austerity

The Eugenicist Attitude to the Coronavirus: the Buck Stops with Boris

Earlier this week, I got a message from Labour leadership hopeful Lisa Nandy urging everyone to put their political differences,including trade unions and employers, and unite to tackle the current emergency. I’d agree with her, if I had faith in the current government. If I believed that Boris Johnson was a competent Prime Minister, who was also deeply concerned to protect the lives and livelihoods of everyone in this great nation. But I cannot honestly say that he is. And one of the reasons that he isn’t is that he let the government’s policy to the virus outbreak be determined by his pet polecat, Dominic Cummings. 

The Sunday Times astonished the British public last Sunday by revealing that the government’s attitude to the spread of the virus had been decided by Bojob’s favourite polecat, Dominic Cummings. And Cummings had decided that it should be tackled by allowing the British public to develop herd immunity. The virus was to be allowed to spread throughout the population, so that people became naturally immune. Biologists, doctors, and epidemiologists warned instead that this wouldn’t work. It has only ever been achieved using vaccination, and if the virus was allowed to spread, it could result in the deaths of a quarter of million people. Its victims would be chiefly the old and the already sick. Tragically, as we’re seeing now, its victims also include young, previously healthy people in their 20s and 30s. Cummings had told people privately that his chief concern was to protect the economy, and if a few old people died, too bad. It’s a disgusting attitude, and Zelo Street was exactly right in his article about it when he says that it places Cummings’ beyond the pale, and that he has to be removed and a public inquiry held afterwards.

https://zelo-street.blogspot.com/2020/03/dominic-cummings-fan-hits-shit.html

Cummings’ attitude is rooted in eugenics. This views humans in very coarse, crudely Darwinian terms. For the race to improve, superior stock must be allowed and encouraged to breed. The inferior are to be weeded out through natural selection – they are either to be allowed to die through disease or their own mental and physical handicaps, or sterilised. In the 19th century, the American corporate elite advanced eugenicist arguments to prevent the government passing what would now be called ‘health and safety’ legislation. It was worse than useless to try to improve the condition of the poor with public welfare. The poor were sick and disabled not through poor working or living conditions, but simply because they were biologically unfit. Any attempt to improve their conditions would only result in the biologically inferior breeding, and so contaminating the rest of the human stock. By the 1920s, about 25 American states had passed legislation providing for the compulsory sterilisation of the disabled. The policy was enthusiastically adopted by the Nazis, who boasted that they were making absolutely no innovations. They took it to its horrific conclusion, however, with the SS’ murder of the insane and mentally handicapped in special clinics. A policy that prepared the way for the Holocaust and the wholesale murder of the Jews with cyanide gas.

And the Tories seem to be permeated through and through with eugenicist attitudes. They were forced to sack Andrew Sabisky as one of Bojob’s aides because he held similar noxious views. Toby Young, the Spectator journalist and media sleaze, lost his job on Tweezer’s board, set up to represent students, after it was revealed he was also a eugenicist. Tobes had attended conferences at University College London on eugenics, where real anti-Semites, racists and Nazis gathered. And Maggie’s mentor, the loathsome Keith Joseph, caused outrage in the 1970s when he declared that unmarried mothers were a threat to ‘our stock’.

This doesn’t mean that the Tories actively want to round up the disabled and long term sick. But it does explain their absolute complacency about 120,000 deaths or so that have occurred through their austerity, including their obstinate refusal to abandon a policy that is killing people. Cummings should not, of course, have ever been allowed to decide that the government should favour the economy at the expense of ordinary people’s lives. But as Mike also pointed out in an article he posted on Monday, the buck ultimately stops with Bojob. It was Bojob who told the British people that many of them would lose loved ones before their time, when he had not then taken the ‘social distancing’ measures he’s now been forced to adopt to slow down the virus – the closure of schools, pubs, clubs, leisure facilities and social gatherings. And so while the media talked about the Polecat’s horrendous attitude, other peeps on Twitter knew where the real culpability lay. And one woman, MrsGee, probably spoke for many when she said Johnson should resign.

Bid to blame Tory coronavirus strategy on Cummings is baloney. The buck stops with Boris

There’s no question that people’s lives should come before the economy. They were debating precisely this kind of situation in the 19th century. The great Norwegian playwright, Henrik Ibsen, even wrote a piece about it. In one of his plays, the leaders of a spa town are faced with a dilemma. The spa is in the grip of a cholera epidemic, but they are unwilling to close the spa down because of the income it provides the community. Perhaps we would be better governed, and our leaders had been truly prepared for this crisis, if sometime during their education they’d actually read Ibsen or seen the play performed.

But I don’t think Johnson is any too interested in modern Continental literature. He’d rather see what the classics have to say about things and compare himself to Caesar and Churchill.

A Short Comment on the UK Government’s Fiscal Policy in the Current Crisis

By Phil Armstrong, University of Southampton Solent and York College.

Man putting on protective mask and wearing latex glovesImage by Terri Sharp from Pixabay

The UK government’s significant fiscal expansion – in line with its ‘do whatever is required’[1] mantra – is, of course, welcome. However, I would argue that it is still far too small to deal with the massive demand shock associated with the coronavirus pandemic (Mitchell 2020a, 2020b) and also that it is incorrectly targeted. It pays insufficient attention to the poorest groups in society; the government has failed to take the necessary steps required to ensure the income of those most in need is adequately supported during the crisis. Clearly, the situation is evolving on a daily basis and, looking forward, it is highly likely that there will be continual calls for the government to increase its fiscal intervention from many sectors in society – not least business leaders who fear the effects of rapidly declining demand.

However, I would stress that the intervention is being enacted against an inapplicable theoretical and ideological backdrop, specifically the mistaken neoliberal framing of the so-called ‘government budget constraint’ (GBC). The logic of the GBC conceptualises the government as a currency-user, which might finance its spending by taxation, by borrowing (debt issuance) or ‘printing money’ (Mitchell 2011). According to mainstream thinking, each of these methods carries problems; increased taxation reduces non-government sector spending power and allegedly generates disincentive effects, ‘excessive’ borrowing leads to higher long term interest rates, in turn, causing ‘crowding out’[2] and ‘money printing’ inevitably results in inflation.   There is also an underlying ideology implicit in neoliberalism; that state expansion soaks up real resources which would be better (or ‘more efficiently’) used by the private sector.

In extremis, it appears that the Conservatives (who have shown a marked distaste for expansionist state intervention in the recent past) and even business leaders who would normally be opposed to increased government spending and enlarged deficits are now prepared to put their weight behind the fiscal expansion[3]. However, the underlying framing based upon the GBC is likely to come back to bite us all – hard – in the future. In line with the erroneous conceptualisation of the state as a currency-user, the government is presenting its current additional spending as being ‘financed’ by borrowing. The story is founded upon the idea that the government needs to spend significant extra sums now – owing to the severity of the crisis – and heavy borrowing is, therefore, essential (reinforced with the contention that it is cheaper for the state to borrow now than in the past as long term interest rates are very low) in the manner of household who accepts a very large credit card bill because there is no other way it can survive[4].

However, following this line of thinking will lead to a damaging and erroneous conclusion. It is highly likely that in the future – when the crisis has passed – mainstream economists will argue that there is a financial ‘mess’ to fix; ‘unacceptably’ large public sector deficits may well persist beyond the crisis alongside an ‘excessive’ national debt as a proportion of GDP. The narrative will then, no doubt, suggest that they need to be ‘dealt with’– possibly with another, even harsher, round of austerity than last time – and it will those least able to cope who are most likely to be the ones asked to bear the greatest share of the burden (as was the case the last time austerity was imposed).

This conceptualisation of the government as a currency-user suggests that money printing and bond issuance are alternative ways of financing a deficit, however, advocates of MMT conceptualise the state as a currency-issuer. From this viewpoint, in reality, they are not alternatives.  The government always spends by the creation of new money – both taxes and borrowing logically and historically follow spending (or lending). Only money that has already been issued by the state can be collected in taxes or used to buy state debt. When the government spends, it does so by crediting the bank accounts of its target recipients, simultaneously increasing the target’s bank’s reserve account by the same amount. When taxes are paid by a private sector agent, her deposit balance falls and her bank’s reserve account balance at the central bank (CB) is correspondingly marked down[5].  The purchase of government debt is best conceptualised as a reserve drain (Mosler 2012) which changes the composition of non-government sector holding of risk-free state debt but not its size.

I would argue that having this correct conceptualisation is the key to avoiding the return of austerity. In reality, the government sets its aims, determines its budget and spends by the ex nihilo creation of new money. When the operational reality of the financial system is correctly understood, then the expectation of a post-crisis ‘mess’ to fix disappears. Once the economy has recovered, that does not necessarily mean a need for austerity or even fiscal retrenchment – only the post-crisis economic outcomes such as growth, employment and price stability matter. If unemployment persists after the crisis has passed, then government net spending should still be regarded as being too low, irrespective of the size of the government deficit both in absolute terms and as a proportion of national income. Only in an economy suffering from inflation from excess demand would fiscal contraction be required.

These are challenging times for us all, but in the current crisis we have the opportunity to push forward the insights of MMT and to challenge established thought – particularly with respect to the inapplicable government budget constraint. If our understanding of the operational reality of the monetary system can be characterised by the insights of MMT, the full scope of existing fiscal space can be understood and importantly, the likely post-crisis push for fiscal retrenchment can be effectively countered.

 

[1] See Islam (2020).

[2] The crowding hypothesis is based on the contention that higher interest rates will lead to lower private sector investment, meaning that large government deficits effectively ‘crowd out’ private investment. Little, if any, empirical support for this hypothesis exists (Armstrong 2015).

[3] For example, Richard Branson expressed his support for fiscal retrenchment in 2010 (Stratton 2010) but changed his mind in 2020 when arguing in favour of a £7.5 billion government support package for the airline industry (Hockaday 2020).

[4]  ‘We are in an entirely new world. A wartime effort, with wartime deficits to cover it’, Rishi Sunak, quoted in Islam, F., BBC News online, 17 March 2020.

[5] It is important to stress that private sector debt or bank money cannot provide the final means of settling a tax bill which occurs when a taxpayer’s bank’s reserve account at the central bank is debited in favour of the Treasury account (Armstrong 2019).

 

References

 

Armstrong, P. (2015), ‘Heterodox Views of Money and Modern Monetary Theory (MMT)’

https://moslereconomics.com/wp-content/uploads/2007/12/Money-and-MMT.pdf

 

Armstrong, P. (2019), ‘A simple MMT advocate’s response to the Gavyn Davies article ‘What you need to know about modern monetary theory’, Gower Initiative for Modern Money Studies,

https://gimms.org.uk/2019/05/27/phil-armstrong-gavyn-davies-response

 

Hockaday, J. (2020), ‘Airline bosses to ask for £7,500,000,000 bailout to survive coronavirus.

The Metro online, https://metro.co.uk/2020/03/14/airline-bosses-ask-7500000000-bailout-survive-coronavirus-12399300/

 

Islam, F (2020), ‘Coronavirus: Chancellor unveils £350bn lifeline for economy’, BBC News online, 17 March, https://www.bbc.co.uk/news/business-51935467

 

Mitchell, W. (2011), ‘Budget Deficit Basics’ 4 April

http://bilbo.economicoutlook.net/blog/?p=14044

 

Mitchell, W. (2020a), ‘The coronavirus crisis – a particular type of shock – Part 1’, March 10,

http://bilbo.economicoutlook.net/blog/?p=44484

 

Mitchell, W. (2020b), ‘The coronavirus crisis – a particular type of shock – Part 2’, March 11,

http://bilbo.economicoutlook.net/blog/?p=44488

 

Mosler, W. (2012), Soft Currency Economics II, US Virgin Islands: Valance

 

Stratton, A (2010), ‘Richard Branson backs Tory plans to cut spending sooner rather than later’, The Guardian, 16 February,

https://www.theguardian.com/politics/2010/feb/16/branson-back-tory-deficit-cuts

 

 

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Capitalism: Closed for Business

Published by Anonymous (not verified) on Sat, 21/03/2020 - 5:01pm in

Our version of capitalism is something that the narcissistic writer, Ayn Rand, would adore. But in a headlong rush to hyper individualism, have we chosen freedom of the individual over survival of our species?

The post Capitalism: Closed for Business appeared first on Renegade Inc.

The government’s spending promises have shown the need for austerity is a lie and a sham. It’s time to hold the government to account for its political decisions, not its fiscal prudence or otherwise.

Published by Anonymous (not verified) on Sun, 15/03/2020 - 10:21pm in

Man teaching girl to wash her hands properlyImage by CDC on Unsplash

In 2010 the newly elected Conservative government, using smoke and mirrors, turned what was a private debt crisis caused by global reckless greed and speculation by financial markets into a sovereign debt crisis. Liam Byrne’s stupid joke note left in the Treasury, suggesting that there was no money left, gave them the perfect opportunity to cash in by claiming that was no alternative to austerity and cuts to public spending. The then Prime Minister David Cameron and his Treasury sidekick George Osborne declared that ‘maxing out the credit card’ and putting off dealing with the problem would make it worse and suggested that without spending cuts we could end up like Greece. The Chancellor declared in his Spending Review – ‘we have taken our country back from the brink of bankruptcy.’

Believing that their own household budgets were like the state’s public accounts (a constantly reiterated message) it’s no wonder that the nation gave a huge sigh of relief. People were mistaking the prospect of “healthy” public accounts for a healthy economy. The nation, which accepted the false premise that there wasn’t any money left in the treasury coffers, subsequently paid a heavy price for this misunderstanding; a misunderstanding that was endlessly promoted by successive Chancellors.

What followed allowed the government to deliver a political agenda which had nothing to do with balancing the budget, even if presented as such. It was quite simply the mechanism to further hollow out our public services, reform the welfare system and sell-off and privatise public assets. It brought to its conclusion a decades-old plan which began as early as the 1970s and was pursued by Margaret Thatcher, as a result of her love affair with the ideas of the economist Friedrich Hayek and the Chicago School of economics; continued by Tony Blair and New Labour.

This Wednesday the new Chancellor of the Exchequer, Rishi Sunak, stood at the despatch box to give his first Budget. The public, from being told over 10 years ago that Labour had spent beyond its means and as a result, the nation would have to cut its cloth and make a sacrifice to restore the public accounts to order, suddenly discovers that the money we were told we didn’t have for public services which were previously “unaffordable”, can inexplicably appear, as if by magic. From apparent scarcity to abundance. Along with the Bank of England cutting its base rate in an effort to fight the impact of Covid-19 on the economy, the money taps have also been miraculously switched on.

As an aside, when public and business confidence is at rock bottom and fear is rampant, it beggars belief that the central bank believes that cutting rates will stimulate people to consume (unless it’s toilet roll, pasta or hand sanitiser) or businesses to invest. Ten years of reliance on central bank monetary policy to stimulate the economy has proved ineffective. The fiscal approach, i.e. government spending to support the economy and its public infrastructure, is the only route left to any government, left or right, if they are to address the prospect of recession as a result of 10 years of austerity or indeed economic collapse because of the coronavirus outbreak.

More importantly, the fiscal approach is also the only route available to fight the immediate consequences of the virus in terms of containing it; the government must use the power of the public purse, alongside its legislative powers, to ensure that resources are freed up to get help to where it is needed. Whether that’s financial support for individuals or businesses caught up in the coming economic slowdown or bringing private sector health companies into public use – meaning hospitals and trained staff – to meet increased demand.

That said, we cannot avoid the stark fact that after ten years of austerity, which have gouged out our public services and left them pared down and in an appalling state of decay with those working in them struggling to pay their way using food banks or in deep debt, it remains to be seen what can be achieved immediately. Austerity reduces our domestic productive capacity, laying the foundation for inflationary pressure when the economy needs to grow or when the nation has to respond to a crisis. The corona crisis will create inflationary pressures which will result in rationing access to real resources and public services. This and many other governments have for decades put bankers and the financial sector before the health of their nations and their citizens.

Just to be clear, in case there is some confusion, turning on the taps has nothing to do with printing money in the Treasury basement, collecting tax or borrowing from the market to fund its spending programme. It is doing what all sovereign currency-issuing governments like the UK’s can do and have been able to do since 1971 – spend the money into existence via a computer keyboard at the central bank, where an employee authorised by the Treasury enters numbers onto a screen and transfers to the appropriate accounts whatever sum of funding it requires to deliver its capital programmes or fund its day to day spending. The fact that government spending is still couched in household budget terms of collecting tax or borrowing serves an agenda and nothing else. It is worth repeating here that there was no such scarcity of money when it was a question of spending it to feather the nests of corporations, reduce taxes for the same or serve a specific government agenda, from bailing out the “too big to fail” banks after the 2008 financial crash to buying votes in the House to keep the government in power.

So, having presided over 10 years of the destruction of our public and social infrastructure, the ravaging of our public services and social security system and all that that has meant for the economy and some of the nation’s most vulnerable citizens, now suddenly it appears the government’s austerity breaks have been taken off and the gears crunched into fourth! If you are wondering how this has this happened, when up until quite recently being fiscally prudent has been all the rage, according to a government minister the sacrifice of the great British public has now paid off, enabling the government to spend. Dear Rishi and any others promoting this nonsense, please pull the other one, it has bells on! The veil pulled over the eyes of the British public who are now suffering the very real physical and economic consequences of government policies is now being torn away in the most brutal way.

The harsh reality is that the sacrifice was unnecessary and indeed damaging. It was justified on the back of a monstrous lie about how the state finances actually work. We heard them say that the nation had been living beyond its means and this required drastic remedial action to avoid bankruptcy. The myths about how money works have left our public and social infrastructure in such a state of decay that the last 10 years of austerity combined with the risks that the spread of coronavirus pose and its effects on the world economy are increasingly becoming self-evident. Government’s ideological choices, with their focus on keeping markets and corporations sweet, have been responsible, not lack of public funds. To put it bluntly, political choices are killing us.

However, before we get too excited about a change of direction (and how the government will explain it) whilst one can obviously support a fiscal programme of government spending as the right approach, one has to question who it will benefit. Whilst, of course, there is a role for the private sector in delivering big infrastructure projects they will continue to feather the bank accounts of big business. This means public money pouring into private profit whilst top management continues to pay itself big salaries, pensions and other bonuses. Whilst investment in our privatised railways has been promised, top management will continue to benefit from public money and pay itself handsomely whilst at the same time failing to provide good, reliable services as many travellers will attest. Government pours money in, but fails to dictate the terms in the public interest.

Sunak neither mentioned the perilous state of social care nor the appalling consequences of the introduction of Universal Credit on the lives of many involuntarily unemployed people and those with disabilities. And whilst he has announced a spending review, which will include local government, the combined effects of 10 years of cuts to funding will take more than a future spending review to improve the dire financial situation of local councils and the current parlous state of local infrastructure and services.

The economy is not some nebulous presence overseeing things from the heavens; it is us. From nurses, doctors and other health professionals, those that teach our children or lecture in other institutions of learning to ensure a healthy and educated society for today and tomorrow to those who sweep the streets and remove the rubbish along with the army of social carers looking after our loved ones in their own homes or in residential care. The government has failed the economy. It has failed us. It has, in fact, decided that some of us are expendable; surplus to requirements.

The ‘spend, spend, spend,’ message has however not gone down well in some circles and whilst we may think that household budget narratives have been swept away in favour of fiscal spending, the question of how it will be paid for still hasn’t gone away. A quick perusal of the government’s own Executive Summary for this week’s budget in which it talks about ‘creating a fair and sustainable tax system to fund first-class public services’, mentions that ‘over the past decade it has taken action to restore the public finances and reduced the deficit by four-fifths’ and suggested that the ‘historically low cost of borrowing means that it can support the economy and provide significant investment in public services and infrastructure’ is still nodding its cap to household budget narratives of how governments spend.

The reaction of the Adam Smith Institute which suggested that ‘spending like a drunken sailor…wasn’t the way to create a thriving entrepreneurial economy’ or the IFS which remarked that ‘The Chancellor seems to think the only best way to boost growth is through public spending’ shows that we still have a way to go in changing the institutional and press narrative.

With the mantra of low interest rates and borrowing to spend still prevailing even amongst what one might call ‘progressive’ left-wing economists and journalists, we seem to still be stuck in the household budget box of taxing and borrowing. Indeed, one economist and commentator claimed that ‘spending on growth-promoting investments would ensure that government wouldn’t have any trouble repaying its debts over the long term’. It is now the job of the left-wing not to question the fiscal prudence of government as in the usual ping pong of debate about the state finances – that train has now left the station – but to hold it to account for its political choices.

The house is still on fire, the emergency suddenly grew into one of huge proportions with increasing climate uncertainty, environmental catastrophes, the prospect of an economic collapse which will affect vast swathes of the world population and we still have people talking about being fiscally prudent in one way or another. It is time to wake up to the reality that it is not a balanced budget that will save us, it is a government which puts human beings at the top of its priorities instead of polluting, exploitative corporations and is willing to make the policies and spend within its resource capability to address the challenges we face for the future.

 

Events

Challenging the narrative about how governments pay for public services – Northampton

March 28 @ 1:30 pm – 4:30 pm

 

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The post The government’s spending promises have shown the need for austerity is a lie and a sham. It’s time to hold the government to account for its political decisions, not its fiscal prudence or otherwise. appeared first on The Gower Initiative for Modern Money Studies.

Capitalism Closed For Business

Published by Anonymous (not verified) on Sat, 14/03/2020 - 5:00pm in

Our version of capitalism is something that the narcissistic writer, Ayn Rand, would adore. But in a headlong rush to hyper individualism, have we chosen freedom of the individual over survival of our species?

The post Capitalism Closed For Business appeared first on Renegade Inc.

After a decade of public sector cuts, it is time to learn the lesson that austerity has consequences for us all.

Published by Anonymous (not verified) on Mon, 09/03/2020 - 2:51am in

Woman doctor wearing face mask with looking at a map of the worldImage by Mohamed Hassan from Pixabay

Fear is growing as the COVID-19 coronavirus spreads across the planet. As the media ramps up the anxiety with its daily reporting, people are crazily sweeping supermarket shelves of toilet roll, hand sanitiser, face masks, pasta and anything else they can stockpile – just in case. Worse, it has been reported that in a UK hospital people have ripped hand sanitisers off hospital walls, stolen bedside hand gels used by health professionals as a preventative measure against MRSA and in France, 2000 face masks were stolen from a hospital in Marseille. Induced by an irresponsible media, the calm and sensible response of taking the recommended precautions against infection has been abandoned; replaced by panic and alarm which is spreading like the disease itself. It reflects the promotion of the individual over collective wellbeing which has been driven by the decades-old ideological agenda of the market and the primacy of the individual.

Clearly, we should be concerned about the spread of the virus, in particular for those at real risk because of age or medical conditions. However, while supermarket shelves are ransacked, people fight over toilet rolls, and the media focuses on the numbers of infections and deaths, the role of government in austerity and its consequences have almost become background news. The real stories about the effects of government cuts to public spending; about human beings who have borne the significant costs of government policies. The real stories about the consequences of public service sector cuts and privatisations.  These will surely come to bite the government where it hurts as the public, in the light of the spread of COVID-19, wakes up to the recognition of the important role such public and social infrastructure plays in keeping a society in good health and an economy functioning. Indeed, in this case, society being able to respond to potential emergency situations.  It will become ever clearer that government policies have been not just harmful, but positively destructive. The message will be reinforced that it is not the state of the public accounts that determine the health of the nation and its economy, but the policy decisions taken by government to deliver it.

GIMMS has covered the events with comment week in week out since its launch 18 months ago and we have built a chilling picture of people’s lives; the ongoing demolition of our public services and local government, cruel reforms to our social security system and their consequences. We have aimed to demonstrate that these policies were not linked to repairing the state of the public accounts, as has been endlessly repeated, but to delivering a political agenda.

We have also aimed to show that, whilst there is no shortage of money, what constrains government spending are the real resources with which to deliver its policy agenda. In effect, that its role is not to balance the budget, but to balance the economy.  In short, this means that a government which issues its own currency must match its spending to the resources it has available and, should it desire to do so, use mechanisms like taxation to free up those resources being used by the private sector to deliver its public policy agenda.

In this regard, it also has an important role in planning to ensure a well-educated workforce and training of essential public sector personnel such as nurses, doctors and other health professionals, not to mention teachers and social care workers – not just for this current generation but for future ones to come. In other words, it has a role to serve the people, even though it has to be said that in recent decades it has been more about serving other masters. It has instead actively sought, through its pursuit of market-led ideology based on monetary stability, increased competition and the primacy of the individual over the collective and thus created a monster.

This week, the evidence piles up about the consequences of cuts – in the health service, in social care and in local government – all sectors which not only have a role to play in the good functioning of society but also when a crisis or an emergency strikes.  However, public spending cuts over ten years have left those services in a state of decay. Doctors responding to the COVID-19 threat are already expressing their concerns about the lack of Intensive Care Units, they are pointing out the lack of beds, isolation areas, huge shortages in nursing staff, and equipment. The fact is that hospitals have been running at 100% capacity for some time, A&Es are full, and patients wait for hours to be seen or for a bed if they are to be admitted. Government has created through its health reforms and lack of funding a ‘just in time’ health service with no spare capacity.  These facts highlight the realities of a service that has been starved of funds and facing a bleak future without a change of government policy. And that was before the threat of COVID-19.

We have a severe shortage of nurses. Last year a report by leading think tanks predicted that in the next five years that would double and GP gaps nearly treble unless radical action was taken. The BBC also reported last year that according to official figures there were just over 28,000 fully qualified full-time equivalent GPS in England as of September 2019, which was a drop of 3.7% since September 2015. Increasing stress and poor working conditions, combined with the pay cap have forced medical staff to vote with their feet; retire or leave the profession.

Figures released at the beginning of last year also showed that the number of people applying to study nursing in England had fallen by more than 13,000 since 2016 which was the last year that students received the bursary. The Royal College of Nursing said that with over 40,000 nursing vacancies in England that the fall in student numbers would jeopardise future supply of nurses and would put safe patient care at risk.

Last November it was reported that the number of hospital beds had fallen to its lowest ever level with 17,230 beds cut from the 144,455 that existed in 2010. Figures showed that the 127,225 beds available in acute hospitals, maternity centres and units treating and caring for patients with mental health problems was the smallest since records began in 1987/88.  The decrease has occurred despite an increase in population and means that from four beds per thousand people in 2000 there are now only two and a half beds per thousand people.

However, it is important to note that bed closures have not just been a feature of the last 10 years of austerity – it has been the policy of successive governments including New Labour to reduce dependence on hospitals and health services in favour of pushing care into the community through the voluntary sector, private provision and public goodwill. Indeed, that has been the objective of the NHS England Five Year Forward Plan despite the current parlous state of our failing social care system and a deterioration in local government services due to public spending cuts.

The government is keen to reassure us that all is in hand and Matt Hancock the Secretary of State for Health said: ‘Public safety is my top priority’.  If that is the case, why has this government and its coalition predecessors spent the last 10 years decimating services through cuts to public spending, when those services form the bedrock of a stable and healthy society and economy?  It would instead show that public safety and wellbeing has been at the bottom of the list of their priorities.

Their solutions to the potential crisis, which added to the current global economic slowdown caused by the addiction to austerity policies will likely and finally push our economy and others into the recession that we have been on the cusp of for some time, are equally wacky. They seem to have resulted from a meeting at the back of the bins at number 10 and noted on the back of a fag packet. Opening up mothballed beds, forcing retired nurses and doctors to come back to service (those very people who might be at risk), amassing a volunteer army (the Big Society in action), doing the shopping for elderly neighbours and advice to self-isolate.

As Aidan Harper from the New Economics Foundation pointed out, self-isolation is a luxury that gig economy workers can ill afford and for low paid and zero-hour workers advice that would leave them struggling. As he pointed out in a recent article Britain’s gig economy has more than doubled in three years and accounts for 4.7million workers; research has shown that one in six UK workers are now in low-paid, insecure jobs where many lack protections such as sick pay.  He cites JD Wetherspoon which has said that workers that are quarantined under government orders will be treated the same as those off sick, meaning they won’t be paid for the first three days of absence and will only receive statutory pay. In such circumstances, people will have a choice – work and spread the disease or lose pay.  Once again it is clear that it would be the poorest with the least financial resources that will suffer. As Harper points out, the social reformer Edwin Chadwick’s ideas were grounded on the clear basis that ‘the conditions of the worst-off in society affect the health of everyone – and even the wealthiest aren’t immune to the threat of disease’.  As, no doubt, the wealthy discovered in another era when the Great Plague killed an estimated 100,000 people —almost a quarter of London’s population in 18 months.

Government has lost sight of its responsibility to its citizens. It has served other masters in the form of global corporations and the excessively wealthy.  When it promises £46 million (a mere drop in the ocean) to fight the coronavirus it has chosen to ignore the consequences of its own policies. Where will the extra nurses, beds and ICU facilities come from should the situation worsen? The government has spent the last 10 years depriving our health service and other essential public services of the funding they needed, leaving our public and social infrastructure in a state of decay.  And now it thinks that throwing money at the problem will make all the difference.

It’s time for us all to understand that it’s never a question of monetary resources or financial unaffordability, it’s always a question of having the real resources to deliver your emergency plans or indeed your policy agenda.  And the government has stripped that infrastructure down to its bare bones. That cannot be resurrected in an instant no matter how much politicians spout their rhetoric at the despatch box.

There is a solution, albeit one that will take time. And it starts with understanding four things:

  • that the role of government should be to serve the public purpose rather than the interests of a small section of society
  • that the public finances do not operate like a household budget and government does not need an income in the form of tax before it can spend
  • that the only balancing a government needs to do is balancing its spending against available resources – asking questions like “Do we have enough construction workers, nurses, doctors, teachers and other real resources to deliver our plans and if not, what can we do about it?”
  • and finally, that government spending choices have nothing to do with whether there’s money in the tax kitty but are politically motivated. The question to ask is not “Did the government balance the budget?” but “Did it ensure a fairer and more equitable distribution of wealth and did it provide adequate public and social infrastructure to meet the needs of citizens and the economy?”

If you want to know more, GIMMS has a website where you can find out more about how money really works and get started on questioning the economic orthodoxy which prevails and has done so much damage.  You don’t have to be an economist or any sort of expert to learn that there is an alternative!

gimms.org.uk/mmtbasics/

 

Events

Challenging the narrative about how governments pay for public services – Northampton

March 28 @ 1:30 pm – 4:30 pm

 

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The post After a decade of public sector cuts, it is time to learn the lesson that austerity has consequences for us all. appeared first on The Gower Initiative for Modern Money Studies.

The Monetarist fantasy is over

Published by Anonymous (not verified) on Wed, 19/02/2020 - 10:11pm in

The forced resignation of the United Kingdom’s Chancellor of the Exchequer, Sajid Javid, is the latest sign that macroeconomic policy is being upended, and not only in the UK. In addition to completing the ritual burial of the austerity policies pursued by UK governments since 2010, Javid’s departure on February 13 has broader significance.

Prime Minister Boris Johnson is determined to overcome Treasury resistance to his vast spending ambitions. The last time a UK prime minister tried to open the government spending taps to such an extent was in 1964, when Labour’s Harold Wilson established the Department of Economic Affairs to counter Treasury hostility to public investment. Following the 1966 sterling crisis, however, the hawk-eyed Treasury re-established control, and the DEA was soon abolished. The Treasury, the oldest and most cynical department of government, knows how to bide its time.

But Johnson’s latest coup also is indicative of a global
shift from monetary to fiscal policy. After World War II, stabilization policy,
the brainchild of John Maynard Keynes, started off as strongly fiscal. The
government’s budget, the argument went, should be used to balance an unstable economy
at full employment.

In the 1970s, however, came the monetarist
counter-revolution, led by Milton
Friedman
. The only stabilizing that a capitalist market economy needed,
Friedman said, was of the price level. Provided that inflation was
controlled by independent central banks and government budgets were kept “balanced,”
economies would normally be stable at their “natural rate of unemployment.” From the 1980s until the 2008 global financial
crisis, macroeconomic policy was conducted in Friedman’s shadow.

But now the pendulum has swung back. The reason is
clear enough: monetary
policy failed to anticipate, and therefore prevent, the Great Recession of
2008-09, and failed to bring about a full recovery from it. In many countries,
including the UK, average real incomes are still lower than they were 12 years
ago.

Disenchantment
with monetary policy is running in parallel with a much more positive reading of
US President Barack Obama’s 2008-09 fiscal boost, and a much more negative view
of Europe’s post-slump fiscal austerity programs. A notable turning point was
the 2013 rehabilitation
of fiscal multipliers by the International Monetary Fund’s then-chief economist
Olivier
Blanchard
and his colleague Daniel Leigh. As Blanchard recently put
it
, fiscal policy “has been underused as a cyclical tool.” Now, even
prominent central bankers are
calling
for help from fiscal policy.

The theoretical
case against relying on monetary policy for stabilization goes back to Keynes. “If,
however, we are tempted to assert that money is the drink which stimulates the
system to activity,” he wrote,
“we must remind ourselves that there may be several slips between the cup and
the lip.” More prosaically, the monetary pump is too leaky. Too much money ends
up in the financial system, and not enough in the real economy.

Mark Carney, the
outgoing governor of the Bank of England, recently admitted
as much, saying that commercial banks had been “useless” for the real economy
after the slump started, despite having had huge amounts of money thrown at them
by central banks. In fact, orthodox theory still struggles to explain why
trillions of dollars’ worth of quantitative easing, or QE, remains stuck in
assets offering a negative real rate of interest.

Kenneth Rogoff of Harvard recently argued
that fiscal stabilization policy “is far too politicized to
substitute consistently for modern independent technocratic central banks.” But
instead of considering how this defect might be overcome, Rogoff sees no alternative
to continuing with the prevailing monetary-policy regime – despite the overwhelming
evidence that central banks are unable to play their assigned role. At least
fiscal policy might in principle be up to the task of economic stabilization; there
is no chance that central banks will be.

This is due to a technical reason, the validity of
which was established both before and after the collapse of 2008. Simply put,
central banks cannot control the aggregate level of spending in the economy, which
means that they cannot control the price level and the aggregate level of
output and employment.

A less skeptical observer than Rogoff would have looked more closely at
proposals to strengthen automatic fiscal stabilizers, rather than dismissing
them on the grounds that they will have (bad) “incentive effects” and that
policymakers will override them on occasion. For example, a fair observer would
at least be open to the idea of a public-sector
job guarantee
of the sort envisaged by the 1978 Humphrey-Hawkins Act
in the US, which authorized the federal government to create “reservoirs of
public employment” to balance fluctuations in private spending.

Those reservoirs would automatically be depleted and refilled
as the economy waned and waxed, thus creating an automatic stabilizer. The
Humphrey-Hawkins Act, had it been implemented, would have greatly reduced
politicians’ discretion over counter-cyclical policy, while creating a much
more powerful stabilizer than the social-security systems on which governments
now rely.

To be sure, both the design and implementation of such
a job guarantee would give rise to problems. But for both political and
economic reasons, one should try to tackle them rather than concluding, as
Rogoff does, that, “with monetary policy hampered and fiscal policy the main
game in town, we should expect more volatile business cycles.” We have the intelligence
to do better than that.

Copyright: Project Syndicate, 2020.
www.project-syndicate.org

Photo credit: Flickr/sr hostil.

The post The Monetarist fantasy is over appeared first on The Progressive Economy Forum.

Flooding: Private Eye Cover Shows How Nothing Has Changed Under Tories

Here’s a piece of de ja vue, courtesy of Private Eye’s issue for 10th-23rd January 2014. It shows former Prime Minister, David Cameron, surveying one of the areas then hit by disastrous flooding. Dodgy Dave has to bear some responsibility for the disastrous, as it was his government that cut funding for the flood defences.

Well, it’s six years later, we’ve got a Tory government that’s promising to increase funding to the public infrastructure, and Tweezer declared that ‘austerity was over’. But there has been no increase in public spending, or at least, none I’ve been aware of. And the country’s now hit by disastrous floods.

Which shows that almost nothing has changed.

Except one thing:

David Cameron at least visited some of the areas that had been hit, like the Somerset Levels, and pledged more funding – funding that should never have been cut anyway.

Boris Johnson, however, is nowhere to be seen. He’s retreated to Chevening, a 115 room mansion in Kent. He’s probably hiding from having to answer awkward questions about why he thought it would be a good idea to hire Andrew Sabisky, a racist, misogynist eugenics nut. Or if he holds the same vile views.

It also shows his own, cynical attitude to public welfare. Johnson hasn’t called any emergency meetings. He did before he was elected, but that was when he needed people’s votes. Now he has them, and is in No. 10, although obviously not physically, he just doesn’t care. But he has sent his deputy official spokesman – not his official spokesman, mind – to reassure us that he is receiving briefing updates and that the flooding is terrible for people affected.

How very reassuring!

Mike in his article points out that one reason Johnson may be dodging this issue is because it raises awkward questions about climate change and global warming. But Donald Trump and the Republic Party don’t believe in it, and are passing laws to gut their Environmental Protection Agency and prevent anyone in it from publishing any research showing that it exists. Because the Republicans and Trump are also heavily funded by the fossil fuel lobby, particularly the Koch brothers. And so they pretend that it doesn’t exist.

But Johnson needs Trump’s trade deal, which will do precious little for the country except hand over British industries and utilities, including a privatised NHS, to the Americans. But it will make Johnson and the Tories backing it rich, so Johnson wants to dodge the issue as well.

Meaning that as Britain starts sinking into the sea and primordial ooze, Johnson is holed up in his mansion hoping that it will all go away.

While Britain sinks, Boris Johnson hides

 

A Conservative Accusation of Liberal Bias at the Beeb

Robin Aitken, Can We Trust the BBC (London: Continuum 2007).

Robin Aitken is a former BBC journalist, and this book published 13 years ago argues that the BBC, rather than being unbiased, is really stuffed full of lefties and the broadcaster and its news and politics programmes have a very strong left-wing, anti-Conservative bias. Under Lord Reith, the BBC upheld certain core British values. Its news was genuinely unbiased, giving equal time to the government and opposition. It also stood for essential institutions and such as the monarchy, the constitution, the British Empire and Christianity at home, and peace through the League of Nations abroad.

This changed radically between 1960 and 1980 as the BBC joined those wishing to attack and demolish the old class-bound institutions. Now the BBC stands for passionate anti-racism, ‘human rights’, internationalism and is suspicious of traditional British national identity and strongly pro-EU. It is also feminist, secular and ‘allergic to established authority whether in the form of the Crown, the courts, the police or the churches.’ This has jeopardised the ideal at the heart of the Corporation, that it should be fair-minded and non-partisan.

Aitken does marshal an array of evidence to support his contention. This includes his own experience working for BBC Scotland, which he claims was very left-wing with a staff and management that bitterly hated Margaret Thatcher and made sure that the dismantlement of the old, nationalised industries like shipbuilding was properly lamented, but did not promote it as ‘creative destruction’ as it should, nor the emergence of the wonderful new information industry north of the border. A later chapter, ‘Testimonies’, consists of quotations from other, anonymous rightists, describing how the Beeb is biased and bewailing their isolated position as the few Conservative voices in the Corporation. He is particularly critical of the former director-general, John Birt. Birt was recruited in the 1990s from ITV. He was a member of the Labour Party, who brought with him many of his colleagues from the commercial channel, who also shared his politics and hatred of the Tories. He goes on to list the leading figures from the Left, who he claims are responsible for this bias. These include Andrew Marr, the former editor of the Independent, and the left-wing, atheist journo and activist, Polly Toynbee.

Aitken also tackles individual topics and cases of biased reporting. This includes how the BBC promoted the Labour Party and the EU before Labour’s landslide victory in the 1997 general election. The Conservatives were presented as deeply split on the issue and largely hostile to EU membership. The EU itself was presented positively, and the Labour Party as being united in favour of membership, even though it was as split as the Tories on the issue. Another chapter argues that the Beeb was wrong in challenging the government’s case for the Iraq Invasion. He claims that in a poll the overwhelming majority of Iraqis supported the invasion. The government did not ‘sex up’ the ‘dodgy dossier’ in order to present a false case for war, and it was wrong for the Beeb to claim that Blair’s government had.

The chapter ‘The Despised Tribes’ argues that there are certain ethnic or religious groups, who were outside the range of sympathy extended to other, more favoured groups. These include White South Africans, the Israeli Likud Party, Serb Nationalists under Milosevic, the Italian Northern League, Le Pen and the Front National in France, the Vlaams Blok in Belgium, American ‘Christian Fundamentalists’, conservative Roman Catholics, UKIP ‘and other groups who have failed to enlist the sympathies of media progressives’. These include the Orange Order and Ulster Protestants. He then claims that the Beeb is biased towards Irish Republicans, who have successfully exploited left-wing British guilt over historic wrongs against the Roman Catholic population. He then goes on to claim that Pat Finucane, a lawyer killed in the Troubles, was no mere ‘human rights’ lawyer but a senior figure in the IRA.

The chapter, ‘The Moral Maze’ is an extensive critique of a Panorama documentary claiming that the Roman Catholic condemnation of premarital sex and contraception was causing needless suffering in the Developing World through the procreation of unwanted children and the spread of AIDs by unprotected sex. This is contradicted by UN evidence, which shows that the African countries with the lowest incidence of AIDS are those with the highest Catholic populations. The Catholic doctrine of abstinence, he argues, works because reliance on condoms gives the mistaken impression that they offer total protection against disease and pregnancy, and only encourages sexual activity. Condoms cannot offer complete protection, and are only effective in preventing 85 per cent of pregnancies. The programme was deliberately biased against the Roman Catholic church and the papacy because it was made from the viewpoint of various groups with an explicit bias against the Church and its teaching on sexuality.

Aitken’s evidence is impressive, and I do accept part of his argument. I believe that the Beeb is indeed in favour of feminism, multiculturalism and human rights. I also believe that, the few remaining examples of the Beeb’s religious programming notwithstanding, the Corporation is largely hostile to Christianity in ways that would be unthinkable if applied to other religions, such as Islam. However, I don’t believe that the promotion of anti-racism and anti-sexism is wrong. And groups like the Northern League, Front National and other extreme right-wing political and religious groups, including UKIP, really are unacceptable because of their racism and should not be given a sympathetic platform. Their exclusion from the range of acceptable political and religious views is no bad thing.

But the book also ignores the copious documentation from the various media study units at Cardiff, Glasgow and Edinburgh universities of massive BBC Conservative bias. Jacky Davis and Raymond Tallis have a chapter in their book on the gradual, slo-mo privatisation of the NHS, NHS – SOS, on the way the media has promoted the Tories’ and New Labour’s project of selling off the health service. And this includes the Beeb.  The Corporation was hostile to Labour after Thatcher’s victory, promoting the SDP splinter group against the parent party in the 1983 election, as well as the Tories. This pro-Tory bias returned with a vengeance after the 2010 Tory victory and the establishment of austerity. Barry and Savile Kushner show in their book, Who Needs the Cuts, how the Beeb excludes or shouts down anyone who dares to question the need for cuts to welfare spending. Tories, economists and financiers are also favoured as guests on news shows. They are twice as likely to appear to comment on the news as Labour politicians and trade unionists.

And we have seen how the Beeb has pushed the anti-Labour agenda particularly vigorously over the past five years, as it sought to smear Jeremy Corbyn and the Labour Party as institutionally anti-Semitic at every opportunity. Quite apart from less sensational sneering and bias. The guests on Question Time have, for example, been packed with Tories and Kippers, to whom presenter Fiona Bruce has shown particular favour. This has got worse under Johnson, with the Beeb now making it official policy not to have equal representation of the supporters of the various political parties in the programme’s audience. Instead, the majority of the audience will consist of supporters of the party that holds power in that country. Which means that in England they will be stuffed with Tories. Numerous members of the BBC news teams are or were members of the Tory party, like Nick Robinson, and a number have left to pursue careers at No 10 helping Cameron, Tweezer and Boris.

The evidence of contemporary bias in favour of the Tories today is massive and overwhelming.

With the exception of particular issues, such as multiculturalism, feminism, a critical and sometimes hostile attitude towards the monarchy, and atheism/ secularism, the BBC is, and always has been, strongly pro-Tory. The Birt era represents only a brief interval between these periods of Tory bias, and I believe it is questionable how left-wing Birt was. Aitken admits that while he certainly was no Tory, he was in favour of free market economics.

This book is therefore very dated, and overtaken by the Beeb’s massive return to the Right.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

There is an alternative so let’s keep PUSHing until something happens! Keep challenging the status quo and undoubtedly it will!

Published by Anonymous (not verified) on Sun, 16/02/2020 - 6:46am in

Slogan PUSH - persist until something happens“Austerity is theft, the greatest transfer of wealth from poor to the rich since the enclosures.”
― 
Fuad Alakbarov, Exodus

What links Spain and the UK?  Some might say tourism as millions make Spain their holiday destination every year for the weather, the beaches and its history and culture. However, not many people, if asked, would mention austerity. This week, Philip Alston, the UN’s special rapporteur on extreme poverty and human rights reported that Spain was failing many of its citizens, leaving them marginalised and living in extreme poverty. He noted the high unemployment and chronic youth unemployment, the shocking housing crisis and that fiscal policies had provided far more benefits to the wealthy than the poor.  The 2008 economic crisis and the implementation of neoliberal policies had left Spanish society fractured, he said, with conditions often worse than in refugee camps where families were raising children with a lack of adequate state services, health clinics or employment centres.

If not a mirror image, it all sounds pretty familiar and comes almost a year on from Alston’s report on the UK in which he noted that the UK’s social safety net had been ‘deliberately removed and replaced with a harsh and uncaring ethos’ and that the government’s ideologically driven economic policies in the form of cuts to public services had led to tragic consequences.  A year on, working people are still paying the price in ongoing austerity and rising poverty.

Austerity is not occurring in isolation. We often tend to think of it in terms of its damaging consequences for UK citizens and the public services on which they depend and yet it is being played out in many European countries including Greece, Spain, Italy and Portugal and more recently France where protests are continuing in towns and cities. From protests in 2016 against weakening employment rights, to President Macron’s more recent proposals for changes to welfare and pensions coupled with cuts to public spending in key public sectors, these demonstrations might be seen as emblematic of growing unrest across Europe and the rise of right-wing populism. Working people have suffered greatly from market-led EU policies which have weakened national democracy, put the corporate sector in charge in the corridors of power and imposed austerity at unforgivable human cost following the financial crash in 2008.

Whilst UK citizens have shouldered the burden of unnecessary austerity for ideological reasons dressed up as good housekeeping, i.e. a political choice, European citizens are paying a heavy price for a dysfunctional Eurozone and EU economic policies. This has trapped member states in damaging fiscal debt and deficit rules, combined with the EU Treaties which form part of an ideologically driven agenda which has enforced cuts to spending on vital public infrastructure and weakened working people’s employment rights. The loss of economic sovereignty of the member states has deprived Eurozone nations of the tools with which they can manage their economies effectively. Austerity is thus reinforced, both in ideological and in Swabian housewife terms.

We are living in ‘interesting’ times if not downright scary. Perhaps UK citizens thought that getting Brexit done would alleviate the uncertainty, but if anything, it has increased it. Trade deals are still a long way off, there is rising political insecurity on a global scale and a threatening worldwide economic slowdown.

Although the UK was thankfully not a member of the Eurozone, successive governments were ‘encouraged’ through the Stability and Growth Pact to keep to the same fiscal rules as Eurozone countries, which perhaps explains how spending plans were always seen through the lens of a household budget and their success or otherwise measured by the state of the public accounts. Although, of course, Margaret Thatcher should also share some of the blame by her declaration that ‘there is no public money, only taxpayers’ money’.  Deficits bad, surpluses good, is the political mantra, which as we know doesn’t tell the whole story. The state of the public accounts should be measured in a government’s economic record, not a balanced budget.

Indeed, the Conservative government’s spending has been tempered by fiscal rules and promises to balance the budget which were imposed by successive Chancellors – from George Osborne to spreadsheet Phil Hammond and lately Sajid David.  In recent months, there have been clear tensions between the Treasury and the Prime Minister’s office about future spending plans.  Over the last few weeks, the authors of the MMT Lens have posed the question as to whether the government’s spending promises would translate into real action, pointing out the nonsensical nature of Javid’s fiscal rules on day-to-day spending (those same ones promoted by the Labour Party) and asking what those spending plans might actually mean. Will they or won’t they and if they do who will be the beneficiaries?

It seemed over the last two days, following Sajid Javid’s resignation on Thursday after the cabinet reshuffle, that part of that question might have been answered. With a new chancellor, a former banker and hedge funder, the markets reacted accordingly and predictably at the prospect of a new broom and a fiscal stimulus. Heaven knows the economy needs one, although of course, it would remain to be seen what that would actually mean in practice!

However, it became clear only a few hours later that the new chancellor is very much in the mould of previous ones as he told ministers to identify ‘deep savings to allow him to turn on the spending taps’ so he could boost spending.  So, the good news about Johnson’s promise to spend on schools, hospitals, the police, buses and cycleways (not to mention his daft Bridge Across the Irish Sea) has been tempered yet again by faulty household budget economics.  Save a bit here and there to spend elsewhere! We’ve been here before. A world of costed budgets, higher taxation or borrowing to pay for spending or robbing Peter’s budget to pay for Paul’s.  The prospect of a fiscal stimulus was bound to bring out the debt doom-mongers asking how it would be paid for and talking about black holes and higher taxation as indeed the FT did last week.  Now it appears they don’t need to worry.

Instead of spending plans which rested on the simple understanding that government is the monopoly currency issuer, that spending comes before taxation and indeed that such a government neither needs to tax or borrow before it can do so, we are back to household budget square one.

However, let’s imagine for a moment that  Boris’s promises weren’t just a lot of electoral hot air and that his spending plans were not a mirage of the ‘now you see it now you don’t’ variety, the next question to be asked would be who would be the beneficiaries of this public spending spree and Johnson’s proposed tax cuts? The already excessively wealthy and the corporate sector, or working people? Handing tax cuts to the already wealthy would simply give them greater access to finite resources and reinforce the wealth gap whilst leaving working people still struggling.

As noted earlier, Johnson has promised spending on schools, hospitals and the police as well as pledging money for HS2, money for buses and cycleways and a Bridge over the Irish Sea.  A spending stimulus should, of course, be seen as a positive move for the domestic economy in the light of the already damaging cost of 10 years of austerity, the prospect of a global economic slowdown and to counter the trade uncertainties that exist as a result of leaving the EU. However, in the light of those 10 years of austerity policies and the government’s political agenda, we must carefully examine what it might mean.

Public and social infrastructure has been ripped to shreds, the NHS and education seriously underfunded, whilst local government is in tatters with further stringent cuts to come, which will have a devastating effect on many northern councils who are already wondering whether they can even meet their statutory duties. Cruel welfare reforms, which were presented as simplification but were in fact designed to cut government expenditure, have penalised families, children, sick, disabled and unemployed people through their stringent and unfair rules.  A big capital spending programme on infrastructure will not provide solutions to the impoverishment caused by such reforms, or the cumulative effects of wage caps, cuts to public services, and rising private debt and nor will it be intended to.  As Yanis Varoufakis commented in his book ‘Adults in the Room: My Battle with Europe’s Deep Establishment’.

‘Austerity is a morality play pressed into the service of legitimizing cynical wealth transfers from the have-nots to the haves.’

We can have ‘MMT for the rich’ whereby public money continues to pour into the corporate sector to provide services for profit whilst at the same time continuing with ‘rugged neoliberalism for the poor’ as Jeff Epstein, the progressive writer and podcaster, described it in a recent video. The winners and losers could be the same as they have been for decades under successive governments since Thatcher.

Without investing in the public and social infrastructure which ensures a healthy and educated population, provides well paid jobs alongside a Job Guarantee, looks after its most vulnerable citizens and provides the essential services that keep an economy running efficiently, a capital investment programme will prove a poor substitute for investment in national wellbeing if the same investment is not made to improve the lives of working people.  The foundations of a healthy society are laid by investing first in the real wealth creators; the working people of this country who form the backbone of a healthy economy.

Furthermore, if the Conservatives had been planning to implement a genuine capital expenditure programme using a modern monetary reality lens, which clearly it is not, then the question would never have been where the money would come from, but whether the nation had the spare capacity and idle resources to do this. Given the scale of the proposed capital infrastructure spending, it will require government planning and forethought to ensure that the country has the construction training programmes in place with sufficient trainers to train workers before a single brick, rail track or bridge tower can be laid. Indeed, it is not the primary role of government to balance the budget; its first consideration should be to deliver public purpose in the interests of those who elect them and the economy as a whole, not just an elite section of it.

Politicians on the left continue to play the game of ‘hard choices’ as one in the Labour leadership line-up did this week, or bang on about making the rich pay their fair share towards public service provision or indeed point fingers at the government for the size of its deficit or debt, so they are failing to focus on the government’s real failure on the economy. While this continues, the ability to deliver a truly left-wing agenda will simply keep on fading out of reach like a mirage. In an increasingly politically unstable world with all the challenges we face, not just in levelling up the distribution of wealth and ensuring that our public and social infrastructure meets the needs of citizens but also in addressing climate change, there is too much at stake to stick to these incorrect narratives. We must accept monetary reality.

 

Events

Professor Bill Mitchell and Professor Steve Hall Seminar – London

February 20 @ 1:30 pm – 5:00 pm

 

Professor Bill Mitchell and Professor Steve Hall Seminar – Manchester

February 21 @ 1:30 pm – 4:30 pm

 

MMTed Masterclass – London

February 22 @ 2:00 pm – 5:00 pm

 

Challenging the narrative about how governments pay for public services – Northampton

March 28 @ 1:30 pm – 4:30 pm

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The post There is an alternative so let’s keep PUSHing until something happens! Keep challenging the status quo and undoubtedly it will! appeared first on The Gower Initiative for Modern Money Studies.

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