public services

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The National Insurance increase shows that levelling up has been consigned to the Conservative bonfire of easy promises

Boris Johnson playing Connect 4 with an elderly lady and a nurse whilst visit Westport Care Home in East London 7/9/21Picture by Andrew Parsons / No 10 Downing Street. Creative Commons 2.0 license

A country ruled by criminals needs two revolutions, one small and one big: The small revolution is to overthrow the criminal government, the big revolution is to radically undo the damage these criminals have inflicted on the country!

Mehmet Murat Ildan, Contemporary Turkish playwright, novelist, and thinker

 

This week, Boris Johnson announced that his government would not ‘duck the tough decisions needed to get NHS patients the treatment they need’, or ‘to fix our broken social care system’. After all the fanfare and promises, from an already morally bankrupt government, the reality is somewhat different. The proposed solution to increase National Insurance will not only do nothing to resolve the growing crisis in social care, or create a fairer system for social care provision, it will also create further burdens on an economy already creaking at the seams.

When Johnson refers to a ‘broken’ health and social care system, he is ignoring the elephant in the room. Who broke it? The actions of successive Conservative governments are to blame, through a decade of cuts that have deliberately starved the public sector of adequate funding, along with decades of allowing a private profit-seeking sector to benefit from public money, at the expense of those needing health or social care services. It did so as a result of its fixation with fiscal discipline and market-driven economic dogma.

The Covid-19 pandemic has exposed the folly of austerity, the toxic and harmful obsession with private sector involvement in the delivery of public services, and the consequences of the lack of strategic planning for such events, which have resulted in the NHS and social care struggling to function effectively during this crisis and led to unnecessary suffering and deaths.

Adding to the already existing shortage of nurses (over 40,000) and other health workers, insufficient ICU facilities, ventilators, beds and PPE, were the warning indicators that something was seriously wrong, as hospitals burst at the seams with very sick patients needing treatment. As a result, we are now facing a growing backlog of patients awaiting diagnosis or treatment (or who have even died waiting), with experts warning of the future consequences on staff already suffering from burnout, stress, and exhaustion. It is humanly unsustainable.

Social care services have not been immune from the same economic illiteracy. The warning signs preceded the pandemic. Social care is in meltdown now, and the proposal to increase National Insurance will not only fail to enable the fairer payment system for social care promised by the government, but it will also do little to alleviate the immediate problems caused by government policies.

Government officials have been clear that most of the money raised by the new tax will be spent on the NHS in the first three years, on the assumption that demand for state-funded care will increase from 2026, as people reach the spending cap. These proposals make no attempt to deal with an already failing underfunded system, and social care providers and charities have already indicated that the extra resources would not be sufficient to improve standards.

The problems faced by social care have been longstanding, exacerbated over decades by a mishmash of reforms by governments unwilling to grasp the nettle, as a likely result of the uncomfortable, but false, question of affordability and how it would be paid for. As a result, under an unfair means-tested social care system, which has for decades been served by private profit-seeking companies and charities relying on state funding to function, social care services have increasingly been impacted by years of funding cuts affecting local council budgets, putting increasing pressures on care standards, wages and employment terms and conditions, as private providers struggle to make their businesses profitable.

This is just pushing the problem yet again down the line, when social care can already no longer meet the needs of those requiring support. Recently published figures showed that nearly 300,000 people are on local authority waiting lists for adult social care, a situation which has arisen as a result of funding pressures and delayed assessments. Figures also reveal a chronic shortage of care workers which has meant that those requiring a home care package have had no option but to accept a ‘temporary’ placement in residential facilities.

The government’s decision to increase National Insurance, a regressive tax that will affect the poorest, not the richest, will lead to many of those already poorly paid workers losing substantial income, as figures now show. Coupled with the looming cuts to the universal credit uplift of £20 a week and rising energy and food prices, it will add more unnecessary pain and suffering to people’s lives. A study published this week by the Health Foundation has shown that the UC cut will hit areas with the worst health hardest and is likely to widen inequality in health and wellbeing, running counter to the government’s promised levelling-up commitment.

Analysis by Policy in Practice noted that by April 2022, the combination of the new Health and Social Care Levy and the removal of the uplift to Universal Credit would mean that carers would be £1035 per year worse off, despite the planned (but scarcely generous) increase to the National Living Wage. Its Director Deven Ghelani said: ‘The unfairness of paying for social care through a rise in national insurance, whilst cutting support for the lowest earners at the same time, means those that kept us going through the pandemic are the ones hardest hit.’

It isn’t any wonder that the media reported this week that many were already choosing to leave social care and find work elsewhere. When Amazon becomes a better alternative to working in social care and playing a vital role in society, then we should question our societal values. When we are told that affordability is key to public service provision, the cruel consequence must be that, down the line, people must suffer higher taxes to balance the budget. How can that even be a consideration for a government which is a currency issuer and has the power of the public purse?

Astonishingly, even the free-market Adam Smith Institute called these plans ‘morally bankrupt’, saying that the government was asking ‘poorer workers to bail out millionaire property owners.’ They also criticised the plan as a ‘kick in the teeth for all the young working people of this country who have already been hard done by the pandemic.’

Whilst the solution is simple, ditching the for-profit motive and replacing it with an adequately funded, publicly paid for, managed, and delivered social care system, getting politicians to agree is quite another matter. Obsessing over how it will be paid for, we have two extremes of economic nonsense being touted in the news and on social media. Both sides of the political spectrum are dedicated to raising taxes to pay for health and social care. The Tories, as these plans show, through punishing already poor people, and Labour by taxing the rich to raise revenue.

Quite rightly, one should tax the rich for reasons of equity and to strip away the power and influence their wealth brings them, but this week some left-wing progressive MPs have flogged the ‘taxing the rich’ to pay for social care narrative to death on social media. James Meadway, a former advisor to John McDonnell, also got in on the act saying that Labour should, ‘seize the opportunity to make the alternative funding case’. A wealth tax and other changes to tax arrangements would fit the bill, he suggested. At the same time, as his party came under pressure to set out a ‘costed plan’, the leader of the Labour Party, Keir Starmer, suggested that Labour would consider taxing wealth even more heavily to raise funds.

How depressingly predictable that the question of how you are going to pay for it is the standard response to funding public services, but the same question is never asked for bailing out banks or going to war.

Yes, of course, we want to see a more equitable society, but playing to Mrs Thatcher’s ‘There is no such thing as public money. There is only taxpayers’ money,’ assertion is a highly damaging tactic. When those supposedly on the progressive left associate themselves with an acolyte of the arch neoliberals Hayek and Friedman, it is scarcely an advert for confidence in them. Although the fact that such views are still underpinning policies and spending is not surprising, given the entrenchment of such narratives in political discourse. Playing to the understanding of one’s audience works every time.

What we need now, desperately, is an opposition which is prepared to put citizens before the profits of private companies and for politicians to reject the gibberish that the belief that taxes fund spending represents. It is hardly progressive to reinforce in the public mind the false household budget narratives of government spending; that tax rises will be necessary to fix what actually has been a deliberately broken health and social care system, or that they could be needed to keep the public accounts straight, as per Sunak’s coming ‘hard choices’ in the October Spending Review.

The insistence that there is no alternative to tax rises to pay for social care is both macroeconomically unsound and cruel to those who are already struggling to keep their heads above water. The consequences of higher taxes in these still uncertain times will be very hard on some of the poorest and most vulnerable in our society, and will do nothing to support the economy, businesses or the working population and their families, as the UC uplift is terminated, and energy and other costs rise. There still remains the looming potential crisis of rising unemployment as furlough ends, and even if there are sectors crying out for workers, there will likely be a mismatch in terms of skills requirements to fill new posts, and that will take time to correct.

In this respect, the government has put all its eggs into the free-market basket, expecting it to come up trumps, and it has failed, unsurprisingly. This government and decades of previous ones have trusted in the market to deliver. The invisible hand of the market, whatever that mythical beast is, has done no such thing. The private sector is a profit-seeking juggernaut which puts its own interests over public purpose. And therein lies the heart of the problem. Government has put fiscal discipline above people’s lives and allowed the private sector to run amok, in an unforgivable free-for-all bonanza of deregulation and profit-seeking.

The question is never, ‘is there enough money’ or ‘how will we pay for it?’ The question is do we have the real resources to deliver a better health and social care service, and if not, what are the solutions? That is the role of the government to plan and deliver through its spending and taxation policies. The government should be us, but now democracy is made a mockery, as government and corporations become one and the same thing, serving not the interests of the people or indeed the planet, but their own rapacious greed.

The price of a hands-off approach has been and will continue to be a heavy one. Government, as an elected body, should have a responsibility to serve its citizens to ensure fair and equitable wealth distribution, to create the vital public and social infrastructure upon which the economy depends, to plan for the future whether in a post Brexit era, for future pandemics, or indeed for a just green transition to deal with the climate emergency. Words and actions, however, like oil and water, don’t mix in Conservative terms. It has done none of those things, and now we have seen how easy it was for Conservative MPs in the Red Wall, who were originally objecting to the NI tax rise, to dutifully line up behind their macroeconomically challenged leaders to vote for more pain and suffering. Levelling up has been consigned to the Conservative bonfire of easy promises, and the people yet again duped into acceptance that there will be no alternative to tax rises, either to fund social care or balance the public accounts.

The failure of government hinges on a lie used to justify austerity. The lie of monetary scarcity. Over decades, despite the rhetoric and promises, the issue of social care has been swept under the carpet, and now the system is barely functioning. It will not be fixed by increasing taxes of any sort. It can only be fixed by a government with the political will to do so. Shamefully, successive governments have made a political choice not to fund it adequately. They invited the private sector in, as if social care or the NHS should be beholden to the god of business efficiency and profit, not public service for human well-being. The real cost has been lives, disaffected, poorly paid staff who are on the edge financially and physically.

We should be shouting it out loud. We have a government that chose this path. A government that chose to let social care collapse for the lie of fiscal discipline. What a terrible price we and our loved ones are paying. It didn’t and doesn’t have to be like this.

There are two potential outcomes: Either that we carry on with ‘business as usual’, as the work and pensions minister Baroness Stedman-Scott put it earlier this week to the House of Lords, referring to the removal of the UC uplift, or something else.

We could imagine a world where monetary reality informs government policies and spending decisions. Where government puts its citizens first. A world in which we could have a functioning public and social infrastructure, funded, managed and delivered publicly. An economy, underpinned by full employment and a Job Guarantee, that works for everyone, not just for an excessively wealthy elite that uses its power and influence to dominate public policy. A society where real resources and wealth are distributed more fairly, and a just transition to a green agenda to address the climate crisis looming close behind. Just imagine! The way may be rocky and uncertain, but if we don’t try, we will never know.

 

 

 

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The post The National Insurance increase shows that levelling up has been consigned to the Conservative bonfire of easy promises appeared first on The Gower Initiative for Modern Money Studies.

Liberal party’s housing platform

Published by Anonymous (not verified) on Wed, 01/09/2021 - 10:25pm in

With a federal election taking place in Canada in fewer than three weeks, I’ve written a 950-word overview of the Liberal Party’s housing platform.

It’s available here: https://nickfalvo.ca/ten-things-to-know-about-the-liberal-partys-housing-platform/

Liberal party’s housing platform

Published by Anonymous (not verified) on Wed, 01/09/2021 - 10:25pm in

With a federal election taking place in Canada in fewer than three weeks, I’ve written a 950-word overview of the Liberal Party’s housing platform.

It’s available here: https://nickfalvo.ca/ten-things-to-know-about-the-liberal-partys-housing-platform/

Fairy tales and the vocabulary of scarcity. Protecting the wealthy and hurting the rest

Fairy tale princess and books in fantasy landImage by Mystic Art Design from Pixabay

“Last time, most of us fell for it. This time, it is critical that we do not. Because, in reality, the crisis we just experienced was waking from a dream, a confrontation with the actual reality of human life, which is that we are a collection of fragile beings taking care of one another, and that those who do the lion’s share of this care work that keeps us alive are overtaxed, underpaid, and daily humiliated, and that a very large proportion of the population don’t do anything at all but spin fantasies, extract rents, and generally get in the way of those who are making, fixing, moving, and transporting things, or tending to the needs of other living beings. It is imperative that we not slip back into a reality where all this makes some sort of inexplicable sense, the way senseless things so often do in dreams.”

David Graeber –  After the Pandemic, We Can’t Go Back to Sleep

 

 

Rishi Sunak is looking to raise funds! So says an article in the mainstream media this week. Raise funds for what? A gym, a swimming pool or perhaps tennis courts for his £1.5 million manor? No, nothing so trivial! The article, like so many over the past few months, was speculating on how the Chancellor might get the public finances back on track after the huge spending response by the government to keep the country economically afloat and functioning during the pandemic.

What’s it to be? Capital gains tax, targeting public sector pensions, abandoning the pensions triple lock, cutting public sector spending, raising taxes, or perhaps increasing National Insurance (to fund the proposed social care reforms if they ever get off the drawing board). After all, you’ve got to find the money from somewhere, haven’t you? At this point one cannot help but note with a hint sarcasm, that an excessively wealthy Chancellor is now considering cutting benefits for some of the poorest people in our society, putting balanced accounts over people’s lives.

Last week, the BBC covered yet another fake story about government borrowing. It reported that whilst overall borrowing was down on the same time last year, the government had spent a record £8.7bn in interest on repaying its debts in June, three times as much as in June 2020, as a result of inflation which had raised the value of index-linked government bonds. It also noted that debt to GDP was at its highest since the 1960s.

In the same article, the Chancellor, whilst patting himself on the back for the ‘unprecedented package’ of pandemic support, the only option that he actually had to keep the economy from taking a nosedive, commented that he needed to ensure debt remained under control in the medium term and indicated that his ‘tough choices’ in the last budget were ‘to put the public finances on a sustainable path’.

The IFS, relishing its doom-mongering task, as always, said in July that they expected that the ‘tough choices’ would continue, even if the economy appeared to be recovering more quickly than had been expected at the last budget. It noted that ‘permanent economic damage’ had been done by the pandemic, and that rising debt interest costs meant that, under their forecast, the Chancellor would have little, if any, additional headroom against his stated medium-term target of current budget balance (borrowing only to invest, not to fund day-to-day spending) in this year’s Autumn Spending Review. Analysts did, however, stress that despite record interest, debt servicing costs as a share of GDP remained low by historic standards.

Ruth Gregory, a senior UK economist at Capital Economics, said that ‘the public finances should reap the benefits of a fuller recovery in GDP than the OBR expects, meaning that the deficit will fall still further.’ Assuming of course that the proclaimed recovery remains on track, which is looking less and less certain.

You can trace in the above text a common theme. Tax, borrowing, deficit, debt, and fiscal headroom is the vocabulary of choice by politicians, journalists and institutions when describing how the government spends. It is, therefore, unsurprising that the public accepts the deficit and debt fairy tales.

Whilst it may be the case in terms of how the public accounts are presented, the reality is that it is merely an accounting framework which fails to reflect the capacity of the UK government, as the currency issuer, to spend money into existence, and is designed to keep a lid on monetary reality.

Instead, the media in its analysis, acts to reinforce the incorrect narrative of how the government spends, and focuses either on the capabilities of the chancellor of the day to manage the economy in a fiscally sound manner, or aims to shock the same public when the deficit and debt increase, leading to false accusations by the political opposition of economic mismanagement and spending beyond the nation’s means.

We can certainly expect more of this household budget nonsense in the months to come. After a vast round of government spending to prop up the economy, someone’s got to keep the public’s expectations in check, to keep the status quo in place by suggesting that government must balance its books, sooner or later.

In this, the journalists fall over themselves, as Will Hutton did this week in an article discussing the current economic situation, to frame the issues as per usual in terms of borrowing, deficit and debt, as if they represented monetary reality. To give him his due, he was clear, in a deficit dove sort of way, that the spending responses the government had made to address the prevailing economic conditions had been necessary to stop the economy from crashing, and went on to suggest that such spending would need to continue to support the economy. However, even if he didn’t say it, caught as he is like many others in the false paradigm of how the government spends, he will be equally quick to suggest at some time in the future that whilst we might continue to borrow while interest rates remain low, eventually there will be a reckoning and government will have no alternative but to curb its spending and restore fiscal discipline.

Now is the time to challenge this notion of monetary scarcity, and also the economic orthodoxy which has done huge harm to the UK, and also globally.

As the MMT Lens has noted many times before, it’s not the state of the public accounts that are important in themselves, but the economic conditions that lie behind them. What choices did the government make, faced with those economic conditions? What did the government do, or not do, who benefited and who did not?

The media, acting like a magician using his powers of sleight of hand, guides the public to be afraid of public debt and its consequences, when all the while the future of the planet hangs in the balance, not just in terms of planetary degradation, but also the poverty and inequality which will continue to grow without urgent action.

We need a State of the Nation Address to make clear what the consequences of the ideologically driven policies of successive governments and their spending choices have been, and most particularly over the last decade. While the rich have benefited from an ever-larger proportion of wealth, the living standards of successive generations have fallen, increasing poverty and inequality.

The ‘cheap as chips’ economy flourishes increasingly for only one section of it. The corporate sector. Earlier in the year, it was reported that the wealth of the world’s billionaires had grown by $4tn during the pandemic, despite the global economy suffering its deepest recession since the Second World War. Jeff Bezos, Mark Zuckerberg, and Bill Gates are just a few of those who have come out of the crisis unscathed, and in some cases even richer.

At the other end of the wealth scale, the gig economy continues to flourish for owners of exploitative companies like Deliveroo, whose workers can earn as little as £2 an hour, unscrupulous employers employing the dirty tricks of fire and rehire on the back of the pandemic, and a continuing low wage economy (even if some sectors are under pressure due to shortages). When the question is asked why such employment standards have been allowed by law and why have they persisted under successive governments, there is only one answer; that those successive governments have served their corporate friends and their own interests through the revolving door, rather than those of the electorate.

This week, the charity Citizens Advice warned, as many have been doing over previous months, that the government’s planned £20 a week cut to Universal Credit could drive 2.3million people into debt. That includes people who were already struggling to make ends meet before the pandemic as a result of government policies.

A survey had shown that more than a third would be in debt after paying just their essential bills, if their benefits were to drop by £20 a week. This increased to half of claimants in the so-called ‘Red Wall’ areas. The organisation is warning of a ‘triple whammy of benefit cuts, rising energy bills and further redundancies as the furlough scheme ends, which will push families into hardship.’

Dame Clare Moriarty, the chief executive of Citizens Advice, described the cut as “a hammer blow to millions of people”, saying that it undermined the chance of a more equal recovery, by tipping families into the red and taking money from the communities most in need.

Whatever happened to Boris Johnson’s levelling up plan? In his usual defence of cutting the Universal Credit uplift, he suggested that claimants should rely on their own ‘efforts’ rather than accept ‘welfare.’ More ‘it’s your own fault if you can’t find a job’ neoliberal twaddle!

Whilst some in the media suggest that cutting the uplift would create electoral risks for Conservative constituencies in the Red Wall, they often fail to bring attention to something much more significant. That the poverty which preceded the pandemic, although alleviated by the increase in Universal Credit, is not a blip of nature, it has been politically induced. Johnson’s mantra of ‘getting people into work’ is no option at all, if wages are not high enough to keep people out of want. It helps no one apart from profit-seeking business, and the irony is that in the end, the whole economy suffers. People are poor, not because of their shortcomings or because they are lazy shirkers and not trying hard enough, they are poor because the government has decreed they should be.

The media should name the economic ideology that drives poverty and inequality and creates the vast disparities in wealth that we are seeing today. Neoliberalism. A phenomenon which has captured political parties, institutions, and the media which parrots its tenets of faith. The fact that many on Universal Credit are in work, surviving from hand to mouth on low wages, is a red warning indicator that something is wrong. It is an indictment of the government that poverty and employment insecurity has been built into the system to serve its corporate supporters who lobby to serve their own profit interests. But neoliberalism teaches, falsely, that government has no power to change the economic paradigm, and that its policies are constrained by scarce monetary resources. It is the spread of neoliberalism’s teachings that has prevented people from seeing the possibilities for positive change.

It was depressing this week to read about Labour’s plans for overhauling the Universal Credit System through allowing low-income workers to earn more, without seeing a cut in their welfare payments. The phrase ‘making work pay,’ featured in the presentation of their plans, which was horribly reminiscent of Iain Duncan Smith’s dictionary of human torture which informed his welfare shakeup and the Universal Credit Plan in 2010, and which incidentally and shamefully Labour supported. What changes? Labour sharing a bed with its corporate friends alongside the Tories, when it had the opportunity to break free of the economic ideology which has done so much damage already.

With increased knowledge about the capacity of government to act, it doesn’t have to be this way. With a government that puts the needs of its citizens at the top of its agenda, it could, through adopting full employment as a policy objective, and the implementation of a Job Guarantee, ensure that people are paid a living wage instead of what happens now, which is, in effect, a wage subsidy to help out their corporate friends.

Since the government is the price setter for labour through its legislative capacity, a Job Guarantee would help both those in work on low wages and those who are involuntarily unemployed and seeking work. A centrally paid for employment scheme, paid at a living wage set by the government, would provide training, give people dignity and purpose as well as offer a transition into better paying, private sector employment, as and when economic conditions improve. That is the best option of all.

The macroeconomic bottom line is that people with more money in their pockets spend it back into the economy, thus benefiting their local communities and the wider economy. They can pay for the real essentials like rent, food, clothing, and travel, with enough left over for life’s pleasures. Nobody should have to rely on food banks to feed themselves or their children.

What’s not to like? It’s a no-brainer. The economy would benefit, (which in an alternative world to the one we currently inhabit should be the aim of all governments whichever side of the political spectrum they stand) and working people would benefit through increased financial security and improved health and well-being.

Furthermore, with the challenge that is being presented by the urgent necessity to address the climate emergency and work towards a just transition to a truly sustainable world, it offers us an important opportunity to rethink the way we do things, re-examine what work is, and move towards a world that is less oriented towards the consumption of things, to a world concerned with sustainable living and dedicated to fulfilling public purpose. We need to do this within the context, not of monetary constraints, but the very real constraints related to resources.

This week the Financial Times ran an article with the headline ‘Climate action will stall until the finance problem is solved’, in which it said:

‘The options are to raise debt, raise taxes (including wealth taxes) or adopt a wartime mentality. None are politically attractive which at a profound level is the reason why the finance question remains unanswered, and the climate crisis remains unresolved’.

On that basis, as humanity sinks beneath the waves, the politicians will still be puzzling their little brains about how to pay for it, when all the time they should have been looking at the real and finite resources we will need to deliver a green transition, and how they can be shared fairly to create a more equitable world. As a social media friend commented, referring to what would have happened if the government had said in 1939 at the beginning of the second world war, ‘We will not defend Britain until the finance is sorted’, it would have been lunacy. The government did what only it could do to prepare for the battles to come, it spent the money into existence, whilst at the same time, offering war bonds to remove private purchasing power to ensure that it was not competing for the resources it would need to prosecute the war. Those same tools can be used for a just, green transition.

When the fate of the planet and its citizens are at stake, it is a paltry and self-serving argument to ask how it will be paid for, or to claim that balanced budgets must come before action on climate, poverty, and inequality.

Whilst we may indeed have to develop a ‘wartime mentality’, we should interpret that, not as deprivation but as an opportunity for cooperation. A transformation from a society of endless consumption of things we don’t need, to one which really delivers public purpose, a society formulated around human and planetary well-being. A cup half full and not half empty.

Such a world seems light-years away, when the Business Secretary Kwasi Kwarteng, continues to advocate a ‘free market’ approach to the economy, that same approach which has created the structural weaknesses revealed over the past year and that will do nothing to save the planet. Whilst, at the same time, right-wing journalists mourn massive state intervention and a culture of unlimited spending (even though it’s poured vast sums of public money into private profit) and promote instead a return to the good old days of unrestrained growth and market dominance.

But in the light of the challenges we face, it is time to acknowledge the damage this approach has already caused and will continue to cause if we fail now to rethink how we live.

Finally, with the news that global trade uncertainty continues to affect the economy, retail sales suffered an unexpected fall in July, and figures show that consumption has levelled off. It rather takes the shine off the expectation that people would be anxious to spend their savings as soon as they were able to, thus saving the government from the ignominy of having to admit that its growth expectations were miscalculated or wishful thinking. The exhortation to spend has fallen flat on its face, for the time being at least.

The elephant in the room crashes about as the government continues to ignore its role in the economic trends, which were already weak before the pandemic as a result of cuts to public spending. And, that it needs to spend sufficiently to deal with the ongoing economic uncertainty and create confidence that government actions are operating in the favour of working people and their families, not the politicians’ corporate friends. In such circumstances, it is clear that those lucky enough to have savings are reluctant to splurge out, just in case things go pear-shaped, and it ignores the many who have no such savings and who have been living on the edge for years as a result of government spending and policy decisions.

While the government continues to threaten more cuts and more public sector austerity to pay down the imaginary debt, the removal of the Universal Credit uplift and potentially the pension triple lock, with the still to come uncertainty surrounding the planned withdrawal of furlough arrangements, people will continue to hunker down after a short flirtation with spending, if they had anything to spend.

Such a strategy, based as it is on a false narrative of government spending, and the evils of deficit and debt, and spending beyond the nation’s means, will constrain the government’s promises, weak as they are, to act on the climate crisis and address the consequences of their own ideologically-driven policies.

If we are to avoid further planetary degradation, destruction of land, resources, and biodiversity, and all that will mean for the future survival of human beings on this planet, we cannot afford to ignore the warnings. We have no monetary constraints, only real resource ones, and it is now for governments across the world to cooperate to ensure that we can deliver a sustainable global economy and a fairer distribution of real resources in both the poorest and richest countries alike. Everything is possible with political will, if we choose it.

 

 

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The post Fairy tales and the vocabulary of scarcity. Protecting the wealthy and hurting the rest appeared first on The Gower Initiative for Modern Money Studies.

the federal Conservatives’ housing platform

Published by Anonymous (not verified) on Tue, 24/08/2021 - 7:03am in

With a federal election taking place in Canada on September 20, I’ve written an 800-word overview of the Conservatives’ housing platform.

It’s available here: 
https://nickfalvo.ca/ten-things-to-know-about-the-federal-conservatives-housing-platform

the federal Conservatives’ housing platform

Published by Anonymous (not verified) on Tue, 24/08/2021 - 7:03am in

With a federal election taking place in Canada on September 20, I’ve written an 800-word overview of the Conservatives’ housing platform.

It’s available here: 
https://nickfalvo.ca/ten-things-to-know-about-the-federal-conservatives-housing-platform

Concentrate on real resources to solve real problems, instead of the financial cost.

Published by Anonymous (not verified) on Mon, 23/08/2021 - 1:36am in

Photo by David B Young on Flickr Creative Commons 2.0 licence

“When people live in a fair, caring society, where everyone has equal access to social goods, they don’t have to spend their time worrying about how to cover their basic needs day to day – they can enjoy the art of living. And instead of feeling they are in constant competition with their neighbours, they can build bonds of social solidarity.”

Jason Hickel, Less is More: How Degrowth Will Save the World

 

Over the last 11 years, this government has presided over a train crash of unnecessary austerity and cuts to public sector spending, justified on the spurious claim that they were not affordable due to the previous government spending beyond its means. The public were told that recovery could only be achieved if people pulled in their belts and made a sacrifice to get the public accounts back into order. Bankruptcy was just around the corner if we failed to do so. The public, none the wiser, accepted the household budget wisdom without question, it has been ingrained in the public consciousness since Margaret Thatcher. Since that time, every part of our public and social infrastructure has experienced the consequences of those public sector spending cuts, from the NHS to adult and children’s social care, along with local government and other public institutions whose budgets have been slashed to accommodate the scam narrative of financial affordability.

We have, over the last year, witnessed as never before the grinding reality of austerity and its consequences on the public domain.

A couple of weeks ago, a research economist at the IFS reported that more than four million people had been on an NHS waiting list before the pandemic and that Covid-19 had increased the pressures on the NHS. He warned that unless the NHS could find effective ways to ‘boost its capacity’, then longer waiting lists would be inevitable. No mention here of the fact that the government has starved the NHS of adequate funding, allowed vast sums of public money to pour into private profit, and is currently overseeing the end of the NHS, as we know it, through its US-style integrated care plans. The suggestion that the NHS is to blame and not the government is just a part of the trickery used by such institutions to shift public focus away from government spending decisions and policies. The reality is that you can’t run a public service on empty for too long before the cracks appear, and Covid-19 has split them wide. But still, the public are led by the nose to accept the notion of public sector culpability, rather than manoeuvring by the government to deliver political agendas.

Recently, the President of the Association of Director’s of Children’s Services, Charlotte Ramsden, asked ‘Where is the national plan for children?’ Yes, indeed where is it? The problem goes beyond the chaos of austerity within local authorities whose budgets have been slashed, forcing tough decisions about how limited funding can be allocated fairly across the competing needs of our communities. It also reflects the increasing pressures caused by rising poverty and families trying to survive on low incomes and being obliged to seek help at the growing number of food banks across the country. Tackling poverty should surely be part of the holistic vision for children’s social service provision, given that they are often dealing with the crises brought about by government austerity in the first place. It is shameful that this government has committed to removing the Universal Credit Uplift which has seen so many people through these challenging times.

While Rishi Sunak counts the beans, children count the real cost of successive Chancellors, more concerned with balanced budgets and their political reputation for fiscal discipline. As the Guardian put it succinctly in an editorial this week:

‘Reform is required as well as money. The children’s home sector requires rebuilding with children’s needs – and not financial incentives – centre-stage. Above all, poverty must be reduced. Its corrosive effects on family life, including poor mental health, addiction, homelessness, and hunger, are well known. To deny or ignore the impact of these on children is not only self-defeating, since the costs of treating the symptoms are so often higher than tackling the cause. It is also cruel.’

Also this week, a study published by the Sutton Trust and the Sylvia Charitable Trust noted that inequality in early years education wasn’t offering a fair start to children. Commenting on the government’s policy of funding only 15 hours of weekly childcare or nursery for three- and four-year-olds from low-income families, compared to 30 hours for children whose parents were in work, was deepening inequalities. Apart from the injustice of unequal access to child-care which favours the wealthier, it is short-sighted. Children who benefit from early years education and opportunities to socialise with their peers take those advantages with them throughout their lives. All children deserve a fair start. They benefit, and society benefits.

We should be looking at the roots of the additional pressures on public sector services, not just the services themselves. We should be examining them in the context of the social determinants of child health and security. Determinants such as poverty, the creation of low wages, precarious employment and involuntary unemployment, as well as inadequate, unfit for purpose housing, along with high rents and a crumbling public infrastructure. All these things create stresses in family life and give rise to the problems struggling people face. In turn, they affect the good functioning of society as a whole.

Over the past few decades, we have also seen increasing privatisation of both adult and children’s social care services. It has been based on two lies: that government has a finite pot of money; and that the private sector can deliver public services more efficiently and therefore more cheaply. For decades we have accepted the narrative of a competitive, for-profit model of social care provision, but its promises have fallen far short of the expectations in terms of delivery of efficient, high-quality services, and have impacted on those employed to deliver them in terms of low wages and poor terms and conditions of employment.

During the austerity years, as cuts to public spending increasingly fed through to local government and service providers, the crisis continued to intensify. The consequences of market-led provision, driven by competition, have progressively undermined the quality of care, and the last year has revealed the widening cracks; the result of a decade of government policy and spending decisions. Ironically, the assumed beneficiaries of this profit-led system of social care have suffered as cuts kicked in, leaving profit margins slimmer and companies considering exiting the care market. That is the prerogative of private companies whose rationale is making profit.

The virtues of the free market have been peddled for decades by governments serving the corporate estate and neglecting their responsibilities as elected bodies to serve the nation’s interests. Over the past year, it has been exposed for the con trick it is. This is exactly why we need to bring social care services back under the public sector umbrella of a publicly, paid for, managed, and delivered, accountable service.

As for paying for it (which is usually the next question) it is only the government that has the monetary and legislative capacity to address poverty and inequality and invest in public and social infrastructure to create a stable foundation for a successful and fairer economy. Whilst the government prevaricates, and discussion takes place about how social care can be funded, those needing support continue to be abandoned to fate. Last month, Boris Johnson, in the tradition of sweeping important decisions into the long grass (at least until the autumn) put on hold plans for a tax rise to fix the disintegrating care system, while further discussion continues.

With some MPs unhappy at the prospect of funding it through increases to National Insurance, a regressive tax which hits the poorest hardest, and others being concerned about what they see as intergenerational unfairness, they either lack the fundamental knowledge about monetary reality, or choose to ignore it. The facts would allow them to focus, not on how to pay for it, but on understanding the real issues that revolve around the real resources that will be needed to deliver a social care system that can function effectively, using the tools government has at its disposal, to ensure a fairer distribution of wealth and resources. An increase in National Insurance does not take into consideration the consequences of taxing people more during a period of economic uncertainty. Again, the principle of one person’s spending equals another’s income kicks in here.

No matter how much money you throw at it, if you have no strategy for ensuring that there is a functioning infrastructure for social care, with sufficient well-paid staff on good terms and conditions to deliver those services, you will fail. The question of how to fund it is a redundant one because the government is the currency issuer. But as it is also the political decision-maker, it can target its taxation policy to ensure it releases the labour and other real resources it needs to deliver a functioning social care system.

All talk about levelling up, or investing in public services cannot happen while we have a Chancellor dedicated to market solutions and fiscal discipline, and while politicians talk in terms of taxing to spend.

Last week, GIMMS reported on the IPCC’s report which put humanity on code red. As the droughts, wildfires and floods continue to be chronicled in the media, the UK government, as a host of this November’s COP26, persists with its rhetoric claiming that the UK is a climate world leader and that it has reduced its CO₂ emissions by 44% since 1990. This week the climate activist Greta Thunberg called out their lies and also suggested that global leaders were still treating the climate emergency as a ‘faraway, distant problem.’ She made those comments at a briefing, launching a UNICEF report, Children’s Climate Risk Index, which found that ‘approximately 1 billion children – nearly half of the world’s 2.2 billion children – live in one of the 33 countries classified as ‘extremely high risk’. These children face a deadly combination of exposure to multiple climate and environmental shocks with a high vulnerability due to inadequate essential services such as water and sanitation, healthcare, and education. The findings reflect the number of children impacted today, – figures likely to get worse as the impacts of climate change accelerate.’

While politicians, and the governments they represent, continue with their gilded climate rhetoric, in the same week, it was announced that the oil giant Exxon is expecting to produce 800,000 barrels of oil a day by 2025 in Guyana, which would exceed the estimates for its entire oil and natural gas production in the south-western US Permian basin by 100,000 barrels, that same year. It would represent ‘Exxon’s largest single source of fossil production anywhere in the world.’ Not only do experts believe that the company’s safety plans are ‘inadequate and dangerous’, but a top engineer has also said that worker’s lives, public health and Guyana’s oceans and fisheries, which indigenous locals rely on for a living, are all at stake particularly in the event of a spill. Vincent Adams, an environment chief said, ‘when they make all their billions, and they are ready to pack up and they’re gone, we’ve got to deal with the mess.’

While the company claims its climate goals are ‘some of the most aggressive’ in the industry, its oil operations in Guyana will flood the atmosphere with more than 2bn metric tons of CO₂. As environmental campaigners have suggested, ‘Exxon cannot reconcile the project with its public commitments to address climate change and reduce carbon emissions.’

Greenwashing on steroids!

Last week’s news that humanity may be on code red, will slowly but surely become tomorrow’s chip paper unless we take the warnings with the seriousness they deserve. The real commitment to radical change still remains on the drawing board with no clear direction or strategic plan, either domestically or globally, hinging as it does on the power of the global corporates to control the messages through lobbying and their financial firepower.

It is ironic that Alok Sharma points the finger of blame at the Chinese and suggests that we can only fight climate change if China does its part. Just another example of shifting the focus of blame; failing to acknowledge in the usual smoke and mirrors the connection between China’s exports and their destination.

Larry Elliott noted in the Guardian this week that China was responsible for 28% of global greenhouse gas emissions, with Britain, France, and Italy accounting for about 1%. However, he forgot to note at the same time that the consumables we all rely on in our homes, from electrical goods to computers, phones, and clothing, have been imported from China. As Sue Dalley in a letter to the paper said, ‘This suggests to me a rather different allocation of responsibility; it is time to engage in the urgent political review of just how we in the west must change our addiction to cheap mass consumption …’

It can be summed up by George Monbiot in an opinion piece in this week’s Guardian:

“The global emergency requires a new politics, but it is nowhere in sight. Governments still fear lobby groups more than they fear the collapse of our living systems. For tiny and temporary political gains, they commit us to vast and irreversible consequences. MPs with no discernible record of concern for poor people, and a long record of voting against them, suddenly claim that climate action must be stymied to protect them.

 

The Treasury refuses to commit to the spending needed to support even the government’s feeble programme. Johnson, charged with transforming the global response to climate breakdown at the November summit in Glasgow, blusters and dithers, seeming constitutionally incapable of making difficult decisions.

 

No government, even the most progressive, is yet prepared to contemplate the transformation we need: a global programme that places the survival of humanity and the rest of life on Earth above all other issues. We need not just new policy, but a new ethics. We need to close the gap between knowing and doing. But this conversation has scarcely begun.”

Whilst we as individuals can make our own personal choices, fundamentally it is only the government through its spending choices and policies that can take the radical action that needs to happen to ensure our children and their children have a future.

The government has many tools at its disposal to achieve its objectives, if it has any beyond ensuring the increasing disparities in wealth and allowing its corporate friends to continue to greenwash their way to continuing profits.

A mainstream newspaper this week ran an article about Green NS& I Bonds. Referring to the NS&I website which explained that all money invested in NS&I is passed onto HM Treasury and contributes towards government spending, it went on to indicate how that money would be used to fund green initiatives, from making transport cleaner, developing renewable energy, decarbonisation of public buildings such as schools, and investment in protecting the environment and the countryside.

Green Bonds could indeed play a significant role in a government’s climate agenda, but not in terms of funding such projects. That is just another example of the illusions which governments promote about how governments need to tax to spend, or to borrow by issuing bonds. The government has the capacity to fund green projects as the currency issuer. It doesn’t need to borrow from anyone or offer bonds to do so. The only benefit an investor might get apart from the interest at maturity is a nice warm glow thinking they’ve helped the government to achieve its green agenda, should it ever publish one.

However, as L Randall Wray noted in a recent MMT Podcast hosted by GIMMS Associate Members Christian Reilly and Patricia Pino, Green Bonds could play a valuable role as did the issuance of War Bonds during the second world war. Contrary to belief, they were not issued to pay for the war, they were issued to remove the purchasing power of citizens, to free up those real finite resources required to fight the war, and thus avoid the inflationary pressures which could have ensued. The same warm glow applied as people felt they were doing their bit to support the war effort, even if the reality was that the government did not need their savings to prosecute it.

That same principle could have the same applications in addressing a war of a quite different kind. The one concerned with human survival on a planet of finite resources. Only this time, we should understand the mechanics of Green Bonds, not as mechanisms to fund a green agenda but mechanisms to deliver a green agenda through re-allocation of resources.

 

 

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The post Concentrate on real resources to solve real problems, instead of the financial cost. appeared first on The Gower Initiative for Modern Money Studies.

the federal NDP’s housing platform

Published by Anonymous (not verified) on Tue, 17/08/2021 - 11:49pm in

With a federal election taking place in Canada on September 20, the NDP has released its platform, which includes important housing-related measures.

I’ve written a ‘top 10’ overview of the housing components of the platform. My overview is available here: https://nickfalvo.ca/ten-things-to-know-about-the-federal-ndps-housing-platform/.

the federal NDP’s housing platform

Published by Anonymous (not verified) on Tue, 17/08/2021 - 11:49pm in

With a federal election taking place in Canada on September 20, the NDP has released its platform, which includes important housing-related measures.

I’ve written a ‘top 10’ overview of the housing components of the platform. My overview is available here: https://nickfalvo.ca/ten-things-to-know-about-the-federal-ndps-housing-platform/.

The cost of Covid-19 is no reason to put off tackling inequality and climate change

Money next to piggy bank wearing surgical maskPhoto by Konstantin Evdokimov on Unsplash

“Emperor Nero, it’s said, fiddled while Rome burned. If you don’t want our politicians to continue to follow his example while the world burns, get politically active now.”

Thom Hartmann – Counter Punch

 

We live in a world of contradictions.

Every day we see warnings about human-induced climate change and its effects on the planet in terms of floods and droughts which is, in turn, impacting on global food production. From the US to Canada, South America, Australia, Asia, and Europe no continent has remained untouched.

In 2019, as reported in the Guardian, 11,000 scientists from 153 countries declared that the world was facing a climate emergency. William Ripple, a professor of ecology at Oregon State University said that ‘despite 40 years of major global negotiations we have continued to conduct business as usual and have failed to address the crisis’.

Two years on, the research team that issued the declaration has warned that ‘there has been an unprecedented surge in climate-related disasters including record-shattering heatwaves, wildfires, hurricanes and devastating cyclones’, and that ‘earth’s vital signs are still deteriorating’.

This week, new research shows a further dangerous slowing of the Gulf Stream. In 2019, currents were at their slowest for at least 1600 years, but a new analysis suggests they may be nearing shutdown, even though precisely when that might happen is still in question. Regardless, we have no time to lose. The Guardian article noted that such an event ‘would have catastrophic consequences around the world, severely disrupting monsoons that billions of people depend on for food in India, South America and West Africa; increasing storms and lowering temperatures in Europe; and pushing up the sea level in the eastern US. It would also further endanger the Amazon rainforest and Antarctic ice sheets.’

Not insignificant consequences, more life-threatening ones.

Niklas Boers, from the Potsdam Institute for Climate Impact Research in Germany who did the research, commented that ‘The signs of destabilisation being visible already is something that I wouldn’t have expected and that I find scary. And, according to the same 2019 analysis, the planet ‘may have already crossed a series of tipping points’ which will result in ‘an existential threat to civilisation.’

Peter Kalmus, a Climate Scientist at NASA’s Jet Propulsion Lab, and one of a panel of experts asked by the Guardian about when we need to start changing our economies and ways of consuming and producing said: ‘We have zero years before climate and ecological breakdown, because it’s already here. We have zero years left to procrastinate.’

Globally the signs are not good, and as the recent floods in London and many other climate-induced events elsewhere in the UK have shown, we are not immune. Scientists have said that the UK is singularly unprepared for what is to come, as recent floods have demonstrated. The once-in-a-lifetime events are likely to become ubiquitous features of our climate landscape, and yet we still procrastinate. The government’s recent multi-billion-pound investment in flood prevention is welcome, but it is still failing to deal with the underlying causes of climate change. The unsustainable way we live.

It was surprising therefore that the same Public Accounts Committee that warned earlier this year that the government was not doing enough to prevent damage from flooding, recently said that taxpayers will be left facing significant financial risk for decades to come because of the high levels of government spending on the pandemic.

Once again MPs, with their incomplete knowledge about how the government spends, are claiming that the debt will be a problem. Which then begs the question where do they think the extra cash will come from to deal with the increasingly damaging effects of the climate crisis? If, as they believe, taxpayers are going to be burdened with debt arising from the pandemic?

The contradictions grow daily.

Whilst Rishi Sunak is promising to restore fiscal discipline at the earliest opportunity, the media builds on the narrative that there will be a financial cost to citizens to restore the public accounts to health. While the water pours over our heads. We cannot apparently afford to save ourselves from planetary and human degradation. We must pay back the debt at the cost of human lives.

Surely, at some point, those that govern us will have to acknowledge monetary reality and accept that the real constraints to spending are not fiscal, but real resources and how they are managed to create a sustainable and fairer society.

Contradictions abound wherever you look.

Whilst the Guardian and other media outlets solemnly report regularly on the climate emergency, at the same time they glory, as they did last week, in the expected opening up of the economy to tourism. In this case specifically ‘to unlock more business travel to boost the economy’. We need more growth, but who cares what sort? News of changes to travel restrictions was greeted with a rise in the stock market value of airline companies and demonstrate everything that is wrong about how we determine value. It seems the prospects for a different way of doing things is not so straightforward. The old normal still has its attractions.

In November, the government will be hosting the global climate summit COP26, which is supposedly going to be yet another defining moment of change. Based on previous experience of similar ‘defining moments’ over decades, which promptly got put on the ‘to do’ list and were shelved as soon as everyone went home, why should we believe that this time will be any different?

If it is so important, why are we not grasping the nettle right now? Why are we waiting for another talking shop to tell us what we know today, right now? As has been pointed out in previous MMT Lens, the UK government’s commitment to addressing the climate crisis is lukewarm, known more for its fancy rhetoric than concrete action.

We must not let COP26 become yet another failed opportunity. The time for warnings is over. As Mike Hall, a recent guest on one of GIMMS ‘In Conversation’ events, commenting on social media this week about the slowing of the Gulf Stream, said:

‘This is really shocking. In order to act on, and sustain, any of this, planners and decision makers need to unlearn the mainstream economics drivel they were taught and learn how a monetary economy actually works – something we mostly knew in WWII in building a ‘Mobilisation Economy’. We need to ramp up action now in order to transform all of our major systems by 2050, energy, transportation, industry, agriculture, waste management. We’ll need to eat less meat, farm in ways that store more carbon in the soils, re-forest degraded or abandoned land and restore wetlands.’

But no, instead, the media talks about opening up, creating more unsustainable growth, and unlocking business to boost it, at a time when we should be urgently talking about how we move the global economy towards sustainability, and addressing the huge global wealth inequalities that have kept a destructive economic system in place for decades, creating vast wealth inequity and leading to the on-going decay of our public and social infrastructure.

For over a decade, working people and their families have been at the sharp end of those consequences, which have proved stark, not to mention disturbing, as public money has been shovelled and continues to be shovelled into private profit, whilst at the same time, further austerity in the form of higher taxes or cuts to public spending, is being promoted daily in the media as the solution to paying down the debt’. The message is stuck in a groove that seems inescapable and is preparing us for the next bout of fiscal retrenchment, not because the government needs to pay down the illusory debt, but because it forms part of its neoliberally driven political agenda.

That neoliberal ideology insidiously pervades our belief systems and is destroying us bit by bit. As George Monbiot wrote in an article in 2016

‘We internalise and reproduce its creeds. The rich persuade themselves that they acquired their wealth through merit, ignoring the advantages – such as education, inheritance and class – that may have helped to secure it. The poor begin to blame themselves for their failures, even when they can do little to change their circumstances.

 

Never mind structural unemployment: if you don’t have a job, it’s because you are unenterprising. Never mind the impossible costs of housing: if your credit card is maxed out, you’re feckless and improvident. Never mind that your children no longer have a school playing field: if they get fat, it’s your fault. In a world governed by competition, those who fall behind become defined and self-defined as losers.

 

Neoliberalism has brought out the worst in us.’

The adherence by all political parties to this toxic economic creed, over decades, is responsible for the exploitation of the planet’s resources and has caused huge environmental destruction, it has impoverished people financially and culturally, created huge wealth inequality, left our public and social infrastructure in tatters, and created huge societal divisions to distract us while the political elites continue to serve the insatiable god of unsustainable growth and their own bank accounts. It has divided us and diluted the concept of common cause and cooperation.

As a result, while we are facing an environmental crisis of gigantic, life-threatening proportions, we are now watching the Minister of Hard Decisions in No 11 evaluate options for paying down the non-existent national debt with the media savouring its role in keeping people fearful of the future. What will the Chancellor do? Almost daily that is the question posed. Will he remove the pension triple lock to reduce the pensions bill as if it were a question of monetary affordability, which it is not, or claim that it is a question of intergenerational fairness as if there were a finite pot of money, which there isn’t. Or will he continue with his plan to withdraw the £20 Universal Credit uplift from some of the poorest people in the country? People who were already struggling to make ends meet before the pandemic.

With this week’s announcement that energy prices will rise, charities are rightly warning that this will hit families very hard at a time when many household budgets are already stretched to the limit.

While the government spews out its rhetoric, our society is in meltdown and our children, who represent the future, are bearing the brunt of government failure. This week it was reported that high levels of deprivation in the north-east of England are driving more and more demand for children’s social care services. A Director of children’s services said that ‘poverty is stark, shameful and obvious. Life chances are blighted. I’ve worked in a number of local authorities all over the country, but I’ve never worked anywhere where poverty is as bad and life chances so poor.

Whilst directors are calling for a radical rethink of how to provide good foster homes for children who need them and recommend the removal or capping of profit-making opportunities in the residential care sector, we should also be looking at the origins of this failure, which is rooted not only in government cuts to spending over a decade, but also the insecure, low wage employment environment which has been promoted for decades and which, in turn, has impacted on the lives of many families.

The pandemic is not over, furlough is ending, and unemployment is predicted to rise as a result. The National Institute of Economic and Social Research said this week that the jobless rate would likely increase from 4.8% to 5.4%. Whilst an upbeat picture is being presented contending that the opening up of the economy will lead to new jobs, nothing is certain if the Chancellor continues along the fiscal retrenchment route. Cutting spending or increasing taxes as the Chancellor suggested earlier this year might be an option, would be, at this time of great challenge and uncertainty, the wrong path to take. As would increasing taxes to pay for social care as No 10 proposed last month or as Zoe Williams from the Guardian put it in an article this week the ‘blindingly obvious way’ would be to fund it with ‘inheritance tax’.

Again, we have politicians and journalists reinforcing the pervasive message that taxes fund spending, without even thinking about the economic consequences of doing so. Whilst they promote boosting the economy, they take away the means for that to happen. Again, contradictions.

Taking money out of people’s pockets when the economy is still emerging from the effects of the pandemic would be not just unwise, but hugely damaging. Adding to the harm already caused by 10 years of spending cuts and public policy decisions which have ravaged our public and social infrastructure, forced people into homelessness and hunger, driven poor wages and employment insecurity with all the associated consequences on people’s health and well-being, would be tantamount to madness. Combine that with the challenges posed by the climate emergency, such a route would be more than disastrous.

Worse, the fact that it is predicated on the lies of monetary scarcity or rising debt, which it is claimed will pose a financial burden on future generations, begs the question, yet again, in whose interests do such lies work? Certainly, not those of working people and their families and friends, nor the planet!

Although much improvement has been made through MMT education networks such as GIMMS and the MMT Podcast, with a nation still largely ignorant of monetary reality, there remains much work to do. At first sight, the mention of economics may be seen as irrelevant to people’s lives, inducing an immediate mental switch off. It is understandable. But once one realises the potential of such an understanding it becomes the art of the possible. Economics is not an arcane subject; it is about us and the impact of government spending and politically driven policies on our lives.  Nobody needs a degree to understand this, and the basics of how the government spends can be described very simply in less than 10 minutes, as the video below shows.

While the right-wing press cries wolf over public debt and urges fiscal retrenchment, those on the progressive left are still, disappointingly, adopting Margaret Thatcher’s narrative about how governments spend. Week in, week out, left-wing groups on social media are awash with memes decrying the Conservative record on deficits and debt. Progressive Labour politicians demand on their pages that the rich are made to pay their tax so that public services can be funded, when, instead, they should talk about taxing the rich to address wealth and real resource inequalities to remove some of their purchasing power and the political influence their wealth wields. That is just as powerful a message and stops dead the incorrect narrative that taxes fund spending. As Warren Mosler says, it’s all a question of sequence and progressive politicians need to understand that governments like the UK’s spend to tax not tax to spend, and whilst they also indulge in the illusion of borrowing, they can’t do that either until they have spent the money into existence. It’s simple when you know.

Instead of calling out the Tories on their economic record, those on the left allow themselves to be side-tracked by such memes which do more damage than good and reinforce in the minds of their readers the idea that the public finances are like their own household budgets. Instead of worrying about the size of the National Debt they could, instead and more productively, focus more on critiquing the economic policies which have, for more than a decade, created huge poverty and inequality, created vast disparities in wealth and destroyed our public infrastructure, whilst at the same time benefitting global corporations and those politicians that serve them through the revolving door.

At election time, the household budget narrative is used by politicians of all shades to discredit each other’s records on deficit and debt. The note left in the Treasury by the Labour MP Liam Byrne, claiming that there was no money left, is an example of this false narrative and proved a gift to the Conservatives allowing them to justify their austerity agenda.

This is absolutely the wrong measure by which to determine the efficacy or otherwise of a government’s time in power. Such beliefs will ultimately drive us into a destructive cul-de-sac at a time when we need to address the climate emergency and bring about a just transition towards a sustainable world as a matter of urgency.

It matters not who increased deficits or created the most debt – it is a red herring designed to take the public’s eyes off the real ball. What matters are the economic conditions at the time and how the government responded. What did they do or not do to ensure the economy could function effectively both in good times and bad? Who benefited and who did not?

Currently, as Frances Ryan, the journalist and disability campaigner, wrote in the Guardian this week:

‘The gap between reality and Boris Johnson’s “levelling up” rhetoric could hardly be starker. It is only concrete action that can lead us down a different path: on housing, disability, insecurity at work, and the gaping holes in our welfare state. A government that leaves millions of the public unable to even eat or wash has, by any definition, failed. Poverty is indeed a mark of shame – but one solely on ministers’ shoulders.’

It is interesting to note this week that Steve Baker, who is the Conservative MP for Wycombe in the traditionally conservative home counties, has urged ministers to abandon its plans to cut universal credit, remarking on the ‘intolerable’ hunger and poverty faced by many of his constituents.

These are the direct consequences of a decade and more of spending decisions and public policy.

Last week, it was astonishing to learn that the Prime Minister and his Home Secretary Priti Patel were proposing a new crime-fighting strategy consisting of ‘chain gangs’ of offenders dressed in such a way as to draw public attention to who was litter picking. Will they be calling for a return of the stocks next or public shaming? Apart from the vile nature of their proposals, reminiscent of Victorian ideals and Dickens novels, it is symptomatic of their singular neoliberal belief in the value of personal responsibility which, at the same time, ignores the role of government in creating an economic environment that strips people of the means by which they can live with dignity and sufficiency and is conducive to an increase in crime.

James Timpson from the UK shoe repair chain was critical of the proposals and tweeted in response:

‘Instead of making offenders wear high viz jackets in chain gangs, how about helping them get a real job instead? In my shops we employ lots of ex-offenders and they wear a shirt and tie. Same people, different approach, a much better outcome.’

Why not go one step further and introduce a properly funded Job Guarantee so that no one faces the indignity of involuntary unemployment? It would provide useful community-based work at a living wage, give people employment and training opportunities when they need them and allow them to make their contribution to society and the economy. It would, at the same time, also promote a sense of self-worth and improve their chances of transitioning into private sector work when the opportunity arises.

Over the past year, we have learned the value of real resources, in this case, the people who do the jobs and keep the economy functioning and productive. Leaving people to flounder, without good work or wages, is detrimental to those affected and detrimental to the economy. These are the people who should be paid decent wages and benefit from good terms and conditions, not be at the mercy of employers exploiting their labour for more profit. A Job Guarantee sets the price for labour and ensures that working people don’t have to work for peanuts or precariously.

This is a time for radical action. Not just to deal with the pressing and urgent climate crisis by rethinking how we live our lives, but also to deal with the vast global inequities of wealth and resources that have arisen over many decades as a result of the exploitation of both people and the finite resources that sustain our western lifestyles.

Time to think the unthinkable! Time to start thinking MMT.

 

 

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The post The cost of Covid-19 is no reason to put off tackling inequality and climate change appeared first on The Gower Initiative for Modern Money Studies.

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