public purpose

The time has come to talk of many things; of taxing and spending and an economic system that needs mending. 

Protest placard with a picture of the Earth in space and the slogan "One World"Photo by Markus Spiske on Unsplash

In the news, the Prime Minister tells millions of  WASPI women affected by the changes to the state pension age that he couldn’t promise to magic up the money for them despite having found lots in the magic money pot for Tory manifesto pledges; the Home Secretary, Priti Patel, whilst visiting a food bank, claims that the Tory government was not to blame for poverty in the UK and, shifting the blame onto local councils, forgets to mention that central government funding has been cut by nearly 50% since 2010/11.

After 9 years of austerity, the consequences couldn’t be starker for our public and local government services, however, it is UK citizens, families and their children who have borne the distressing costs of cuts to social security benefits, both on their health and financial well-being. It cannot be clearer that the steep cuts to tax credits, child and disability benefits, ESA and Incapacity benefit and housing along with the introduction of Universal Credit have been behind the increases in child malnutrition, food bank use, homelessness and suicide.

The IPPR this week published its report ‘Divided and Connected’ which reveals that the UK is more regionally divided than any comparable advanced economy.

In the same week, the Resolution Foundation published its report ‘The Shifting Shape of Social Security’ It notes in its analysis of the manifestos of the main parties that child poverty is set to continue rising under the Conservative Party’s social security plans, whilst Labour’s £9bn of extra spending would mean 550,000 fewer children in poverty, it would not reverse the effects of the £5bn benefits freeze and could still see more children living in poverty in 2023 than do today. It noted that major policy changes have reduced support for working-age households since 2010 resulting in overall spending in 2023-24 being around £34bn a year lower on current plans than if the 2010 benefit system had remained in place, and that the cuts in support had fallen almost entirely on low-to-middle income working age families. It also noted that the Conservatives’ 2019 manifesto makes no changes to existing policy and as a result child poverty risks reaching a 60-year high of 34%.

Although the conservatives are promising more spending on health and education, it seems clear that they intend to carry along the same policy paths they have followed since they came to power in 2010 which have involved cuts to benefits, conditionality, sanctions and welfare to work. Clearly, they have no intention either of reversing the already implemented cuts or reforms which have done so much damage and left a trail of devastation in many people’s lives. Priti Patel’s remark about who is to blame for poverty is indicative of Tory neoliberal credentials of denying governmental responsibility and passing the buck along to others, whether local government who have been firefighting for lack of funds or indeed shifting the blame onto citizens themselves. Her position has not changed much since 2015 when she said, ‘There is no robust evidence that directly links sanctions and food bank use.”

In the light of the very real consequences on people’s lives of government spending decisions and policies, it is all the more depressing to read the two analyses of the party manifestos by the Resolution Foundation and the IFS which instead of looking at the real effects of government spending policies on the lives of real people, examine them in purely financial terms and arbitrary fiscal rules which as we may now be realising bear no relationship with how money really works.

Hunkered down in household budget explanations, the IFS, rather than considering the spending promises of all three parties from the perspective of potential outcomes for the economy and its citizens, examines them in relation to the prospect of raising taxes or borrowing and the likely impact on the deficit and national debt.  As usual, the question, if not asked directly, is how will the parties pay for their spending plans? When, instead, they should be acknowledging that the real question is how will a future government manage existing resources to meet government goals? This will be the real constraint that any future government will face, however progressive that government may be. The resource balancing act will be key to maintaining spending within the productive capacity of the nation to deliver public purpose.

The Resolution Foundation summed it up depressingly in its conclusion in saying that:

‘The priority that both main parties have placed on credible fiscal frameworks in this campaign is laudable. Such rules are hugely important for the government’s overall economic priorities. In setting out new fiscal rules, it is vital that they provide a clear framework for sustainable public finances, constraining the temptation for policy makers to promise unfunded giveaways.’

Such institutions unsurprisingly have focused on the notion that it is the role of government to balance its budget rather than serving citizens and improving their economic and social well-being. It is regrettable that a recent poll has suggested that many people doubt whether such spending plans are affordable and yet given the reality of the consequences of not spending adequately how could we possibly afford not to?

The nation is now paying the price for politicians pedalling the lie of the last forty years that money is scarce, that there is no such thing as public money and that good government is about fiscal discipline. Even if changing that notion in the public consciousness will take time, in the light of the urgency of the challenges to address climate change and social inequality we need an urgent step change in economic thought on a planetary scale since it is our survival on this planet which is at stake.

This is not, however, a time to make compromises with an economic system which has already done such huge damage. The seeds of an alternative model are already being hijacked by companies cynically promoting their green credentials with one aim in mind: to create more growth to keep the profits rolling. Reducing our plastic use and buying electric cars will scarcely make a dent in the scale of the changes we need to implement. We may have a broad vision, but that now needs to be developed into concrete realities. It may be still a work in progress, but it is a vital one we must not ignore.

This is a time to reimagine the world. A fairer and more sustainable approach to replace the one of endless growth which currently defines our capitalist economic system and puts profit before people and the planet.

Progressives on the left are beginning to initiate a much-needed conversation about what we need to do to reverse the decades of social injustice and challenge the idea that we can maintain the engine of growth on a finite planet.

However, and most regrettably, politicians on the left are still trying to have that conversation stuck in old economic paradigms of how money works. When they are asked how they will pay for these vital programmes the response is always one of tax and spend or borrowing to invest. Raising corporation tax, bringing back the magic money tree from the Cayman Islands, taxing the rich until the pips squeak or borrowing on the markets because interest rates are low. Instead of talking about taxing the wealthy to redistribute wealth by removing their colossal purchasing power and ability to influence politicians, they talk about funding our public services with the proceeds.

Again, on the left some politicians are suggesting that the government is akin to a business and that renationalising transport, our utilities, mail and the NHS will allow the government to plough back the profits back into public services. Yes, we need to end the rip-off of privatisation which has not benefited citizens and has allowed public money to flow into private pockets for profit motives, but let’s not buy into the idea that the government resembles a large corporation with a profit and loss sheet. It doesn’t.

The government is the currency issuer and neither needs to tax nor borrow in order to spend and nor does it need the profits of renationalised industries for us to have public services.  It just needs the political will to deliver them.

The role of government is to create the framework for markets to exist and dictate through legislation how they will function and in whose benefit. It taxes the populace, not to fund its spending but to manage its economic policies, from the redistribution of wealth to expressing public policy and is one of the key tools it can use to manage inflationary or deflationary pressures.

Government not only has the power of the public purse to improve the lives of its citizens it also has the power to legislate to drive its political agenda. All a question of choices which are not dependent on the state of the public accounts. Indeed, not only does it have the power to spend for the public purpose, it has the power to change the rules of the game. For example, it might regulate the financial sector to ensure that when people’s savings of whatever kind are put to work it is done to shift our negative and damaging behaviours towards creating a positive impact on society and our environment instead.

Outcomes are the measure of any government’s success. With the political will it could:

  • create the framework for good quality universal public services provide a social security system which is both not punitive in its functioning but also ensures a decent standard of living for those unable to work through disability, sickness or old age,
  • pay for a just Green transition,
  • offer a Job Guarantee as standard to create price stability and act as an automatic stabiliser for the economy to give people the dignity of proper, well-paid employment when needed.

All of these things are fundamental to the good functioning of society.

What are we so afraid of? A better future for our children? A more sustainable and fairer economy for all? Indeed, a planet for us to live and breathe on? What is not to like? So, when you hear interviewers berating left-wing politicians (who have not quite made the leap into monetary realities) about how they will pay for their progressive agenda ignore those questions and remember instead that a government’s economic record will be defined by how it serves the nation’s economy as a whole, improves the lives of its citizens and how it uses the resources it has at its disposal to achieve its agenda – not whether it balanced the budget.

 

For more in-depth information about how money really works, you can find all you need on our GIMMS website.

https://gimms.org.uk/

 

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The post The time has come to talk of many things; of taxing and spending and an economic system that needs mending.  appeared first on The Gower Initiative for Modern Money Studies.

It’s not balanced budgets that will save us. It’s the power of the public purse and our human values.

Person at a demonstration holding a placard with slogan "What lessens one of us lessens all of us"Photo by Micheile Henderson on Unsplash

Charles Dickens began his novel ‘Hard Times’ thus:

“NOW, what I want is, Facts. […]. Facts alone are wanted in life. Plant nothing else and root out everything else. You can only form the minds of reasoning animals upon Facts: nothing else will ever be of any service to them. [….] Stick to Facts, sir!”

Whilst one might dispute Dicken’s character Gradgrind with his miserable vision of human existence, facts can be very useful. They can trace the human misery caused by 9 years of austerity and the last forty years of a pernicious market-oriented ideology which has led to vast disparities in wealth distribution and caused huge damage to society by encouraging the pursuit of self-interest.  And yet it has to be said as the election campaign gears up, that in terms of monetary reality, of facts there seem to be very few to be had.

As political and economic commentators, not to mention politicians on all sides, emphasise daily their claims that the government finances are like a household budget, the public has largely remained stuck in the quagmire which is presented as monetary reality and distrustful of a political system which has failed them.

Looking at newspaper front pages this week you could be forgiven for thinking that we are headed for bankruptcy if Labour were to win the election or that their spending plans would cost UK households £43,000 each. A ‘reckless spendathon’ is in the offing according to a government spokesperson in a recent BBC television interview.

Aside from such narratives being a fallacy, they are designed to put the frighteners on people who are already suffering financial hardship caused by years of austerity and ideologically driven government policies. Those with a political agenda shore up those false beliefs that borrowing too much will lead to government insolvency. They cynically and callously terrify people that they will be asked to pay for those spending programmes when they will not. This is an establishment that is running scared that their reign of power is coming to an end. The means justify the ends!

It cannot be denied that if we are to escape the worst effects of a coming global downturn, an incoming government of whatever variety will need to implement adequate spending programmes and increasingly fiscal policy is becoming the ‘mot du jour’. However, the message is reinforced daily by all sides of the political spectrum that there are still financial limits to that spending.

Last week Ed Davey, deputy leader of the LibDems said of Labour and the Tories spending plans that they are ‘writing promises on cheques that will bounce’. The very same party that joined in with Tory austerity during the Coalition and voted for public spending cuts and welfare reforms.

In the same week, the Greens promised welcome public investment of £1trillion over 10 years to fight climate change, the money for which it said would come from ‘borrowing’ and ‘tax’ changes.

Then the Chancellor of the Exchequer in a ‘give with one hand take back with another’ message promised to increase borrowing to fund billions of pounds to pay for new infrastructure but then announced three new fiscal rules to ‘control borrowing, to control debt and to control debt interest’.

Stuck in household budget la-la land he said without a hint of jest:

‘like anyone who budgets whether it’s a household, or small business or large business, I know that we must keep track of what we are spending and what we bring in…. We can’t run an overdraft forever on day to day spending, so I can confirm that our first rule will be to have a balanced current budget. What we spend cannot exceed what we bring in.

Never mind that you can build as many hospitals as you like as part of an infrastructure spending programme but if you make up foolish rules about day to day spending those hospitals will remain empty of nurses and doctors and other health professionals to staff them.  And let’s not forget the bailing out of the banks or successive wars funded without a taxpayer in sight.

The same tired old tropes abound about taking advantage of ‘historically low borrowing rates’ and ‘living within our means’ remain the context for Conservative spending plans and figure in one way or another in the language narrative of other parties too.

In a similar vein this week, the shadow chancellor reinforced that same story when he tweeted:

‘The Tories can’t invest in the public services we need because unlike Labour they won’t raise taxes on the super-rich and take on the international tax dodgers’.

The implication being here that he will bring back the magic money tree from the Cayman Islands to pay for our public and social infrastructure.

Even the Leader of the Opposition has suggested that if they don’t tax the very rich, then Labour won’t be able to pay for public services.

As Professor Bill Mitchell commented in a blog in response:

‘The British government does not need to tax the rich to pay for first-class public services. It can do that at any time it can muster the real resources to accomplish that aspiration. It issues its own currency.

It might want to tax the rich because they have too much power but that is quite separate from justifying such an action because the government needs their ‘money’.

Although without doubt the proposals on the progressive left to tackle social inequality, rebuild public infrastructure and address climate change are laudable and indeed vital, it is to be regretted that the arguments for public spending programmes are being reduced to household budget frameworks of monetary affordability, where the money will come from and economic credibility. We have become fixated by the single idea that the country’s economic ‘health’ hangs on whether or not we run a deficit.

GIMMS will say it again. In reality, the only analysis that really counts when deciding which way to vote in any election is not a judgement based on a government’s financial record or whether it balanced the public accounts but what its economic record was.

We as citizens should be examining where the money was spent and who benefited. Did that spending ensure that its citizens were in secure employment and fairly paid, had decent housing and sufficient food in their bellies? Did it create a healthy and more equitable economy in which wealth was more fairly distributed? Did it ensure that the vital public and social infrastructure such as the NHS, social care, education and local government were adequately funded to serve the public purpose and not fill the coffers of private profit? Or was that public money sucked up by the private sector in a big free for all in which the state serves the interests of the corporations rather than the interests of its citizens?

And what about government policies on health, education, welfare spending and the environment? Did they create stable lives by improving the material, financial, physical and mental health of citizens? Did they ensure adequate investment to ensure that the nation can be as productive as possible through good education and training both for present and future generations? And finally, the environment – what actions did they take to address the climate crisis?

In other words, we should be examining what the real economic outcomes were.

After nine years of telling the public that there was no alternative to austerity and cuts to public spending because the coffers were bare, it’s amazing what the prospect of an election can do to turn the spending taps on. And yet the smoke and mirrors, lies and deception about how government spends just carries on relentlessly.

But now it’s all OK (for the moment) the Conservatives have found the magic money tree, cutting the deficit has apparently given them some savings and the fiscal ‘headroom’ to spend. For those that know, this narrative is a fairy tale of epic proportions. For those that don’t, it should be enough to arouse a cynical response by a public which has been at the sharp end of those tax and spend myths which have formed the basis for its policies.

Indeed, only this week the following headlines should serve as the wakeup call for the public about Conservative economic credibility.

‘UK suffers biggest fall in jobs in four years’

‘UK avoids recession but annual growth slowest in almost a decade.’

‘Wage growth slows’

We can blame it in part on the uncertainty caused by Brexit, but the reality is that behind the faceless employment figures published by the Office of National Statistics are the lives of real people who have been affected by the government’s policies and spending decisions over the last 9 years.

To put it in basic economic terms, when a government spends it creates income for the private sector which is then spent into the economy. When it imposes spending cuts it is removing money from people’s pockets leaving them with only three options: Use their savings if they have any, take out credit or go without.

All spending, whether from government or the private sector, equals income for someone. What happens when you take that away? That’s people who lost their jobs in the public sector as local government, the NHS and schools were forced to pare down their budgets as a consequence of public spending cuts. That’s people constrained by public sector pay caps and pay cuts. That’s people who ended up working two or three jobs on low pay to keep a roof over their head and food on the table. That’s people working in precarious employment in the zero-hours or gig economy with no guaranteed decent income or sick or holiday pay. That’s people affected by the reforms to welfare and the introduction of Universal Credit, from those who are unemployed left with insufficient financial resources to make ends meet and those in work but not earning enough to keep their heads above the water to those left struggling to cope because of chronic sickness or terminal illness.

In seeking the nirvana of balanced budgets by cutting spending the Conservative government has not created a healthy economy it has done the very opposite. The statistics are the proof.  Without adequate spending, the economy suffers, and people pay the price.

And yet as political parties present their spending plans and worry about how they will demonstrate their economic credibility the elephant in the room is crashing about trying to make itself noticed. On one note it is pathetic to see the Conservative party take issue with the opposition’s spending plans calling them reckless and unaffordable whilst promoting its own as being fiscally responsible. On another, in their rush to spend, neither party seems to have considered the real resource factor and how that will be managed.

The IFS for all its neoliberal sins ‘gets’ the elephant in the room and recognises that whoever wins on December 12th their spending plans will be dependent on whether they have the right resources at their disposal to deliver.

After 9 years of insufficient spending into the economy to prepare for the future, will there be sufficient people with the right skills to meet the government’s needs? Whether that’s engineers and construction workers to design and build the proposed infrastructure or homegrown nurses and doctors already trained up to service the planned spending on the NHS? Or in these days of climate crisis we might also be talking about the resources needed to deliver the Green New Deal and ensure a just transition not just for those in the rich west but those in the global south whose countries have already been plundered of raw materials and impoverished so that we can maintain our standard of living.

For progressive parties like Labour and the Green Party who wish to deliver a left-wing agenda what they have to do is decide their key priorities, consider the availability of resources and how they could be freed up to deliver a future government’s objectives efficiently and effectively. A case in point this week is Labour’s plan for free broadband which has much to recommend it in terms of bringing communities together in an inclusive and connected society. Journalists and others predictably have asked the question where will the money come from? They have missed the point entirely and should be asking instead how many workers would we need to deliver it?

Ultimately, all sovereign currency-issuing governments don’t need to match their plans to tax revenue or determine whether the markets can lend them the money. The role of government in this respect is not to balance the budget but to balance the economy.

The public needs to understand that it isn’t the government’s ability to tax the rich but its power to run a deficit which determines the health of an economy. As the sovereign currency issuer, the UK government has the power of the public purse to fund the public works necessary to tackle social and wealth inequalities, deal with the current global economic uncertainty, and fund the Green New Deal, should it choose to do so.

However, at home, our public and social infrastructure is in a shocking state of decay caused by 9 years of cuts to public spending and lack of planning. Reversing that decline is not something that just promising to spend can solve in the short term.  There are important issues to consider for the long term which may not fit the short-termism of the political five-year framework and many politicians who have become used to serving other interests.  That is the scale of the challenges we face.

When all is said and done even though the Labour party persists with the household budget myths John McDonnell has it right in terms of what is required not just to reverse the social injustices heaped upon global populations because of pernicious ‘free’ market ideology or the threat to the human species at our own hand. As he said not only must the scale of investment match the scale of the crises we face both in ecological and social terms, but also if we don’t make these investments our future generations will never forgive us.

Let’s leave the final words to Professor Bill Mitchell who wrote a while back:

“My ideological disposition tells me that the pursuit of human values is the only sustainable way of organising and running a world. The neoliberal era has severely undermined that pursuit.

That’s what we must change and urgently if we want half a chance to save ourselves and our children’s children from disaster.

 

Note: GIMMS has a very good resource section on our website which takes you through how money works. From FAQS to resources sheets and external websites, videos and academic papers for those who want to take it further. For an introduction to how money really works follow the link here.

 

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The austerity prescription was not an experiment; it did not fail for the rich. Time for a rethink. Time for an economic revolution.

Published by Anonymous (not verified) on Sun, 03/11/2019 - 8:51am in

Poling station sign on a fencePhoto by Martin Bamford

“Ultimately austerity has failed because it is unsupported by sound logic or data. It is an economic ideology. It stems from the belief that small government and free markets are always better than state intervention. It is a socially constructed myth – a convenient belief among politicians taken advantage of by those who have a vested interest in shrinking the role of the state, in privatizing social welfare systems for personal gain. It does great harm – punishing the most vulnerable, rather than those who caused this recession.”

David Stuckler, The Body Economic: Why Austerity Kills

 

So here we are. After literally years of national uncertainty over Brexit, parliamentary wrangling and growing public discontent, a general election has been announced just before Christmas. Whilst at this early stage it is unclear what the outcome might be (we have a road to run yet) who we vote for should be determined not by listening to the promises that will be made in political manifestos but by examining closely the economic record of the current government over the last 9 years.

Who has gained and lost out through government’s and taxation and spending policies? Who has suffered at the sharp end of austerity politics and why? Every day the consequences are ever more visible. On our streets, in our hospitals and GP surgeries, in our schools and local communities, amongst our family and friends. Hunger and the normalisation of food banks, growing homelessness, cuts to child and adult social services, the collapse of social care, lonely deaths of vulnerable people behind closed doors, longer waits to see a doctor or hospital referrals, the humiliation and financial distress caused by welfare reforms. This is what austerity has achieved. GIMMS has covered these things week in and week out for the past year in some form and again we make no apology for doing so again. What happens next will be in our hands as will the future of our children and future generations.

Austerity has been built on a lie, and in fact, has allowed the incumbent government to pursue the neoliberal ideology of decades with impunity. It has shamelessly promoted the cult of the individual over collective action, demonised those who don’t fit the mould of hard-working people, left them at the mercy of the unemployment queue or working in the low paid, insecure gig economy, burdened them with high levels of private debt, increased poverty and inequality not to mention sold off public assets and privatised vital public services.

We were endlessly told that the previous Labour government had spent all the money and bankruptcy beckoned. We were told there was no alternative to cutting public spending to get our finances back in order. We were told that our public services were inefficient and no longer affordable. And we believed it all. Not because we were stupid but because it seemed a logical premise that the government’s finances were like our own. We were bound by Dickens’ character in David Copperfield, Micawber, whose dictum was that happiness arose from not spending beyond one’s means. However, those misunderstandings are now starting to shift and although many politicians and orthodox economists are trying to ignore the elephant in the room, modern monetary realities are moving into the mainstream arena to be discussed, criticised and picked over. We should feel more confident at this positive step forward.

In the meantime, though, we still have a big job in front of us to inform and challenge the status quo and economic orthodoxy of the last 40 and more years.

While we prepare for the coming election (and Christmas) the effects of government austerity roll on, affecting people’s lives remorselessly.

Published in July and updated just a few weeks ago, the Insolvency Service reported that levels of personal insolvency were approaching the highest in a decade. In the three months up to September, they rose from 25,169 in the same period last year to 30,879. The data also showed a dramatic increase in company insolvencies which had increased for the third consecutive quarter. Duncan Swift, president of insolvency and restructuring trade body R3 said ‘figures provide a worrying insight into the state of personal finances’ and are ‘further evidence that the economic and political turbulence of the last 12 months has taken its toll on businesses’. He also observed that ‘although real wages have hit a recent high, they are still lower than they were before the financial crisis. Unemployment may be low but it’s not necessarily secure for everyone’.

In a blog in 2017, Professor Bill Mitchell wrote:

‘One of the defining features of the neo-liberal era has been the build-up of private debt, particularly household debt. [……….]. Pursuing budget surpluses is necessarily equivalent to the pursuit of non-government sector deficits. They are the two sides of the same coin’.

In other words, when a government is in surplus i.e. it has taxed more than it has spent the non-government sector pays the price.

We should be wary however about blaming everything on Brexit, as many pundits do, and instead should be looking at other causes for the rise in private, household debt and growing financial instability.

Over the last nine years, the government has pursued an austerity policy of cuts to public spending on the false premise that it needed to cut its deficits and borrowing to get the public finances back into shape. It also provided a handy smokescreen for the Conservative government to reduce the level of state involvement in public service delivery by contracting out and privatising services, although it did not stop public money going into private profit.

Public services were cut, people lost their jobs and local government grants were slashed.  Poverty and inequality grew as employment became more precarious in a low wage economy along with the rise of zero and part-time hours, and the gig economy. The claim at the time was that if the public deficit was not reduced then the economy would suffer through a scarcity of money. The politicians advised by economic experts promised that lower deficits or fiscal surpluses would guarantee financial stability.

However, the reality was the reverse. Austerity policies, quite simply, removed money from the economy and reduced people’s spending power, leaving them with no other option but to increase their debt by taking out credit or spend their savings. As John Maynard Keynes so rightly noted ‘the boom, not the slump is the right time for austerity’.

When a government stops spending sufficiently to ensure full employment, someone else has to take up the slack i.e. the consumer has to spend instead to prop up the economy. However, unlike currency-issuing governments whose spending constraints are not financial, private households are limited in their capacity to spend by their income or their ability to borrow. Pursuing lower deficits or surpluses was, and still is perverse, not to mention damaging, given the economic context at the time. The nation is now paying a heavy price for austerity as the country faces the prospect of a future recession caused also by a global slowdown and the uncertainty of Brexit.

By way of example, we can show how the prevailing economic orthodoxy had serious consequences for the economy. In the early 2000s, Labour ran budget surpluses achieving the lowest deficits in UK history. Politicians of the time, in justification and using the classic household budget metaphor, said that there was nothing progressive about budget deficits and that every pound we spent on debt interest was one less we could spend on the NHS, on vital public services, on helping the poor and vulnerable. The UK was at the time on the crest of a wave of consumption built on household debt which subsequently and, as we know, ended in the Global Financial Crash caused by crooked financial institutions who’d got out of control, and governments who had not only encouraged a deregulated financial environment but also pushed debt into the private sector whilst claiming themselves to be financially prudent.  We don’t seem to have learned any valuable lessons from that experience.

In a co-authored paper with Luke Reedman, Professor Bill Mitchell wrote in 2002.

‘… a major shift in monetary and fiscal policy is required and must begin with an acceptance that public deficits are typically required to maintain stable growth rates in spending and sustainable levels of private sector debt. The government can clearly run surpluses for a time by exploiting the willingness of the private sector to increase its debt levels. But this strategy becomes highly deflationary once private agents seek to restore their balance sheets. The resulting output corrections force the public sector into deficit with accompanying private wealth losses and rising unemployment. In this context, the argument that budget surpluses are needed to ‘fire-proof’ the economy is nonsensical.’

To give these technical facts a human dimension we need to bring them down to real-life realities.

Aditya Chakrabortty commented in an article this week, that more than four million are children living in poverty in the UK and that the number of food banks has increased from 57 in 2010 to 428 last year, handing nearly 580,000 parcels to children. Such figures, in one of the richest societies in human history, should mortify us as a nation. Reviewing the recently published book ‘It’s a no money day’ Chakrabortty describes it as ‘a watershed moment when Britain’s food banks go from newspaper headlines to a subject that teachers cover in classrooms; the moment at which mass destitution is no longer a badge of political failure but is instead accepted as part of British life.’ The normalisation of food banks and the charitable collection of food in supermarkets should be THE moment when the alarm bells start to ring.

When the likes of Michael Gove sneer at people using food banks for not being able to ‘manage their finances,’ in so doing they not only perpetuate the lie that people are to blame for their own misfortune, but they also provoke hate and create societal division.  By propagating the lie of money scarcity and shifting of responsibility from government to individuals, politicians are failing in their duty as elected officials to serve citizens. The role of government needs to shift back from one which serves corporate interests to one which serves the public purpose.

We are a nation rich in real resources and have a currency-issuing government with the capacity to mobilise those resources for the public good. Nurturing our children should be always central to our nation’s investment, with their young minds nourished with hope and inspiration and not the needless misery of foodbanks and poverty. By extension, this applies to the population as a whole, many of whom have suffered needlessly from government austerity and ideologically driven policies.

Given the climate crisis and the challenges we face in righting the social injustices of the past few decades (caused by an ideology which has put the individual over the interests of the collective and profit over the health of the planet and its citizens increasing poverty and inequality and threatening the existence of our species), it is time to engage in a conversation about what we think should be our priorities in the future.  About what sort of country we want to be, what public and social infrastructure we need to create economic and social well-being and what sort of future we want for our children’s children. These are not left or right questions, they are, quite simply, questions about our human values.

In the words of the current Prime Minister, ‘Britain deserves better’. It certainly does. Better than the last 40 years of economic and ideological orthodoxy which successive neoliberal governments have pursued relentlessly. It’s time for a change.

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The post The austerity prescription was not an experiment; it did not fail for the rich. Time for a rethink. Time for an economic revolution. appeared first on The Gower Initiative for Modern Money Studies.

Genuine Hope. Collective Action.

Published by Anonymous (not verified) on Mon, 28/10/2019 - 2:45am in

Hand holding a dandelion in its seed head stagePhoto by Aleksandr Ledogorov on Unsplash

“Man cannot discover new oceans unless he has the courage to lose sight of the shore.”

Andre Gide

In the week when protests have erupted in countries around the world from South America to Asia, the Middle East and the UK are we beginning to see a real revolt against the prevailing economic ideology? One which has poisoned politics, allowed corrupt behaviour through the influence of global corporations, caused environmental devastation and totally unnecessary and degrading human suffering.

People may not name neoliberalism as the author of their deprivation, but the ascendency of market-driven ideology has left many living in penury, with its associated effects not just on individuals but on societies across the world. Whilst the few live lives of unimaginable luxury, they do so on the backs of those who have virtually become slaves to a rotten and decaying system. The Chicago Boys who experimented in Chile with such destructive consequences have much to answer for decades down the line, where today the country’s economic model has produced vast wealth but left many struggling to manage as this week’s protests there have shown – a situation that has been replicated on a global scale whilst the few continue to gobble up the world’s wealth and resources for themselves.

Can we dare to hope that in the face of rising discontent that those politicians, economists, institutions and even journalists who have brazenly promoted and given this cruel economic system legs will eventually be called to account?  Can we dare to believe that, as the events show in Chile, a million individuals acting collectively can prove a powerful force to be reckoned with?

And yet the UK headlines this week once again make for stark contrasts between those who have lost out and those who have gained through government policy decisions and spending and taxation policies.

Hundreds of people forced to live in caravans added to those eking out a miserable existence living under railway arches, in temporary accommodation or sofa surfing. Two thirds of single parents losing out under the universal credit system adding to those who have already suffered at its hand and fears that it will only add to soaring child poverty rates. Yet more schools opening community food fridges to tackle family hunger caused by in-work poverty and the scourge of low wages adding to the 2000 food banks already providing support across the country. A nurse pleading for help after having ‘nothing left’ after rent, childcare and travel costs and teachers living in sheds or cars and depending on food banks to eat.  Amazon warehouse staff exhausted and under pressure to perform, working 10-hour shifts, falling asleep on the toilet and being forced to join what are euphemistically known as ‘power hours’ to speed up productivity.

One of its staff called it modern slavery and another asked why are people being treated like this when Jeff Bezos is the richest man in the world? In the same vein, when the boss of Deliveroo gets a 57% increase in pay and £8.3m in share options whilst those so-called ‘self-employed contractors’ at the firm work without a guaranteed minimum wage, holiday pay or sick pay and Argos staff get their annual Christmas bonus cut to just £5 by a boss on £3.9m it’s a wonder that people have accepted their servitude with so little protest, up until recently that is.

Are the chickens coming home to roost? And where will it lead us? With people crushed by the burden of debt, low wages and precarious employment, a consequence of government policies, many people find themselves hard pushed to protest as keeping heads above the water becomes the overriding priority in life.  Combine this with a democratic system which increasingly leaves citizens with no real voice, we shouldn’t be surprised that their fears and insecurities are now cynically being exploited by extreme right-wing politicians.

This is not confined to the UK or even the EU. There seems to be a huge chasm between the lived realities of people’s lives and politicians from across the world. Politicians blind to those realities or unwilling to engage with them, many of whom are still defending austerity as if there were no alternative then and would even cheerfully prescribe more of it now should they consider it necessary. The household budget analogy of the public finances persists and has a lot to answer for!

It begs the question whether, in the face of a global domino effect falling towards world recession as China’s economy slows and the US pursues its trade tariff policies, if the same inherent misunderstandings about how a modern monetary system works persist what the consequences could be? Even in the event of a temporary fiscal stimulus, failure to embrace that real understanding will leave future generations poorer in terms of life expectations on whichever continent they live, not to mention the salutary prospect of the destruction of our species on a planet no longer able to sustain us, all on the untruth that any action would be ultimately monetarily unaffordable.

As David Attenborough said this week ‘all these seven worlds are actually one and we are dependent on it for every mouthful we eat and every breath of air we take’. GIMMS has noted before that it is difficult to imagine anyone believing that money is so scarce that we can’t save ourselves, when the real challenges (which are less spoken about if at all) are the actual real resources that will allow a sustainable and just global transition to take place without exceeding the productive capacity of the planet and its citizens.

This week saw a small glimmer of hope as the TUC published its report Lessons from a decade of failed austerity: Getting it right this time’. It rightly challenges the view pushed by many economists and governments across the world that austerity had been the right response to the Global Financial Crash and traces the economic consequences of such policies on the economies of OECD countries and the impacts on workers’ pay. It also contests the widely-held view that there was no alternative to cuts to public spending and that society ‘must simply learn to live with degraded conditions’ on account of the public and social infrastructure no longer being affordable.

It recognises that although austerity thinking is still prevalent in some quarters, a programme of expansionary fiscal policy will be vital to support aggregate demand to counter the effects of a predicted global recession and reverse the damage caused by almost 10 years of cuts to public spending. It recommends that ‘government should expand expenditure on public sector salaries and services, fast track increases in public infrastructure and use fiscal policy as part of a wider plan to deliver ‘sustainable growth’ including investing in the public services families rely on, the skills workers need for the future and a just transition to net-zero carbon emissions’.

Whilst one might want to know more about what it means by ‘sustainable growth’ in a finite resource world, overall the report is encouraging. Its acknowledgement that ‘austerity thinking is the logic of the household budget and omits the impact of government policy on the economy’ is very welcome. But then it spoils it somewhat by the suggestion that ‘on a macroeconomic view government spending strengthens the economy and can improve rather than damage the public finances’ and then goes on to say that ‘increased expenditure should be financed by borrowing rather than increased taxation.’

As people are hopefully now becoming aware, reference to improving or damaging the public finances fits into the tax or borrow narrative of how governments spend which is incorrect. It is also contradictory to the report’s earlier recognition that the logic of the household budget omits the impact of government policies on the economy. The latter is the only measure of the effectiveness of government spending and taxation policies, in other words, who gained and who lost out as a result, not how a government managed its public finances or whether it balanced the budget or achieved a surplus.

The question of how we pay for it is not answered by taxing the rich or borrowing from them. Indeed, as the economist Scott Fullwiler noted this week ‘it’s time for the left to recognise that raising tax rates on the rich a few % to match spending isn’t the same thing as a comprehensive policy to actually reduce inequality. In fact, taxing the rich to ‘pay for’ spending means you need them to stay absurdly rich.’

Only this week, Jeremy Corbyn in a Q&A session invited successful people ‘to be happy with their wealth, but also to share it a bit by paying their taxes, [….] so that our public services are there for them just as much as they’re there for everybody’

Most certainly one should have no objection to the rich paying their taxes for reasons of equity but the constant references to finding the magic money tree in the Cayman Islands or getting rich people to pay their taxes so that we can have public services smacks of Victorian altruism and gives rich people more significance in relation to how governments spend than relates to reality.

Paying for government programmes is achieved by the recognition of the sovereign currency-issuing powers of the government which can authorise its central bank to spend to deliver its political agenda and that applies whichever side of the political spectrum you are on. Labour will be onto a winner if and when the penny finally drops!

The report goes on to discuss the natural rate of unemployment and the theory of NAIRU which is an economic concept that proposes that there is a trade-off between unemployment and inflation. It suggests that when unemployment falls below a defined threshold, wage inflation then price inflation will be triggered.

In the words of Matthew Klein from the FT who is quoted in the report ‘in addition to being morally odious, the theory is empirically unsupportable’. The post-war full employment policies led by the governments of the day was followed by a complete change of tack which for decades has left working people as collateral damage in the service of employers who have been the sole beneficiaries. Whilst there may have been an increase in employment (notwithstanding the levels of underemployment contained within those figures) this has occurred alongside a decline in wages across advanced economies leading to subsequent declines in living standards. Working people have been the losers.

The report, however, suggests that on the evidence, the natural rate of unemployment must be a ‘moveable feast’ as policymakers have had to reassess the Natural Rate of Employment over time. Whilst it is not mentioned in the report it would seem that the next logical step must surely be towards examining the Job Guarantee as a more humane and macroeconomically sensible programme to create full employment and price stability without the associated societal ills caused by people being abandoned to the immorality of unemployment as a government choice. Enabling public sector work at a living wage which offers the dignity of employment and social inclusion must be an improvement, surely?

Let’s leave the final words to Mervyn King the former Governor of the Bank of England who said this week:

‘Another economic and financial crisis would be devastating to the legitimacy of a democratic market system. By sticking to the [..] orthodoxy of monetary policy and pretending we have made the banking system safe, we are sleepwalking towards that crisis. Following the Great Depression of the 1930s, there had been new thinking and intellectual change. No one can doubt that we are once more living through a period of political turmoil. But there has been no comparable questioning of the basic ideas underpinning economic policy. That needs to change’

Those of us who are working to promote a better understanding of how money works within a Modern Monetary Framework are already doing just that and the conversation is just beginning.

 

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The post Genuine Hope. Collective Action. appeared first on The Gower Initiative for Modern Money Studies.

The people are the change. Time to step out of our comfort zone and make it happen.

Published by Anonymous (not verified) on Sun, 20/10/2019 - 1:13am in

Poster on lamppost with the slogan do you want a future of decency equality and real social justicePhoto by Jon Tyson on Unsplash

Oh, the irony of it. Boris Johnson makes law and order the central plank of the Queen’s Speech. After having spent 9 years telling us about how we could no longer afford our public services and imposing cuts to every part of our public and social infrastructure, his response to the consequences is astonishing.

Austerity has been about removing the cornerstones of a healthy society, increasing poverty and inequality and abandoning people to privation and hardship. Johnson’s logical response should have been a reversal of the politics of austerity; instead, it was to tighten up on law and order. You couldn’t make it up if you tried.

Cuts have had and are continuing to have consequences. One element of the breakdown of society has been the huge increase in knife crime. As campaigners warned earlier this year, spending on youth services has been decimated; an analysis of figures compiled by the YMCA in England and Wales showed that the average spend per local authority had fallen drastically.  In 2010 it stood at £7.79m and will fall next year to £2.45m. Denise Hatton the CEO of the YMCA said at the time that ‘the impact of these cuts were visible across the country’ and that youth services had a ‘significant role’ to play in reducing the numbers of young people carrying weapons.

Some media sources chose to report this emphasis on law and order announcement in positive terms. Others like Frances Crook, the Chief Executive from the Howard League for Penal Reform were less complimentary referring to it as ‘the politics of the lynch mob…currying favour by stirring up hate’ and she later tweeted ‘increasing punishment is a race to the bottom of politics.’

A Labour frontbencher’s response was less understandable when they said that Johnson’s proposals were ‘just an uncosted wish list which the government has no intention and no means to deliver’. As Deborah Harrington, one of GIMMS advisors commented “What has the cost got to do with it?  If we can afford to hurt people does it make it ok? Would we applaud the government if it had both the intention and the means to deliver more cruelty?

Criticising the government by continuing to frame the debate in monetary terms of affordability is not only insensitive but also fails to acknowledge the cruelty that has already been meted out by a government more interested in delivering its ideological priorities and serving its corporate friends by using a false household budget metaphor to justify it.  Those on the opposition benches should not be trying to score points in a ping pong battle of who is more fiscally prudent but should be rejecting this damaging model outright. Instead of fixating on the state of the public accounts we should be considering instead the effects of government spending and policy decisions on a nation, its economy and citizens. That is the only measurement that counts.

To reduce people’s lives to monetary concerns is an affront to those who have suffered at its hands, particularly in the light of the comments of Therese Coffey, the newly appointed Secretary of State at the DWP, who this week denied that government cuts were driving children into poverty. She challenged a June 2019 report carried out by the Child Poverty Action Group which charted the damaging effects of the two-child policy on parents and shamefully defended other reforms to the benefit system which have been equally harmful, despite the evidence piling up against them.

In a display of arrogance, she claimed she was the ‘only person in government who’s got a PhD in science’ and referred to ‘product lines’ and ‘balance sheets’ for analysing whether welfare was working. The evidence of poverty, hunger and destitution are clearly not enough for her. She also talked about how the benefits of increased prosperity could be shared with everyone in society as if somehow those benefits were dependent on a strong economy. This will not be the first time that a Conservative minister has trotted out this lie when the truth is that a strong economy depends on a healthy nation and a government serving public purpose through sufficient spending.

When ministers fail to recognise the human dimensions of their policies then we are in serious trouble. Worse still, when a Church of England bishop complained about the stench in an underground tunnel where many homeless people were sleeping, which subsequently resulted in community protection notices being served threatening them with fines of £20,000 if they continued to sleep there it shows how far we have descended into indifference about the consequences of government policies. Whilst she sympathised with their plight, she had nothing to say about the origins of it. One of the group said ‘our belongings were taken and thrown away without warning, sleeping backs and all. We were harassed under the 1824 vagrancy Act and then without warning a grate was installed expelling us from the best shelter in the area and the closest thing we had to a home. The tunnel now sits warm and empty and unused at night while we sleep outside.’

We have too often accepted the notion that homelessness and hunger are the result of the inadequacy of individuals rather than a direct effect of cuts to public spending which is a deliberate policy choice by the government and has no relationship with the state of the public accounts. The government in its spending and other policies has ignored the social determinants of health whether of body and mind or the economic well-being of society as a whole.

In other news this week according to joint research by the Organisation for Economic Cooperation and Development and the Centre for Cities, there are excessive levels of hidden unemployment in towns and cities across Britain which are not included in official government statistics. The study revealed that if this hidden unemployment was included national estimates would jump from 4.6% to 13.2% and would raise the official level of 1.3 unemployed to almost 4.5m. It reported a clear north/south divide and figures showed that in many northern cities such as Liverpool, Sunderland and Dundee approximately one in five people were likely to fall into this category.

Whilst the Conservatives have consistently lauded their record on unemployment claiming that around 3 million jobs have been created, the government has not only been creative in its presentation of employment figures, but it has also overseen a huge growth in self-employment, work on zero-hours contracts and agency work as well as the growing gig economy. Record employment levels don’t tell the full story and belie the actual quality of the work being undertaken as people struggle simply to survive in any way they can. The harmful effects of low incomes and employment insecurity on individuals, families and the wider society are daily in evidence.

Unemployment and underemployment is a scourge and yet is a political choice made by the government of the day.  It doesn’t have to be like this.  In the post-war period governments pursued full employment as policy objectives as a matter of course. From the 70s onwards in the belief that pursuing such policies would increase inflation successive governments have equally chosen to make a political choice to leave millions of people unemployed, underemployed or in insecure low paid jobs. In this way, it took economic power out of the hands of working people and gave it to employers, who could use it to keep wage costs down at huge human cost.

A public sector job guarantee challenges this gross assumption and offers a serious alternative which not only acts as a price anchor for wages, gives people the dignity of work at a fair wage and good working conditions but also and more importantly operates as macroeconomic stabiliser smoothing out the ups and downs of the business cycle offering increased economic stability for all.

At a moment in history when we face the challenges of dealing with the climate crisis and addressing the huge disparities in wealth which exist across the globe, we need an alternative model. It is shocking, as Oxfam pointed out earlier this year, that the world’s 26 richest people own as much as the poorest 50%. Worse still to realise that these facts are not down to a natural state of affairs driven by the ‘market’ as if it was a living breathing entity directing the orchestra but by human intervention and deliberate political action it  should be the lightbulb moment which drives us to challenge the prevailing narratives which have suggested that money is scarce and public services unaffordable. When a train boss for the TransPennine Express is rewarded by a 44% pay rise including a bonus and pension boost whilst people struggle to put food on the table to feed their children and live hand to mouth with scarce or no savings to fall back on then we surely must know that something has gone terribly wrong.

In his speech, Johnson referred to ‘a momentous new environment bill’ – a lodestar by which we will guide our country towards a cleaner and greener future’ Meanwhile Extinction Rebellion activists were disrupting London life, with over a thousand being arrested and risking a police record for protesting. Extinction Rebellion demands that the government declares a climate emergency and legally commits to reducing carbon emissions to net-zero by 2025. This will require huge public investment and a willingness to run deficits, which is nowhere indicated in the government’s position and, indeed, runs counter to its free-market beliefs.

The actions required are global in scale and demand attention now. They demand strong national governments to work cooperatively to deliver a global public purpose agenda aimed at addressing the climate crisis and the social injustices which blight the planet. They require national governments as monopoly currency issuers to undertake directed spending programmes through a Green New Deal and Job Guarantee programme. And, importantly, to legislate for a green path towards sustainable living.

This can only be achieved if our representative democracy is strengthened to ensure that elected politicians are there to serve the public purpose and not their own careers in a revolving door which allows them to influence policy at the behest of big business for future rewards such as directorships with handsome salaries.

Extinction Rebellion activists say that the civil approach has not worked and therefore the only course of action left to raise awareness is direct. Certainly, they are right in that as it stands our political system exists to deliver corporate benefits dedicated to unsustainable growth and profit motives which do not coincide with the best interests of the health of the planet or human survival. Without electoral reform and radical change to restore public confidence in electoral democracy, we run the risk that corporations become the arbiters of greenness in the promotion of ‘eco-capitalism’ aimed at keeping the growth and profits status quo in place whilst promoting the idea that we can have our ‘green’ cake and eat it.

We are very aware of the scale of the problem of addressing the climate crisis and solving social injustice. It is a perennial problem and every step forward meets resistance. But that never means we shouldn’t try and that we can’t succeed. Understanding how governments fund their agendas remains central to that success. We leave the last few words on the subject to the historian, playwright and socialist thinker, Howard Zinn:

History is instructive. And what it suggests to people is that even if they do little things, if they walk on the picket line, if they join a vigil, if they write a letter to their local newspaper. Anything they do, however small, becomes part of a much, much larger sort of flow of energy. And when enough people do enough things, however small they are, then change takes place.”

 

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We need to relearn the art of adequate spending for public purpose

Published by Anonymous (not verified) on Sat, 12/10/2019 - 9:30pm in

The GIMMS team have been away and had a very busy two weeks travelling between Brighton, London, Manchester, Leeds and Newport for a variety of events.  All in all, it has been very successful and well worth the effort. We’ve had the pleasure of meeting lots of enthusiastic and lovely people across the country and we hope that over time the interest can be carried forward into real action in local settings.

The recording of the Brighton Fringe Event at which Professor Bill Mitchell spoke is now available here and we are working on editing the training session in London and the recording of GIMMS event at the Green Party Conference.

So, from this week normal service is resumed for our MMT Lens with a round-up of the key events over the last two weeks.

 

Cardboard placard at a protest with the slogan "Fight today for a better tomorrow"Photo by Markus Spiske on Unsplash

Boris Johnson is spending. Well, not his own money, of course, but he has authorised a multibillion-pound government spending programme not to mention substantial tax cuts for the wealthiest. After nine years of unnecessary and harmful austerity politics a focus on fiscal rather than monetary policy, which is in a predictable dead end, is to be welcomed although strangely it seems to reflect many of Labour’s spending promises. They say that imitation is the sincerest form of flattery, don’t they?

As part of the spending review by Chancellor Sajid Javid some weeks back, Boris Johnson in his speech at Conference promised investment in the NHS and social care, education, transport and roads, local government, police and the environment. And again, strangely, all those things that it has been busily cutting over the last 9 years because it was claimed we couldn’t afford them are now back on the spending menu. It is tempting to ask the question but where will the money come from since it’s the one that the Conservatives have most often asked Labour when they have announced their policy and spending programmes.  It has also been tempting for some like Paul Johnson from the IFS to wonder whether Boris’s proposals for tax cuts were feasible given his public spending promises.  That is, of course, if like Paul Johnson you accept the too often trotted out household budget version of the state finances which says that government relies on tax and borrowing in order to spend which GIMMS readers surely must know by now they don’t in a country where the government is the sovereign currency issuer.

These spending promises and tax cuts drive a coach and horses through the notion that government spending is constrained by taxpayer revenue. It also tells us very clearly that some politicians know exactly how the money system works and let’s be honest it’s not been the first time that the Tories have opened the public purse to serve a specific political agenda! Those computer keys at the Bank of England will be red-hot if the promises are kept.

After having been told in no uncertain terms that there was no money and that we all had to pull in our horns to get the public accounts back into health suddenly there’s money but an equal question in people’s minds about how it will be paid for. And that cannot be surprising given that the household budget narrative reigns in the public consciousness.

As usual and in response to the government’s plans, some of which were announced prior to the Conservative conference, there have been alarm bells ringing in the usual quarters both political and institutional about the impact on the deficit and debt and borrowing levels.

The government’s spending plans sit contrary to the 2% of GDP limit which was set for the 2020-2021 fiscal year and suggests a rowing back from the traditional Tory mark of fiscal prudence. It remains to be seen how much of this is an electioneering ploy and whether it will translate into reality. However, interestingly, as government announced its spending plans there was trouble brewing in its own party as voices of dissent were being raised at a party fringe meeting where MPs, representatives from the Taxpayers’ Alliance and the Institute of Economic Affairs indicated that although they recognised that people had suffered through austerity they believed that the government had not gone far enough in cutting public spending. John O’Connell, Chief Executive of the TPA went as far as to reject the word austerity saying we should refer instead to ‘living within your means’.

It is shameful to note that there are people who, whilst acknowledging that austerity has caused suffering, want more of it. The household budget framework of taxing to spend and the resentment felt by some that ‘their tax’ is funding freebie public services for all lies at the heart of it and reflects the neoliberal ideology that the state should take a step back and abandon people as authors of their own fate. The idea that ‘living within one’s [financial] means’ is a better measure of economic success than pursuing public purpose to benefit people materially and in terms of well-being is an indication of how far we still have to go to challenge this narrative. Not only do we need to counter the notion of ‘taxing to spend’ with the correct description ‘spending to tax’ we need to correct the idea that living within one’s means relates to money. The only ‘living within our means’ we need to be doing relates to our resources whether that’s people or the materials used in the production of goods and services that we benefit from. The only balance we need to make is the one between spending and resources.

Predictably, news of the government’s spending and taxing plans brought out the debt sirens on the left who have been posting FB memes that the national debt has soared under the Tories to almost £1.8 trillion since 2010. It is disappointing to note in the face of the real consequences of austerity that the language narrative about how government spends is still dogged by household budget explanations, ‘rising deficits’, ‘increased borrowing’ and ‘mounting national debt’.

The Conservatives response has been that the government’s prudent management of the public accounts has given them the fiscal space to spend. In fact, the Prime Minister trotted out the usual nonsense that the Conservative Party had ‘tackled the debt and the deficit’ left by the last Labour government and suggested disingenuously that it has only been able to increase investment in schools and hospitals because it had ‘cleared up the wreckage they left’.

All these descriptions used by both the right and the left wing lie within a flawed mainstream paradigm. On the one hand, the Conservatives have used it to defend the need for austerity to deliver their own ideological agenda and claim fiscal superiority over their political rivals. On the other, Labour persists in the language of tax and spend and finding the magic money tree in the Cayman Islands to fund their laudable progressive programmes. Even John McDonnell could not resist saying that the proposed tax cuts would ‘rip out £10-£20bn a year from our already decimated public services’.  When clearly, they can’t and won’t!

It is regrettable that the public finds itself still caught in the headlights of a long deceased monetary narrative the consequences of which live with us now and will continue to do.

Instead of taking the debt sirens at face value in their criticism of the rising national debt under the Conservatives we should instead be evaluating their economic record. Who gained from their spending and taxing policies and who lost out?   Measuring success by the state of the public accounts from the size of the deficit/debt or whether the government has balanced the budget or achieved a surplus is quite simply incorrect and tells us nothing about the context of the state of the public accounts.

This can best be evaluated with a brief look at both the government’s spending plans, its policy agenda and the on-going consequences of cuts to public spending.

The government whilst it is planning to spend £25bn on improvements to the road network it has not been similarly generous to the bus network which amounts to only £220m. Combined with its already announced spending on the environment of around £432m which is a fraction of the amount needed to address the challenge of climate change demonstrates the Conservative’s complete disregard for the environmental challenges facing us. Apart from the fact that since 2010 government has cut spending on subsidies to bus companies which have forced the closure of 3000 bus routes (not to mention all the other consequences of cuts to public sector spending including the NHS, social care, education policing and local government) this would have been a good time for substantial investment in sustainable public transport instead of giving precedence to roads and cars.

Of course, as indicated earlier, it cannot be denied that a domestic spending programme is a good move at a time when the figures show that the world seems to be sinking towards recession. However, it should not be surprising, given who has authorised the spending, that it is still framed within a neoliberal framework of privatised public services and public money going into private profit whether that’s the NHS and social care or privatised transport networks. It does not suggest a reversal of neoliberally inspired agenda which the Conservatives have been pursuing under cover of austerity.

It also ignores the on-going consequences of public sector cuts, reforms to welfare and the introduction of Universal Credit on the well-being of citizens and indeed the economy.  The scandal of the huge rises in homelessness is bad enough (the Charity Crisis estimates some 24,000 people last year) but just last week figures published by the Office for National Statistics revealed that 726 homeless people died on our streets in 2018. The figures showed a 22% rise over 2017 which was the biggest increase since data was first collected in 2013

The Chief Executive of Crisis, Jon Sparkes, responding to the figures and at the same time putting a human face on the statistics said:

“It is heart-breaking that hundreds of people were forced to spend the last days of their lives without the dignity of a secure home. This is now the second year running where we have known the true scale of the human cost of homelessness, yet still the lessons from these tragic deaths go unlearnt.”

Add to this the record numbers of people, as reported by the Trussell Trust earlier this year, who are using foodbanks along with increasing food insecurity and the spectre of malnutrition, far from turning the page on austerity, the consequences of it remain with us and will do for some time to come unless we get a change in government.

Just a quick look at other news from the last couple of weeks emphasises that just the promise of spending is not going to fix the damage quickly. Behind just these few headlines lie the reality of the harm that has been caused by austerity and government policy choices.

“England sees ‘worst summer on record’ for A&E waits”,

“Alcohol tax cuts cause nearly 2000 extra deaths”,

“Severe obesity among children aged 10 to 11 at record high…. Figures highest among children from the most deprived communities”

 “Unprecedented’ rise in infant mortality linked to poverty”,

“Nursing vacancies hit record high leaving patient care at risk”

For the lie of balanced budgets our economy has slowed, people have got poorer and inequalities have risen, and our public and social infrastructure is cracking up. And all the while the rich have got richer and appropriated an immoral share of the country’s wealth – all with the helping hand of government.

But it doesn’t have to be like this. There is an alternative world and it is up to us to bring it about not just for our sakes but for our children who will bear the burden of our inaction if we turn away.

It starts by understanding these simple concepts:

“A sovereign government is never revenue constrained because it is the monopoly issuer of the currency. In other words, its public debt level is irrelevant in terms of its capacity to spend in the future, unless it deliberately constrains itself with voluntary fiscal rules.

Such a government is never financially constrained in its future choices by its past fiscal position. 

Fiscal Space is [not] about financial resources. It can only be about real resource availability in a modern monetary economy where the government issues its own currency.”

Bill Mitchell 2017

It is both encouraging and exciting that the orthodox narratives are being challenged now in the mainstream media as modern monetary realities get an airing even if sometimes critically. The debate is moving on. We just have to ensure it reaches a successful conclusion.

 

As we said in our introduction, the video of Professor Bill Mitchell’s talk on the Green New Deal has been published on our YouTube Channel.

 

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The post We need to relearn the art of adequate spending for public purpose appeared first on The Gower Initiative for Modern Money Studies.

Young people and workers of the world unite! You have a right to a future.

Published by Anonymous (not verified) on Sat, 14/09/2019 - 9:41pm in

Placard at a demonstration with the slogan "Planet over Profit"Photo by Markus Spiske on Unsplash

Earlier this week in New York, Greta Thunberg, Naomi Klein and other environmental activists shared a platform in an event entitled ‘The Right to a Future’. In the face of growing public concern about the consequences of climate change (see last week’s blog) the discussion focused on how to break through the political and economic barriers which are preventing addressing the climate crisis, and how best to secure a future in which human beings can survive and thrive.

Greta Thunberg’s lonely protests outside her own Swedish parliament have grown into a world-wide movement. Next week on September 20th a series of climate strikes will take place on every continent across the world (link here). Young people who have the most to lose will be joining hands in an act of world-wide resistance and asking politicians to take their heads out of the sand and act before it is too late.

Greta’s simple message to the world in the face of those who claim that action will be too expensive was; ‘’If we can save the banks, we can save the world. If there is something we are not lacking in this world it’s money. Of course, many people do lack money, but governments and these people in power, they do not lack money’.  

In the light of the growing campaign to challenge the monetary orthodoxy of the past decades by bringing an understanding of modern monetary realities to ordinary people and shining a lens on the consequences of austerity and public spending cuts, this simple message was a heartening one. Such public figures as Greta Thunberg and Congresswoman Alexandria Ocasio Cortez espousing such ideas in a public arena allow us to explore and challenge the narratives of destruction and go boldly forward in the knowledge that a Green New Deal is not just affordable, but vital to our existence.

As Professor L Randall Wray and Yeva Nersisyan write in their paper entitled ‘How to pay for a Green New Deal which they explain mimics that of J.M Keynes famous book ‘How to Pay for the War: A Radical Plan for the Chancellor of the Exchequer’;

We already have the financial wherewithal needed to afford whatever is technologically possible. We do not need to go hat-in-hand to rich folks to get them to pay for it. We do not have to beggar our grandkids to pay for it. We do not have to borrow from China to pay for it. We do not have to get the Fed to “print money” to pay for it. All we need to do is to remove the self-imposed constraints, the myths, and the misplaced morality; then budget for it, approve the budget, and spend. […] That is how you pay for it.” *

*For federal reserve read Bank of England.

Prior to last week’s Spending Review, Greenpeace and the Friends of the Earth urged the Chancellor to invest at least £42bn to tackle the climate crisis. Much of course has been made of the loosening of the fiscal purse strings (along with dire warnings by the economic sirens of orthodoxy) but the £32m allocated by Javid amounted to little more than a gesture and was just 0.l% of what is needed to help the country meet Theresa May’s 2050 net-zero target. In fact, as the Friends of the Earth noted, ‘it completely undermines the government’s commitment to taking climate and biodiversity seriously’. Instead of putting its money where its mouth is, it is showing the complete contempt with which it holds our young people who will inherit the consequences of its failure to act.

Of course, that may come as no surprise when you know that the some of the signatories of a letter (a former founder of the Taxpayer’s Alliance, the Institute of Economic Affairs and the Adam Smith Institute) sent to the EU and the UN last week entitled ‘There is no Climate emergency’ are reported to be advising Javid, Johnson and Truss.

Naomi Klein climate activist and campaigner wrote in her book ‘This Changes Everything’ (2014):

“The bottom line is what matters here; our economic system and our planetary system are now at war. Or, more accurately our economy is at war with many forms of life including human life. What the climate needs to avoid collapse is a contraction in humanity’s use of resources: what our economic model demands to avoid collapse is unfettered expansion. Only one of these sets of rules can be changed, and it’s not the laws of nature.”

Our governments and the corporations they serve need to move beyond viewing the natural world and its citizens as resources to consume and throw away in their constant search for profit. As Klein says, we need a ‘shift in worldview at every level’. In her new book On Fire: The Burning case for a Green New Deal to be published next week she makes the point that ecological breakdown and economic injustice are inseparable. From action to deliver a greener and more sustainable world to addressing the inequality which leaves too many without enough food, adequate shelter, healthcare and education, the Green New Deal (GND) provides a radical framework upon which we can build for real change.

However, we should also not forget the importance of the Job Guarantee which is fundamental to delivering a GND. We need to manage the transition for workers currently employed in carbon heavy industries, towards a green pathway that not only cleans up the environment but redresses the exploitation of both humans and finite resources in the search for surplus value. This exploitation has formed the basis for the economic and societal injustices that have prevailed for far too long and the adjustments which will have to be made must not impoverish further or place any more burden on those who have already paid a heavy price and suffered enough.

On the one hand, we have politicians on the right barricading themselves in with nonsensical fiscal rules which, despite a loosening of the purse strings to offer a few crumbs from the table, still favour financial prudence over societal and planetary well-being to keep the status quo in place. On the other we have economists and politicians on the left discussing how the green new deal can be paid for through borrowing because interest rates are so low. They, in their different ways both deny the monetary reality that a government which issues its own currency doesn’t have to borrow to fund its spending and fail to grasp that such financial constraints could put the brakes on government action to address climate change. Instead of imposing monetary constraints which do not reflect monetary reality, our leaders and their advisors should be looking at how we can best manage the resources that will be needed to put the GND into action without exceeding the productive capacity of a nation and indeed the planet.

It is imperative that our young people grasp monetary realities and challenge the stale paradigms and incorrect narratives on both sides of the political divide which will deprive them of a future if not addressed urgently. On a dead planet there are no workers – well actually there are potentially no people!

In other news this week our NHS is still on the endangered/critical list as budgets are squeezed and services increasingly put under pressure thus creating the perfect conditions for a long-planned takeover by a privatised US style Medicare system. What began with Thatcher and was enthusiastically embraced by Blair and later Cameron’s Tory/Lib Dem coalition now is in its endgame as US private healthcare companies circle for the ‘prize’.  Brexit or no.

It was reported that London GPs have been told to restrict specialist referrals under an NHS plan to ration services in order to plug the growing hole in healthcare budgets. This will amount to cost-cutting at the expense of patient care whilst also and very importantly removing from doctors in GP Practices or in hospitals the ability to make decisions about what is best for their patient. Financial accountability trumps the clinical needs of patients. Health Campaigners rightly fear that similar cuts will be imposed in other Clinical Commissioning Groups across the country, which also have substantial deficits.

However, the public needs to be aware that this is all part of a long-term plan, which began in the 80s and was pursued by successive governments, to whittle down the NHS to its barest essentials to make it a profit-making enterprise for the private healthcare sector and allow it access to a ready market of private/insurance paying patients thus creating an unequal two-tier health service of haves and have nots.  The Americanisation of the NHS has been with us for decades and whilst the focus is often on funding, as if somehow addressing that would be a solution, we should be directing our attention to campaigning to reinstate the NHS as a publicly owned, funded and managed organisation for the benefit of the nation and its health and not the coffers of private companies.

In the same week it has been reported by the left-wing think tank the IPPR (link here) that NHS trusts crippled by the Private Finance Initiative still have £55bn of their debt outstanding, which it says represents a huge burden on already squeezed budgets at a time when trusts are struggling to provide patient services and meet the spiralling costs of estate maintenance. Whilst noting that PFI had proved to be a very bad deal which by 2050 will have cost around £80bn for just £13bn of assets, it suggested incorrectly that although they were bad deals, they were the only mechanism that could have brought enough capital into the health system.

The truth of the story is that PFI (introduced by John Major) was embraced enthusiastically by Blair and the then Chancellor of the Exchequer Gordon Brown who used it as a mechanism to keep expenditure off the public accounts in order to remain within the government’s fiscal rules. Contrary to the suggestion made by the IPPR that they were the only means of funding NHS infrastructure, the government as the currency issuer could have funded that capital investment without borrowing a bean. Interestingly, at the time the Chief Economist of the IPPR, Peter Robinson, said that the idea that government could not have afforded new schools and hospitals without the PFI was ‘economically illiterate’ although it has to be said that that was in the context of the state being able to borrow more cheaply.

As Chris Thomas, an IPPR fellow, who carried out the research notes ‘Toxic PFI contracts are still driving billions away from patients and into private bank accounts.’ Our NHS is now paying the price for an accounting trick to give the impression of a financially prudent government which has financially burdened the NHS and enabled the privatisers to achieve their objectives under cover and with impunity.  And we should not imagine that this just applies to PFI. Clinical and back office services which have landed in the lap of private companies through tendered contracts also take public money away from patients.  The State has become nothing less than a profit-oriented cash cow for the private sector to leach from at the expense of patient care.

Tweet bu @help_forceContinuing with the NHS theme, if you’re a tweeter you may have seen this earlier in the week. Helpforce is an organisation that in its words is ‘working with NHS Trusts to create exciting roles for safe, reliable and effective volunteering’. In the tweet, reference is made to Emma Valentine who is explaining to the assembled audience the flexibility that NHS England offer their employees should they wish to volunteer within healthcare and praising what a difference volunteering can make to our society.

GIMMS has covered volunteering before in its blogs so excuse us if we do so again. It is important to reiterate that it is not knocking at all the social value of volunteering both for those doing the volunteering and those on the receiving end. However, we cannot support volunteering when it is a part of a clear strategy to reduce costs and deliver a profitable health and social care system for private providers whilst at the same time denying a person the dignity of a paid job.

In NHS England’s volunteering strategy Consultation Document published in 2017 it wrote in its forward:

‘Volunteers are crucial in both health and social care. […]. The Local Government Association has made proposals that volunteers including those who help care for the elderly, should receive a 10% reduction in their council tax bill […]. We support testing approaches like that, which could be extended to those who volunteer in hospitals and other parts of the NHS. The NHS can go further, accrediting volunteers and devising ways to help them become part of the extended NHS family, not as substitutes for but as partners with our skilled employed staff.

In a world where driving down costs to extract profit is the aim of the capitalist game, it is easy to see why volunteering holds attraction to those in the business of global domination of healthcare. As the campaigner Jo Land wrote last year in her article in the New Internationalist ‘Why neoliberals are pushing ‘Accountable Care’ worldwide’ (link here)

‘Costs are to be kept low through using deskilled staff and telehealth technologies. Another way of keeping costs low are controversial ‘new models of care’ in which populations such as the frail elderly are cared for at home, leveraging maximum (unpaid) support from volunteers and family.’

A new report by the charities ProBono Economics and Helpforce found that around three million volunteers are giving their time in health and social care and that the NHS is planning to increase its voluntary support from 80,000 to 156,000 over the next three years. It suggests that given the NHS’s digital transformation strategy tech-literate young people could teach patients to use new technologies to help them manage their conditions and it also proposes that skilled workers could also offer their skills as unpaid volunteers in project management or data analytics or as economists and lawyers. Such volunteering roles will be prioritised as part of the Helpforce programme which is supported by NHS England and forms part of its long-term plans.

In a lecture in 2014 Andy Haldane, the Chief Economist at the Bank of England and Trustee of Pro-Bono Economics, pointed out the value of volunteering to the economy could exceed £50bn a year. If that is £50bn of unpaid work which is contributing to the well-being of society for free, then surely this is a moment to ask questions? As Harvie and Dowling note in their paper; Harnessing the Social: State, Crisis and (Big) Society:

‘capital’s lifeblood is unpaid work, and the Big Society as political economy is an attempt (to) extend the realm of unpaid work that can be appropriated.’

What has been presented as community empowerment aimed essentially at devolving power from the state which has deliberately been marketed to appeal to our human capacity for empathy has been used by government to restructure society as the State increasingly withdraws ‘from fiscal intervention or the provision of welfare’.

Where government should be at the heart of delivering societal and economic well-being through its policies, the public has been persuaded otherwise as part of a long-term divisive strategy to lay blame on individuals rather than the state. Thus, it enables justification of its withdrawal from provision of public services and social security to favour private sector involvement and a restoration of Victorian charitable values.

But it doesn’t have to be this way. We can and should challenge the mantra of “there is no alternative” because it has done huge damage to people’s lives, their livelihoods and the planet.

Firstly, instead of freebie labour which keeps capital exploiting working people to manage their profit margins we need a better model which gives working people more control over their lives and can also act as an economic stabiliser during an economy’s cyclical ups and down. Why not start with government re-embracing full employment policies – we did once why not again? The Universal Declaration of Human Rights includes a right to work (article 23 (1)) and both the UN and the International Labour office asserted that full employment should be a national and international goal.

Why not implement a Job or Employment Guarantee to benefit our local communities which would both sustain their economies and also provide a mechanism to address climate change on a local basis?  Why not pay people a decent wage and offer training to provide support in socially useful work which would have the added benefit of offering a stepping-stone into private sector employment with skills to match should they choose to? The research is clear about the value of work which allows people to feel socially included, participate in the economy, feed and clothe themselves adequately and also raises their self-esteem.

Secondly, if a skilled job needs to be done, then why are people not being employed on a regular salary to do it? If, for example, there are tasks that need to be accomplished on a regular basis outside of normal nursing and caring duties then why not employ people to do it on a living wage?  Full employment policies combined with a job guarantee would put working people back in the driving seat and would have the added benefit of putting money into circulation to ensure a thriving and sustainable economy.

As it stands, we have government colluding with big business through its employment policies which include the encouragement to volunteer via a cynical appeal to their better nature which keeps working people suppressed and capital in charge and profitable.

Why not think beyond the neoliberal narrative which abandons people and the planet to its fate? Let’s work towards a fairer and more inclusive economic model which puts the planet and people at its heart. It’s time.

 

Upcoming events:

GIMMS Labour Fringe Event

Dorset Gardens Methodist Church, Dorset Gardens
Brighton, BN2 1RL

September 23 @ 2:00 pm – 4:30 pm – book your free ticket here

Bill Mitchell – Training the Trainers

Springer Nature – Stables Building, Trematon Walk, Kings Cross
London, N1 9FB

September 24 @ 6:30 pm – 21:00 pm – book your free ticket here

GIMMS Talk and Social – Leeds

Headingley Enterprise & Arts Centre, Bennett Road
Leeds, LS6 3HN

September 28 @ 2:00 pm – 5:00 pm – book your free ticket here

 

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The post Young people and workers of the world unite! You have a right to a future. appeared first on The Gower Initiative for Modern Money Studies.

There is no Planet ‘B’, so we’d better save this one (and how we do it)

Published by Anonymous (not verified) on Sat, 07/09/2019 - 11:18pm in

Climate protester holding sign with the slogan "We don't have time"Photo by Markus Spiske on Unsplash

While climate chaos continues to make the news, from hurricanes and fires in the Amazon to melting ice in Greenland, politicians, journalists and others are still killing us softly with the vocabulary of economic orthodoxy. John Sauven, an economist and director of Greenpeace, claimed that we will leave our children with a ‘planet sized debt’ if government fails to act now to address climate change. As he quite rightly points out, in the face of the climate emergency government is still acting as if we’ve got plenty of time, but the reality is that if we don’t act now the future cost to our children will not be the financial one he claims; it will be their survival that is at stake.

Everywhere you look, whether it’s spending on public and social infrastructure or saving the planet, in the eyes of politicians, journalists and institutions it all boils down to whether we can afford it and how it will be paid for. Journalists who challenge fiscal stimulus whichever Chancellor is offering it, do so in terms of concerns about ‘damaging the public purse’ and ‘breaking fiscal rules’. Or the suggestion that paying for public services is limited by how fiscally prudent the Chancellor has been or how much he might be able to borrow on fickle international markets.

It is astonishing that planetary and human well-being is reduced to financial costs rather than our very survival. As the Executive Secretary of the UN Convention on Biological Diversity, Cristiana Paşca Palmer, noted at the end of last week, without action to stabilise the climate and protect ecosystems, we risk moving towards a tipping point of no return. As she said, we don’t just need to transform the way in which we consume and produce but ‘we need to put biodiversity and natural capital at the centre of the economic paradigm’. Who argues, given the seriousness of the situation, that we need to think about financial affordability? The more important question is what do we do to save ourselves and the planet which sustains us?

However, while Brexit dominates the political show in the UK, commitment to action by politicians around the world seems, as Greta Thunberg recently noted, limited to rhetoric and fine promises but very little else. And time is ticking.

The consequences of climate change which the media brings to us on an almost daily basis and the apocalyptic scenes of flattened buildings in the Bahamas and burning rain forest combined with the increasing scientific evidence put before us should surely emphasise the dire nature of the challenges we face.

The acceleration of the melting of Greenland’s massive ice sheet has caused the average global sea level to rise by more than a millimetre, this year alone. The ice sheet stores huge amounts of water, which if melted would raise sea levels by up to 7m. But even small increases could threaten the lives of millions of people living in low-lying areas like Bangladesh and coastal cities around the world like New York and ones with large tidal rivers like London. As glaciers melt, water flows into the oceans and raises sea levels, which in turn brings storm surges and catastrophic flooding on coastal seaboards across the world.

In hotter climes, Hurricane Dorian has battered the Bahamas this week causing devastation, structural damage, flooding and deaths. It was a category 5 storm, the strongest ever to hit the islands, which then slowly moved northwards to pound Florida with strong winds and heavy rain as it progressed up the east coast. As the seas warm due to climate change, it fuels stronger and stronger hurricanes which in turn suck up more moisture which then finally falls as torrential rain.

A double whammy of destruction.

Agriculture also contributes to the greenhouse effect and climate change and is likely to challenge food security in the future. In a report published this week, the European Environment Agency noted that as heatwaves are revealing the vulnerable nature of agriculture in relation to climate change, crop yields and livestock productivity are already being affected across Europe. This phenomenon is being repeated across the planet.  In a world where more than 10% of people already don’t have enough to eat and yet where sufficient food is produced to feed the current world population, climate change will increasingly contribute to future food insecurity as a result of reduced food production and increasing prices.

As soil erosion and degradation increases, and water becomes scarcer, which in turn combines with extreme weather events, the impact of climate change on populations around the world will result in rising hunger and threatens mass migration. It is a sobering thought.

Since agriculture and food production are already in themselves a major source of greenhouse gas emissions and as more intensive food and meat production have become the norm, then it is clear that we face some pretty stiff challenges for the future. The European Environment agency points out that the potential benefits to some farmers of global warming will be outweighed by the losses.

As humans, we need to grasp the fact that what affects one part of nature as a result of living beyond its means will have knock-on effects elsewhere and this is playing itself out with destructive consequences. Nature is indifferent to humanity and yet we stand before it, ignoring the facts with astonishing hubris.  Earth is the only planet we’ve got, so we should worry less about the public finances and more about ensuring a future for our children – follow the link to find out why.

In other news this week, in his spending review, the Chancellor promised the UK a ‘decade of renewal’ as he set out his plans for spending on education, the NHS, social care, policing, the military and tackling climate change as well as increased funding for local government. The Chancellor said in the House that he was turning the page on the age of austerity, but the reality is that its consequences will continue for some time yet and are painfully in evidence wherever you look. You can’t repair the damage of a decade in one fell swoop just by throwing money at it. The Institute of Public Policy Research commented that ‘The public shouldn’t be taken in by today’s spending review. It does not reverse a decade of austerity and chronic underinvestment in our society and economy’

It is risible that after 10 years of cruel austerity, the Conservatives want to convince us that their financial prudence has paid off which has given them headroom to spend. Without wishing to knock a fiscal stimulus, which is definitely a good thing, the fact that it is couched in terms of household budget economic orthodoxy is disappointing and suggests that the brakes could as easily come on as go off should the government decide to. The question to ask is whether austerity is really over or just on pause? The prospect of a coming election might explain the giveaway and the electorate well knows politicians’ promises don’t always translate into reality.  As the IPPR and many commentators have noted, however welcome this stimulus is one should also question how much it can achieve after 10 years of cuts. The damage it has done to the fabric of society is profound and it is more likely to be a case of trying to play catch-up and will not address the structural and human consequences of 10 years of austerity.

For example, as GIMMS has covered previously, the adult social care system is in a state of collapse. Local authorities have been increasingly firefighting to deliver their statutory obligations which include social care. Worse, the proposal to collect a 2% council tax precept to raise a measly £500m will further depress local communities already suffering the consequences of government cuts, the effects of low wages and insecure employment. It will be a tax burden that local communities can ill afford and overall will do little to create the ‘decade of renewal’ the Chancellor is promising.

Also, this week the BBC Panorama programme asked whether we have reached a crisis point in education funding. Following staff and pupils at a primary school in Great Yarmouth, it gave an insight into the many challenges faced by head teachers across the country in trying to balance their books – from having to take the difficult decision to let teaching assistants go and cutting after school services for pupils whose parents have to work.

A survey carried out by the National Governance Association in 2018 revealed that almost half of schools covered by the survey were providing additional services for families in need, including washing school uniforms, meals outside of term time, food banks and emergency loans. The Chief Executive of the NGA said that ‘School staff have an increased burden of providing welfare services because of chronic underfunding in other areas and particularly cuts to local authority services.’ The leader of the Association of School and College Leaders stated that schools were becoming ‘a fourth emergency service providing clothing, food and pastoral care.’

In a rich country, this is a shameful and totally unnecessary state of affairs. The government, through its austerity policies, has failed a generation of children whose deprivation will likely follow them into adulthood. A well-functioning and cooperative society depends on having well-educated and healthy citizens. Instead of nurturing children to give them the best start possible, the government has perversely done exactly the reverse and the societal cost both today and in the future will be substantial.

And meanwhile with no mention by the Chancellor of welfare, the disastrous reforms and cuts to spending on benefits which are causing serious and indeed life-threatening hardship to many indicates that unless they can serve the government’s electoral agenda, those without power and influence can be disregarded as irrelevant. And let’s not forget the effects of such cuts on the economy. Spending always equals income to someone whether that’s by the government or the private sector and if both are cut then the economy and citizens become the casualty.

A few weeks ago, GIMMS asked what makes a good society?  In the FT this week, in a new series entitled The Corbyn Revolution’, the headline drew attention to the Labour Party’s plans to rewrite the rules of the UK economy which will ‘represent a fundamental redistribution of income and power’. These fighting words are getting the Establishment very hot under the collar since they represent a challenge to the status quo out of which they have done very nicely!

Labour is proposing higher taxes on the rich, nationalisation of rail, water, mail and energy companies. The mission is, as the FT puts it, ‘to shift power from capital to labour, wresting control from shareholders, landlords and other vested interests and putting it in the hands of workers, consumers and tenants.’

Aside from the plan to introduce a Universal Basic Income which GIMMS has covered in previous blogs two issues stand out in these plans by the Labour party which need to be examined more carefully. Firstly, the proposal to bring in a ‘right to buy’ scheme to help tenants buy their homes at a reasonable price. In a reversal of Margaret Thatcher’s policy of selling off council homes in the 80s the scheme it is claimed would help to tackle the proliferation of buy to let and the problem of landlords who fail to maintain their properties adequately. It would also allow for properties to be purchased below the market price.

Whilst clearly the crisis in housing and the problem of bad landlords needs to be addressed, surely the solutions to both these problems are elsewhere? Stringent legislation is needed to ensure that landlords are properly regulated and cannot abuse tenants both on rents and the quality of accommodation. More social housing needs to be built to deal with the crisis which pushes tenants into the private rental sector in the first place because there is no choice. The party has already committed to a radical programme for building a million genuinely affordable new homes in England over 10 years most of which will be for social rent. If Labour truly wants to deal with a decades’ old problem which successive governments have failed to grapple with adequately, then government as the legislator and the keeper of the public purse has a role to play in stricter regulation, implementing a house building programme and bringing the million or so empty homes into productive use.

The second issue is Labour’s plans for ‘inclusive ownership funds’ which would require every company with more than 250 employees, which equates to half Britain’s workforce, to transfer 1% of their shares each year into an ‘Inclusive Ownership Fund owned by its employees.  The shares would be held collectively and entitle the fund to ‘voting rights and decision-making powers in the company – as well as entitling every worker to dividend payments’ (capped at £500 per employee – circa £41.00 a month) with the balance being paid to the government to pay for public services and welfare.  It would, according to James Meadway give a ‘much-needed boost to workers’ earnings.’

It is clear that after decades of reshaping power and wealth towards capital, it is time to reverse the inequalities that lie at the heart of the current economic paradigm. A reordering of both towards labour is vital in achieving that objective. But would an Inclusive Ownership Fund actually achieve this? How would, for example a 1% equity share lend significant voting rights and we need to ask the question whether such a share which would still rely on the market to deliver would make a real difference to working people’s lives?

Rather than offering shareholdings in private companies, why not be bold? Give all people a stake in the economy and greater control over their lives through a government funded Job Guarantee, at a genuine living wage, with benefits and unionisation of roles which currently go unpaid and unrecognised. Labour must seek to genuinely shift the balance of power back towards labour, delivering a just mechanism for ensuring price stability across the economy.  A Left national government with the keys to the public purse as the monopoly currency issuer, is the price setter and legislator and as such it has enormous power that it can wield in favour of working people and our ecology.

One would also have to take issue with the idea that the balance would be paid to government to pay for public services and welfare. With modern monetary realities in mind the government, as currency issuer, can create the money it needs to fund public services and welfare which includes pensions. It doesn’t need to rely on funding from the private sector to do so any more than it does from general taxation or even borrowing on the international markets. The only spending constraint that any such government might face would be resources whether that is labour or other physical resources needed to deliver public services and infrastructure.

Labour needs to be bold. The crisis facing our climate and the working classes is demanding it.  Call out the corporate welfare that arises from a financial sector that manages the faux government ‘debt’ for private pensions. Rein in the casino financial speculation that seeks to privatise its gains and socialise its losses.  In government, Labour would wield the power to set the agenda and create the framework to deliver it. Why not consider abolishing the asset inflating, polluting private pensions sector and replacing it with a guaranteed living state pension?

We must ask ourselves how Inclusive Ownership in corporations that deliver our crucial public services would improve the outcomes for service users? Would an equity share in Southern Health have saved the lives the hundreds of patients with mental illness and learning disabilities that have died in their care in recent years? Or the prisoners who’ve ended their lives while in custody at G4S facilities? Would a 10% equity share have offered sufficient clout to Carillion staff or teaching staff at Academies to protect the equitable education of our nation’s greatest asset… our children? Would the shareholding staff at housebuilding giants be better able to afford a decent home on their wages and salaries?

Labour could choose to be bold, deciding what we allow to be within the scope of the ‘economy’ to genuinely resolve the crisis facing health and social care sectors. Perhaps offer medical staff who work for private providers tax incentives to return to the NHS rather than a shareholding in the private healthcare firms they’ve abandoned the NHS for?  How about abolishing the parasitical private health sector completely? Rather than handing out tax incentives to those who opt for private medical insurance. Nationalise education, health and social care, prisons, rail and water ensure the essential infrastructure in in place to provide our nation with the stability in needs to support future generations, delivering Inclusive Ownership of common goods would be a fight worth winning and educating its electorate for.

It is to be regretted that Labour has yet to embrace modern monetary realities and still looks to the rich and large corporations who’ve hidden their wealth in the Cayman Islands to fund its programme for change and this along with its adherence to fiscal credibility rules could constrain their political agenda. Given the urgency of dealing with the catastrophe of climate change and delivering a fairer, more equitable society, a little bit of window dressing will not cut the mustard.

The country needs politicians who are prepared to embrace modern monetary realities and think boldly. Yes, to a fundamental redistribution of income and power to address the injustices of the last 40 years, that is a given, but it would be best achieved by rejecting a model which has been part of the problem.

 

 

Upcoming events:

GIMMS Labour Fringe Event

Dorset Gardens Methodist Church, Dorset Gardens
Brighton, BN2 1RL

September 23 @ 2:00 pm – 4:30 pm – book your free ticket here

Bill Mitchell – Training the Trainers

Springer Nature – Stables Building, Trematon Walk, Kings Cross
London, N1 9FB

September 24 @ 6:30 pm – 21:00 pm – book your free ticket here

GIMMS Talk and Social – Leeds

Headingley Enterprise & Arts Centre, Bennett Road
Leeds, LS6 3HN

September 28 @ 2:00 pm – 5:00 pm – book your free ticket here

 

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The post There is no Planet ‘B’, so we’d better save this one (and how we do it) appeared first on The Gower Initiative for Modern Money Studies.

To transform the world, we need a revolution in our priorities and values

Published by Anonymous (not verified) on Sat, 24/08/2019 - 10:34pm in

Rough sleeper talking to a shopper outside a Prada shopPhoto by Max Böhme on Unsplash

“We all need to work together, because there are no jobs on a dead planet; there is no equity without rights to decent work and social protection, no social justice without a shift in governance and ambition, and, ultimately, no peace for the peoples of the world without the guarantees of sustainability.” 

Sharan Burrow 

Now is the winter of our discontent…. Oops, let’s rewind somewhat and rewrite Shakespeare. Now is the summer of our discontent might be more appropriate, given the troubling state of the country and the media coverage which has been shining more light on the realities of life for many people in the UK; the growing inequalities and the declining state of our public infrastructure.  The austerity chickens are coming home to roost big-time for the current government. The promise that getting the public finances sorted would bring economic triumph is everything to them, but in the real world, cuts to public spending have brought pain, suffering and in too many cases early death. Worse still, the neoliberal ideological agenda is still being played out relentlessly by Tory politicians with a specific aim in mind – the dismantlement of the public and social infrastructure, including the welfare state, which has benefited citizens since its inception in 1948.  

First up is the publication of a new report by the erroneously named Centre for Social Justice, one of whose founders was Iain Duncan Smith, former Secretary of State for Work and Pensions, promoter of the mantra ‘work pays’ and the prime mover behind the now increasingly discredited Universal Credit system.  In its report ‘Ageing Confidently: Supporting an ageing workforce’ (funded by Deutsche Bank and the Joseph Rowntree Foundation) one of the recommendations is to raise the retirement age to seventy-five. Duncan Smith, in a tweet after its publication, claimed that ‘removing barriers for older people had the potential to improve health and well-being, increase retirement savings and ensure full functioning of public services for all’.  The public outcry has been quite understandably ferocious and the campaigner and columnist Frances Ryan’s response was acerbic ‘It’s a dystopian vision of life, in which capitalism tells workers who have already grafted for 40 years that working a five-day week through their 70s is, in fact, the path to a healthy body and society’. 

As was noted in last week’s MMT Lens, life expectancy varies depending on your geographical location and financial means. Figures show that improvements in life expectancy for older people has stalled since 2014 and is actually worsening as the gap between social classes and regions widens. Austerity and the political ideology of self–reliance over state intervention have taken their toll. The social determinants of health from income and employment, education and access to good health services and adequate food and housing have all been affected by the political choice to cut spending. As such, this proposal is offering a ‘work until you drop’ scenario where those most affected by government policies may die before they even reach retirement age unless of course, they are lucky enough to have the financial means to retire in good health.  

When you combine this proposal with the revelations this week in the report Pension Reforms and Old Age Inequalities in Europe which revealed that the proportion of elderly people living in poverty in the UK is five times what it was in 1986, the alarm bells should be ringing loudly. We are all going to be old one day. There is no escape!  

The author of the report, Bernard Ebbinghaus from Oxford University, said that ‘The United Kingdom is a good example of Beveridge-lite systems that have historically failed to combat old age poverty’. The research also revealed that the increasing focus on private pension provision was increasing the pre-existing level of social inequality. So even if you get to get to 75, you still face the prospect of an impoverished retirement.  

The arguments about pensions and retirement centre around an ageing population; the belief that because the number of elderly people is increasing faster than the number of those who are working, the impact on government revenues will leave it cash–strapped; that as a larger amount of its budget will have to service the costs of social security for the old, it will be left with less money for investment elsewhere. Indeed, the report makes such references:  

“Fiscal impacts: pensions and out of work benefits. The demographic shift to an older population raises concerns over the fiscal stability of the UK in the future.” 

“This demographic change has resulted in a decreased proportion of working age people, which presents significant fiscal challenges.” 

However, these are not new arguments and the public message has been that our welfare system and pensions are no longer affordable, and we have to accept later retirement and make our own preparations for old age. Mind you, how that works in a low wage and insecure employment economy where people struggle to feed themselves let alone save for their retirement is unclear.   

In 2015, Liam Fox described the benefits system as a ‘Ponzi scheme’ which would burden future generations, claiming that ‘we can’t afford it now, [and] we can’t afford it in the future and that we need to make ‘the adjustments… for us to be able to get back into balance’. 

These are the typical household budget descriptions of the public accounts which define the public understanding of money and how it works. First and foremost, it is important to note that any changes to benefits or pensions will be a government choice, based on a political agenda of limited welfare and self-reliance, and has nothing to do with the state of the public finances. Secondly, that a government which issues its own currency does not have to rely on tax or borrowing to fund its spending and that its real constraints are not monetary, but the real resources which our public infrastructure relies on to function for the health of the nation.  What we really can’t afford, is a government that fails to invest sufficiently in the public and social infrastructure, to ensure that the nation will be productive as it can be to provide enough goods and services for people to purchase in the future. Nobody is borrowing anything from the future, or its taxpayers. 

It’s worth repeating again that whilst it cuts spending on public services and welfare on account of financial concerns, this government has had no problem finding the money for its own pet projects such as HS2, funding wars or buying off the DUP, not to mention pouring funds into private businesses to run public services. The question is not how a government can pay for its policies, but what it chooses to pay for based on its policy priorities.  The health of the economy and well-being of society seems to come right at the bottom of the list and corporate welfare at the top.  

When we look at the chaos that is now ensuing as a result of damaging government policies, it should shock the public that the government has been happy to treat its citizens with such contempt whilst at the same time sending out its propaganda cavalry to smooth citizens’ concerns,  sweet talking them about its achievements and how the public’s sacrifice has been worth it.  

The public’s sacrifice has been a real one and nowhere is it more evident in this week’s other news. 

This week the Children’s Commissioner warned in a report Bleak Houses published this week that 210,000 homeless children are being housed in unsuitable accommodation. Families with children living in shipping containers, B&Bs, hostels, old office blocks and warehouses or even sofa surfing. Families living on top of one another, in cramped conditions, accommodation prone to damp, mould, cold and overheating, and spending sometimes years in temporary housing until permanent accommodation can be found.  

Polly Neate, the Chief Executive of Shelter, responded to the report saying that it was a damning indictment of the failure to address the housing emergency and blamed it on a combination of punitive welfare policies and a housing crisis along with excessive private rents, all of which were robbing hundreds of thousands of children of a decent and normal childhood. 

Combine this shocking state of affairs with the obscenity of up to four million children (more than two million under aged 5) going hungry through the summer holidays because they have lost their free school meals and one should be outraged that this is occurring in what is the fifth richest country in the world. The chief executive of the Childhood Trust, Laurence Guinness, reported this week that he had met young people who had been forced to sell drugs in exchange for food or children as young as 12 who regularly scavenged in bins for food. One, he said, had been reduced to eating toilet paper to stave off hunger pains. 

As a result of this devastating poverty and deprivation, which has its roots in a sham economic system that has prevailed for more than four decades and on the back of a lie about the unaffordability of public infrastructure and essential services, our children go hungry, are housed in appalling conditions and face long-term chronic ill-health as a result, the consequences of which will follow many of them for the rest of their lives.   

A report published by the Commons Housing, Communities and Local Government Committee has warned that our social care service for children is on the verge of collapse, following almost a decade of cuts to central government funding which has put a huge burden on local authorities. Local communities across the country have borne the brunt of draconian cuts in services which have put vulnerable families, disabled people and the elderly at risk. Such services traditionally respond to local needs and form the bedrock of a healthy economy and society.  

Austerity has also had a devastating impact on public health. As reported in the Journal of the Royal Society of Medicine a former director of public health warns that the very same organisations which have had to cope with cuts to central government funding (local authorities) and whose budgets have been slashed as a result have left environmental departments unable to meet potential threats to human health which have already caused failures in the public health system. 

It can’t be emphasised enough that this has always been an ideological choice unrelated to the public finances, which makes the government culpable for the chaos through its policy and spending choices. The blame lies at the government’s door and the solution is not, as has been suggested by some union officials, to allow councils to borrow more and raise income locally. In an economy that, as figures are showing is slowing, increasing local taxes will simply place an increased burden on the functioning of local economies as local councils do indeed have to raise tax in order to spend, unlike central government. Taking money out of people’s pockets is not the answer. The solution is for increased fiscal spending through central government which can then be targeted appropriately at a local level to meet local needs. That could be through managing a locally focused Job Guarantee programme to provide useful public work for those affected by involuntary unemployment. Or investment in public works to revitalise local economies and introduce local programmes aimed at creating environmentally sustainable communities.  

If we have to talk about unaffordability, let’s not see it in terms of money as a scarce resource which has to be shared out amongst competing demands. Let’s instead look at it from the point of view of resources, as they are the only real constraints which governments have to manage. Whether it’s having enough social care workers, nurses and doctors or public health officials as well as the public infrastructure to meet people’s needs – those are the real obligations that government must manage in the interests of citizens and the national economy. A government which fails to do so, fails for both current and future generations.  

Finally, in a week in which we have seen film of the devastation being caused in Brazil as a result of what are likely to be deliberate burning of swathes of the Brazilian rainforest to satisfy our thirst for beef, the publication of more and more scientific reports about the speed at which our climate is changing and the visible consequences on our environment, we need some of our economists to stop denying the realities of modern money.  

As Professor Stephanie Kelton tweeted last year:   

‘If you’re clinging to 100– year–old theories about how money works you are a climate change obstructionist.’  

In the face of the colossal challenges we have to save ourselves (the planet itself will get on very nicely without us) those that want to pick arguments revolving around the dangers of ‘printing more money’ should just take a short trip into history and wonder just exactly how we paid for the second world war. The government of the day didn’t have to wait until it had collected enough tax, it just spent the money on the military hardware it needed to fight the war. Nobody raised their eyebrows at the rising deficit and debt or pointed a finger at government profligacy. The money was created, and it was spent. And just to note, after the war when we had a debt to GDP ratio of 248%, we built the NHS and the welfare state. We didn’t go bankrupt then, any more than we can do so now. 

Let’s not squander the currency–issuing powers of governments around the world which can act together and make the difference between survival and extinction.  

And just to end on a very positive note, Peru approved a law this week that aims to put an end to the deforestation that arises from destructive palm oil plantations and production. It is a huge win for wildlife and sustainable agriculture. Let’s hope that this will be just the start of a process that will encourage other nations to take the bull by the horns and act to oppose more Amazonian deforestation; the forest is the lungs of this beautiful planet Earth, on which we all depend. 

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The post To transform the world, we need a revolution in our priorities and values appeared first on The Gower Initiative for Modern Money Studies.

Change is coming. Keep calm and keep on PUSHing

Published by Anonymous (not verified) on Sat, 17/08/2019 - 9:32pm in

Neon sign with the word "change"Photo by Ross Findon on Unsplash

Each week, GIMMS aims to keep its readers abreast of the latest stories in the news and they form the basis of our weekly MMT Lens.  Each week we search for positive signs that things are changing, given that it always seems to be a catalogue of increasing doom and gloom which can be depressing at times. However, this week we’d like to begin the lens on a positive note with reference to Professor Bill Mitchell’s blog earlier this week We are approaching an era of fiscal dominance’.  We can surely be encouraged by his words which suggest that we are observing a paradigm shift as the neoliberal narrative is failing big-time and the dissonance in mainstream economics and political debate is getting more intense and more public. It shows promise that such questioning is beginning to take place in public arenas.  Recent articles from Reuters and Bloomberg, along with the growing understanding of monetary realities by more and more people across the globe, must give us hope that the challenge to the mainstream macroeconomic consensus which has dictated government policies for decades is beginning to bear fruit. All we need now is to get the politicians on board! Alexandria Ocasio-Cortez in the US and in the UK, MP Chris Williamson, are already shining a light on how money works and how such an understanding will allow us to respond to the challenges we face and deliver progressive agendas to meet them.  To use an analogy from nature, a seed planted and nurtured will grow.

However, whilst bearing that in mind, we cannot ignore the daily news which demonstrates how the flawed economic system which has dominated the last four decades, along with the last 9 years of government-imposed austerity, have created vast disparities in wealth and increased poverty and inequality. Whilst Brexit thunders on in the political arena and mainstream news reporting the very real consequences of public sector cuts and government spending policies are increasingly in evidence. People are suffering, people are dying, and our public and social infrastructure is crumbling and breaking down. All those things which form the foundations of a healthy society and allow it to function are failing (although the government propaganda might lead you to think otherwise). These are the very real consequences of government cuts and policies and should be the wake-up call that shocks the nation into active opposition.

The government is promising increased spending on policing and proposes extended stop and search powers in response to rising knife and other crime. However, it has failed to acknowledge the role of austerity in rising crime and the drug crisis which has been termed as a public health emergency and has resulted from the decay of our publicly paid-for institutions, local government and other supporting organisations along with rising poverty and inequality. Over 760 youth clubs have closed and 3500 youth workers have lost their jobs as a consequence.  Nearly 130 libraries, which provide many other important services including access to the internet, were scrapped in 2018 alone and those that remain do so on reduced hours or are serviced by volunteers instead of a paid workforce. Our public land assets are increasingly being sold off, from our parks to playgrounds, police stations and NHS estate.  Developers are doing very nicely from this sell off of previously owned public assets.

As our communities start to shrink and die, crime rises, the old and sick become isolated and distrust and fear grows as the social frameworks which knit people together as communities are dismantled and fall into decline. The last 40 years, which have given precedence to business and profit seeking, have diluted the importance of the public institutions which lie at the heart of a healthy economy and national well-being.  It is withering away and with it any semblance of a civilised society. The neoliberal narratives of self-help and a blame culture have poisoned the concept of human cooperation, and are leaving us confused and lacking in hope.

As noted in last week’s blog, far too often the loss of this public and social infrastructure is explained away in financial terms of unaffordability; that expenditure on such infrastructure is reliant on an economy that is growing and a fiscally prudent approach to the state finances.  Indeed, Sajid David the new Chancellor suggested only this week that it was down to the hard work of the public that investment in public services could be made, once again making an implied but incorrect connection between tax collection and paying for public services.

The public has been bamboozled for far too long by household budget descriptions of how money works. It seems only right and proper to us that like private individuals and households, governments should behave the same and spend in relation to income.  However, instead of looking at the deficit and debt arguments which proliferate and determine the public response to a government’s actions we should be examining its economic record and ask ourselves whether it has delivered a healthy and sustainable economy that serves the public purpose? It’s what you do with your spending that really counts. Who benefits and who doesn’t? Not whether you balanced a budget or achieved a surplus. Deficits certainly matter but not in the way that most of us think they do.

In the case of the UK, the ones who have benefited from Tory policies are corporations, big business and wealthy people, not just in money terms but also through the influence that such organisations and private individuals exert on politicians to favour them.

Just a quick flick through this week’s newspapers brings to the fore the consequences of ideology, austerity politics and government spending decisions on people’s lives.

The founder of the Museum of Homelessness reports that one homeless person dies every 19 hours on average, while shamefully more than a quarter of a million homes lie empty. Matthew Downie, the director of policy and external affairs at Crisis, commented that was disgraceful that hundreds of vulnerable people across the country have died without the dignity of a secure home. He points out that many of these fatalities are occurring, not while people are sleeping on the streets but when they are in temporary accommodation that is not fit for purpose.  Most people don’t choose to live on the street or want to be shoved from pillar to post living in temporary accommodation or relying on the goodwill of friends, sofa surfing.  Families with children, young and older people have become victims of government spending choices, not because there was no money but because it suits an ideologically driven neoliberal agenda of a small state and self-reliance.

The Bureau of Investigative Journalism researching effects of poverty in Oxford which is a city with one of the highest average salaries in the UK has found that in its poorest wards, men die on average fifteen years younger than their counterparts living in Oxford’s more prosperous areas. It noted that the gap that had been recorded between 2011 and 2015 had increased by four times more than it had been between 2003 and 2007. Over England and Wales, differences in life expectancy for those living in the most and least deprived areas was nine and a half years for men and seven and a half years for women (2015-17). The increasing divide between the rich and the poor is conveyed in their stories which are distressing to read (link here).  While the public applauds fiscal prudence, people’s physical and mental health is declining, and people are dying as local authorities and organisations struggle to keep up with the demand for support because of cuts to government funding leading to cuts in social programmes designed to assist vulnerable individuals, families and children.

Added to this situation are the cuts to spending on a welfare system which, following reform, is not fit for purpose and has left people struggling financially and in fear of getting into debt. The bottom line is that when people don’t have sufficient monetary resources to live a decent and dignified life, not only do they suffer unnecessarily but the economy also takes a hit. Money removed from people’s pockets through spending cuts is money removed from the economy.

While the Chancellor of the Exchequer applauds the Conservative record on employment this week and thanks the public for their hard work, unemployment rises by 31,000, which is the biggest rise since 2017, vacancies are down and although earnings did rise once adjusted for inflation, they are still below pre-crisis levels. As usual, the government fails to acknowledge the working realities of those figures. People doing three jobs just to keep themselves and their families afloat, the increase in zero-hour contracts to near record levels, up 15% from 791,000 a year ago to 896,000 in the last three months, bogus self-employment and the gig economy which is increasingly being used to supplement people’s wages are the realities of the statistics presented by the government.

It was also revealed this week that NHS spending on private mental healthcare had risen by almost 30% to £100m in just one year. Sick and vulnerable patients are being sent hundreds of miles away from home away from their families for lack of sufficient local NHS beds to accommodate sick individuals who need expert care. The government’s pledge to end out of area care by increasing the number of beds has yet to be honoured and the NHS is paying huge amounts of public money to private, profit motivated companies whose rationale is deriving profit, not delivering first class, expert care.

Figures from the Department of Health and Social Care show that last year it handed a record £9.2bn to private providers such as Virgin Care and the Priory mental health group. When Matt Hancock pledged ‘there is no privatisation on my watch’ clearly his statement fails to reflect the policies of successive governments, including the current one, which has until more recently been a slow burn towards privatisation and is now speeding towards a successful conclusion – the creation of a two-tier health services ‘alla’ accountable care in the United States.  The media and the politicians have done an exceedingly good job at concealment of the intentions.

The beneficiaries of money from the public purse are not confined to the NHS and nowhere more evident is the outsourcing of children’s services. In 2014, despite opposition, changes to regulations made it easier for commercial companies to bid for contracts and for-profit organisations are now involved in the provision of foster care, children’s homes and children’s social services.  Ray Jones, Emeritus professor of social work at Kingston University and author of ‘In Whose Interest? The Privatisation of Child Protection and Social Work’ (link here) noted in an article last week:

“For the past 40 years, successive governments have pushed crucial services out of public ownership and into the private market. Despite the dismal track record of big outsourcing companies failing to deliver on their public service contracts, and overcharging central and local government, opportunities continue for private companies to make money from the public purse”

While this government has pursued austerity on the basis of money scarcity, the idea that public services can only be paid for if we have a healthy economy and the belief that the private sector is more efficient, the facts tell a different story. As Ray Jones notes:

not only are local authorities spending large sums with private companies, they are purchasing poorer quality services at a higher cost.’

Public money is being siphoned off into the private sector for profit whilst at the same time, the government plays the ‘Mikawber’ card which suggests that there is no money for public services and deceives the public with its lie. As was pointed out earlier, we should be less concerned about the size of the deficit which should always be seen in context and more concerned about what the government is spending on.

As fares are set to rise on a privatised rail network, a private company wins a ‘lucrative’ contract to run the HS2 and graduates in England face increasing debt burdens as total interest on undergraduate student loans is set to double, it is clear that the effects of the last 40 years of entrenched neoliberal dogma, combined with a deliberate political intent to use false analogies about how money works are now coming home to roost as daily we see evidence of the consequences.

This is not a time to watch as bystanders; this is a moment for action.  Some will tell you that ‘we can’t do anything so why try?’ But let’s not be defeatist. We are already making a difference, as activists and campaigners from around the globe work together to challenge an idea that’s had its day. As one of GIMMS’ favourite economists reminds us from time to time, we need to keep on PUSHing until something happens.

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