Ethics

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We are fighting fascism

Published by Anonymous (not verified) on Tue, 14/06/2022 - 5:58pm in

There is a problem that the British and US political systems share in common. It is the deeply delusional far-right politics that has in each case entered and captured one of the two main parties within both these supposed democracies.

In the US the rise of Trump has been obvious. The current hearings on the 6 January 2020 storming of the Capitol makes clear, using evidence from Republican sources alone, how profoundly corrupt Trump and those around him were. Former senior administration members say Trump has lost touch with reality. But, and this is the key issue, millions of Americans still believe Trump. They contend that the man who apparently sanctioned the hanging of his Vice President is the victim here, and should be given another term in the White House. And so powerful are they, and the money that backs them, that many elected Senators and Congress members appear to share their view.

The UK situation with the corruption of the Conservatives is not quite as stark as yet. So far they have not invited the violent takeover of government. But, where the Republicans go so, seemingly inevitably, does the current Tory Party follow, so rule nothing out yet.

What both offer is, of course, populist politics. This is largely devoid of meaningful policy content, because those leading both movements know that populism works best when it cannot be nailed down to a position. Instead what it creates is the fear of ‘the other’.

Racism drives both parties.

So too does deep seated misogyny.

France comes high on the list of common enemies; the Tories just extend it to the whole EU.

The rule of law is considered flexible. Both seek to capture the legal process for their private gain.

Their economics is dressed up to appeal to the person on average earnings whilst giving most benefit to their wealthy backers. Those on lower incomes who suffer as a result are persuaded this a price worth paying to beat the enemies who line up against them on the left, and elsewhere.

Government paralysis is by political choice: their belief is that they win from chaos. As soon as a crisis appears to subside they deliberately create another.

And all the while they seek to grind down reasonable people, making them by attrition gradually accept that what is exceptional is normal.

Except it isn’t. Those of us who are appalled are the sane in this situation. We should be disgusted by what our government is doing, and we are, just as we are disgusted by the media that exonerates them.

So what can be done? Inevitably, there are options available.

One is to not accept what they are doing, from Brexit onwards. Disappointment with Labour’s failure to reject Brexit is entirely reasonable in this situation.

Another is to continually point out the Tories’ failings. Social media let’s us do this. Taking part is to be part of the necessary opposition to what they are doing.

Third is to protest, peacefully. It is encouraging that spontaneous protests around migration related issues are now happening.

Then we need to vote Anything But Conservative. This is not a by-election policy, but one for general elections too.

And after that the pressure for real reform has to be made. A Labour government that perpetuates the system that has permitted fascists to seek control of government would fail us all, because fascism will try again.

Finally, for now, keep talking to Tories - or the people who vote for them. Make clear that the party they say they support is nothing like even that of Cameron and is only remotely related to that of Major, Thatcher and others most Tories recall. The seeds of disquiet have to be sown, because the great hope is that the Tories collapse into factions. This is seemingly inevitable after Johnson goes because there is no one who seems remotely capable of reconciling the factions within the party. It is only by splitting that the Tories might be beaten, but I stress, might be.

And remember, we are fighting fascism. And there is a duty to do that.

The Tories define necessity as what suits them

Published by Anonymous (not verified) on Tue, 14/06/2022 - 5:08pm in

We now know that the government is relying on the supposed doctrine of necessity to breach the Northern Ireland Protocol. It cannot do so because under international law it cannot have contributed to the necessity creating the breach, which in this case it very clearly has, not least by not using the Article 16 option within the Protocol to try to resolve the issue in the first instance.

But that, of course, is not what this is all about. That is much more easily stated, as I did in a tweet this morning:

It is not necessary to save Johnson.

It is not necessary to cover up his lies.

It is definitely not necessary to breach the Good Friday Agreement.

It is not necessary to aggravate so many people to ensure Liz Truss has a chance of winning the far-right Tory vote in a Tory leadership election.

It is not necessary to do any of this.

But the Tories define necessity as what suits them. And when 30% or so of the UK electorate share that worldview then we have a problem.

And this is the problem to be solved.

Well, that and getting rid of Brexit altogether.

But Labour won't say that, and as a result they compound the problem.

The world’s central bankers: running the economy as if they want a disaster

Published by Anonymous (not verified) on Tue, 14/06/2022 - 4:57pm in

As the Guardian reports this morning:

Fears about a possible recession have pounded stock markets around the world amid reports that US Federal Reserve could raise interest rates by as much as 0.75% this week – its biggest single hike in borrowing costs for nearly 30 years.

As Wall Street’s benchmark S&P 500 index fell almost 4% on Monday into bear territory, prompting selloffs from Sydney to Shanghai, US central bank policy makers will begin a two-day meeting on Tuesday with expectations mounting that they will lift rates by at least 0.50%.

This is only the seventh bear market since 1945, so this is economically significant.

So too is the Fed's reckless path that is not stopping inflation, but is driving up the dollar, is threatening recession and will create massive poverty in countries that have debts denominated in dollars - about whom the Fed seems to be utterly indifferent as if running a reserve currency is an issue of no consequence for it.

Simultaneously, the Fed is providing cover for those on the UK Monetary Policy Committee seeking to impose maximum hardship on the UK when, once again, interest rises can only increase the economic problems that we face, and solve none.

It's as if some people wanted a disaster.

 

Sunak’s choice: to support the banks and their ill-gotten gains or to save the people of this country from poverty?

Published by Anonymous (not verified) on Fri, 10/06/2022 - 5:36pm in

I have posted this thread on Twitter this morning:

There is a story doing the news rounds this morning that Sunak has cost the government £11 billion by failing to manage government interest rates properly. But the real story is much worse than that. This is about banks winning at cost to us all, yet again...a thread to explain.

The claim being made is a relatively simple one, but technically it’s a bit complex. I’ll try to make this as clear as I can. It all revolves around quantitative easing, or QE.

QE has been used twice in UK history. The first time was after the financial crash in 2008. Between 2009 and 2013 just under £400 billion of QE was done. Another small chunk of QE was gone in 2016 because of the risks created by Brexit, bringing the total to that date to £445bn.

This form of QE had one real purpose, although the government never admitted it at the time. The intention was to put a lot more cash on the balance sheets of UK banks to prevent them going bust, as Lloyds, Royal Bank of Scotland, Northern Rock and others had done in 2008.

To do this the government did QE, which is a ridiculous process where the government issues new bonds (which are fixed term, fixed interest rate savings products by any other name, but which are quoted on stock exchanges so they can be bought and sold). It then buys them back.

The government issues these bonds to supposedly fund its deficits when it spends more than it gets in through taxes, although (like so much about the government) finances this claim is a lie.

The government need never borrow money to fund its spending because it has its own bank - the Bank of England - that can always lend the government the money it needs instead.

And if you wonder where the Bank of England might get the money from to fund this the answer is that it simply creates it. All it has to do is type two numbers into a computer.

One increases the government’s loan account with it by, say £10 billion. The other increases its current account with the Bank of England by the same amount. And that’s it. That’s how it makes new money.

There is nothing odd about this, by the way. That is literally how every single penny of new bank lending in the UK is funded. You never borrow someone else’s money when you tap your credit card on a card machine. New money is created by you and the bank every time you do that.

This is because all money is just debt, and all banks do is record the debts they owe to and from their customers. There is no money in a bank as such. There’s just a giant set of accounts that records money owing.

The twist is that they charge you for the privilege of owing them money you did as much to create as they did.

To get back to QE. Before 2008 banks trusted each other to pay the money they owed each at the end of each day as they settled up the accounts between themselves as they paid out or received money for the customers of other banks.

And then after 2008 the banks realised how terrible they all were, and how untrustworthy they’d become and stopped trusting each other and basically demanded that there was more cash in the inter-bank payment system.

The inter-bank payment system is called the central bank reserve accounts that each UK bank and some other regulated financial services companies are required to keep at the Bank of England. In 2008 there was only around £40 billion in these accounts. It was not enough.

The government was desperate to prevent any more banks failing. So it had to boost the amount on the central bank reserve accounts. It did that using QE. It bought back the government bonds I have already mentioned. It did it by using new money created by the Bank of England.

The Bank of England then put that money in the central bank reserve accounts of the commercial banks. As a result those banks then paid the people who previously owned those bonds that had been sold back to the government.

Importantly though remember there is nothing physical about money. It’s just debt. So, the banks paid out to their customers because the Bank of England promised to pay them, but that payment was not with the money the Bank of England provided.

Instead the commercial banks noted that the Bank of England (which is the only bank that can never fail, because ultimately it creates all money) had promised to pay them and so, in turn, they paid their customers.

But they don’t pay their customer the Bank of England’s money (or debt, which is what it is). Instead, the payment they make is actually a new record of debt from them to their customer, which they will make because they trust the promise from the Bank of England to pay them.

This is a long way around saying that the new money created by the Bank of England on the commercial bank’s central bank reserve accounts stayed in those accounts. Pretty much they went up by about the same amount as the amount of QE debt repurchases.

The commercial banks were saved with money the government gave them and on which it paid interest at the Bank of England base rate, which has always been 1% or less since 2009, and until recently was 0.1%. The cost was pretty small. No one worried about it.

Then came Covid. And so did QE, again. But this time the deal was quite different. The Bank of England created new money that was spent by the government to simply keep the economy going. £450 billion or so of it.

This was paid out through the commercial banks and the central bank reserve accounts went up again, by near enough this amount, to reach near enough £900 billion.

To pretend that this was not happening i.e., to provide cover for the fact that the Bank of England was really giving the government all the money it needed and no Covid spending was coming from tax or borrowing the government and Bank of England pretended to do more QE.

This whole QE operation in 2020/21 is best described as a sham, or a lie. Each week after the government pumped money into the economy the Treasury issued new debt to pretend borrowing was paying for these costs. And within days the Bank of England then bought this new debt back.

So, the commercial banks or their customers were asked every week to buy debt, but they always knew that they would get their money back in days. That was the sham. This QE was put in place to pretend the national debt increased, but it did not.

From April 2020 to July 2021 99.5% of all new government debt was repurchased by the Bank of England to pretend new government debt was created when in reality none was.

Instead the Bank of England funded the Covid crisis. But the money it provided to the government had to get into the commercial banking system and that meant it was paid to those banks through their central bank reserve accounts, which grew as a result, to near enough £900 billion.

Remember what these central bank reserve accounts really are. They are in effect bank deposit accounts that the commercial banks hold with the Bank of England. They are nothing more complicated than that.

Critically though, the money in them was not the savings of the commercial banks. It was simply gifted to them by the government. Nothing more or less than that. The commercial banks were given this £900 billion by the government.

And the government paid interest on the gift as well. That was no problem when the interest rate was 0.1%. The cost was under £1 billion a year. But now it’s 1%, and rising. So each year the government is now paying out £9 billion to the commercial banks.

The commercial banks have not earned this money. They are just being gifted it. And that cost is going to rise. Some bankers are demanding Bank of England interest rates rise to 4% or more. The annual gift to the banks might rise to more than £40 billion in that case.

So, at a time of austerity and because the government is letting the Bank of England raise interest rates (which is a wholly mistaken policy because that will just crush the economy when we’re already heading for recession) and the UK’s banks are cashing in, massively.

In effect, as people in this country go into deep poverty and debt the banks will have never made so much and all because the government literally gifted them £900 billion, much if to stop them going bust after 2008 and Brexit, and the rest because of Covid.

Money is not going to trickle up to those who deserve it least. It is going to flood in their direction. And although I’ve been saying this for some time, now people are beginning to notice. But, they have the wrong response.

They’re making technical arguments, saying that Sunak should have issued than commercial banks with long term, fixed-rate debts last year so limiting the amount of interest the banks could earn. Well, maybe, yes he should have done. But he didn’t, and hindsight is wonderful .

So what should he do now? There several things that could be done.

First, he could tell the Bank of England to cut interest rates. He needs to do so. These interest rate rises are going to cause recession in any case and will do nothing to stop inflation. But the Bank and conventional economists will yell and squeal and so he won’t do that.

Second, he could tell the Bank to only pay bank base rate on, say, £100 billion of the central bank reserve accounts and the rest he could say should still be paid at 0.1%. This is possible. After all, the commercial banks pay almost nothing on the deposit accounts they provide.

Or, he could do a windfall tax on the banks. This could be at 90% on the money they are paid on their central bank reserve account balances (or even 100%, as they never earned these sums). That would solve the problem.

Any of those three options solve this problem and would stop banks from profiting as most in this country face a financial crisis. Will he do any of them? That is the ultimate test for Sunak. The people, or the banks? That is his choice to make.

Time will tell, but I fear he will favour the banks. He will say he can't do a windfall tax at those rates. And he will say he can't overrule the Bank of England, who he will claim are independent, which is another complete sham as they aren't.

And he will say we need interest rate rises because people have to be punished with a recession for the inflation they did not cause and which he is doing nothing to resolve. 

But it need not be this way, and now you know why. Sunak can destroy the country by favouring the banks. But he need not do so. Please shout about that. ENDS. 

POST SCRIPT:POST SCRIPT: It's been suggested to me that Rishi Sunak can't overrule the Bank of England. He can. Section 19 of the Bank of England Act 1998 lets him do so at any time.

UPDATE: After just three hours this has gone a bit ballistic on Twitter:

 

A note to the Tories: the tax cuts you want will not save the economy

Published by Anonymous (not verified) on Wed, 08/06/2022 - 5:27pm in

Reports in the Guardian this morning suggest that ministers and other Tories are demanding tax cuts as the price of their support for Johnson, and as their remedy for the cost of living crisis. They echo the Adam Smith Institute in making the demand, apparently.

It so happens that I too want tax cuts right now. But thereafter the common ground disappears.

My desire is for tax cuts on fuel and energy duty and on related VAT charges to bring down the actual cost of these items at present. The aim should be that the Treasury take no more in tax  from these sources than it did in 2020. That protects the green agenda but by cutting absolute prices to business and consumers now three goals are achieved.

First, all business gets immediate support, and so far most small and medium sized entities are getting none right now, so this would be of direct help to them in their struggle to survive.

Second, the inflation rate is reduced at source by this move, reducing the pressure for wage rises and inflationary price increases in other sectors. The spillover effect of increasing fuel prices is reduced as a result, making recovery much easier.

Third, those in fuel poverty are helped most, meaning this is targeted.

Vitally, given that this would be delivered as a cap with duties bearing the bill of the cuts, this can be delivered quickly. As everyone knows, fuel duties can change within hours of a budget. But essentially, a sunset clause for this arrangement would also be automatically built in. When prices fall, as they will, the arrangement will cease. The arrangement would work in that case when nothing else can.

I have only one other immediate tax reform that is needed, which is increased tax on those well off as they still have the means to drive inflation and are doing so, as second hand car prices indicate.

The Tories meanwhile demand reduced income taxes and reduced corporation taxes. Neither can happen now. Neither help those in most need. Neither tackles the cause of inflation. Both most benefit the best off.

Corporation tax cuts have so far not stimulated the economy: in fact the Sunak super deduction for business investment has so far resulted in a decline in business investment.

And, most bizarrely, there is also a demand for a cut in inheritance tax, as if that helps the 93% or so if the estates of dead people that will never suffer the charge.

The Tory demand is then the usual suggestion that if only the richer were made richer all would be well in the world. Mine tackles the issue.

And where is Labour? Who knows? After the Tories stole the windfall tax, which has already been forgotten by voters, it appears to have nothing to say.

The Tories continue to act only for the rich. Labour continues saying nothing of consequence (and I do know about their VAT cut proposal, but it is inadequately thought through).

Meanwhile, the cost of living rises, nothing is stopping the threat to the viability of many employers, and the risk of ever deepening recession grows by the day.

The Moral Maze, tonight

Published by Anonymous (not verified) on Wed, 08/06/2022 - 4:10pm in

Tags 

Ethics, Politics

As regular readers of this blog will know, I have strong republican sympathies. I most recently made that clear in the aftermath of the Jubilee weekend. But I have said so previously. In fact, it was a blog I wrote in February that drew this position of mine to the attention of the Moral Maze team at BBC Radio 4. As a consequence I will be taking part in that programme tonight at 8pm, discussing this issue.

The programme is live (subject, I suspect to a very short delay) so quite what opportunity I get to develop my arguments against a panel of four, three of whom I doubt will be sympathetic to my cause, I do not know. But at the very least it will be an interesting evening out, but not a novelty. I have done the show at least twice before, the most recent being in 2012.

We need freedom from fear

Published by Anonymous (not verified) on Fri, 03/06/2022 - 5:33pm in

I wrote this yesterday:

A vision has to address people’s hopes and their fears. Everyone has both. The balance between them determines the public mood and in turn the priorities for an economic vision.

The predominant public sentiment in the 2020s is fear. The fear is of:

- insecure employment
- low pay
- of never being able to call a place home
- ill health and the inability of the NHS to deal with it
- old age and not being cared for
- that no one cares about your community
- climate change
- a lack of freedom to be yourself as you really are
- A lack of physical security.

A vision must in that case tackle the fear that comes from relative poverty, isolation and the fear that comes from worrying about whether we might even have a future to enjoy, let alone one we can afford. We need freedom from fear.

Is that fair?

HM Revenue & Customs really do not want to collect tax from the wealthy

Published by Anonymous (not verified) on Mon, 30/05/2022 - 4:37pm in

I campaigned for automatic information exchange from tax havens for a long time. Perhaps my most important paper on the issue was published in 2009. It was written after a meeting at the Treasury where I was told data exchange from tax havens would not happen in my lifetime and I set out to explain how it could, and how the data in question might be used.

We eventually won automatic information exchange. The OECD driven Comprehensive Reporting Standard began reporting in 2016 and has been fairly effective on a widespread scale since 2018. It takes time for reform to happen: this is one that can be very largely attributed to pressure from the Tax Justice Network during the era that John Christensen and I ran it.

Now Dan Neidle has secured data from HMRC on the level of funds held offshore. The data looks like this:

He has also secured data on average balances held split between tax haven and non-tax haven locations:

So, we now know we were right to be concerned. Around £570 billion is held in tax havens. You might expect that to yield a useful tax return each year, split between tax on income and gains.

But, as Dan Neidle discovered, HMRC has no idea how many of these accounts are properly declared, and nor has it sought to find out. It's as if they don't care. Instead, they are actually offering excuses, suggesting for example that most such accounts are probably held by non-doms and therefore not a concern, when in itself that is simply not true.

As Dan correctly points out, it is not possible to be sure what tax is lost as a result of this indifference by HMRC. It is their job to work this out. But we can be quite confident most of the accounts are not held by non-doms: there are just not enough of them.

So, what to conclude?

First, HMRC is not trying to collect tax owing.

Second, there is no one holding them to account for that.

Third, no wonder we have growing inequality in the UK.

Fourth, no wonder too that we have a tax gap that is out of control.

Fifth, there can be no political direction on this. Clearly, ministers have never asked.

I hope that pressure is brought to bear as a result because right now it is apparent that HM Revenue & Customs really do not want to collect tax from the wealthy.

Of course the Tories have to lie: their beliefs and actions are in fundamental and inevitable conflict with each other

Published by Anonymous (not verified) on Sun, 29/05/2022 - 6:58pm in

I posted this thread on Twitter this morning:

We know we have a government that lies. We know it is corrupt. And its big new idea is bringing back pounds and ounces, which few in the UK now understand. But the biggest failure is to pretend low-tax, small-state government is still possible. It isn’t. A thread….

Until methods to measure national income were created, largely as a consequence of central planning during World War 2, growth was not an issue in politics. And then, when the war was over it became everything: the one thing every politician had to deliver.

Tories delivered with indifference as to how the resulting wealth was distributed (by and large). Labour did so whilst worrying about inequality and access to services. But growth was the common goal.

There was also a common blind-spot in this strategy. That was the planet. Economics taught politicians that there were ‘free gifts of nature’ for us humans to exploit, and we went in for that exploitation in a big way.

We dug up the planet, built on it, dumped on it and poisoned it. As a result we warmed it. And all this in the name of finance. And when the planet could not, despite all that abuse, deliver fast enough, finance just turned inward and used the same techniques on itself.

Then came the warnings. I read about the dangers to the planet created by growth in the 1970s. The warnings were not heeded.

In 2008 the world’s financial system tottered as it was discovered that finance could not, after all, pollute its own systems with hierarchies of false lending and still make money.

And then came Covid, the worst pandemic for centuries, whose impact is a very long way from being over as yet, not least because the next, and potentially more serious wave, is now emerging.

The reality is that the planet is finite, money cannot ultimately be made by financial exploitation, and if we abuse the planet it has the potential to harm our health. None should be very surprising, but for over 75 years we have been in denial about all three.

No one has been in greater denial on this issue than the Tories. Their ‘small state, low tax, the markets know best’ approach to politics is built on three assumptions.

They are that the planet remains infinite, finance can solve everything by simply pursuing profit and that problems are individual, and not at the level of society, meaning government cannot and should not address them.

These core assumptions that underpin the modern Conservative’s thinking are all wrong, and they know that. They have committed to tackling climate change. They had to use government-created money via QE to solve the problems in finance post-2008. And they spent a fortune on Covid.

But, and this is the paradox, although all their actions say that they know that an active state is required, that’s not what they are saying. So whilst taxes reach highs, QE funds are still there, and climate change goes on many Tories still demand small state solutions.

It’s hardly surprising that Tory messaging is a mess in that case. What they say and what they do are totally inconsistent. They don’t have the conviction to deliver policies they are forced to adopt. And their claims as to what they believe in clearly don’t stack.

Of course they are a mess. And of course they are lying. They are literally living a lie every day they are in office, always fighting what they know they have to do, and pretending otherwise. No wonder they all look so worn out.

It does not help that Labour shares the lie, as does the SNP, and the LibDems. All are committed to growth that cannot be delivered. None has yet to appreciate, or talk about, that. Instead they still offer prospects like green growth, which is still based on despoiling our earth.

What do we need? The lies have to end. The planet has to be respected. Finance has to be constrained. The common solution to the common problem has to be sought, and delivered. The needs of all have to be met, and markets have never known how to do that.

This is possible. We can feed everyone, house everyone, keep everyone warm, educate everyone, and keep them healthy. People could have leisure, holidays, pleasure and more too. All of this could be done and respect the planet.

But this can only be done communally. I am not suggesting that means differences need be suppressed. They are part of what it is to be human. But the key problem we all face is the one the Tories are now face-to-face with, which is that their core assumptions are false.

We have to assume the planet must be respected, that finance can help us but can never solve our problems, and that we must act for the common good in the face of common threats. Adopt those three assumptions and we have a chance.

Stick to the existing scenario and it’s not just the Tories living a lie; we all are.

We have a choice, but I suggest that only one is viable.

Fast foodification: what is it, what’s driving it, how do we stop it?

Published by Anonymous (not verified) on Sun, 29/05/2022 - 1:26pm in

In this discussion, Peyton Bowman and I discuss my term ‘fast-foodification’. I coined the word trying to describe modern politics. The techniques used by politicians and their professional enablers are optimised to attract votes in the same way that McDonalds and KFC optimise their food with salt, sugar and fat to attract sales.

We also discuss other areas characterised by fast-foodification.  And we look at the question of what psychologists call ‘primary’ and ‘secondary’ preferences — namely what we want as compared with what we want to want. Growing as people involves a process of schooling tastes to acquire better ones. We might want to get fit, find going to the gym a chore for a while as we get used to it, but once we’re habituated to it we don’t want to miss our session.

Many things in human flourishing are like this as we school ourselves and habituate ourselves to better tastes and better behaviour.   Finally, having both agreed that capitalism and competition for votes tends to reinforce primary preferences — we discuss what institutions might encourage a culture in which secondary preferences might be nurtured. The audio is available here.

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