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Where Has All the Money Gone?

Published by Anonymous (not verified) on Sat, 25/09/2021 - 3:35am in

Quantitative easing risks generating its own boom-and-bust cycles, and can thus be seen as an example of state-created financial instability. Governments must now abandon the fiction that central banks create money independently from government, and must themselves spend the money created at their behest.

LONDON – Amid all the talk of when and how to end or reverse quantitative easing (QE), one question is almost never discussed: Why have central banks’ massive doses of bond purchases in Europe and the United States since 2009 had so little effect on the general price level?0

Between 2009 and 2019, the Bank of England injected £425 billion ($588 billion) – about 22.5% of the United Kingdom’s 2012 GDP – into the UK economy. This was aimed at pushing up inflation to the BOE’s mandated medium-term target of 2%, from a low of just 1.1% in 2009. But after ten years of QE, inflation was below its 2009 level, despite the fact that house and stock-market prices were booming, and GDP growth had not recovered to its pre-crisis trend rate.

Since the start of the COVID-19 pandemic in March 2020, the BOE has bought an additional £450 billion worth of UK government bonds, bringing the total to £875 billion, or 40% of current GDP. The effects on inflation and output of this second round of QE are yet to be felt, but asset prices have again increased markedly.

A plausible generalization is that increasing the quantity of money through QE gives a big temporary boost to the prices of housing and financial securities, thus greatly benefiting the holders of these assets. A small proportion of this increased wealth trickles through to the real economy, but most of it simply circulates within the financial system.

The standard Keynesian argument, derived from John Maynard Keynes’s General Theory, is that any economic collapse, whatever its cause, leads to a large increase in cash hoarding. Money flows into reserves, and saving goes up, while spending goes down. This is why Keynes argued that economic stimulus following a collapse should be carried out by fiscal rather than monetary policy. Government has to be the “spender of last resort” to ensure that new money is used on production instead of being hoarded.

But in his Treatise on Money, Keynes provided a more realistic account based on the “speculative demand for money.” During a sharp economic downturn, he argued, money is not necessarily hoarded, but flows from “industrial” to “financial” circulation. Money in industrial circulation supports the normal processes of producing output, but in financial circulation it is used for “the business of holding and exchanging existing titles to wealth, including stock exchange and money market transactions.” A depression is marked by a transfer of money from industrial to financial circulation – from investment to speculation.

So, the reason why QE has had hardly any effect on the general price level may be that a large part of the new money has fueled asset speculation, thus creating financial bubbles, while prices and output as a whole remained stable.

One implication of this is that QE generates its own boom-and-bust cycles. Unlike orthodox Keynesians, who believed that crises were brought on by some external shock, the economist Hyman Minsky thought that the economic system could generate shocks through its own internal dynamics. Bank lending, Minsky argued, goes through three degenerative stages, which he dubbed hedge, speculation, and Ponzi. At first, the borrower’s income needs to be sufficient to repay both the principal and interest on a loan. Then, it needs to be high enough to meet only the interest payments. And in the final stage, finance simply becomes a gamble that asset prices will rise enough to cover the lending. When the inevitable reversal of asset prices produces a crash, the increase in paper wealth vanishes, dragging down the real economy in its wake.

Minsky would thus view QE as an example of state-created financial instability. Today, there are already clear signs of mortgage-market excesses. UK house prices increased by 10.2% in the year to March 2021, the highest rate of growth since August 2007, while indices of overvaluation in the US housing market are “flashing bright red.” And an econometric study (so far unpublished) by Sandhya Krishnan of the Desai Academy of Economics in Mumbai shows no relationship between asset prices and goods prices in the UK and the US between 2000 and 2016.

So, it is hardly surprising that, in its February 2021 forecast, the BOE’s Monetary Policy Committee estimated that there was a one-third chance of UK inflation falling below 0% or rising above 4% in the next few years. This relatively wide range partly reflects uncertainty about the future course of the pandemic, but also a more basic uncertainty about the effects of QE itself.

In Margaret Atwood’s futuristic 2003 novel Oryx and Crake, HelthWyzer, a drug development center that manufactures premium-brand vitamin pills, inserts a virus randomly into its pills, hoping to profit from the sale of both the pills and the antidote it has developed for the virus. The best type of diseases “from a business point of view,” explains Crake, a mad scientist, “would be those that cause lingering illness […] the patient would either get well or die just before all of his or her money runs out. It’s a fine calculation.”

With QE, we have invented a wonder drug that cures the macroeconomic diseases it causes. That is why questions about the timing of its withdrawal are such “fine calculations.”

But the antidote is staring us in the face. First, governments must abandon the fiction that central banks create money independently from government. Second, they must themselves spend the money created at their behest. For example, governments should not hoard the furlough funds that are set to be withdrawn as economic activity picks up, but instead use them to create public-sector jobs.

Doing this will bring about a recovery without creating financial instability. It is the only way to wean ourselves off our decade-long addiction to QE.

Robert Skidelsky

The post Where Has All the Money Gone? appeared first on The Progressive Economy Forum.

Should we tax wealth to fund social care?

Published by Anonymous (not verified) on Wed, 15/09/2021 - 2:21am in

Photo by Jingming Pan on Unsplash

PEF Council members recently discussed, via email, the government’s plans for social care and its financing. We were unanimous in agreeing on the bad design of the scheme, on the absence of real funding and reform for social care. And we also agreed on the need for a significant shift in the balance of taxation towards wealth. The points of contention are around how the latter should take place and a macroeconomics that might help explain why.

Stewart Lansley

The case for financing social care through wealth is overwhelming. There are two broad options: first, the 2010 Burnham Plan, which means all those needing care would keep their home and a charge made at death. Alternatively, an annual property charge of say 1% pa up to say a maximum of 5%. Both of these could be paid into a social care fund, as argued in Remodelling Capitalism.

The last two decades have seen a great surge in asset values and unearned wealth (what John Stuart Mill called “getting rich in your sleep”), notably in property. The total value of personal wealth in the UK in 2018 was £14.6 tr of which property is £5tr and financial wealth £2.2tr – so a hypothetical one per cent tax on all property and financial wealth would yield £70bn a year, and just on property would be £50bn per year. Any such tax should be charged on assets above a certain level, which would then yield less than the estimates given here.

Yet the tax take from wealth is tiny, with the UK tax system disproportionately dependent on taxing income. In 2015/6, the combined revenue from existing capital taxes – stamp duty on property transactions and shares, capital gains and inheritance tax but excluding council tax – raised about £27bn a year, some 3.9% of all tax revenue.  This accounts for less than one per cent of total private asset holdings.

The case for higher taxation on personal and corporate wealth is being widely recognized. Before the 2017 November budget, the National Institute of Economic and Social Research proposed an annual tax on net wealth (assets minus liabilities) above £700,000 (including residential property) to replace three existing capital taxes on inheritance tax, capital gains and dividends. A tax set at 2 per cent would raise £72 billion (gross).

The scheme would may have been unpopular in 2010, but might be much more popular now given that the public accept that we need to find a way of paying for social care and are unconvinced by Johnson’s plan. This is surely an area where KS should be out with all guns blazing!

Danny Dorling

I was one of the people earlier suggesting taxing wealth would be difficult. I don’t think I explained myself well. It is not the taxing of wealth that is difficult, that is easy. Ireland showed how it could be done on property with a progressive property tax where the percentage taken rose according to the value of property. They did it in an extremely short amount of time when forced to by the Troika in the Eurozone crisis at the start of the last decade. When that process began, they had no “gazetteer” – no universal register of properties – let alone any decent sets of valuations.

The best systems of wealth taxation make paying the tax annually part of the way you claim and maintain a record of your ownership of property. You can chose not to pay the wealth tax if you wish to gift that wealth to the state. You can also argue that your property is worth less than the valuation of the state. However, when you then come to sell that property, you may find that buyers don’t wish to pay more than you have said it is worth. Wealth taxes should also decrease the value of property which would not be a bad thing. So my concern is not with the idea of wealth taxes.

My concern is with suggesting it – and suggesting introducing a wealth tax to pay for the NHS/Social Care, without suggesting all the other mitigations you would do at the very same time that would make it appear plausible to many people.

But so many mitigations are needed that you end up needing a whole manifesto to explain them. I’ll give just one example. A large group of people in their 40s and 50s who have managed to get a mortgage now talk of their home as their pension. Their various precarious jobs have meant they have no decent pension, and although they may now be being auto enrolled into a pension. It is not one where they can envisage a future of being able to “keep the thermostat on 17 in their old age” as it was recently put to me by one home owner (still paying off their mortgage, and with the annual average income of the UK). What they plan to do is sell their home when they retire, downsize and use part of the savings to (among other things) pay the gas bill in winter.

If we suggest a wealth tax, taxing away a slice of what they see as their savings every year without also suggesting how pensions will be improved, then in the mind of someone in that position your policy will condemn them to an old age of being cold. Gas and electric bills have just risen very quickly so these bills are on peoples’ minds at the moment. In effect, for them a wealth tax is an annual tax on their future pension. And quite a low pension at that.

I think this is one of the dangers of talking about raising a new tax to pay for one thing, when all the others things are not considered.

My preference is to keep taxing and spending separate, not hypothecated. So talk about rebalancing the tax system to make it fairer – with the emphasis always on fairness. And I would bring the overall level up to what is normal in Germany (almost identical to what Labour promised in their 2019 manifesto). Talk about bringing in taxes on wealth solely for the purpose of increasing fairness, not to pay for a particular policy, but also partly to allow other less fair taxes to be reduced, and partly to allow overall public spending to be at normal European levels.

On spending, we shouldn’t talk too much about the amounts of money in each sector, but much more about what it is you actually want to see. Something that is very good need not be very expensive. The Finns spend less as a share of GDP on their school than we do on ours, but their schools are much better. In contrast, we spend an enormous amount on our now almost entirely privatised universities, but we don’t see that as a tax. In the USA, they have the highest spending on health care in the world – and in general poor health.

I’ll stop there, but hope it helps explain my worry about suggestions of introducing a wealth tax to pay for health and social care.

Josh Ryan-Collins

I agree governments should not hypothecate (and I’m amazed HMT broke its own golden rule on that in this case) both because it can lead to less politically popular services getting neglected but also because it embeds the idea that we can’t pay for stuff unless we raise the money first which is simply not the case in sovereign currency issuing nations.

Having said this, the Tories have hypothecated and they have just implemented the biggest tax rise in living memory indicating (perhaps) a seismic shift towards the centre on economic policy. This threatens Labour in quite a serious way if they can’t differentiate themselves effectively.  The way to differentiate is to focus less on the amount of tax needed and for what (as you say Danny and Sue) but on how that tax should be raised and from whom in a way that is both socially just and economically sensible.

It is not sensible to be withdrawing purchasing power from workers and businesses when the economy remains fragile. But the even bigger issue is that tax needs to be seen as a key tool via which issues like inequality and falling productivity can be addressed via pushing against economic rents and favouring investment and wages.  This NIC tax hike broadly does the opposite. If you make your money from rental income, interest fees or capital gains, don’t pay a penny more, in contrast to workers and firms. The chart below from Resolution Foundation shows how crazy the situation is:

Source: Resolution Foundation

Will Hutton

I am all for taxing capital and am in violent agreement that too much capital taxation has been allowed to atrophy: no revaluation of residential property since 1991 so that council tax yields a fraction of the old rates, de facto semi-voluntary inheritance tax, too low capital gains tax, etc. During the 1945-50 Labour government tax on estates ran at 10 per cent of all tax revenues. There is huge scope to increase capital taxes, and as Josh has argued, property is immovable.

Stephany Griffith-Jones

I agree with Will on practically all points – including the extraordinary absence of  a revaluation of residential property since 1991, which includes periods when Labour was in power! An effective and fairly high inheritance tax is very desirable, as one of the structural problems is perpetuation of wealth concentration via inheritance.

Stewart Lansley

Just on Danny’s points:

1. ONS wealth figures are net wealth and any wealth tax on residential property would be net of mortgage debt, so Danny’s examples would not be affected. 

2. Yes, we must do more to make the existing taxation of income fairer, for example by reform of National Insurance system, but this would not be enough on its own to create a more equal society. 

3. As I argued in Return of the State, we are close to the limits of income taxation, So if we want to raise funds for improving social provision we need to turn to  asset-redistribution, though this would require taking public with us. Wealth is much more unequally distributed than income –  Top fifth hold 64 % of personal net wealth and 80% of financial wealth – and unless we tackle that we will not be able to reduce inequality and poverty on a sustainable basis.  It’s perfectly possible to design a wealth tax system that is concentrated on top wealth holders. 

Geoff Tily 

The TUC have argued that reforming Capital Gains Tax is a much fairer way to fund social care than hiking workers’ and businesses’ national insurance contributions.  But like President Biden’s notion of “work not wealth”, I want to make a broader macro argument that the interests of wealth and of labour are fundamentally opposed.  

My Keynes Betrayed was concerned with restoring Keynes’s conclusion that the long-term rate of interest must be set permanently low. Since I have been at the TUC, it occurs to me that this rate should interpreted more broadly as the return to capital/wealth and should be compared with the return to labour. Keynes’s conclusion that “we must avoid [dear money] … as we would hell-fire” (Collected Works XXI, p. 389) then means that we orient the system to the interests of wealth at our peril.    

The below chart shows a measure of the real (inflation-adjusted) long-term interest on US corporate debt, going beyond the normal comparisons of rates on government bonds. Even this doesn’t capture well the experience since the global financial crisis, but plainly we know full well what has happened to the broader return to wealth versus the return to labour over the past decade. (I suspect US investment grade corporate debt has simply become increasingly regarded as retreating from risk – and this goes right back to bubble.) “Dear money” can be seen coming in rapidly from 1979 (in parallel to the ‘Volcker shock’), and interest rates were sustained some way above the post-war levels (and back to the 1920s).  

US real interest rate

Source: Federal Reserve for BBA corporate debt and BEA for GDP deflator; y-axis truncated for years of severe deflation.   

Josh’s chart from the Resolution Foundation is a nice one, not least because the timing of the key dislocation matches well the restoration of dear money on the above. Above all, this rise in returns to assets is a consequence, not a cause, of dear money.

Previously I had argued (following the General Theory chapter 22) that macroeconomic disarray comes in through overinvestment, but now I like a broader over-production/under-consumption (or rather, under-compensation) approach (it’s trade union friendly, has recently been revived by Matthew Klein and Michael Pettis [though Stuart Lansley had done so nearly a decade sooner], and is likely to be more correct!). Rather than spending to compensate for the underspending of labour, the wealthy speculate and so exacerbate over-production. This leads to unsustainable private debt, and ultimately meltdown; the fear here is Quantitative Easing has simply kicked the can down the road, with the risk of meltdown appearing later.    

Tax on the wealthy can be part of the solution (as in the opening of the final chapter of General Theory), but to restore the balance to labour requires wholesale macroeconomic change that operates on a global basis. Hence my recent argument that ‘internationalism begins at home’.  

We were convened in the first instance as a group inspired by Keynes, so I hope colleagues engage with this argument. On my view, it’s how Attlee, Dalton, Gaitskell, Bevin, Blum and FDR understood the world, helped them successfully to win office, and to begin to make real change.    

Jan Toporowski

The real con trick in the government’s proposals is the claim that this is a solution to the social care crisis, when the funding for that is being explicitly postponed until the difficulties in the NHS have been overcome. So the social care funding is conditional on that same funding being enough to overcome NHS difficulties, a most unlikely prospect. The electoral con is the message that the residual of working people on proper contracts will get in their payslips that their money is going to be spent by the government not once but twice to solve both health crises.

Guy Standing

One cannot sensibly discuss how to pay for social care without a systematic view of what care entails, which encompasses its messy definition, who should receive it, who should receive money being spent on it, how they should receive it, and so on. Once one opens the Pandora’s box one should realise that any hypothecated approach, as implied in what the Tories are doing, makes no sense whatsoever. Hypothecated taxation opens the door to the worst features of utilitarianism, 

The Government’s tax and NI rise is doubly regressive, since it lowers the earning of most paid carers at a time when their income and morale are abysmally low. If a government does not alter the structure of the so-called ‘social care industry’, the primary beneficiaries of pouring more money into it will be the private equity interests (mostly foreign capital) which are plundering money being spent on social care. Removing private equity should be a top priority. And any funding scheme that relies on means-testing will accentuate what is a highly regressive scheme, not reduce it.

More generally, there must be a huge shift in taxation from earned incomes to wealth of all kinds and to incursions into the commons, which means much increased eco-taxation. Ironically, incomes are nowadays the least taxable, with the UK being a rank outlier in the very high extent of tax evasion by high-income earners. But changing the incidence of taxation should be the secondary concern to the need to restructure the care sector. The social care crisis is a structural one, not primarily a fiscal one. Perhaps a Royal Commission should be set up to devise a proper plan for an integrated, universally-based system.

Sue Himmelweit

I agree strongly with Danny about not muddling up comments on taxing and with those on spending. But I don’t think that means that Labour should comment soley on alternative forms of taxation.

The first thing that has to be said about the so-called plan for social care is that it isn’t one, that it won’t be doing anything to improve provision nor even get back to the already failing system that we had in 2010. As the party that stands for protecting the vulnerable by collective provision this must be Labour’s first call. If they are commenting on a policy on social care, their first comment should be on social care and the need for it to be adequately funded (in the sense of enough spent on it), not on different forms of taxation. This should be true of PEF too!

Labour should also make clear that we could benefit from an overhaul of the tax system, so that it taxes, at the very least, gains in wealth. Reforming CGT so that is charged at the same rates as income tax with no specific tax allowance (except to exempt gains too small to count) would be a first step. And I would also like to see inheritance tax replaced by a receipts tax covering all ways of receiving wealth, also taxed at income tax rates (with some allowance for spreading a windfall over a few years). This way all ways of gaining wealth would be taxed at a reasonably high rate. This to me seems easier and more logical than taxing wealth itself at a low rate.

The post Should we tax wealth to fund social care? appeared first on The Progressive Economy Forum.

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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Social care and the Tories’ raid on paypackets

Published by Anonymous (not verified) on Mon, 06/09/2021 - 8:21pm in

The Conservative government looks set to announce that it will be introducing a rise in National Insurance Contributions of up to 1.25 percent on Tuesday this week. The intention is to raise around £10bn to attempt to staunch the crisis in social care – a crisis, it should be added, of the government’s own making, with the Tories smashing up all-party talks on fair funding way back in early 2010, ahead of the May general election that year. The Dilnot Commission, meanwhile, made recommendations for reform as far back as 2011, including a cap on individual care cost contributions. The Tories have been in power for the entire time, and failed, during that entire time, to either provide adequate funding for social care – with a £4bn or more shortfall by 2025 to simply meet existing needs – and leaving 1.5m people without adequate care provision.

I’ve written elsewhere on what a poor way the National Insurance Contribution (NICs) rise would be to fund the contribution cap, amounting to a perverse redistribution from mainly younger and poorer workers to at least some better off elderly. Almost any tax alternative currently on the table – from increasing income taxes, with its broader base, to Capital Gains Tax increases, to introducing a proper, progressive wealth tax – would be fairer and preferable.

That the NICs rise currently polls ahead of other options is a tribute to the framing of NICs (and the polling question asked!) more than anything else: it isn’t called a tax, and there’s still a firmly held belief that NICs payments go into a grand national pot that people can draw from later. This was the original intention of the system, dating back to the 1944 Beveridge Report and beyond, in which “national insurance” would act as a genuine, contributory insurance system, providing for those who had paid in during times of need. It has never really functioned like that: the Treasury, as its wont, has always treated NICs payments as just another flow of tax payments (with some slight complications).

But the seeming popularity of NICs rises is likely to prove fragile if the case against them is made, and – crucially – if the case for an alternative is clearly presented. Labour have now indicated that they will oppose the hike, but to clinch the argument they will need to present an alternative. Otherwise, it really will look like the party is just moaning about the world: you can’t look like an alternative government if you don’t have alternative policies. And if they can bite the bullet on wealth taxes for social care – in whatever form here – it can force open the argument about wealth and taxation more generally: a must if the party is to go into the next election with something approaching a serious, long-term programme to solve Britain’s chronic economic problems. And wealth taxes, as the polling evidence keeps showing us, are popular. (Unsurprisingly: by definition, almost none of us are in the top 1%…)

Party Conference

Labour Party Conference, returning to Brighton at the end of the month after a two-year covid-induced pause, will be the biggest opportunity the party and its new leadership has had to date to present its case. You don’t often get a free hit at the following day’s front page headlines as the Opposition, but that’s what Conference can offer, Keir Starmer has offered some rather broad hints about his own speech, and of course it’s the leader’s closing address that gets the bulk of the media attention. But Shadow Chancellor Rachel Reeves’ own speech is going to be worth keeping an eye on. She has already marked out a few key commitments, including a strikingly anti-neoliberal Mariana Mazzucato-style policy to support domestic supply chains and jobs. This was particularly noteworthy: the first time that I can recall Labour offering a genuinely post-Brexit policy under Starmer’s leadership. Now that we have left the EU, there is a seam there to be mined – with a bit of policy imagination.

But the challenge for Reeves and her team in three weeks’ time will be to not only throw in some headline-grabbing policy announcements – essential for the front pages – but to start to create a convincing story about what sort of economy the next Labour government wants to shape. Credibility doesn’t come from parroting the economically illiterate nonsense that clutters Westminster political reporting; it’ll come from having a clear, simple story that potentially millions of people can grasp and understand. The Tories’ NICs hike has given Labour a free gift, the chance to show they are the party that will look after your pay packet. Tax the wealthy, not the workers has a certain ring to it.

The post Social care and the Tories’ raid on paypackets appeared first on The Progressive Economy Forum.

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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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 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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When COVID is behind us, we're going to have to pay more tax

Published by Anonymous (not verified) on Wed, 21/07/2021 - 4:20pm in


column, tax

The biggest unstated message from the intergenerational report released during the lull between lockdowns is that we will need more tax.

Not now. At the moment it’s a matter of throwing everything we’ve got at getting on top of the COVID outbreaks and worrying about how to (and the extent to which we will need to) pay for it later.

But when the economy is healthy again, taxes are going to have to rise, big time.

That the intergenerational report doesn’t say so explicitly might be because the government is sticking with its arbitrary and implausible guarantee that tax collections will never climb above 23.9% of GDP, which is the average between the introduction of the goods and services tax and the global financial crisis.

Or it might be because what’s needed sits oddly with legislated high-end tax cuts likely to cost $17 billion per year from 2024-25.

Among the drivers of increased government spending identified by the report is spending on health, at present 4.6% of gross domestic product, and on the report’s projections set to climb to 6.2% over the next 40 years.

We’ll want better health

To fund that alone the government will need to collect 6% more tax in 2061 than had spending on health stayed where it was as a proportion of GDP.

Perhaps surprisingly, most of the extra spending on health won’t be a direct result of the population ageing. It’ll be because health technologies are getting better and becoming much, much more expensive (à la the COVID vaccines). And because incomes are rising.

Rising incomes, the report explains, are the largest driver of government spending on health internationally.

That’s because for some things, including the provision of hospitals, private spending can’t cut it, no matter how well off you are.

After billionaire Kerry Packer suffered a massive heart attack while playing polo in 1990, he was rushed to Sydney’s Liverpool Hospital.

When the ANU election survey began in 1990, 54% of Australians surveyed regarded health as “extremely important” in determining their vote. It’s now 70%. In 1990 11% regarded health as “not very important”. It’s now just 2%.

The intergenerational report has spending on aged care climbing from 1.2% to 2.1% of GDP, which by itself means the tax take will have to be 4% higher than otherwise, but it was prepared ahead of the government’s final response to the aged care royal commission.

The interim response had 14 (mostly expensive) recommendations subject to “further consideration”.

The National Disability Insurance Scheme already accounts for one in 20 tax dollars collected and is set to overtake Medicare.

The report says the government’s response to the royal commission into disability care presently underway is likely to place “additional pressure” on costs.

We’ll need to spend more than projected

None of this extra spending is bad if it delivers value for money, and it’s what the public wants. But it is hard to reconcile with official projections in the report showing government spending climbing only 2.5% per year in real terms over the next 40 years, compared to 3.4% per year in the past 40.

Read more: Intergenerational report to show Australia older, smaller, in debt

The report gets there in part by an outrageous sleight of hand. It says JobSeeker and other payments will become tiny as a proportion of GDP because they will only climb with inflation (which is typically low) rather than wage growth or GDP growth (which is typically higher, and lines up with how the pension grows).

A moment’s reflection would show that if that actually happened for 40 years — which is what the treasury’s report assumes — JobSeeker would fall from 70% of the single age pension to a hard-to-justify 40%.

JobSeeker and age pension as projected in intergenerational report

Payment for a single, dollars per fortnight. JobSeeker indexed to IGR inflation projections, pension indexed to IGR wage projections.

We know it won’t happen because it hasn’t happened.

JobSeeker was boosted this year after only 20 years rather than 40 in order to make sure that sort of thing wouldn’t happen.

And we know there’s nothing to stop an intergenerational report using more realistic assumptions.

The 2015 report, released at a time when the Abbott government planned to adjust the pension in line with the more miserly JobSeeker formula, relaxed the assumption after 13 years because if it left it in place the pension would slide untenably below community expectations.

We’ll easily be able to afford more tax

There’s nothing wrong with paying more tax if it’s for things we want, like better health care, better aged care, better disability care and benefits we can live on.

The intergenerational report has government spending climbing by four percentage points of GDP between now and 2061. But it also has real GDP per person almost doubling, climbing 80%.

Even if that’s an overestimate and GDP per person grows by, say, 50%, and the need for tax grows by more than four points, we’ll easily be able to afford the extra tax, and we’ll want what that tax will buy. Expectations climb with income.

The present government will be long gone by the time the tax to GDP ratio reaches its “cap” of 23.9% of GDP (which the report expects in 2035).

The finance minister who came up with the cap, Mathias Cormann, is now head of the Organisation for Economic Co-operation and Development, in which the average tax take is 34% of GDP.

An obvious place to look for the tax is high-income senior citizens, at present enjoying tax-free super, refundable franking credits and special tax offsets.

Grattan Institute calculations suggest an older household earning $100,000 pays less than half the tax of a working-age household on the same amount.

Like the households of less well-off seniors, those households are highly likely to use the services tax provides.

To say we’ll need more tax is not to say the government needs to fund all of its spending with tax.

It is projecting budget deficits for the next 40 years. Budgets have been in deficit for all but a few of the past 100 years.

But it will need to cover much of it with tax to keep the economy in check. If we want what tax provides, we’ll be prepared to pay it.

Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Peter Martin is economics correspondent for The Age and the Sydney Morning Herald.

He blogs at and tweets at @1petermartin.

How private wealth can be employed to re-orient sustainability

Published by Anonymous (not verified) on Tue, 13/07/2021 - 9:00am in


Blog, tax

Around the globe governments spent massively to soften the effects of Covid-19 on their economies.  They spent a combined total of $16 trillion in the year to April 2021, according to the International Monetary Fund.  As a result, debt-to-GDP ratios have risen.  Globally, the debt-to-GDP rose to 97.3% in 2020, from 83.2% in 2016; the ratio is expected to increase to 99.3% by 2026. Advanced countries’ debt/GDP rose from 105.5% in 2016 to 120.1% in 2020 and is expected to reach 121.1% in 2026. Emerging countries experienced an increase from 48.4% to 64.4%, expect to reach 73.2% in 2026.  Low-income countries debt/GDP rose to 49.5% from 39.8%; to decline to 45.7% in 2026 (higher than its 2019 figure of 44.3%).  The recent elevation of debt/GDP ratios brings sustainability of sovereign debt to the forefront of policy discussion as economies begin to recover.

Low interest rates have helped countries service their sovereign debt burdens.  This situation may not last as the U.S. Federal Reserve has signaled interest rate increases for 2023.  Renewed growth will improve tax revenues and reduce expenditures via stabilizers in the medium- and long-terms.  However, fiscal deficits are projected to persist despite improvements in the coming years (see IMF: table 1.1), which means national debts are set to increase.

When a national government runs into problems servicing its debt the typical responses are to restructure the debt and/or introduce austerity into fiscal budgets.  Unfortunately, the introduction of austerity has the immediate effects of worsening unemployment and weakening social safety nets.  Austerity measures, moreover, often do not account for cultural and institutional structure of countries (see Suzanne Konzelmann, Austerity, Polity Press, 2019).  Could sustainability be achieved differently?

The IMF has suggested that pandemic-related expenditures could be met by temporarily raising taxes on income or wealth.  While income taxes could be effective their burden lands on workers and firm owners.  Wealth holders bear the burden of wealth taxes.  However, this type of tax has not been very effective due to issues such as tax avoidance and evasion and the costs of administering the tax.  A relatively undiscussed issue is wealth taxes are typically defined on net wealth, assets minus liabilities.  This implies debt can be used to lower a wealth tax liability and undercut the tax’s effectiveness.

A wealth tax based upon gross private assets, rather than net assets, might work.  Wealth has increased tremendously for the top wealth holders since the Covid-19 pandemic began.  According to Oxfam, the combined wealth of the top richest men increased by US$540 billion between March 2020 and December 2020; for all billionaires, it increased US$3.9 trillion (Oxfam 2021: 12).  A tax on gross assets is not a new idea; it can be attributed to the late economist Michał Kalecki.  The orientation of sustainability is how to complete (net) interest payments, at least, on sovereign debt consistently and directly.  A Kaleckian wealth tax is defined as: national debt x interest rate = tax x assets. The tax is equitable in that everyone’s assets are subject to the tax, with possible exemptions for the poor, owner-occupied dwellings (under a certain threshold) and small business owners and tradesmen.  Because of lack of data, estimates of the tax were never generated.  Fortunately, the United States now has the data to estimate it.

The current size of the national debt for the United States is US$22.5 trillion.  The size of assets is US$325 trillion.  With respect to the interest rate, the highest interest rate in a 10-year forecast period is 3.15%; we use this as the worst-case scenario.  With this information, the wealth tax is 0.22%.  When applied to private assets it yields revenue of US$715billion.  Net interest outlay is projected to be US$345 billion, which leaves US$370 billion left over.  That money could be used to reduce reliance on new borrowing in plans for fiscal spending and keep austerity at bay.  Over a 10-year period, it will generate nearly $10 trillion in revenue.  This is enough to cover the net interest outlays in the forecast period, about $4.04 trillion, and leave nearly $6 trillion as a surplus to reduce reliance on new borrowing, fund green initiatives associated with a Green New Deal and reinforce the social safety net (please see Schroeder (2021) for more detail).

The reduction in reliance on new borrowing can slow, if not reverse, the debt-to-GDP ratio, by slowing the growth of the numerator. The reversal of the ratio can be assured if the surplus funding supports new expenditures for green initiatives so that a multiplier effect kicks in.  In the event of negative interest rates, the structure of the tax shifts to a tax on assets which ensures that net interest payments are met (tax x assets = net interest payments).  A suggestion is to set the tax higher to ensure consistency in payments and generate funds to slow new borrowing and fund social and green initiatives.  For instance, if the interest rate were negative in the U.S., the wealth tax could be calculated as net interest payments/assets, US$345 billion/US$325 trillion or 0.1%, with a suggestion to increase it to 0.15% .

A challenge for implementing a Kaleckian wealth tax is the accuracy of data on assets.  For instance, Australia’s data on assets is good, but incomplete; data on assets are available for households, non-financial corporations, and financial corporations.  There is no publicly available data on small and medium sized enterprises. (Footnote: Using what is available the wealth tax is approximately 0.1%, see website for calculation.)  Another issue is that data on assets for any country is likely to be underreported because of the use of tax havens by high wealth holders; Emmanuel Saez and Gabriel Zucman, for instance, have documented the extent of tax havens and opportunities to improve data on assets.  Obtaining data is not insurmountable.  It is in the wealth holders’ interest to be forthcoming on assets because more complete information will lower the tax.  Another challenge is convincing policy makers and the public, more generally, the tax not only releases fiscal budgets from the threat of austerity, but also enables governments to spend much more liberally on initiatives which strengthen social safety nets and enable green transitions.  It offers a chance to thwart the threat of austerity and end the neoliberal era – for good.

The post How private wealth can be employed to re-orient sustainability appeared first on Progress in Political Economy (PPE).

Politicians and the media coax the public to accept a new period of austerity

Elderly woman looking out of her windowPhoto by Kaspars Eglitis on Unsplash

“The political class in Westminster have failed us. They inoculate themselves against the pain that we suffer. We will not forgive them, and no, we will not be patient with their political ideology – a belief system which sees exploitation, grotesque levels of inequality, the constant threat of war and destitution as a fair price for the protection of a system which serves them and the richest so well. We have run out of patience with their destruction.

They wilfully look away at the crisis in housing, at poverty pay, they have encouraged a system of privatisation and fragmentation of our NHS, taking away more and more of our services, they stoke a despicable nationalistic racism and cultivate culture wars to distract us, to divert our attention and to obscure the truth. The truth is they refuse to serve our interests and they have disdain for our lives.”

Laura Pidcock


This week, the debt doomsters have been out in force! The media and politicians alike have yet again been trying to pull the wool over our eyes with warnings about public debt, handily reinforced by the publication of the Office for Budget Responsibility’s (OBR) Fiscal Risks Report.

Whilst Labour’s Rachel Reeves commits to a cosy conversation with the public about how we can pay for social care, saying that the party would be willing to put up taxes to do so, the OBR’s report has set off a spate of media articles designed to prepare the public for some ‘hard choices’, as Rishi Sunak has previously described it.

We are being primed for the government to abandon its commitment to the pension ‘triple lock’ with scaremongering about its cost, as Sunak claims that concerns about the 8% rise to the state pension due this year under the policy are ‘completely legitimate’, and that any decision will be ‘fair for pensioners and taxpayers.’ And thus, yet again, we see politicians creating and reinforcing societal and intergenerational division for a political agenda, based on the lie that taxes fund state pensions. By claiming that there is a limited pot of ‘taxpayers’ money’, they imply that the triple-lock for pensioners will deprive young people of a stable life and burden them with higher taxes in the future, leading to the conclusion that pension costs must be controlled to be fair to the young. At the same time, it ignores the ongoing reality of decades of government created pensioner poverty and the mess of government-encouraged private pensions that rely on a corrupt and unstable financial sector. Yet again, we see the government creating conflict and absolving its responsibility for its citizens on the false premise of monetary unaffordability.

Then, this week, it was announced that the government would be withdrawing the £20 a week Universal Credit uplift which gave people a lifeline during this difficult time, and went some way to repair the damage caused by 10 years of cuts to public and social security spending.

What sort of perverted logic claims that reducing weekly payments will contribute to getting people ‘back into work’? What sort of perverted logic suggests that people already in work and existing on low incomes and in precarious employment, and for whom the uplift represented an improvement in their living standards, should now be denied it?

Apart from lacking moral compass, such a decision is also macroeconomically bonkers, as it removes money that was being spent into the economy by both those unfortunate enough to have been made unemployed or indeed those receiving in-work benefits because of low incomes. In this respect, the government’s preoccupation with the economy is laughable, since it fails to recognise the role of private spending. It also fails to recognise that it is the government that is actually responsible for creating an environment conducive to the good functioning of the economy.

When asked how a cut would help people to find work, Sunak’s response was that the government was ‘making sure that people are funded by the government to get new qualifications and skills.’ However, as the parable about the 100 dogs and 95 bones (told by Warren Mosler, below) and the economist Bill Mitchell make clear, ‘training does not equal jobs.’


And as for job creation, we can look to the government’s Kickstart scheme which allows employers to offer a six-month work placement funded by the government. It was revealed this week by the work and pensions secretary, Therese Coffey, that just over 40,000 young job seekers had started work on the scheme out of a planned 250,000. A scheme that expires at the end of the year, and we are already halfway through. Not exactly a roaring success.

Those in government suggesting that reducing the current payments is a solution and would contribute to getting people back into work, presumably because then they will accept a low wage and insecure employment, clearly have never had a day of living with government-created want in their lives. Even former Tory work and pensions secretaries have asked that the government rethink, as government ministers have admitted that they have made no studies on how many more children the withdrawal of the Universal Credit uplift will push into poverty, with figures being suggested of over 400,000.

In that light, a report published this week by Loughborough University revealed that even before the pandemic arrived 4.3 million children were living in poverty, up 200,000 on the previous year – and up 500,000 over the past five years. It also noted that 75% of children living in poverty in 2019/20 were in households with at least one working adult, which was up 67% on 2014/15.

Anna Feuchtwang, Chair of the End Child Poverty Coalition said:

“The figures speak for themselves – the situation for children couldn’t be starker. We all want to live in a society where children are supported to be the best they can be, but the reality is very different for too many.

“The UK Government can be in no doubt about the challenge it faces if it is serious about ‘levelling up’ parts of the country hardest hit by poverty. After the year we’ve all had, they owe it to our children to come up with a plan to tackle child poverty that includes a boost to children’s benefits. And they need to scrap plans to cut Universal Credit given parents and children are having a tough enough time as it is.”

The solutions lie in a much broader and radical approach to unemployment which puts government at the heart of policy, rather than leaving the market to dictate unpalatable responses which are about maintaining a competitive environment to keep profits rolling in, but which are at the expense of working people. People who have been exploited and manipulated to serve an economic system that depends on keeping some of them unemployed to control inflation and benefit employers, by keeping wages low and jobs insecure, whilst at the same time blaming those very same people for being unemployed.

Given the huge environmental challenges ahead, we need a policy mix which includes expanding the public sector to restore its efficiency and effectiveness. We need to enable a shift in what we consider to be a healthy economy by moving away from endless growth and consumption of stuff to keep the profit wheels oiled, towards one which values human well-being and planetary sustainability as key to success.

This policy mix should be underpinned by the implementation of a permanent Job Guarantee to provide economic and price stability when the next recession hits, as most surely it will, along with a fit for purpose benefit system for those who are unable to work for any reason.

And yet while the very real challenges which will define our future remain, with respect to the consequences of climate change, the continuing exploitation of human beings, land and oceans for profit motives, we are being coached daily and relentlessly to accept the likelihood of increased taxes and more public sector austerity to pay for public debt, as the OBR’s report shows. Someone, somewhere, will have to pay in financial terms on this model.

The BBC, The Telegraph and The Financial Times, like many other news outlets covering the OBR’s report, focus yet again on debt piles and the so-called ‘eye watering’ record levels of borrowing. The Telegraph, quoting from the report, claimed that soaring costs would threaten to make Britain’s debt unsustainable, should interest rates rise to curb inflation. It painted a picture of a chancellor ‘battling to steady the public finances’, as if he is a captain straining to keep control of his ship in a raging storm. It suggested that addressing the spending pressures could require both cuts to the budgets of government departments and tax rises. It cautioned that the fiscal impact of achieving net-zero could add 21% of GDP to public sector net debt in 2050-51, that lost fuel duty due to the move towards electric vehicles would impact on the government’s fiscal position, and that investment in zero-carbon technologies would add to costs as it would only be partly offset by higher carbon tax revenues. The report also warned of the potential rising costs of servicing government debt in the event of what it called the ‘future shocks’ of higher inflation or interest rates.

The classic household budget narrative of how governments spend rules the roost, and acts to prepare the public for an unpalatable solution to rising debt.

Of course, this narrative does not reflect monetary reality, however hard the orthodoxy tries to suggest it does. The government doesn’t have a debt pile and the Chancellor doesn’t have to tackle it with tax rises or cuts to public spending in any government departments. There is no finite pot of money to share out.  The government is the financial and legislative ‘controller’.

The concerns about dealing with public debt and the potential ‘threat’ of the rising cost of borrowing, which would, according to the orthodoxy, place future burdens on taxpayers, are continuing headline themes on the right of the political spectrum. Whilst on the left, the message is that we must sting the rich to pay for public services, and that politicians must have supposedly ‘sensible’ conversations with the public about paying more tax to provide social care, or being able to borrow at low interest rates to spend on public infrastructure.

However, whilst the monetary orthodoxy prevails, it is becoming more and more difficult to believe that Rishi Sunak, at least, or his Treasury staff really don’t know how the government spends. One can only draw the conclusion that denying monetary reality allows them to continue delivering their political agenda by claiming that money is scarce. It is quite simply all part of the ongoing smoke and mirrors of how the government spends, which gives them power over the public purse and who benefits from it and who loses out.

At this point, it would be useful to revise the facts of monetary reality. It is not difficult to understand and doesn’t require the services of an economist to decipher. Such general knowledge could make a huge difference to how people view politics, which would allow them to examine the connection between government policies and spending decisions and who benefited and lost out as a result. Neither politics nor the economy exist in a vacuum; they both determine how well society functions or not as the case may be. Without that understanding, such narratives will always, in the end, put the brakes on government action, on the false count of unaffordability, and threaten the implementation of policies to deal with the climate crisis and rising poverty and inequality.

Firstly, the government is the currency issuer. It spends money into existence. That is where the story of how the government spends begins.

Secondly, as the currency issuer, the government neither needs to tax in order to spend, nor to borrow to cover its spending over and above its tax revenue. The government’s deficit, which sounds quite scary to ordinary people who compare it to a shortfall in their own household budgets, is everyone else’s surplus. That is the money in our savings and circulating in the economy, in our pockets. The use of the tax, deficit, debt and borrowing frameworks are just accounting conventions that bear no relation to the monetary reality of how the government spends.

Thirdly, by asking where the ‘money’ in our pockets and bank accounts comes from, we find that logically speaking the government must spend before any of us can pay our tax, and by extension before it can ‘borrow’, which is just another smoke and mirrors illusion.

The act of spending is the primary step, and on that basis, why would any government want to borrow money it had spent in the first place? However, the term borrowing’, which is often accompanied by the phrase ‘living beyond our means’, serves to keep the public on board with the idea of the need for fiscal discipline. Relating those concepts to people’s own budgets keeps people accepting the prospect of tax rises and cuts to public services.

In the Times this week in the light of the OBR’s fiscal risk report, the paper reported that Sunak had been warned by the OBR that the £10bn ‘deficit’ (which is the money in our savings and pockets) can be fixed only by taxation and yet more spending cuts, as apparently ‘there is no longer any easy way of cutting Britain’s debt.’

Referring to the ongoing challenges of clearing hospital backlogs, maintaining the test and trace and vaccination programmes, catch-up funding for schools and making up lost rail fare income would, it said, ‘add around £10bn a year on average in the next three years.’

 What can one say? Good luck with that Rishi! Thinking caps need to be at the ready! How will taking money out of an uncertain economy with a virus still raging and furlough unwinding help? The idea that the government needs any tax to reduce the deficit or pay down debt is quite simply yet more deliberately sowed confusion. Worse, to suggest more austerity when we are living the consequences of 10 years of public sector spending cuts, is, without doubt, absurd and would continue to damage an already fragile public infrastructure.

By extension, the false logic must surely follow that we cannot then afford to deal with the planetary emergency that threatens our existence, because there will always be a burden of debt hanging over us and a shortfall in revenues, which will require the government to make difficult decisions by increasing taxes, cutting its spending, or divvying up a finite money pot to serve its agenda. In the end, such narratives will always lead to the government putting on the spending brakes to balance the public accounts, regardless of the impact of such decisions.

The same false logic suggests that we cannot afford to rebuild our public and social infrastructure, even if we had a government with the political will to do so, rather than one that spent 10 years dismantling it. That we cannot address the growing poverty and inequality that has arisen over a decade, due to politically motivated austerity by a government which over the last year has shown its true colours, using its spending capacity as the currency issuer to benefit corporations with little or no accountability or transparency. Corporate welfare at the expense of public purpose.

By that false logic, abandon all hope ye who enter here because, apparently, we’ve spent too much and need to attend to the public finances. The deficit spending in itself, however, does not represent the material risk to the public spending outlook that is being suggested. In fact, we need to turn this argument right on its head and ask a different question.

Instead of worrying about the public finances and the size of the deficit, we would do better to consider first what the deficit represents, and who has benefited from the government spending and who has not. Secondly, rather than seeing the deficit as a problem, we need to examine how we can best address the future challenges before us through government policy and spending decisions. And thirdly, if finance is not the constraint, then what is?

If spending is always reduced to the concept of fiscal discipline to keep the public accounts in order – how much tax is collected and how much has been borrowed -then the future will most certainly be bleak. The cutting spending and increasing taxes recipe that the Chancellor will most certainly trot out on budget review day later in the year, will satisfy the Treasury bookkeepers tallying their modern computer-driven version of the public accounts, thus giving the government an opportunity to promote itself as a safe pair of fiscal hands in future elections. However, such thinking will fail at the first hurdle by creating yet more economic pain for a nation that has already had a bellyful, as delivering public purpose is relegated yet again to being unaffordable.

The real constraints we face are, as we are finding out, resource-driven, and the potential that creates for inflationary pressures. Early on in the pandemic, we experienced such pressures on the NHS when trying to source PPE and other equipment, not to mention the pressures on a service which was and remains short of over 40,000 nurses as a result of government policy and cuts to spending.

In recent weeks, the lack of HGV drivers has put increasing pressure on supermarket delivery networks. The construction industry is experiencing shortages of building materials and transport capacity and is being affected by long lead times for items coming from abroad. And then there is also a shortage of the semiconductor chips which form the basis for the technologically driven world in which we live, from TVs, PCs and cars to hospital and other vital equipment that drive our energy and water networks.

Even though the Bank of England has said that it expects these current price pressures to be temporary as economies start to open up, the inflation doom merchants continue to rattle their warnings about high levels of public debt and future financial burdens. They should instead turn their attention to the real issues related to continuing economic uncertainty and raised levels of unemployment, the all too real threat of climate change and managing our finite resources to create a stable and sustainable economy. That is the real role of the government, not balancing the books. Future shocks will have nothing to do with the rising costs of borrowing, but will be related to any government decision to cut spending or impose more austerity at the expense of people and the planet.

We have a government which must know about monetary reality by now, advocating fiscal discipline on the backs of human existence and abdicating its role in spending and legislation to drive public purpose aims. At the same time, it promotes killer growth and the role of the profit-motivated private sector as the mechanism for human betterment. A contradiction in terms. We have a government wielding the power of life and death for the supposed sake of balanced budgets and the maintenance of the status quo.

In the words of Naomi Klein:

Our economic system and our planetary system are now at war. Or, more accurately, our economy is at war with many forms of life on earth, 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.”



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The post Politicians and the media coax the public to accept a new period of austerity appeared first on The Gower Initiative for Modern Money Studies.