firms to have inventories, just to have  enough ‘stock’  to satisfy the consumer at the point of
demand.  To hold financial reserves
against a rainy day is also wasteful. In efficient markets there are no rainy
days. So firms should be leveraged up to the hilt!

This
is fine, provided there are no unexpected events. Come a ‘shock’ like the
banking crash of 2008, and the whole efficient market model collapses, and with
it the economy. Something like this has been happening to our medical services
today. Bed occupancy is as high
as 98% in our marketised NHS, meaning there is no longer a reserve, and we are
not self-sufficient in doctors and nurses and expect other countries to train
them for our use.

We
need to restore what used to be called ‘the precautionary principle’. In all
those situations in which we can rationally anticipate a severe  life-threatening event, ‘just in time’
thinking needs to be replaced by ‘just in case’ thinking. 

But this is not all. A major fault lies in the attitude of  neo-classical economists and their political followers to ‘innovation’. The general idea is that nothing will be invented unless companies are given extended monopoly rights (patents) over the invention to enable them to recoup their investment. This is not only historically wrong (most innovation has been done or financed by government), but can have the effect of keeping life-saving inventions off the market.  Dr. Shamel Azmeh points out that it would have been perfectly possible to develop ventilators  ‘simple enough to be stockpiled and quickly deployed’, but  a prototype of such a ventilator commissioned by the US government was aborted in 2012, after the private  company concerned  was acquired by a large producer of ‘expensive, immobile, highly technical, difficult to use’ ventilators suitable  for a rich-country market.  This kind of suppression of useful medical tools   is little short of criminal.  (Project Syndicate, The Perverse Economics of Ventilators, 16 April)

A
final cause of unnecessary shortage is our dogmatic reliance on global supply
chains. It is obviously more ‘efficient’ to get something produced in a cheap
labour location than by our more expensive labour. But what happens when
supplies from China are interrupted, because of a sudden increased demand for
them in China, as apparently happened with surgical masks?

The
Noah’s Ark problem can never be entirely avoided because extreme unexpected
events will continue to happen. But we can at least be better prepared for the
next pandemic.  The fact that COVI-19 was
unexpected, should not stop us taking precautions against this class of
disaster.

  1. Stockpiling. Billions of dollars are spent in stockpiling weapons of mass destruction. The same logic should be applied to stockpiling weapons of mass salvation. For example, a World Authority  could be tasked with maintaining  a Strategic Reserve of medical supplies  needed to support  the life of everyone on earth for three months – in the face of a limited range of drastic events. It should  be financed by taxes levied on national states  in proportion to their national incomes. Such stockpiling can also be done nationally or regionally: the EU would be an ideal place to start. If this was accompanied by agreed disarmament, it might even be possible to reduce taxes.
  2. No patent laws should apply to medical innovation. Public contracts and prizes should be the only incentive.
  3. Countries which can afford to should retain enough spare domestic capacity to scale up medical production rapidly if needed.  This would be in addition to stockpiling. Part of this spare capacity should be automatically available to counter  medical crises in the developing world. The logic of globalisation does not apply to ‘essential’ services.

Key
measures would be:

A final thought: we don’t know how to increase the supply  of virtue, but we do know how to increase the supply of ventilators. (1637)

Photo credit: Flickr/Jim Forest

The post COVID-19 and THE NOAH’S ARK PROBLEM appeared first on The Progressive Economy Forum.

Starmer’s and Rayner’s Zoom Discussion with Labour Members

Published by Anonymous (not verified) on Mon, 27/04/2020 - 11:56pm in

Last Monday, 20th April 2020, I got an email update from the local constituency party here in south Bristol letting me and the other members know what was happening with the party. This included nationally as well as locally. This included the news that the previous Wednesday the new leader and deputy leader, Keir Starmer and Angela Rayner, had held a meeting over Zoom with 10,000 party members, answering their questions. Those discussed included

• How do we hold the Tories to account – related to the deaths of frontline workers

• How do we unite the Party in the light of the leaked report

• Can the green new deal be used to help rebuild the post pandemic economy

• How can we encourage more women in leadership

• A question about schools, keyworkers, PPE and tracing/testing

• Asked if Labour Party could push on the gaps for support for workers e.g. recently formed small business

• What about nationalisation post pandemic

• How to we stop the frontline workers being relegated after the crisis

• How will we oppose austerity

I am no fan of Starmer. He’s a right-winger, and the indications are that he will attempt to undo the gains for the left made under Corbyn and return to the party to the Conservative policies of privatisation and dismantling the welfare state under Blair. But the questions indicate that many members are still serious about nationalisation, the Green New Deal and opposing austerity, as well as placing more women in positions of leadership, alongside immediate, life and death issues such as holding the Tories to account for the deaths of front line workers.

Unfortunately, Starmer’s and Rayner’s answers aren’t recorded, so I don’t know what they were or how they intended to tackle these issues. But at least those issues are still live.

Fundraisers v Public Money for NHS

Published by Anonymous (not verified) on Mon, 20/04/2020 - 12:24am in

GIMMS is pleased to have permission to reblog this article from @pamos19. Originally published on her Idle Obs blog site here

 

“Charity is a cold grey loveless thing. If a rich man wants to help the poor, he should pay his taxes gladly, not dole out money at a whim”…Clement Attlee

 

We love our NHS

The NHS is the ‘jewel in our crown’, our ‘national treasure’…. we love our NHS. In fact, we love it so much we’re pained to see its staff struggling to cope with the COVID-19 outbreak.

Our hearts go out to the families who have lost their loved ones from this terrible illness, and to the NHS staff battling to save them, who sometimes have to make the most difficult decisions about treatment pathways laid down by NICE guidelines.

Understandably, talking about the NHS brings out our strongest emotions. Knowing that NHS staff and Social Care workers are not being provided with adequate Personal Protective Equipment (PPE) in too many settings – hospitals, GP surgeries, Residential homes, ambulance crews, community nursing/caring, it brings out a natural response: we want to help.

Hence, there has been an explosion of fundraising activity on social media platforms. The biggest has been organised by NHS Charities Together.

Text Clap NHS Charities Together advertisement

Run for Heroes Instagram account

NHS Charities Together Virgin Giving page

As someone who has been a proactive campaigner in support of #OurNHS for three years, I fully understand the desire to help.

However… Stop It! Our NHS Is Not A Charity

Be warned, you may find what you’re about to read controversial. I ask for your patience in reading all the way to the end. I might challenge your perceptions, but bear with me, I hope by the end you will have seen why I felt it was important to write this blog.

I’m going to set the historical context first. Then I’ll demonstrate how the context has impacted our NHS and why it’s in the position of needing help and support today. Next, I will put forward the macroeconomic context, and finally, I intend to show that Public Money should be the winner in a Fundraiser v Public Money for our NHS argument.

 

The NHS – brief historical context

NHS: the Early Years

In post-war Britain 1948, the Labour government launched our National Health Service

Government leaflet sent out in 1948 explaining the National Health Service

A publicly owned, publicly run, and publicly delivered comprehensive *National* health service free at the point of need for all.

Birth to death…from the cradle to the grave. Eyes, ears, nose, mouth, mind, limbs, internal organs, disease, infection… Midwifery, District Nursing, Consultations, Tests, Treatments, Hospital stays, and Prescriptions were free.

Aneurin Bevan, Health minister at the time said:

Nye Bevan image and quote "No society can legimiately call itself civilised id a sick person is denied medical aid because of lack of means"

Many governments have come and gone, making changes such as implementing prescription charges, centralizing and decentralizing the ambulance service, and in 1998 devolution had some impact…

“The UK’s four systems were created very similar at the high-water mark of British political unity. They were all ‘national health service’ (NHS) systems, with the government directly owning hospitals, contracting with primary care General Practitioners (GP) and employing most other staff in a system centrally financed out of general taxation and provided for free at the point of service.”

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC5127421/

 

Corporatisation and Markets

The internal competitive market and Foundation Trusts (run as businesses) were introduced early to mid-2000s.
But… every Secretary of State for Health of whichever political party in government had the responsibility to provide comprehensive healthcare for its citizens… until the Health and Social Care Act 2012 passed into law.

NHS Death Knell – The Lansley Act

Professor Allyson Pollock (March 2013):

“The UK NHS was created by national consensus in order to ensure that every citizen was guaranteed health care. Underpinning these arrangements was the secretary of state’s core duty to provide or secure a comprehensive health service, a duty repealed by the first clause of the Health and Social Care Act.”

This was passed at a time when the country was still reeling from the 2008/9 global financial crash and the coalition government had imposed severe austerity measures on public services. But more on that a bit later.

  • The Act opened up all our NHS services to the external market except for acute emergency and obstetrics.
  • It opened the flood gates for private sector provision of health and social care services
  • The Act also gave birth to four quangos: NHS England, NHS Scotland, NHS Wales, and NHS Northern Ireland each responsible for the provision of health and social care. Although still called NHS it was no longer a National Health Service
NHSE – The US model of healthcare comes to England

The appointment as head of NHS England was given to Simon Stevens, worked for the USA giant United Health Insurance company, where he was president of their global health division and CEO of Medicare.

His job as NHSE head was to oversee implementation of the complete reorganization of our health and social care service in England, by splitting England up into 44 regional health economies – ‘footprints’.

The aim was to establish Accountable Care Organisations (an American model) which we now call Integrated Care Systems/Organisations.[1]

These ICS/ICOs are contracted out to a body (which can be a private business or a combination of local authority and private partnerships) who are responsible for the provision of health and social care across their ‘footprint’ within a fixed budget. They are run like a business, so must balance the books or make a profit… they cannot go into deficit.

Government Austerity and NHSE Combine for Maximum Impact
  • Under Austerity, we saw swathing cuts in budgets to our public services from 2010 onwards
  • NHS trusts told to make ‘efficiency’ savings, savings targets set and if not achieved, financial penalties imposed. A Trust could even be put into Special Measures for being in ‘debt’
  • Staffing levels were cut, wards and small hospitals closed, bed numbers dropped.
  • Businesses have taken over services such as diagnostics, Mental Health, phlebotomy, radiology, cleaning, catering, ophthalmology, and so on.

In the private sector, the leanest service they can give the more profit they make. Our health service and social care system began to feel the strain.

“Sustainability” became the mantra of Government and NHS England chiefs.

By 2016 Sustainability and Transformation Plans (STPs) were published. These were the plans which would transform our health service and social care into ICS/ICOs.

Some STP Boards held Public Consultations

As small gatherings of ‘the aware’ sat and listened to highly paid NHSE employees give glossy presentations, telling us that our NHS will not survive unless we make these changes, which would improve the service… make it sustainable so it’s there for the future.

They asked for our views, which in practice were never going to make the slightest difference to their grand plans.

And Here We Are…

2019 saw our fragmented, under-resourced, under-funded, and under-staffed system in a very poor state:

  • 43,000 nurses and 10,000 GPs short
  • Hospital targets abandoned because they consistently couldn’t be met
  • Worn-out staff working longer shifts than they were being paid for
  • Cancelled appointments and operations a common occurrence
  • Little to no mental health support
  • 3 week waits to see a GP
  • Apps being touted as the answer to everything

People were dying who shouldn’t have been…

“Like many junior doctors who have worked in overwhelmed and understaffed A&E departments, I’ve seen things happen as a result of the overstretched conditions that I believe should be classed as “never events”. Since 2016, nearly 5,500 patients have died in England alone as a direct result of having waited too long to be admitted to hospital. To put that in perspective, that’s nearly twice the number of people killed in terror attacks in the UK  since 1970. We should be outraged”

https://amp.theguardian.com/commentisfree/2019/dec/10/doctor-johnson-thousands-deaths-nhs-patient

Now in 2020, the pandemic has hit an already ‘in crisis’ health care service (exacerbated by a chronic problem in social care)

 

Our NHS… Macroeconomic Context

It is political!

To all the naysayers who shout “Keep politics out of our NHS”… you can’t.

“What does the Government do?

The Government is responsible for deciding how the country is run and for managing things, day to day. They set taxes, choose what to spend public money on and decide how best to deliver public services, such as:

    • the National Health Service
    • the police and armed forces
    • welfare benefits like the State Pension
    • the UK’s energy supply

What does Parliament do?

Parliament’s job is to look closely at the Government’s plans and to monitor the way they are running things.

Parliament works on our behalf to try to make sure that Government decisions are:

    • open and transparent – by questioning ministers and requesting information
    • workable and efficient – by examining new proposals closely and suggesting improvements, checking how public money is being spent and tracking how new laws are working out in practice
    • fair and non-discriminatory – by checking that they comply with equalities and human rights laws and by speaking up on behalf of affected individuals”

https://www.parliament.uk/about/how/role/parliament-government/

Government has control of the public purse its role is to spend public money for public purpose and social benefit.

“If the job is to be done, the state must accept financial responsibility“

Nye Bevan quote "Society becomes more wholesome, more serene, and spiritually healthier, if it knows that its citizens have at the back of their consciousness the knowledge that not only themselves, but all their fellows, have access, when ill, to the best that medical skill can provide. But private charity and endowment, although inescapably essential at one time, cannot meet the cost of all this. If the job is to be done, the state must accept financial responsibility."

 

So what is the public purse and public money?

  • The public purse is not a fund, and public money is not taxpayers money
  • The public purse is the Bank of England and public money is the creation of pounds sterling by keystrokes – entering numbers into banks’ reserve accounts so they in turn can credit the account of a person or company selling its goods or services to the Government – as instructed by the Treasury.

Having said this, I can hear you ask… but where does the money come from? It must come from somewhere?

The keyword is “creation”

The UK Government is the sole issuer of our sovereign fiat currency. Every time the Government (of whichever colour) spends, it creates pounds sterling out of thin air. If the government needs to purchase goods or services which are for sale in GBP, then it simply instructs the Bank of England to do so via the Treasury. The Chancellor of the Exchequer provides the Budget Statement ie ‘shopping list’ and this is administered by the Treasury’s Debt Management Office (DMO) and the Monetary Policy Committee (MPC) at the Bank of England.

There is no taxpayers money funding Government spending. The only constraints on spending are the availability of resources (goods, services, labour) and inflation caused by resource shortages.

Now ask yourself…. when the global financial markets collapsed in 2008 what shortage did this cause?

Government told us “There is no money! We have to tighten our belts… Austerity!”

Did anyone shout back “Hang on a cotton-picking minute… you create money!”

[To be fair, some did. But the response they got (and still do, but from fewer people) was “Venezuela” and “Zimbabwe”… which demonstrated how little they know about those countries’ economies.
See my blog https://idleobs.wordpress.com/2020/03/29/coronavirus-economic-stimulus-but-how-will-you-pay-for-it/ ]

The Truth: Our Government can NEVER run out of money

 

The Final Argument – Why we should not have to fundraise for the NHS

Current Shortages in our Health and Social Care Services
  • Nurses, Doctors, Radiologists, Social Workers, Care-workers ie labour
  • Equipment, especially PPE, COVID-19 Tests, and Ventilators ie goods
  • Diagnostics/Testing laboratories ie services
Labour – the workforce

500,000 volunteers have come forward to help our ‘NHS, there must be jobs that these volunteers are doing, and that is great. Practical help at a time of most need.

No shortage of people willing to work for no pay – although government could pay them via a Job Guarantee programme, and this could encourage more people into care-worker jobs.

However, the shortage of clinical staff and social workers needs addressing urgently through government investment in bursaries, decent wages, and free education, but will not help in the immediate crisis.

Goods

Through a combination of incompetence or deliberate policy, the government did not purchase goods listed above prior to the pandemic, despite being forewarned in the pandemic simulation report 2016. Government’s initial ’do nothing’ strategy exacerbated the situation as global demand for equipment and tests grew. By the time Matt Hancock and NHSE tried to get hold of, or refused to deal with certain suppliers of, what we needed, the goods aren’t there (although that’s debatable)

Volunteers across England are making PPE out of the goodness of their hearts and donated material. Practical help at a time of most need.

Services

Although slow to start, government are negotiating contracts with laboratories. Money is being created to purchase these services.

 

Conclusion

There can never be a shortage of public money to purchase anything if it’s available for sale in our own currency

There is not a shortage of money to attract, train and retain staff, only the shortage of will by the government to do it

There is not a shortage of money to purchase equipment, only the shortage of will by the government to do it, and at the right time

So why does the NHS need money from charity when government can provide it with public money?

It doesn’t and shouldn’t!

If the government keeps getting away with not accepting financial responsibility, they will keep starving our NHS of money to pay for the facilities, staff, equipment, and resources it needs to exist!!

Please stop giving money to charity for the ‘NHS’

Demand from government that it carries out its duty to use public money as it was meant: for public purpose and social benefit.

[1]Accountable in a financial sense, ie accounting Integrated in an admin sense ‘backroom stuff’

 

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The post Fundraisers v Public Money for NHS appeared first on The Gower Initiative for Modern Money Studies.

The cost of government austerity has been a one of infrastructure decay and human suffering. Our nation has paid the price. Are we ready yet to re-imagine our world?

Published by Anonymous (not verified) on Sat, 18/04/2020 - 9:09pm in

Blackboard with the slogan "Upgrade thinking" written in white chalkImage by Gerd Altmann from Pixabay

‘No society should need permission from wealthy people to operate in a high functioning way’

Nick Hanauer

 

A day of reckoning is coming. The exponential rise in deficit spending to manage the COVID-19 emergency is coming to crush future generations and will need action to address the prospect of a future burden of higher taxes to pay for it. Or so a briefing paper published by the Social Market Foundation claimed this week. The SMF (funded by Vodaphone, Barclays and KPMG amongst others) states in its report that public sector net borrowing could rise above £200bn per year which raises the prospect of an ‘Austerity Round Two’ leading to tax rises and spending cuts once the worst of the crisis is over. It calls for the economic costs of responding to the coronavirus pandemic to be shared fairly across the generations and says that ‘as we emerge from the crisis, older generations must uphold their part of the contract by bearing a fair proportion of future tax rises and welfare reforms.’

In short, it is suggesting that there will be a financial price to pay for the government’s increase in spending and recommending that the ‘triple lock’ which ensures substantial rises in the Basic State Pension should be replaced with a ‘double lock’ tying increases to earnings or inflation. This it says could contribute £20bn to deficit reduction over the next five years and reduce the fiscal burden on the working-age population.

Economic orthodoxy lives on. After the initial positive buzz which resulted from the government’s announcement of a huge spending programme to manage the economic and human fall out of the COVID-19 crisis (before we realised its shortcomings) the debt sirens are back beating the debt drum. Not surprisingly. The neoliberals have caught up with the challenge to their economic and monetary supremacy and are fighting back by posing the customary question about how it will be paid for. We can expect more as the weeks roll on. On this line of thinking someone, somewhere has to pay the financial cost sooner or later and the question will be who.

Of course, the usual response to the question is the taxpayer and that narrative is not just the line pursued by the right-wing. The household budget narrative dominates both on the right and the left. On the right, low taxes are the aim and have justified the slimming down of public services and infrastructure. Those who rightly wish to address economic inequality, do so by falsely suggesting that tax avoidance or evasion is a drain on the public purse, and we must ensure that the rich pay their fair share. The ‘solution’ on the left is to bring back that ‘ol magic money tree’ located in the Cayman Islands. Indeed, earlier this week, an editorial in the Morning Star suggested that the government should open up tax havens and tax the super-wealthy to raise the extra funds needed for welfare benefits, job support, training schemes and public services including the NHS.

The truth is that we are not dependent on the rich (or indeed anyone) paying their tax to fund public services and we don’t need to grovel or expect them to do the right thing as if somehow it is a charitable exercise in goodwill. We need instead to recognise the currency-issuing powers of government to pursue a public purpose agenda which serves the interests of the nation. Make the rich pay their tax for the right reasons, which are to do with redistribution of wealth through progressive taxation and not because it funds government spending. It doesn’t.

We need to recognise that the real costs of austerity are not financial but human ones. In fact, we are now paying the costs of that burden imposed in 2010 by the Conservatives when they cut public spending on our public and social infrastructure including our public services and welfare. The burden was never the financial one it was dishonestly described as; it has been the subsequent burden of infrastructure decay and human suffering as a result of austerity. We are now seeing its effects on the lives of our friends and families as we struggle to cope with the effects of lockdown; counting the harrowing cost on our financial, physical and mental health. It is a sad thing indeed that it had to be coronavirus that brought it to our attention as life as we know it stopped like a broken clock.

Past austerity has cut our productive capacity. That has built in the potential for inflationary pressures which could prove to be an issue with a critical global shortage of PPE and other vital equipment and import restrictions from affected nations.  While the government isn’t like a household in financial terms, it is clear that it has failed our nation on the very yardstick it chooses to measure itself by.  It has run down the essential supplies of critical equipment and materials to keep the public safe and compromised our national security by running the NHS at full capacity without the slack required to cope in a crisis. This will be the deficit that we inherit; not the spreadsheet balances. As Fadhel Kaboub noted in a recent podcast ‘It’s not about having the money it’s about having the real, physical productive resources’

And yet the economic orthodoxy that precipitated this destruction still looms like a bad penny on our horizon. Once again, the neoliberals are proposing to hit those who can least afford to pay with the very real costs of any future austerity. The SMF’s economic illiteracy, which suggests that today’s government spending will have to be paid back at some point in time and would thus be a burden on future generations, is a blatant misrepresentation of the truth.

The government does not need to find savings now and scrapping the triple lock on pensions in order to restore what is referred to as ‘intergenerational fairness’ will quite simply create more pensioner poverty than already exists, which in turn will have a detrimental effect on the economy. Quite simply, whether it is retired or working people, involuntarily unemployed or underemployed people, less money in their pockets translates into less money being spent into the economy which is what keeps it turning. Tightening the money tap will quite simply send the economy into a death spiral if it is not already there. And that cost will be even harder to bear, not just for the most vulnerable in society but also for the future of the planet.

As Prem Sikka suggests in an article this week in Left Foot Forward, the SMF has failed ‘to assess the impact of pension reduction on the life of retirees. With reduced income, retirees will spend less on good and services and thereby reduce the multiplier effect. The SMF proposals would ensure that retirees surviving the coronavirus pandemic will face a future of severe poverty’.

That is the real burden a human one. The role of government is not to balance its budget, but to serve the common interests of its citizens and in that its function is to ensure that its economic policy decisions result in a more productive nation. Future generations, or indeed retirees will pay the heavy price of both ineffective government inaction today and economic decisions to impose yet more austerity or increase taxes in the future.

In short, today’s government debt will not in itself be a burden on future generations. The real burden will be government’s failure to spend adequately today to ensure a better future tomorrow. Cutting spending once the crisis is over would be tantamount to ensuring economic collapse if indeed we haven’t already reached it before then.  Using ‘intergenerational fairness’ as an excuse to cut spending is designed to create smoke and mirrors and conflict between generations and is a sleight of hand to place blame anywhere but at the government’s feet.

In conclusion, we end this MMT Lens with a quote from a blog by Bill Mitchell.

“…the inclusion of public debt and unfunded pension liabilities for government workers in the index are based on a misunderstanding of what actually will burden the future generation.

The fact is that the current government has as much ‘money’ now as it had yesterday and the same amount it will have tomorrow. That is, it has whatever it wants to spend. It always has that. It has no more or less capacity to spend today because there were surpluses in the past than it would have if there had have been deficits in the past.

[…..]

Every generation chooses its own tax rates. That is, the mix of public and private sector involvement in the economy is a political choice. If the future generations want more private and less public they will choose lower tax rates etc.

Currency-issuing governments do not draw down on the savings provided by the previous government’s surpluses. It is a nonsensical notion thinking that a sovereign government would ‘save’ in its own currency.”

 “The idea that borrowing ‘takes money from the pockets of future taxpayers’ is nonsensical. The funds to pay for the bonds originate in the government net spending in the first place.

 Clearly, deficits now are in part helping the current generation with income transfers and the like. But they also facilitate public education, public health and other infrastructure which provide massive benefits into the future for the current generation and their children. 

Once you understand that then the idea that there is a future burden will make you laugh.

 

 

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The post The cost of government austerity has been a one of infrastructure decay and human suffering. Our nation has paid the price. Are we ready yet to re-imagine our world? appeared first on The Gower Initiative for Modern Money Studies.

COVID-19 is our practice run. Our future survival may be at stake, but the solutions are within our grasp. NOW.

Published by Anonymous (not verified) on Sat, 11/04/2020 - 12:42am in

Planet Earch wearing a surgical maskImage by FunkyFocus from Pixabay

“How all this plays out ultimately depends on us. The emperor is now naked and the ground for a radical paradigm shift – one based on popular sovereignty, democratic control over the economy, full employment, social justice, redistribution from the rich to the poor, relocalisation of production and the socio-ecological transformation of production and society – is indeed more fertile than it has been in a long time. Yet change won’t come from above but only through mass mobilisation once the worst of the crisis is over.” – Thomas Fazi

 

 

The BBC reported this week that more than 150 top football players had launched an initiative to help generate funds for the National Health Service to ‘help those fighting for us on the front line’ during the Coronavirus Pandemic. It noted that whilst Premier League Clubs had previously said that they would ask players to take a 30% pay cut in order to protect jobs, the Professional Footballers Association had said that players were ‘mindful of their social responsibilities’. Matt Hancock, the Health Secretary, jumped on the solidarity bandwagon and according to the BBC ‘had warmly welcomed’ the ‘big-hearted decision’.

Of course, nobody would wish to deny public support for the NHS and its workers, or the growing solidarity with those who perhaps people are now just beginning to understand represent the backbone of our society without which nothing functions. As noted in an MMT Lens a few weeks ago, at this critical time people are beginning to realise the value of the public sector and other key strategic sectors of the economy. They are also beginning to question the long-promoted propaganda that society needs the rich to create wealth, which then trickles down from the top table like manna from heaven.

We cannot fail now to notice the huge wealth inequalities that have been created by the pernicious market-driven ideology, which have poisoned our human relationships with each other, sowed division and hatred, divided communities and working people and left our public infrastructure in a state of decay.

The upsetting and often poignant daily news reports which rend our emotions are making it ever clearer that something is very wrong, as the evidence piles up before our eyes as to the long-term consequences of austerity. Indeed, it was remarkable this week to hear a BBC journalist, Emily Maitlis, challenge the prevailing ideological dogma after having failed to do so for years when she said:

“They tell us Coronavirus is a great leveller. It’s not. It’s much harder when you are poor. How do we stop making social inequality even greater? You do not survive the illness through fortitude and strength of character, whatever the Prime Minister’s colleagues will tell us.”

A surprising but timely debunking of neoliberalism from an unlikely source. A challenge to the idea that individuals are alone responsible for their fate.  A first step? Let’s hope so.

It is also becoming clear that governments are much more powerful than they have been given credit for in a market-driven world. In fact, that the market is not an all-seeing god operating outside government control. That it is government alone, through political decisions, that provides the economic infrastructure for the market to exist. That only government can ensure that our public and social infrastructure is capable of operating in good times and bad and has the capacity to respond to emergencies like the COVID-19 pandemic or the very pressing challenges facing us with respect to climate change.

However, for too long, government has tipped its hat to democracy, relinquished its sovereign powers to deliver public purpose and served other masters all aided by a media owned by those same masters who manage the narratives for their own ends.

In recent weeks, however, we have been given an inkling of that sovereign power as the Chancellor of the Exchequer opened the spending taps, thus challenging the decade-long narrative of austerity that has been justified by the lie that Labour had overspent and that the State must now pull in its horns and get the public finances back into order.

It might be getting clearer, a week or so on, that these promises are not all they are cracked up to be, but it proves without doubt, that the world is not flat and that government, not the market, holds all the cards in terms of response, particularly when one notes the corporate queue at the door of the Treasury for handouts.  The government decides its spending priorities and indeed who benefits.

To return to the footballer story, on social media many noted the huge wealth inequalities that exist and expressed the view that it is only right that the rich, including footballers, share some of their wealth.  That, of course, would be a view that many of us would share and buys into the belief that we should all contribute our fair share in taxation for the public infrastructure that we all benefit from.  Indeed, for many people paying their tax is seen as their contribution to that infrastructure.

However, we need to challenge the notion that the public infrastructure requires charitable donations from the rich or for them to pay their tax to fund it. Because it is not true. The idea appeals to our sense of fairness and equity, particularly in the light of growing public awareness of the huge inequity and injustice which exists occasioned by governments who still favour tax breaks for the rich. But it reinforces the belief that without the rich we will all be poorer. The mantra of trickledown is still entrenched and this gives the rich more power, rather than diminishing it. The last few weeks make a serious challenge to the false assumption that the rich are needed as we realise what really sustains society when the chips are down.

We need to challenge the mindset that the NHS is a charity requiring donations. It does not. Aside from the fact that what is on offer is a mere drop in the ocean in respect to the annual NHS spend and would be a salve of conscience rather than real assistance, it is yet another example of the shift in public understanding that has occurred in recent years.

This has suggested that since money is ‘in short supply’, the Big Society, instead of the State should play a bigger role in public service – from lotteries to fund vital work in the community to the growth of charitable organisations providing services to volunteering to support the NHS and other public institutions, not to mention vital medical and other research.

The implication has been that the State can no longer afford to fund the public infrastructure and people’s generosity and desire to help has been cynically utilised to fill the gaps that have arisen by political choice.

In the meantime, COVID-19 has exposed – in the grimmest way – the state of our NHS, social care, policing and other public sector bodies like the civil service and local government. The poor state of these services being the result of government economic and spending policies.

We are at a crossroads in human history and as never before we need competent government to serve the people. COVID-19 may indeed be a practice for the greater challenges we will face in connection to climate change and human survival. We must strive to make it clear what is and is not possible and the constraints which will in future determine what can and cannot be done.

Essentially, that the government as the sovereign currency issuer makes its economic and spending decisions based, not on whether it has the money, but on ideological premises. Over the last 10 years, the coalition and Tory governments made a political choice to cut funding for the NHS and other vital public services and carried on the decades-old programme of privatisation.

There was, however, no shortage of money just as there is no need for the UK government to collect tax or borrow to fund its spending choices (although that is not an argument for not paying one’s tax and that is another matter). To reiterate the oft-repeated mantra – the government finances are not like a household budget.

We need to challenge our perceptions that government has a limited pot of money to spend and realise that the real constraints are real resources, not £ sterling. Indeed, there cannot be a starker acknowledgement as we are so poignantly reminded every day with the lack of PPE, ventilators, nurses and doctors and other facilities in an NHS cut to the bone.

The scale of the challenge may seem like a mountain to climb. This is not a moment, therefore, to challenge the validity of Modern Monetary Theory with spurious arguments as so many do, holding onto false narratives which suggest that we can’t afford to save ourselves.

We have nothing to lose by informing ourselves and challenging the entrenched notions which lead us by the nose. Indeed, our future depends on our willingness to do so.

 

 

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Iain Duncan Smith Denounces Plan to Introduce Universal Basic Income

Published by Anonymous (not verified) on Tue, 31/03/2020 - 4:29am in

Universal Basic Income, the scheme by which governments give a specified guaranteed income to all their citizens regardless of personal wealth or employment, has been widely discussed in recent years. I think some countries may already have such schemes in place, and there might be a programme about it this week on Radio 4. It was also one of the ideas mooted to help people out of their financial difficulties caused by the Coronavirus lockdown. Ten days ago, on Friday, 20th of March 2020, Mike put up a piece reporting that Boris Johnson was then considering the idea. And not only that, the idea had the support of some British industrialists, like Liam Kelly, the chair of the Baltic Triangle group of companies. Kelly said that the scheme wasn’t quite as radical as dropping money from a helicopter, but was a plausible solution to the problem of the present crisis. He said “It will help stave off the unprecedented economic challenges we face and protect us from another. This is a sensible fiscal stimulus and it’s time it went directly to the people, not just to the banks.” This might be a reference to one of the criticisms of the government’s financial bailout of the 2008 banking crash. The money went to the banks, who have carried on as before. Some critics have said that what Brown should have done instead is given the money to the public, so that their spending would solve the crisis the bankers had created. Who would have to face the consequences of the massive financial bubble they had created, rather than expect everyone else to bear the costs imposed through austerity while they continued to enrich themselves.

One voice, however, spoke against this scheme: Iain Duncan Smith. The pandemic has had a profound personal effect on some people. It’s brought out the best in them, as friends and relatives rally round to look after those, who are too vulnerable to do things for themselves like go shopping. IDS, however, has remained untouched by this. He still remains a shabby, deplorable excuse for a human being. In an article in the Torygraph stuck behind a paywall – because the Tories don’t let the proles getting anything for free – IDS issued his criticisms of the scheme. He blandly stated that the scheme would make no difference to the financial problems of low-income households and would not alleviate poverty. For which he provided no evidence whatsoever. He also said that it would disincentive work, and cost an astronomic amount of money. This is despite the scheme being budgeted at £260 billion, which is £70 billion less than the £330 billion Rishi Sunak has already imposed.

Mike says of … Smith’s appalling attitudes that they come from a man, who seems to believe that the solution to poverty is killing the poor themselves. Why else, Mike asks, would he have imposed policies that have pushed the vulnerable so deeply into poverty that many have died.

Mike also makes the point that he’s also trying to protect his own political vanity projects, like the Bedroom Tax, Universal Credit, PIP and ESA assessments, which would all become redundant with the introduction of UBI. Mike concludes

And he wants to ensure that we do not get to see the beneficial effects of UBI, even if it is only brought in for a brief, experimental period.

It seems clear that, while the Tories are claiming to be doing what they can in the face of the crisis, the evil that motivates them remains as strong as it ever was.

See: https://voxpoliticalonline.com/2020/03/20/coronavirus-trust-iain-duncan-smith-to-try-to-wreck-our-chances-of-survival/

This is absolutely correct, though it can be added that the Gentleman Ranker isn’t afraid of seeing his own political legacy discarded, but the whole Tory attitude to poverty and the question of wealth redistribution. The Republicans in America and the Tories over here hate redistributive welfare policies. The rich, they believe, should be left to enjoy their wealth, ’cause they created it and its all theirs, and the poor should have to work for their money. If they can’t work, or are poor, it’s because of some fault of their own – they’re idle, or simply don’t have the qualities to prosper in the meritocratic society created by unfettered market capitalism. And since Maggie Thatcher, Tory and Blairite welfare policy is based on the assumption that a large percentage of people claiming disability or unemployment benefit are workshy scroungers. Hence the fitness to work tests, in which it has been claimed that the assessors are instructed to find a certain percentage fit, because Tory ideology demands that they do. Even if in reality they are severely disabled, terminally ill, or in some cases actually dead. This also applies to Jobseeker’s Allowance and Universal Credit, and the system of sanctions attached to them. It’s all the principle of less eligibility, by which the process of claiming benefit is meant to be as harsh, difficult and degrading as possible in order to deter people from doing it. It is designed to make them desperate for any job, no matter how low paid or degrading. Or if they cannot work, then they are expected to find some other way to support themselves or die. The death toll from benefit sanctions runs into hundreds, and the total death toll from Tory austerity is 120,000, or thereabouts. And many of these deaths are directly attributable to IDS’ wretched, murderous policies.

If Universal Basic Income were to be introduced and shown to be a success, it would effectively discredit Tory welfare policy. The idea that state welfare stops people from looking for work has been a Tory nostrum since before Thatcher. But with Thatcher came the belief that conditions for the poor should be made harder in order to make them try to do well for themselves. I can remember one Tory, or Tory supporter, actually saying that on the Beeb during Thatcher’s tenure of No. 10. But these ideas would be seriously damaged if UBI were successfully implemented. It would also help undermine the class system the Tories are so keen to preserve by closing the gap between rich and poor through state action, rather than market forces. Which, indeed, have never done anything of the sort and have only created glaring inequalities in wealth.

Iain Duncan Smith couldn’t bear to see this all discredited. And so to stop this, he blocked UBI, even though it offered a plausible solution to some of the financial difficulties people are suffering.

Which shows you exactly how despicable he is, and how devoted to the maintenance of a welfare system that has done nothing but push people into poverty, starvation and death.

 

 

The University in a Moment of Intersecting Crises

Published by Anonymous (not verified) on Tue, 31/03/2020 - 2:45am in

Covid-19 has brutally laid bare the devastating impact of several decades of privatization and capitalist globalization.  The rapidity of the virus' traversing of the globe, its powerfully unequal impact on different countries, and on different segments of the population within countries, are all linked together by the simultaneous expansion of the movement of goods and people and the evisceration of the public welfare and public health in many countries.  In the United States, to take the case closest at hand, the absolute under-funding of public health and the refusal to prepare for pandemics adequately is now reaping havoc on the population and on the doctors and nurses who are trying to heal them.  Three decades of diverting resources to commercializing publicly-funded research has only made this situation worse.  As the LAT has reported, Jerry Brown, with his usual lack of foresight, managed to dismantle a program that Arnold Schwarzenegger had created to respond to pandemics; in this he is an odd precursor to Donald Trump even if he did oppose him on many other things.  As I watch my medical colleagues struggle with insufficient safety equipment, a lack of ICU beds, an inability to test on a mass scale, and the exhaustion of overwork, I often wish that I lived in a modern country.

In the United States, of course, the pandemic is striking at a society riven by increased inequality.  Wage stagnation and the growth in corporate profits, along with its effect, the gig economy, has left more and more people without the resources to ride out the crisis.  Unemployment claims have skyrocketed to remarkable levels.  Neoliberal policy and practice have displaced alternative forms of rationality; public goods and solidarity are devalued in favor of individual capital; they return only in their ghostly mirror image of ethno-nationalistic anger.  Knowledge, both of nature (climate change, epidemiology) and of society are denied in the name of the populist wisdom of the president's gut.

Universities, of course, are deeply embedded in these crises--both the immediate and the long-term.  Colleges and universities across the country have moved to remote learning; moving staff, students, and faculty off-campus, shutting down labs, and, where they have medical centers trying to move as many resources as possible to support them.  Despite some skepticism, this was clearly the right thing to do.  But we should acknowledge the likely damage that it will cause: not only in student learning, but in financial resources, faculty and staff careers, scholarship disrupted if not derailed, and the damage to thinking together that is, or at least should be, the hallmark of the community of scholars.

At the same time, higher education has itself been embedded in growing inequality.  If knowledge is devalued, some part of that is due to the reality that colleges and universities have themselves contributed to inequality: seeking out prestige through selectivity, eagerly participating in the games of rankings, and turning towards satisfying the demands of donors over public needs.  This latter behavior, of course, is rooted in, and reinforces, the relative decline of public funding.  The return of the private took place in the decade following the dramatic expansion in the numbers of women and people of color on campus, not to mention the decade of student revolt.  Universities have been paying for this ever since.

But if higher education faces daunting challenges, it is not to soon to think about what we want in the aftermath of the pandemic.  There is an opportunity here for new thinking.  No, I don't mean giving in to the ed-tech gurus or those administrators now circling the crisis like vultures, wishing to strip away from students their residential education, and from faculty their control over curriculum and its forms. If the forced separation that Covid-19 has taught us anything it is that certain aspects of universities and colleges are essential and that they can only be saved by rethinking that which is not.

First, rather than proof that the future is online, the present retreat into distance learning is revealing the exact opposite.  Students have made clear exactly how much they value the residential experience-- just as faculty are remembering how important the shared classroom is for education.  The problem, as Chris and I have been arguing for years, is not the reality of in-person instruction but its lack of proper funding.  Universities will need to develop a new public contract; more people--not fewer--should be enabled to have the residential experience if they choose.  This means increasing public resources to reduce price across the whole spectrum of costs.

As I suggested a few weeks back in the days before Covid, universities especially need to more effectively defend the importance of research and graduate education across all disciplines.  Although attention now is focused appropriately on the search for medical remedies and care, the pandemic shows once again how deeply important knowledge of culture, politics, history, and society are for responding to crises, as those domains largely control the development of the crises themselves.  STEM is not going to answer the questions of the costs of privatization or the effects of the emphasis on commercialized tech transfer; nor will it help us solve the problem of homelessness or housing; or provide people with the perspective to learn from previous crises; nor, even on its own, enable us to try to prevent climate catastrophe.  Those are all eminently political and social problems and need to be understood as such.  Nor will STEM help UC address the ethical issues of allowing graduate students to lose their healthcare or live in their cars in the middle of a pandemic.  We need far more natural science--both pandemics and the climate crisis demand it.  But we need social and cultural knowledge as well.

To even begin to do these things, two large shifts will be necessary, if not sufficient, conditions. The first is an end to the pretense that tuition and philanthropy can overcome the challenges facing public higher education.  The rote repetition of some UC leaders that "free college is a dangerous idea," bears more than passing resemblance to the apocryphal "let them eat cake."

The same can be said for the repeated claims of UCOP that a tuition increase is better for poorer students than having the state buy it out.  This is true from one perspective of course--but it depends on concealing the fact that this situation is a result of a policy decision at OP, not built into the nature of things.  UC could just as easily decide to spend the same percentage of the state buyout on financial aid. They simply don't. 

But even these points remain trapped in the wrong ballpark.  States do have budget limitations; the answer is going to have to come in a new national contract.  I know that at the moment, with a knowledge-despising president and a science-denying party in control of the executive, judicial, and half of the legislative branch this seems like an impossibility.  But if the 2 trillion dollar stimulus should put paid to any myth, it is that Republicans care about budgets or deficits when their own access to public money is at stake.   Covid-19 increases the credibility, by the day, to modern monetary theory's notion that the real challenge in economic life is the underused capacity of the real economy.  From the Green New Deal to a new social contract for health and education, universities must take the lead.  Or they will have failed to live up to their name.

This will mean hard choices for the community of scholars as well.  Those colleges and universities who recover from this crisis will need to think deeply about their purposes and not simply fall back into patterns formed over the last several decades.  Managers will need to reject their dependence on precarious faculty whose numbers expanded in the name of market flexibility. Faculty will need to think through what is essential in their teaching and research organizations and the hyper-individualism and localism that they can fall prey to.  Both faculty and administration will need to rethink authority so that decisions are made by those--even within the university--who are closest to practice and knowledge.  And underlying all of these decisions and debates will lie the most important one: are colleges and universities--and those who work in them--going to continue to see who can triumph in the struggle for private prestige?  Or are they going to work to help produce a revitalized, and international, public good?

It will be the struggle of the 2020s.

The End of Austerity Speak

Published by Anonymous (not verified) on Mon, 30/03/2020 - 9:42pm in

Fiscal Policy & the Ancien Idéologie

On 11 March the new chancellor presented his Spring budget. While the budget
was unambiguously expansionary after a decade of cuts and freezes, as the Shadow
Chancellor pointed out it did not restore expenditures to their 2010 levels especially
for local government
. But for all its shortcomings and faults it marked a first
step towards ending the rhetoric of fiscal austerity.

In response to the shift on austerity by a Tory government, reactions to
the budget demonstrate more than anything else how engrained in the media was the
ideology of austerity, what we might call austerity speak. Typical was an FT article that while praising the Chancellor
because he “rose to the occasion” with “a careful orchestration of
fiscal and monetary policy”, said his budget “flung money at a grateful
population”. To reinforce the message, the author told us that “it’s easy
to throw money around” but harder to “spend it well”.

This rhetoric of being loose with money comes not only from the business-friendly FT and media on the right. A Guardian news article referred to the budget as “a spending spree”, designed to “win over [the] public.” The Guardian’s economics editor, who is one of the UK’s most progressive mainstream commentators on economic issues, hinted at the budget’s problems in an article that assessed that the Chancellor “can count himself relatively lucky” that the Institute for Fiscal Studies did not attack him more vigorously.

The source of this IFS criticism becomes clear in another article by Elliot that carries the headline “Sunak’s spend, spend, spend budget”. The author comes close to praise because the Chancellor has acted “to break the economy out of its low-growth, low-investment, low-productivity trap”. The first sentence of the article refers to this break as a “giveaway budget”. A jointly authored article by Elliot and Stewart pursued the pejorative language, writing that the Chancellor “turns on the spending taps”, and reported that the sacked Chancellor Javid “warned against abandoning all spending rules”.

Amid this language of spending sprees, turning on taps and warnings of violating rules, one searched in vain for a favourable judgement about increased spending as a budget strategy. The FT editorial board provided a rare example of an assessment almost void of value-laden language, referring to “the right budget for the moment” that seized the “opportunity provided by low interest rates to invest”.

Ancien Idéologie gets Shock Therapy

In March 2020 the UK economy faced two major economic shocks, each on its
own sufficient to provoke a recession, the corona virus and uncertainties associated
with leaving the European Union. With interest rates low and public borrowing under
2% of GDP, the technical case for a fiscal expansion should be obvious to any open
minded commentator. Why then the widespread anxieties about an expansionary budget
and the negative language of sprees and giveaways?

Two explanations present themselves, the persistence of the austerity ideology
and a much older ingrained ideology in the UK media. For almost a decade the Tory
austerity ideology preached a doctrine of balanced budgets, to the point that it
went unchallenged, accepted as valid without need of justification. This false imperative
to balance the budget received independent verification from the Institute for Fiscal
Studies, which repeatedly stressed the dangers of deficit spending. Despite
its focus being microeconomic
and budgets requiring a macroeconomic analysis,
the media embraced the IFS as Britain’s definitive source on public finances.

Judging deficit spending as a prima
facie
problem does not explain all pejorative language found in the media, especially
use of “giveaways” and “hand-outs”. Such polemics have a long
history in the UK media, reinforced by repeated reminders that all spending eventually
increases the “burden on taxpayers”.

These terms are regularly applied to all budget statements Conservative and
Labour. For example, whether a Tory chancellor will have the space for tax cuts
to attract voters appears as a common pre-budget speculation, as do queries that
a Labour government will find the tax revenue to deliver spending to its core constituency.
This approach to public sending betrays a deep distrust of both the public sector
and the political process. It treat public spending as the instrument used by cynical
politicians to curry favour with voters rather than the legitimate or even preferable
alternative to private provision.

Thus, the proposal in the Labour manifestos of 2017 and 2018 for free (i.e., public payment of) university tuition fees could be described even by centre-left commentators as a bribe for young voters. The NHS represents a striking exception to this cynical view of public spending, which in the second half of March became the vehicle for a profound paradigm change by the Tory government and in public perception.

Difference a Week Makes

Towards the end of March rhetoric of spending sprees and handouts disappeared,
swept away by the threat of a national health disaster. Larry
Elliot who as in 11 March referred
to a “spending spree”
and a “spend, spend, spend” budget, on
20 March abandoned such rhetoric
. Two days later on
22 March he completely embraced
and lauded the extraordinary increase in public
spending by the Tory Chancellor in a deeply insightful article,

…[A] model [of limited spending] that has failed not once but twice has
been ditched. Governments recognise they have to support their citizens through
this. 

“Supporting citizens” and taking responsibility for stabilising
the national economy are central tasks for every responsible government. The execution
of those tasks should require no justification, just as the public accepts the need
for a well-funded NHS protecting our health. The NHS has the responsibility for
the nation’s health. The Treasury has the responsibility for a stable economy that
provides decent incomes for all.

Once we re-recognise that over-riding public responsibility, we should dismiss
the ideologically driven anxieties about excessive government spending, encouraged
by mainstream economists of the centre-right and centre-left. In retrospect, we
can see that the threat to economic stability in the UK, US and Europe lay not in
the remote possibility of too much public spending but in the reality of not enough.
If spending rules are necessary, they need ones to insure adequate funding not frugality.

The Progressive Economy Forum firmly states
on our web site that it opposes austerity and the current ideology and narrative
of neoliberalism, campaigns to bring austerity to an end and ensure that austerity
is never used again as an instrument of economic policy. Is it too early to say
that we are at last making progress in these aims?

Furthermore will there be at some point a reckoning for those who increased our public debt and caused needless suffering by pursuing a reckless and damaging ideology to shrink the state only to abandon this when it became politically expedient and in the face of national emergency?

Photo credit: Flickr/HM Treasury.

The post The End of Austerity Speak appeared first on The Progressive Economy Forum.

Rishi Sunak is wrong. ‘Righting the ship’ won’t require any taxpayers to ‘chip in’ to cover the cost of his spending plans – not now, in the future, or ever. 

Published by Anonymous (not verified) on Sun, 29/03/2020 - 4:37am in

Scientists wearing masks holding sign with the slogan "Together we do it"Image by Gerd Altmann from Pixabay

Marcus Tullius Cicero was a Roman statesman, lawyer and academic sceptic philosopher. He wrote ‘The Safety of the People shall be the Highest Law.’

This week, it was reported that the former health secretary Jeremy Hunt was in charge when medical advice to stockpile protective equipment in event of a flu pandemic was rejected on the grounds that stockpiling would be too expensive. By this decision, it would seem that this government chose deliberately to put cost over the health of its citizens, thus perpetuating the myths about the unaffordability of public services. The health and safety of the nation has been in the hands of a government which thought saving money was more important than keeping people protected. Jeremy Hunt claimed a while back, that public services depended on a healthy economy. That falsity will come to haunt him as we find out the hard way that it is, in fact, the other way around. A healthy economy depends on a healthy nation.

The neoliberal order which has dominated the global corridors of power for more than 40 years, combined with monetarist policies and more recently austerity following the global financial crash, has led to the destruction of public and social infrastructure not just here but in many developed nations around the world including the EU trading bloc. It lies at the heart of this crisis.

The horrors we are seeing in Spain, France, Italy, the US and other countries as the COVID-19 coronavirus compromises the ability of health and other public services to cope underline painfully the consequences of government decisions. Governments which rejected the power of the state to serve its citizens, promoting the god of the markets – the invisible hand – instead, have appeased it at every turn to favour the global corporations which have dictated the rules.

In the UK, despite the early advice from other experts in countries where coronavirus had already struck, government prevarication and failure to act expeditiously has allowed the disease to spread through the nation affecting many, not just those who are elderly with underlying health conditions. All human life is precious and yet this government has treated some as expendable and put the lives of those in the front line in the health service at risk.

As GIMMS noted in a previous MMT Lens, we will pay a heavy price for the ‘just in time’ approach to our health and public services and the lie that they were only affordable if the economy was doing well.  The media, having done little to hold the government to account for decades and especially in the last 10 years, has left us without sufficient nurses, doctors and health workers, beds, ventilators, ICUs and other equipment. Our health professionals are still crying out for Personal Protective Equipment (PPE) and are selflessly putting their own health at risk for others.  They are crying out for ventilators to keep people alive. They are crying out to be tested to keep themselves and their patients safe.

A healthy economy relies on public infrastructure, which is in short supply as a result of government choice. Ramping up the much-needed supplies is proving slow and difficult, not to mention demonstrating government incompetence. A good government delivering public purpose would have meant that we would have been better able to deal with this emergency and we might not be witnessing its current trajectory.

Our public infrastructure has been the victim of government cuts and we are now paying the price for the breakdown which is occurring as a result of limited or non-existent emergency planning, deregulation to suit market demands and privatisation – which have all been justified by the lie that the state had no money of its own and public services were a luxury determined by the health of the economy.

When the Chancellor got up to announce his spending plans and the measures to help those now unable to work, people cheered. If nothing else, this should have demonstrated quite clearly that the government was not constrained by tax or borrowing in order to spend, despite the charade that successive governments have played out about how its spending is paid for.

With big business queuing up for handouts (reminiscent of those banks that were too big to fail who were bailed out with public money) for others, it has been like squeezing blood from a stone. The very people who form the backbone of society, who keep it functioning and contribute to the economy through their work – the self-employed in particular – are being asked to jump through hoops to get any money at all, leaving them struggling and worrying about the future. People who for a decade have been living hand to mouth with scarce or no savings, working in zero-hours employment, the gig economy or in part-time work, will have to wait months for the government to pay up. Those in desperate need without employment are being asked to apply for Universal Credit for a measly £94.50 a week hanging on in telephone queues which can be as long as 90,000. It will not be long before those who congratulated the Chancellor for his largesse will have to think again, as bills go unpaid and people go hungry. People need support now, not later. The breakdown of society is in the offing if the government fails to act as it could now simply by authorising the central bank to make payments through HMRC who hold our data.

Alongside the tragedy which is playing out, the household budget narrative is never far behind, even in the words of Rishi Sunak who during his announcement of measures for the self-employed claimed that when this emergency was over we’d have ‘to chip in to right the ship’ promoting yet again that at some time in the future there will be a cost to taxpayers. Which in short there will not, since the government does not need to collect tax before it can spend!

Next, an ITV newsreader asked, ‘can the public finances take the strain?’ And this was followed by Robert Peston telling the TV audience that we’ll be ‘paying off the national debt for years’. To be clear – for the UK government, which is the currency issuer, there is no strain on the public finances and there will be no future burden on the taxpayer.

The Tax-Payers Alliance then announced that in future there would have to be ‘growth-enhancing’ measures and spending restraint’ both mutually exclusive positions which hark back to a false claim that cutting public spending could lift growth. The evidence is before us right now that this is not true.

Finally, the journalist Philip Inman suggested that Sunak’s budget spending spree could come at a high price, ‘fighting a war with borrowed money.’ Except that the government, as the currency issuer, does not need to borrow to cover its deficits; nor does it need to issue bonds in order to spend.

Our public and social infrastructure is under severe pressure and cracking under the strain, and people are suffering and dying. And yet they are still arguing about the financial cost of the Chancellor’s spending as if deficits and borrowing were the devil, balanced budgets the epitome of a government’s economic success or that there will be a price to pay if fiscal prudence is abandoned.

The ONLY cost in the future is the human cost we will face if the government fails to act in a manner that secures the lives of citizens, ensures they can pay their bills and eat during this emergency.  Fiscal prudence is the least of our worries!

We must today, tomorrow and in the future, keep holding to account government, politicians and all those who peddle the economic orthodoxy that there is no money. The Chancellor has shown that there is the possibility to spend without checking the public purse first. It is a political choice. So much is now at stake and we need as nations to keep pushing with more persistence until change happens. The battle lines are being drawn as we speak. The coronavirus, hard as it is, may be our societal wake-up call. Let’s hope so.

 

 

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The post Rishi Sunak is wrong. ‘Righting the ship’ won’t require any taxpayers to ‘chip in’ to cover the cost of his spending plans – not now, in the future, or ever.  appeared first on The Gower Initiative for Modern Money Studies.

Shut down the ratings agencies

Published by Anonymous (not verified) on Sun, 29/03/2020 - 12:12am in

Remember Friday Night Is Downgrade Night, from the Eurozone crisis? It's back. Last night, Fitch Ratings downgraded the UK to AA-, negative outlook. Here's their rationale:

The downgrade reflects a significant weakening of the UK's public finances caused by the impact of the COVID-19 outbreak and a fiscal loosening stance that was instigated before the scale of the crisis became apparent. The downgrade also reflects the deep near-term damage to the UK economy caused by the coronavirus outbreak and the lingering uncertainty regarding the post-Brexit UK-EU trade relationship. The commensurate and necessary policy response to contain the COVID-19 outbreak will result in a sharp rise in general government deficit and debt ratios, leading to an acceleration in the deterioration of public finance metrics over the medium term.

The Negative Outlook reflects our view that reversing the deterioration in the fiscal metrics beyond 2020 will not be a political priority for the UK government. Moreover, uncertainty around the future trade relationship with the EU could constrain the strength of the post-crisis economic recovery.

For some reason, Fitch thinks that making it more expensive for the UK to finance the necessary fiscal expansion to survive the virus without destroying the economy is a good idea. Presumably it will apply the same logic to other sovereigns in due course. The UK, of course, is a major reserve currency issuer, and its central bank has already indicated that it will do everything necessary to support the Government's actions. But other sovereigns don't have this security.

I well remember the cascading downgrades that wrecked the economy of Greece and frightened other sovereigns, including the UK, into imposing unnecessary and harmful austerity - austerity that is in large measure the reason why we are so ill-prepared now for this pandemic. The message from Fitch is clear. It is threatening sovereigns with a repetition of those cascading downgrades if they dare to spend the money needed to deal with a public health crisis.

Fitch is not the only one. Simultaneously, Moody's downgraded South Africa, on similar grounds. Moody's is also on a mission to downgrade corporate and institutional debt. Swathes of it. Including, for heaven's sake, hospitals:

Downgrading a hospital in the middle of a pandemic is downright immoral. And how in God's name it is sensible to make corporations whose cash flows are evaporating pay more for their debt is beyond me. Have these agencies no sense?

To be fair, we already knew they had no sense and no morals. After all, before the last crisis, they were paid to misprice the risks of toxic securities. And since that crisis, they have forced countries to shred safety nets, underfund healthcare systems, and leave millions without the means to survive a sudden economic collapse. They are the architects of this disaster, just as they were of the previous one.

These ghouls serve no useful social purpose. Shut them down now, before they do any more damage.

Related reading:

Modern gods and human sacrifice

Image from Investopedia

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