Economics

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Is The Current NHS Worth Fighting For?

Published by Anonymous (not verified) on Mon, 29/11/2021 - 11:06pm in

This was the title of a piece written by the Conservative candidate for North Shropshire. Reading it, I was half intrigued, half horrified and half not surprised. And I know that adds up to 1½ but it somehow seems appropriate for a man who was a surgeon in the forces, has since qualified as a... Read more

Rational expectations — the triumph of ideology over science

Published by Anonymous (not verified) on Mon, 29/11/2021 - 9:46pm in

Tags 

Economics

 For more than 20 years, economists were enthralled by so-called “rational expectations” models which assumed that all participants have the same (if not perfect) information and act perfectly rationally, that markets are perfectly efficient, that unemployment never exists (except when caused by greedy unions or government minimum wages), and where there is never any credit […]

Looking for a C change

Published by Anonymous (not verified) on Mon, 29/11/2021 - 9:23pm in

In a blog post this morning I called for politics based on care, community, cooperation, coordination, and conviviality.

In response, a commentator has suggested to me that we need to rid ourselves of the curses of competition, cheapness and convenience.

We are looking for a C change.

Consigning the sterlingisation zombie to history

Published by Anonymous (not verified) on Mon, 29/11/2021 - 6:35pm in

It is big news when an issue to which this blog has contributed makes it to be an FT headline, but it happened this morning:

Of course, the credit goes to Dr Tim Rideout who spearheaded this campaign, and got the resolutions passed with a majority of 418 to 37, despite warnings being given to the conference that a country having its own currency as a 'dangerous experiment'.

Tim has shared his speech with me. This is it:

The Scottish Reserve Bank (Establishment) Bill

Conference,

In April 2019 you rejected the Growth Commission sterlingisation proposal in Appendix C.

You voted instead that Scotland should start the preparations for our own currency.

You wanted that to happen as soon as possible after a vote for independence.

The aim was to introduce our new currency as soon as practicable after Independence Day.

This recognised the fact that no advanced economy has ever sought to use the currency of another nation. To try to do so would be to start probably the most dangerous experiment in global monetary history.

So, we need to follow the tried and trusted safe route taken by almost every country to become independent, and that is to have our own currency.

We will use the Scottish Pound – and not the English one.

Having a central bank is a key component of having our own currency. It is also a pre-requisite for applying to rejoin the European Union. Using sterling rules out any EU membership application. So we must plan for that too.

Planning is key. After the Brexit vote London was in a ‘what do we do now’ state of total unpreparedness. It would be inexcusable for us to find ourselves in a similar position when we win Independence, however that is achieved. We will need to be ready, so we hit the ground running. Two years, or whatever it turns out to be, for a transition to Independence Day will go very quickly.

On the currency front there are things we can do now. One of those is to draft the bill to establish the Scottish Reserve Bank as the new central bank of Scotland. That gets us to the point where we are ready to introduce that legislation the day after we vote. Bear in mind it will likely take six months to be approved by Parliament.

The resolution before you is a very truncated version of what Dalkeith Branch submitted. Conference Committee deleted two thirds, namely clauses A to F of the principles for that draft bill. As those are the key elements, I will explain them briefly to you. They are important.

Critically, the Reserve Bank will be owned and controlled by the Scottish Government. It will be the monetary authority, meaning it will create Scottish pounds. It will own the Scottish payments system, and it will be banker to the State.

Vitally, we need to ensure it is under the control of Parliament and answerable at all times to us and our elected representatives. That means things like US style confirmatory hearings for the appointment of the Governor, annual reports, and appearances before parliamentary committees. Accountability is key.

That is because as the monetary authority it will establish and issue the new Scottish currency. It will also set interest rates for lending to commercial banks, and it will work in collaboration with other international central banks. That means it will hold and manage our foreign reserves on behalf of the Finance Ministry.

At home, it will maintain the Scottish Government’s accounts and will provide such loan and overdraft facilities as are required to achieve the government’s fiscal policies, such as full employment and the Green New Deal.

Lastly, as envisaged by Douglas Chapman MP, it could manage a Scottish Sovereign Wealth Fund.

The Amendment to the resolution provides a forum to discuss those principles and I would urge you to support that.

In nearly 50 talks around Scotland, it is clear to me that you, Delegates, know that there is only one choice. That is our own currency. Let us start that process now, by voting in favour of the resolution.

Warm congratulations to Tim.

But, I also note that the FT reports:

Asked after the vote, the SNP said: “The currency of an independent Scotland will continue to be the pound sterling until a new currency can be safely and securely established in the interests of the whole economy. A Scottish currency will be introduced as soon as practicable after independence.”

That is not exactly a warm endorsement of what the SNP membership had clearly indicated to be their wish.

I leave the last word to Tim though. As he noted in a Tweet:

I hope the sterlingisation zombie now has a stake through the heart.

I can but agree.

Why won’t the SNP’s leadership let its members take the lead on the currency?

Published by Anonymous (not verified) on Sun, 28/11/2021 - 10:04pm in

As The National newspaper has reported in Scotland this morning:

The Alba Party has said it will do the “heavy policy lifting” on independence after party members backed the adoption of a new currency “as soon as possible” after a Yes result in indyref2.

Alex Salmond’s party was in Dunfermline yesterday for its national council.

Delegates voted for a new currency after independence, and research on “the practicalities of the currency transition and the institutional preparations required to facilitate the move” will now be commissioned.

I no more do party politics in Scotland than I do in the rest of the UK, keeping an open mind about all parties unless they are racist, when I will have nothing to do with them. So, I have spoken to Alba as much as I will to the SNP this week, and have done to Labour recently.

I say that to preface the fact that I do, of course, welcome this decision.   As I have said, repeatedly, Scotland cannot win independence without resolving this issue. Whilst the SNP procrastinates it seems that independence is not part of its leadership’s plans.

The merit of this decision is that in a member led party a decision has been taken. I think that the SNP membership would take the same decision based on my discussions with them.

The question is, why are the SNP leadership holding back?

In memory of Stephen Sondheim

Published by Anonymous (not verified) on Sat, 27/11/2021 - 8:23pm in

Tags 

Economics

My favourite version of my favourite Sondheim song. RIP.

If you thought Covid was all over now might be the time too think again

Published by Anonymous (not verified) on Sat, 27/11/2021 - 7:38pm in

I think it fair to say that I have never been a Covid optimist. Since February 2020 I have felt that those believing that Covid was just going to be a blip have been wrong.

So far whilst precise trajectories have, of course, been hard to predict my concern has been justified. Things have been persistently worse than the government has wished to portray, and its measures to address Covid related issues have always proved to be inadequate. Boosterism has always undermined any attempt to take measures to  squash disease spread, ease pressure on the NHS or contain the disease by effective vaccination worldwide.

And so we come to Omicron. Do we have reason to be worried? Watch this and I suggest that we have.

I will leave it to the Covid experts to discuss the health consequences of that risk. This blog is largely on economics. Markets noticed the risk and priced it yesterday. These two headlines come from FT emails this morning:

The Guardian had this variation:

Of course markets can get their reactions wrong. It’s also true that if  only they had not been over-optimistic about Covid being over they would not need this adjustment.

I do not, of course, know what will happen. Omicron may be a storm in a tea cup. Danny Altmann clearly does not think so. From what I read it is not. In that case three things follow.

The first is that travel restrictions will not stop the spread of this variant.

The second is that only serious measures, including masks, ventilation, social distancing and maybe lockdowns are likely to achieve that. Vaccine variants are maybe 100 days away, and take much longer to roll out.

And third, the economy is not likely to be booming any time soon as a result.

In that case all those clamouring for interest rate rises should put their demands on hold. They are the last thing that we will need.

And all those who think that government spending can be brought under control, as Rishi Sunak would define it, should also think again. The likelihood that government intervention in the economy might be required again looks to be quite high to me at present, although all options are on the table right now.

And last of all, those who really think that it’s all over had better think again. Until we take the obligation to vaccinate the world seriously this is a long way from happening.

Pass the parcel to rail

Published by Anonymous (not verified) on Sat, 27/11/2021 - 9:05am in

In my occasional forays into the Railway Gazette (which I like because it has a worldwide purview rather than focussing simply on the efforts to reopen the old railway to, say, Okehampton – which in fact it also does)… But I’m more interested in things that are perhaps slightly less mainstream and I was delighted... Read more

What now for domestic energy markets?

Published by Anonymous (not verified) on Fri, 26/11/2021 - 6:57pm in

The media realised the scale of the costs of the failure of Bulb Energy yesterday when the administrators who have been appointed to run the company were granted a £1.69 billion (£1,690 million) loan by the government to see the company through to the end of April 2022. Depending on the way the administrators' report is read they expect to lose between £500 and more than £1,000 per customer that Bulb has over the next six months, which is a staggering sum.

In all this, the two blogs I had written on Bulb got noticed by journalists, with the accounting analysis attracting special attention. The result was that I ended up on ITN's News at Ten last night, and am discussing two more stories with other journalists.

The concern is fourfold. The first is that Bulb, and the two other energy companies that failed yesterday, are not the last of the UK's domestic energy suppliers to fail. There are quite a number more to go as yet: most of the rest have simply yet to admit it.

Second, at the end of this process there are only going to be a handful or so domestic energy suppliers left in the market, many of whom will also be generators.

Third, what this means is the whole market-based approach to regulation of the UK domestic energy market has, in effect, failed. The new market entrants who were meant to ensure that the prices offered to consumers were kept low have very largely proved themselves unable to take on the task, and have themselves become victims of the market.

Fourth, after the dust has settled it is likely that we will be left with domestic energy suppliers who, with one or two exceptions, are also generators. The threats that such suppliers pose, because they can control every stage of the market, was one reason for regulation in the first place. This was because those suppliers can very easily claim that they make little or nothing from domestic energy supplies whilst making considerable profits in their generation, trading and distribution activities, leaving the consumer open to exploitation. The attempt at diversification to tackle this has clearly failed.

This failure was, always, inevitable. I noted years ago when working on trade union related reports on this issue that the disparity between profits in the domestic energy supply market and those in the generation and trading markets were so significant that it was apparent that the focus of regulation was in the wrong place. It was also apparent that competition in the domestic market could not solve this. The big six energy suppliers, as they were at the time, were always capable of making their margins in the domestic sector look modest whilst making overall significant profits. It is now apparent that nothing that has happened since then has changed this.

So, what now for the domestic energy market when multiple companies, multiple tariffs, vast amounts of quite literally wasted energy in switching suppliers to reduce cost, and significant numbers of lost jobs have proven that the imposition of an artificial market into the sector has delivered no real consumer benefits whilst leading the real risk of consumer exploitation in place? My suggestion is a simple one. It is to suggest that this is the time for a national energy company. Other countries do, of course, have these. We did. And only by taking control of energy source, and by running it in the public interest with the intention of preventing monopoly exploitation can any government now really deliver for the UK public.

The problem with this suggestion is a straightforward one. It involves the N word, where N stands for nationalisation, about which there is a UK national political phobia. But, the reality is that Bulb has been nationalised and its losses are being accepted by the public sector. We can either be horrified by this or accept that the public regulation of such an essential product is so important that control is a necessary part of protecting the UK public, most especially when climate change is a matter of such enormous significance in the years to come.

But will politicians rise to this challenge, or fudge it as they are on railways?

Taxing the multi-millionaires – getting national insurance right

Published by Anonymous (not verified) on Fri, 26/11/2021 - 6:06pm in

In a series of videos on taxing multimillionaires, I am exploring the changes to the UK's tax system that are required to tackle the problems that growing inequality in the UK is creating.

Having explored the background to this issue in the first three videos in this series I am now exploring, video by video, the changes required to the many taxes in the UK that are biased towards the wealthy. In this video I look at National Insurance, which is a deeply unfair tax that has a significant bias that favours higher earners because under the existing rules of this tax they pay lower overall rates of national insurance contribution than those on average earnings in the UK. I do, of course, include suggestions for reform.

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