NHS

Social-Distancing Laws (1970)

Published by Anonymous (not verified) on Wed, 01/04/2020 - 2:17am in

Knowing where money comes from is key to keeping healthy…

Published by Anonymous (not verified) on Tue, 31/03/2020 - 7:00pm in

Unilever has always been a fairly progressive company – although there are certainly arguments about its products and advertising strategy so I was interested to see this piece in this week’s ‘Sunday Times’: Giving hand sanitiser to the NHS is all fine and dandy but I strongly suspect Jope has no idea that this does... Read more

Is world leading NHS care an affordable proposition?

Published by Anonymous (not verified) on Sun, 29/03/2020 - 6:35pm in

In October 2017 the Progressive Pulse blog, which I publish but rarely appear on, posted the following blog which appeared under the above title. I think it worth repeating now. What the authors showed was that we could have had world class care by now. We haven't. And that is this government's fault:

Authors:

David Laws, Consultant Anaesthetist, City Hospitals Sunderland NHS Foundation Trust, Sunderland, Tyne & Wear, SR4 7TP

Professor Charles S. Adams, Department of Physics, Durham University, Durham, DH1 3LE

Introduction:

The unquestioned assertion that a highly developed currency-issuing nation cannot afford high-quality healthcare [1] is based upon a set of inter-related and almost universally-held false assumptions:
  • Money is in limited supply (as there is no ‘magic money tree’).
  • Taxes fund government spending.
  • Private banks lend out pre-existing savings.
  • NHS spending is a burden on the economy rather than a boost to the economy.

1) Money is created ‘out of nothing’ on bank computers

In 1973 the Bretton-Woods international exchange rate system, where currencies were ultimately pegged to the price of gold, was formally ended. Since that time we have used an international fiat monetary system where the value of each currency is determined by the workings of international financial markets. Fiat (Latin: ‘let it be made’) money is created from nothing on the basis of a promise – a promise to deliver goods or services in the future. Only if we believe in these promises and the systems that support them, does money have value.

The following description of the monetary system and its components is highly schematic to aid elucidation of the underlying principles. Money is created either when the government spends or when a bank makes a loan.[2] We can think of government spending and bank loans as the beginning of two interconnected money circuits. The government and bank circuits form the duopoly of money creation, rather like the pulmonary and systemic circulations of the cardiovascular system only in this case the circuits work in parallel. Both circuits are supported by the central bank which creates a unique type of money held within the bank known as electronic reserves (Figure 1). To extend the analogy of the cardiovascular system, the central bank is akin to the heart, individual bank accounts would be equivalent to the capillaries and the wider economy would be the working cells of the body.

The two monetary circuits commingle through banking transactions so bank money and government money become indistinguishable to bank account users. After money is created it flows through the economy and eventually returns to the issuer.

Figure 1: Schematic diagram of the monetary system of a sovereign nation. Bank account users cannot distinguish the origin of their deposits.

2) The government money circuit – taxation removes money from the system

In the government circuit, money is spent into the economy and is effectively cancelled when it returns to the government via the payment of taxes. The collection of taxes is not a prerequisite for government spending as many people assume, but exists at the end of the government money cycle when taxes removed prevent too much money being created. Taxation mainly helps to control inflation and alter peoples’ behaviour in a way that should be beneficial to all. The net result of deficit spending is to leave savings in the form of Government Bonds in the hands of the private sector (Figure 2).Figure 2: The government spend and tax circuit with a deficit. The difference between spend and tax equals private sector saving and is known as the deficit.

Conversely a government surplus (where taxation exceeds spending) would destroy these savings. The superficially sensible idea of running a balanced government budget simply prevents saving in the private sector. This is illustrated in models a) and b) within Figure 3. In a) the government injects money via a fiscal stimulus in year zero. Taxation means that over time all this money is returned. In b) the public choose to save a fraction of their income which leads to the deficit. Savings simply delay the return of money in the circuit. In other words, the private sector is only able to save money because the government supports this activity by running a deficit. The government circuit is leaky by design. For example, people are encouraged through tax breaks to save for their future (e.g. pensions & ISAs). Therefore, the national debt is not what we currently owe but what we currently own.Figure 3: (a) model which shows that after government spend (fiscal stimulus) if people do not save then all the money comes back as tax, whereas if people save this leads to the deficit (b).

3) The private bank money circuit – banks create credit and don’t lend out savings

Most of our money is created in the form of bank loans (credit). When a loan agreement is signed the bank creates a new bank deposit to the value of the loan in the borrower’s bank account. Money is returned to the bank by the repayment of the loan plus interest (Figure 4). Similar to government spending, bank lending influences private sector behaviour but the allocation of money creation is not democratically controlled. The primary purpose of bank lending is to enable individuals and businesses to function and to generate profits for bank shareholders, both over the short and long-term.Figure 4: The bank circuit where loans concurrently create bank customer deposits and private debt leading to bank profits.

Banks must have a licence issued by the government to create money in this manner and aspects of their activities are regulated. However there are no formal economic, social or environmental responsibilities associated with the creation and allocation of bank credit despite the significant influence these decisions have over our lives. Bank credit creation is predominantly distributed towards land (property) and financial asset speculation which dwarfs their support for entrepreneurship. The majority of UK small businesses are actually self-financing.[3]

As the proportion of unproductive private debt increases in an economy a correspondingly increasing proportion of economic output is directed towards servicing this interest-bearing debt. Consequently the private bank money circuit tends to be inherently destabilizing as it drives assets towards the already wealthy making the economy increasingly fragile.

What are the outcomes when the two circuits combine?

If all the money was returned to the issuers the quantity of money would go back to zero (the balanced budget illustrated in Figure 3a). In practice the rate of new money creation is usually higher than the rate of money cancellation and the total amount of money in the economy grows over time to support economic growth (Figure 5). Ideally growth in the money supply should match the growth in economic activity, such that prices remain roughly stable and we maintain confidence in the value of our currency unit. Control of the rate of money creation and destruction in the government and banking circuits are known fiscal and monetary policy, respectively.Figure 5: UK Money (M4) Supply 1987 – 2017. Source: Bank of England.

The money supply increased significantly in the decades prior to the Global Financial Crisis (circa. 2007) primarily through bank credit expansion. In contrast, between 2009 and 2014 net credit was negative.[3] As bank credit creation wavered from 2008 onwards, government deficits rose to prevent a deflationary depression. The actual sector balance data for the UK is shown in Figure 6 and there is similarity with the simple model we presented in Figure 3. Note that the rest of the world is a net saver of UK money (these savings have to be spent in the UK ultimately). Note also that when these three sectors combine, the balance is near zero as this is nothing more than an accounting identity.Figure 6: UK sectoral balances data from the ONS. The inverse correlation between Private and Public sectoral balances. Private sector savings mirror the public sector deficit as illustrated by the model in Figure 3.

Why two circuits?

Why do we need this duopoly of both a government circuit and a banking circuit? Why do we need both fiscal and monetary policy? As money is a collective good, should we transfer all money creation powers to government and demote private banks to the role of intermediaries as some propose? Or could we hand over all money creation to private banks as free-market fundamentalists would prefer?

Put simply, the commercial bank circuit serves private needs while the government circuit serves collective needs. The bank circuit exists to serve individuals and ‘capitalism’, while the government circuit exists to deliver on democratically controlled promises.

Economists often call our collective interests public goods. The failure of the private interest bank circuit to provide public goods is easy to understand by exploring healthcare. The market solution is to cater for the patient offering to pay the most. Even worse, the market may deliberately create a scarcity in order to charge a higher price. A market cannot operate effectively in matters of life and death. Kenneth Arrow a highly-respected pioneer of neoclassical economics and winner of the Nobel Prize in Economics in 1972 wrote ‘the laissez-faire solution for medicine is intolerable’.[4] In situations where competition is not viable, where demand is unlimited like health, and supply delivers societal benefits, then collective democratic control is the optimal solution. The House of Lords Select Committee on the Long-term Sustainability of the NHS report in April 2017 reaffirmed that the principal method of funding the NHS should be via government spending.[5]

What has gone wrong?

The art of economic management is to balance fiscal and monetary policy. An over dependence of one or other is doomed in the long term. The core failure over recent history lies in the inability of politicians and central bankers to regulate the banks and to use fiscal policy appropriately. There now exists UK Department of Health data to support the assertion that government austerity may be the primary underlying cause for the deterioration of health inequality measures in England.[6]

‘In her present condition, Great Britain resembles one those unwholesome bodies in which some of the vital parts are overgrown…and through which an unnatural proportion of the industry and commerce of the country has been forced to circulate, (which) is very likely to bring on the most dangerous disorder upon the whole body politick’. When one considers the unhealthy dominance of the financial sector within the UK and global economy today, it may be surprising to discover that Adam Smith wrote these prescient words in the Wealth of Nations over two hundred and forty years ago.[7]

In a similar vein, using central bank monetary policy alone to rescue the global economy has been misguided. In 1969, the world-famous economist, Milton Friedman said ‘The available evidence . . . casts grave doubts on the possibility of producing any fine adjustments in economic activity by fine adjustments in monetary policy’.[8] More recently, Mark Carney, the Governor of the Bank of England, reinforced this point in his ‘The Spectre of Monetarism’ speech published in December 2016 where he stresses that monetary policy needs to be in ‘better balance with fiscal and structural policies’. [9] The sudden change to no money growth after 2010 in Figure 5 is evidence of the complete failings of recent monetary and fiscal policy.

4) NHS spending boosts the wider economy in excess of the money spent

Fiscal policy is very powerful but needs to be carefully managed. The NHS was conceived and built in times of high national debt. This could occur because creation of money is not an inherent constraint. Thanks to the government spend and tax circuit, the NHS nurse, doctor, physiotherapist or pharmacist need not cost anything as long as (they serve a useful purpose and) the money spent on them is also spent. In fact, it is more likely that society will profit through ‘crowding in’ more economic activity through NHS employees’ subsequent spending and a healthier public.

It is estimated that the fiscal multiplier for UK healthcare spending currently lies between 2.5 and 6.1. This means for every £1 spent on the NHS approximately £4 of economic activity results.[10] If you had a cash-back card that gave you £4 back for every £1 spent, you would not cut back on your spending! Only when we reach a position of over supply when NHS staff wait forlornly for patients to present do we reach a point where the multiplier falls to below one. We are, at present, an unsafe distance from a workforce oversupply scenario.

As a sovereign nation, the UK can always afford high quality universal NHS healthcare. Money is essentially an accounting system designed to facilitate our collective activities and development. Fiscal policy needs to be activated to meet the needs of our society as there is now observable failure of the prevailing reliance on monetary policy and preservation of rent-seeking private interests. It is evidently wrong to assert that healthcare access and quality is limited by the availability of money. The constraint, in truth, has never been the potential availability of money, but the desire to resource the NHS appropriately. In the words of John Maynard Keynes, ‘Anything we can actually do we can afford’. [11]

References

[1] Department of Health annual report and accounts 2016 to 2017 https://www.gov.uk/government/publications/department-of-health-annual-report-and-accounts-2016-to-2017 (accessed August 2017)

[2] Money Creation in the Modern Economy. Bank of England Spring Bulletin 2014

http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q102.pdf (accessed August 2017)

[3] Bank of England interactive database

http://www.bankofengland.co.uk/boeapps/iadb/newintermed.asp (accessed August 2017)

[4] Uncertainty and the Welfare economics of medical care. Kenneth J. Arrow. The American Economic Review December 1963. http://www.who.int/bulletin/volumes/82/2/PHCBP.pdf (accessed August 2017)

[5] House of Lords Select Committee on the Long-term Sustainability of the NHS. The Long-term Sustainability of the NHS and Adult Social Care Report Published 5th April 2017. p44. https://publications.parliament.uk/pa/ld201617/ldselect/ldnhssus/151/151.pdf (accessed August 2017)

[6] David Buck, King’s Fund  https://www.kingsfund.org.uk/blog/2017/08/reducing-inequalities-health-towards-brave-old-world (accessed August 2017)

[7] Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. p468-9. Edited by S. M. Soares. MetaLibri Digital Library, 29th May 2007 (accessed August 2017)

[8] Milton Friedman and Walter W. Heller, Monetary vs. Fiscal Policy, W. W. Norton and Company Inc., New York 1969.

[9] ‘The Spectre of Monetarism’. Speech by The Governor of the Bank of England. December 2016. http://www.bankofengland.co.uk/publications/Documents/speeches/2016/speech946.pdf (accessed August 2017)

[10] Does investment in the health sector promote or inhibit economic growth? Aaron Reeves et al. Globalization and Health 2013. https://doi.org/10.1186/1744-8603-9-43

[11] The Collected Writings of John Maynard Keynes. Vol. 27 p270. Activities 1940–1946: Shaping the Post- War World: Employment and Commodities ISBN 978-1-107-65156-2

 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 

 

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

COVID-19 in Great Britain and Northern Ireland

Published by Anonymous (not verified) on Fri, 27/03/2020 - 7:59pm in

Tags 

ireland, NHS

Introduction The overall HMG response to the Covid-19 pandemic has been flatfooted, slow and confusing. Mixed messages have been given as in Fig. 1. This video from Joe.uk shows total inconsistency from PM Johnson. This mixed messaging has the potential of being disastrous. According to Sonia Sodha: Media experts despair at Boris Johnson’s coronavirus campaign.... Read more

Matt Hancock’s Telegraph article Shows He Really Doesn’t Understand the NHS Ethos

On Sunday, the current malign incompetent currently posturing as NHS secretary, Matt Hancock, issued a statement of the government’s current policy regarding the Coronavirus. This contradicted Boris Johnson’s previous statement, which was that we shouldn’t be afraid of catching it, because this would confer on us all herd immunity. The Tory party, like the Republicans in America, hate experts. This rather cavalier attitude owed something to the massive ignorance in the Republican party over the other side of the Pond. They had been loudly denouncing it as a scare dreamed up by the Democrats, until one of their number came down with it at CPAC after meeting and pressing the flesh with several of their leading politicos and activists. The result was complaints that the American public weren’t being told enough about it. Johnson here obviously didn’t know what he was talking about, and outraged people who did – doctors, epidemiologists, virologists, and informed laypeople – weighed in to put him right.

Both Buddyhell and Martin Odoni have put up excellent pieces shooting down Johnson’s spectacularly ignorant comments. They point out that herd immunity means that everyone, or at least the vast majority, would have to come down with it. Only a very few would become immune, and that immunity would only last a couple of months, not years or a lifetime. And because nearly everybody would have to contract the disease, even if the mortality rate is low, the result would be that a large number of people, perhaps as many as 200,000, would die for the rest to acquire this short-lived immunity. It’s an immensely callous attitude from a Prime Minister, who obviously doesn’t know what to do. Worse, as the French philosophical feline and Martin rightly pointed out, it shows the eugenicist thinking underlying Boris’ and Cummings’ response to the disease. Eugenics hold that the biologically unfit, which means the inferior lower orders, should not be allowed to breed. The handicapped should be sterilised to make sure they don’t. At the same time, health care should not be extended to the poor, and certainly not racial groups specifically held to be inferior, like Blacks, because this will interfere with the proper natural process by which inferior stock is weeded out of the population. Eugenicist arguments were invoked in America by the corporate rich in the 19th century to prevent the state passing legislation to improve standards of workers’ health and safety. Because if workers and their families contracted disease and had shorter lives, it wasn’t because living conditions were worse than their employers. It was because they were biologically unfit. Cummings seems to hold eugenicist views, as did Andrew Sabisky, before the latter’s unpleasant opinions meant that the Tories had to get rid of him. But you can bet that the attitudes still there. Maggie Thatcher’s mentor, Sir Keith Joseph, caused outrage in the mid-70s when he declared that single mothers were a ‘threat to our stock’. And that does seem to be how the Tories regard the British public – as stock, to be cultivated or culled according to the whims of their masters.

See: https://thegreatcritique.wordpress.com/2020/03/12/herd-immunity-is-your-answer-johnson-truly-the-lunatic-has-taken-over-the-asylum/

https://buddyhell.wordpress.com/2020/03/12/wait-what-herd-immunity/

Hancock’s article seems to me to be partly an attempt by the government to allay some of the outrage Johnson’s comments caused, and to show that the government really does have a sensible policy to tackle the emergency. Despite all appearances to the contrary. But Hancock’s article also showed that Hancock and his masters have no understanding of or sympathy with the public service ethos underlying the NHS. This was shown not so much by what Hancock said, but how he said it. His statement was released as an article in the Torygraph behind a paywall. This caused more justifiable outrage. Zelo Street made the point that Hancock should have made his announcements publicly, not just in a single newspaper, and certainly not tucked away behind a paywall so that only Torygraph subscribers could read it. The Torygraph seems to have taken the hint, and made the article free, as it should be.

https://zelo-street.blogspot.com/search?updated-max=2020-03-15T16:12:00Z&max-results=20

But this attitude, however, makes perfect sense from the Tories’ ideological basis in private enterprise. Private industry operates by offering a range of services for the consumer, priced according to what they can afford or are willing to pay. The poorest only get the basic package, if they can afford that. As you pay more, so service improves. Now this works fine if you’re buying a washing machine or computer, but it’s no way to run public services that have to be accessible to all. Like the NHS. When that’s left to the private sector, as it is in America, it means that millions of people can’t afford proper healthcare. It means that 40,000 people a year die because they can’t afford their medicines, and the poorest hoard what medicines they have or use veterinary medicines for animals. A similar situation existed in this country before the establishment of the NHS by the Labour party under Clement Attlee and Nye Bevan. Before then, healthcare varied according to how wealthy you were. You got excellent care if you were well-off or were one of the few occupations that was covered by government health insurance schemes. If you were poor, you either had to make do with the charity hospital, the municipal infirmary, where standards varied immensely, some being extremely poor and basic, or you went without.

What changed attitudes to produce a broad consensus in favour of a socialised medical system was the Second World War. German bombs during the Blitz didn’t distinguish between rich and poor, who were hit alike and often in the same locations, so that the same healthcare had to be offered to everyone, regardless of personal wealth and class. But that was over 75 years ago, and the underlying lesson that made the NHS possible seems to have been forgotten by the Tories. If they ever learned it in the first place.

And so we had the unedifying spectacle of Hancock responding to the Coronavirus in the pages of the Torygraph like a private entrepreneur responding to increased demand. The announcement was made in a broadsheet paper aimed at and read by the top ranks of British society. It was hidden behind a paywall, so that only paying customers could access it. You get what you pays for, and this was premium service for valued customers. Which means the rich, whom eugenicist doctrine holds are biologically superior than everyone else.

This attitude is incompatible with running the NHS and tackling the coronavirus. Progress will only be made through properly funded state health provision and a government that genuinely has a public service ethos, rather than just pays lip service to it. 

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.

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.

Corbyn Warns that Fighting Against Corona Virus Will Be Harder Due to Tory Cuts

Published by Anonymous (not verified) on Sat, 14/03/2020 - 4:37am in

Yesterday the papers were falling over themselves to praise BoJob’s wretched budget to the rafters. It was the first populist budget since Maggie Thatcher! There would be more spending on the NHS to help it combat the corona virus. The Tories were now committed to spending more on the economy and the infrastructure. Boris was giving the public what they wanted. It was all A Very Good Thing indeed.

It seems it was only Jeremy Corbyn, who struck a more sober, realistic note. According to a piece in yesterday’s I, by Richard Wheeler and Sophie Morris, the former Labour leader warned that fighting back against the virus will be harder because of 10 years of cuts. The article ran

Jeremy Corbyn urged the Government to be straight with people about how the coronavirus response will be “much tougher” after 10 years of “deeply damaging” cuts.

The Labour leader welcomed Budget steps taken by Chancellor Rishi Sunak to head off the economic impact of the spread of Covid-18.

But the UK enters the crisis with its public services “on their knees” and with a “fundamentally weak” economy, Mr Corbyn added.

Replying to the Budget, the Opposition leader said: “The Chancellor shows not some but a lot of brass neck when he boasts that measures to deal with coronavirus are only possible because of his party’s management of the economy.

“Look outside – in the real world, we’re still living through the slowest economic recovery in a century. Our economy is fundamentally weak.”

He told the Commons: “The steps the Government has announced today to head off the economic impact of the coronavirus are obviously welcome, but I have some points I wish to raise.

“We have to be straight with people, it is going to be much tougher because of the last 10 years of deeply damaging and counterproductive cuts to all of our essential public services.”

He added the Budget “doesn’t come close” to delivering on the Government’s election promises to working-class communities.”

Bristol South Labour MP Karin Smyth on the Budget

I was at a meeting of the local Labour Party in south Bristol yesterday. Our MP, Karin Smyth was there to give her report to us all. And she was very scathing about the Budget and the Tory response to the coronavirus. She said first of all that the Tories should not be congratulated for doing something they’d destroyed. The money they promise to put back into the economy will not restore it to 2009/10 levels. And at the moment, it’s just headlines. The money has not been allocated and there is no infrastructure. She didn’t say it quite like this, but this is what is: guff. Empty, vapid guff and promises. She also said that it showed how far removed from the lives of ordinary people that they really didn’t understand how Statutory Sick Pay worked, or that people with the virus would have to go into work because otherwise, thanks to their cuts, they wouldn’t have any money.

Her comments on the state of the NHS and social care also bore out Corbyn’s comments. Before she became a local MP for Bristol, she was involved in the CCGs – the commissioning groups set up within the NHS by Tony Blair – in north Somerset and then in Bristol. She stated that Bristol was well placed to tackle the coronavirus, but this was only through the work of the local authority. The party’s LGBT officer stated that Bristol was also strongly placed to tackle the disease, as she worked in the virus labs. However, this was solely due to the local authority and NHS groups working to develop the machinery to deal with emergencies like the virus themselves. The Tories had destroyed the national machinery to deal with them with the introduction of Andrew Lansley’s pestilential Health and Social Care bill of 2012.

Tory NHS reforms and partial privatisation have damaged this country’s ability to respond to the coronavirus. 

I ended up talking about the coronavirus emergency with the taxi driver coming home. He too was mightily unimpressed with BoJob’s response. And he was furious at Johnson’s statement that people would die. Now I think Johnson meant it as a mere statement of fact, but the driver, and many others I’m sure, have taken it to mean that Johnson is completely indifferent to the deaths of the poor, the disabled and the elderly. Mike has commented to that effect. So has Zelo Street. And they’re right. Johnson’s government has repeatedly shown that they have no interested in preserving the lives of the vulnerable. Quite the opposite – they do seem to see the mass deaths they’ve inflicted through the work capability cuts and the benefit sanctions as ‘culling the herd’.  Which brings me back to another comment Smyth made – that the government’s welfare reforms means that the welfare safety no longer exists. And the effects will get worse towards the end of this government in 2024.

People are going to die because Johnson and the Tories hate the welfare state for keeping the poor and vulnerable alive and imposing taxes on the rich.

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