taxation

Taxing Wealth to Create a More Equal Canada

Published by Anonymous (not verified) on Thu, 19/09/2019 - 4:34am in

Tags 

taxation, wealth

This is a longer, wonkier version of a piece I wrote for National Newswatch.

As part of a broader fair tax agenda,
Jagmeet Singh and the federal New Democratic Party have proposed a
wealth tax. This is intended to fight obscene and rising levels of
economic inequality by limiting the concentration of wealth in the
hands of the very rich, who can well afford to pay more, and by
generating new fiscal resources to be invested in equality-promoting
programs such as expanded public health care and student debt
reduction.

A report released by the Parliamentary
Budget Office (PBO) released on September 10, just as the federal
election got underway, confirmed that the wealth tax would raise $70
billion over ten years. Very significant new federal revenues of $6
billion rising to over $7 billion would be raised each year, even
though the proposed levy is quite modest.

https://www.pbo-dpb.gc.ca/web/default/files/Documents/ElectionProposalCosting/Results/32630202_EN.pdf

The NDP wealth tax would be applied at
a rate of just 1% on wealth (assets minus liabilities) above a high
threshold of $20 million. The vast majority of affluent families let
alone ordinary working Canadians would be completely unaffected. Even
a family with $25 million in wealth would pay just $50,000 (1% of $5
million.)

Statistics Canada data for 2016 show
that the median Canadian household (half have more and half have
less) has a net worth of just $295,100 – usually representing
equity in a home and modest savings.

The bottom 20% of families have almost
no wealth at all. To get into the top 10% takes wealth of $1,650,000,
which sounds like a lot but is not untypical of older Canadians with
a mortgage free home in a large city and significant pension savings.
The top 10% hold about 60% of all wealth.

https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1110004901

The Statistics Canada data show that wealth inequality has been rising, but understate its true extent since household surveys are unlikely to find billionaires at home, and billionaires do not like to disclose their assets. Economist Lars Osberg estimates that the share of all wealth of the top 1% may be as high as 20% compared to a reported share of about 10% baed upon household surveys of wealth.

https://www.policyalternatives.ca/sites/default/files/uploads/publications/National_Office_Pubs/2008/Quarter_Century_of_Inequality.pdf

For that reason, the PBO study takes into account reports of large wealth holdings such as an annual list of the richest Canadians compiled by Canadian Business. They create a synthetic database using Canadian Business reports, and the Survey of Financial Security. It should be noted that they expect the rich to avoid about one third of the theoretical increase in government revenues through tax avoidance strategies.

The PBO numbers showing that a wealth tax would raise a lot of money again confirm that wealth in Canada is extremely concentrated in the hands of a very small group of the ultra rich. Even a small levy would raise a lot of money since those with wealth of more than $20 Million own a LOT. At these rarefied levels, wealth is made up mainly of financial assets, especially large shareholdings in both public and private corporations. Often, these family fortunes are passed between generations.

David Macdonald of the Canadian Centre
for Policy Alternatives reports that the top 87 Canadian family
fortunes averaged just under $3 billion in 2016, up by a stunning 37%
from 2012 compared to an average increase of 16%. These large
fortunes totalled $259 billion, the same amount shared among 12
million Canadians at the lower end of the wealth ladder. Inherited
family wealth looms large at the very top of the list, and there is
relatively little turnover from year to year

https://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2018/07/Born%20to%20Win.pdf

Another recent global study finds that
there are 10,840 “ultra high net worth” fortunes of $30 million
or more in Canada and that the total wealth of this group is over one
trillion dollars – $1,100,000,000,000.

https://www.cbc.ca/news/business/canada-wealth-high-net-worthy-1.4814907

Thomas Piketty has famously shown that
the wealth of the very rich tends to rise at a much faster rate than
the wealth of the many, unless strong countervailing political forces
come into play. High levels of wealth inequality also increase income
inequality, and convey massive economic and political power to the
few. Many fear that the ever-increasing concentration of wealth in
the hands of the very rich threatens democracy itself as we return to
the ultra unequal world which existed in the late nineteenth century
and first half of the twentieth century.

Seen in this context, the NDP’s
proposed wealth tax is a needed and quite modest measure. Such a tax
already exists in a few countries, and is being proposed for the
United States by Democratic contenders Elizabeth Warren and Bernie
Sanders. Almost uniquely among major economies, Canada currently
levies neither a wealth tax nor a tax on large inheritances (though
lifetime capital gains are taxed at death.)

Some will argue that the rich “deserve”
their huge fortunes. This hardly applies to inherited fortunes. The
liberal John Stuart Mill famously argued in his Principles of
Political Economy
(Book 2) that a large progressive inheritance
tax should be levied to ensure that private property did not become
too concentrated in a few hands, and in order to prevent economic
advantage from being inherited.

While much is made of the rise of the
high tech billionaire so-called “wealth creators” progressive
economists such as Joe Stiglitz and Lars Osberg in Canada argue that
it is impossible to identify the individual productive contributions
of individuals who work as part of large and complex social
organizations. Quite unlike the textbook economics world of
competitive markets, the actual economy is dominated by large and
powerful corporations run mainly in the interests of their owners,
and share ownership is highly concentrated. These corporations
establish market dominance, drive down wages, fight unions, and lobby
governments to heed their interests. CEOs and other senior corporate
management insiders can and do pocket large incomes far in excess of
their real productive contribution to the enterprise they lead or to
the economy as a whole, and they are required to generate high
profits distributed to the shareholders

The central point is that it is hard to
argue that the distribution of wealth is fair if ownership of capital
is highly concentrated in a few hands as a result of self-enforcing
economic and political power.

Jagmeet Singh and the federal NDP are
to be congratulated for taking the fight for greater economic
equality to a higher level by challenging the growing concentration
of wealth and power in Canada and by showing how a fair tax agenda
can generate the resources needed to pay for a progressive policy
agenda.

A Brexit free zone. GIMMS reports on the real news: austerity hurts (and what we can do about it)

Published by Anonymous (not verified) on Sat, 31/08/2019 - 9:50pm in

Neon sign slogan For the WorldPhoto by John Tyson Tang on Unsplash

“…under the Covenant, all States parties should avoid at all times taking decisions which might lead to the denial or infringement of economic, social and cultural rights. Besides being contrary to their obligations under the Covenant, the denial or infringement of economic, social and cultural rights by States parties to the Covenant can lead to social insecurity and political instability and have significant negative impacts.”

Chair of the UN Committee on Economic, social and Cultural Rights.

In the news this week the Chancellor Sajid Javid pledges money for schools, the NHS and the police in a pre-spending review announcement. Thanking the British people for their hard work over the last decade he said ‘we can afford to spend more on the people’s priorities – without breaking the rules around what government should spend […]. But at the same time, it’s vital that we continue to live within our means as a country’. Reminding the public that the government mustn’t allow its public finances to ‘get out of control’ he also said that when it came to spending ‘taxpayers’ money’ he would make ‘no apology for challenging every decision and making sure every pound is wisely spent’.

The promise to open the purse strings a tad comes with the same tired old language and false narratives about how money works. A worn-out record endlessly repeated as if to brainwash the public with its truth.

But, if the government keeps repeating the false household budget narratives of tax and spend and fiscal rules then those of us who know differently must keep challenging it, must call it out for what it is. A falsehood which has left many in the country bereft of the dignity and economic security that well-paid works brings, exacerbated by a pared down public service sector which has stripped people of the support they need through good times and bad and in the service of creating a functioning more equable society.

What the Chancellor offers with one hand, he takes away with the other in his reference to living within our means and sticking to the spending and borrowing rules set out by his predecessors. The implication is that as the Tories have been so careful with the public finances they have collected enough pennies in the state piggy bank to give them some room to spend. At the same time, long-suffering citizens get a pat on the back for having sacrificed so much so that the government could get its finances back into order and now here’s the reward for pulling in their belts! Better public services. Except that the price for pulling in our belts has been catastrophic. For the last nine years, spending on public services and welfare has shrunk, hunger and homelessness have increased and our most precious planetary cargo our children, (as reported in last week’s MMT Lens) who will carry the consequences of austerity forward, have all borne the brunt of cuts on the back of the lie. Not a week goes by without proof of the damage that has been caused both to people’s lives and the economy.

Austerity hurts and it was a choice.

It is quite amazing what the prospect of an election can bring forth, as the Conservatives attempt to airbrush their image to hoodwink the public into believing that they have been good custodians of the public accounts and the economy whilst claiming yet again 9 years later (a boring record now) that they had no alternative as they were clearing up Labour’s financial mess. Labour has paid a high price for Liam Byrne’s message left in the Treasury that there was no money left

However, this money on every count from schools, to the NHS and policing, whilst welcome, is too little too late. It cannot make up overnight for the consequences of the last nine years of austerity, but then it probably is not meant to. As Aditya Chakrabortty noted in an article this week about funding for education it also has political aims attached. Not only won’t the £2.8bn reverse the cuts made over the last 10 years, most schools won’t benefit at all since the government has indicated that the cash will go to areas which have been underfunded in the past which just happen (not by chance of course – do you hear the election trumpets?) to be full of Conservative target seats for a coming election.

Chakrabortty also notes that ‘classrooms have been turned into the new frontline of the welfare state, with staff filling in for councils in financial collapse and parents in precarious jobs or terrible housing’. This emphasises the wide-ranging consequences of cuts to welfare spending on the most vulnerable people in our nation from those that are sick or with disabilities to those who are involuntarily unemployed or in insecure, low paid employment.

If MMT Lens readers caught the ITV video report on Thursday evening which captured the raw reality of life for people in Liverpool then it surely must bring a heavy heart to many and pose questions about the Conservative’s economic record.

In Liverpool, one in three children live below the poverty line – that is equivalent to more than 35,000 children. That is a shocking statistic. But statistics don’t tell the full story. Families on the breadline with no reserves to fall back on, living hand to mouth, relying on food banks and parents going hungry to feed their children. A life lived in fear of the knock at the door that might render them homeless.

Shirley Marshall, who runs a community store in Liverpool, commented in the video ‘We’re turning into a third world country, that might sound overdramatic, but I don’t think it is, people have got nothing at all, absolutely nothing’. Liverpool is just one of many towns and cities where similar conditions are occurring. We are failing our children and whilst the government extols the virtue of balanced budgets future generations will pay a heavy social and economic price.

While government continuously lauds from its propaganda towers its employment record reiterating at every opportunity its ‘work pays’ mantra it masks the upsurge in insecure work which is pushing people into the red. It masks the people who are working two or three jobs just to make ends meet as people become trapped in chronic poverty and have to rely on charity to exist. It masks the fact that women, who have been affected most by government cuts to public spending, have to work as many part-time jobs as they can fit in just to keep their children fed, clothed and sheltered. The same women who then struggle during the summer holidays to cover the cost of childcare which pushes them into the red and into debt.

This is a vicious circle which once entered becomes increasingly difficult to extricate oneself from. People are made to feel inadequate, as if they alone are in control of their fate and are not subject to the deliberate and harmful intentions of government policy. The mantra of ‘work pays’ is inextricably linked to a neoliberally inspired blame culture which suggests that people are either feckless and improvident or responsible and good with their money. We become winners or losers in a competitive, dog eat dog world and which one you are is down to your personal qualities and hardworking attitudes rather than the time or place in which you were born and brought up and the government policies which were or weren’t enacted.

In the week when Boris Johnson suggested that patient morale might be improved by hot buttered toast and a national tabloid claimed that health tourists have totted up £150m in unpaid bills which could have funded more nurses, doctors and operations, Javid also promised more money for the NHS.

After having deprived it of adequate funding for nearly a decade, closed hospitals, cut services and staffing levels (not to mention the ones who have left through the intolerable stress caused by the pay cap and endless firefighting) it is simply laughable to suggest that hot buttered toast and employing a celebrity chef to improve food will improve patient morale. After a long line of previous celebrity chefs who failed in their task to improve food quality, the latest appointment will have her work cut out. Last year, figures were released which showed that hospitals are spending as little as £3 a day on food for patients. This at a time when records show that the number of patients admitted to hospital with malnutrition has more than doubled since 2009/10.

The problem of malnutrition is becoming so serious that earlier this year MPs recommended that the government appoint a minister for hunger in the UK (yes you read that right) to confront the growing problem of food insecurity which according to figures affects one in five children.

According to the Commons Environmental Audit Committee, the UK has among the worst levels of food insecurity in Europe and up to 2 million people may be undernourished including those admitted to hospital, care homes and mental health units.

Human Rights Watch, in a report published earlier this year Nothing left in the cupboards’ , examines how the changes to the welfare architecture and austerity motivated reductions in government expenditure on welfare are responsible for the huge increases in the distribution of food parcels through the food bank network to meet the needs of those families in food poverty.

Interestingly, it also examines whether austerity motivated cuts to welfare were a political choice or a necessary bitter pill. It was, of course, presented to the public as necessary to restore the public accounts to health as the new Conservative government rejected Labour’s fiscal stimulus and set the country on its austerity path. As Cameron is quoted as saying at the time ‘The age of irresponsibility is giving way to the age of austerity…The age of austerity demands responsible politics. Over the next few years, we will have to take some incredibly tough decisions on taxation, spending, borrowing – things that really affect people’s lives. Indeed, the authors of the report claimed that ‘reducing the public deficit could be a legitimate aim for state policy and may be genuinely unavoidable’ thus confirming yet again the extent of the misunderstanding about how our money system works. That said it also said that

In carrying out such cuts to spending a state cannot, however, disregard its duty to protect people’s human rights. Even where unavoidable, decisions taken in the context of fiscal contraction should not have a disproportionately negative impact on rights. States are required to assess their plans against their obligations under international human rights law.”

As we are now witnessing, Cameron’s ‘age of austerity’ and ‘responsible politics’ have turned sour. Austerity has touched every aspect of ordinary people’s lives and affected the good functioning of our society as the public and social infrastructure is taken apart and the welfare system stripped to the bone.

It is a vicious circle where low incomes, insecure employment and poor housing, combined with changes to welfare benefits impact on health – which in turn creates more pressures on a health service which is itself crumbling under the strain of austerity and cuts to its budgets. And now, after 9 years of pain, the Conservatives have the audacity to claim that as a result of their careful stewardship of the public finances they have money to spare. Which is a little surprising since in the real world of the state finances governments can’t have money to spare as they can’t save it in the first place.

The front-page headline about health tourism and unpaid bills covered in two tabloids plays to a primed audience and is a distraction from the realities of government austerity policies and their ideological purpose. Firstly, to note that when considering that the total annual spend for the Department of Health is approximately £124.7 BILLION, £150 million is a drop in the ocean!

In this age of austerity which has wrought division and aroused suspicion of foreigners (not to mention immigrants), focusing on health tourism in such a hateful way is a deliberate distraction designed to drive a wedge between people with the suggestion that their tax money is being diverted to pay for treatment of foreign visitors. Aneurin Bevan, the founder of the NHS was clear in his essay ‘In place of Fear’:

“The fact, is of course, that visitors to Britain subscribe to the national revenues as soon as they start consuming certain commodities, drink and tobacco for example, and entertainment. They make no direct contribution to the cost of the Health Service any more than does a British Citizen’

As our NHS is being carved up and reorganised to create a US-style Medicare health service shaped as Integrated Care, how convenient it is to focus on hot buttered toast and health tourists to stir up animosity. While the real prize is being sliced and diced into private hands the public has been blinded by emotive arguments with sleight of hand in mind.

The idea of ‘taxpayers’ money’ is a divisive one and intended to be. It separates us into categories of hard-working people or shirkers, citizens or foreign visitors and immigrants. Instead of seeing human beings, we see money and entitlement.

With better knowledge of how government spends, we can challenge that story. Indeed, unless we do challenge these false narratives about how government spends then the future could be a bleak one for us all, but most especially our children’s children.

We can point to the fact that the government as the currency issuer, is never short of money and neither needs tax revenue or to borrow before it can spend.

We can point to the fact that from a macroeconomic point of view austerity was always the wrong path given that spending whether by government or the private sector equals income to someone. It is that which keeps the economic wheels turning.

We can point to the fact that the government made a deliberate choice to restrict funding to pursue an ideological agenda under the guise of creating financially sustainable public finances and public sector services, but which had nothing to do with monetary realities.

We can point to the fact that contrary to the ‘There is no alternative’ mantra which has been thrust into the public consciousness on a daily basis, that there is one. It starts with asking fundamental questions of those who suggest that our future is dependent on financial considerations. It starts with challenging the notion that we can’t afford the vital programmes needed to deal with climate change and rising inequality.

We can show that a government has choices which are not related to balancing books. We can demonstrate that it’s not money that constrains government spending but resources. We can illustrate how government can put them to work to deliver public purpose; human and planetary survival in the first instance and in the second to address the huge inequalities that have arisen as a result of government policies designed to fill the pockets of the rich at the expense of the majority.

As one of the US Presidential candidates pointedly noted: ‘If the environment were a bank it would have been saved already’. The same could be said of poverty and inequality.

Let’s get informed and let’s get cracking.

If you have questions and want further information on these important issues you couldn’t do better than exploring our website. It has all the information you need from the basic to more in depth knowledge.

Give us a whirl and you won’t regret it.

 

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

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September 24 @ 5:00 pm – 7:00 pm – book your free ticket here

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

 

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The post A Brexit free zone. GIMMS reports on the real news: austerity hurts (and what we can do about it) appeared first on The Gower Initiative for Modern Money Studies.

The Stepford Daughters of Brexit and Slavery and the Emergence of Capitalism

Yesterday for our amusement the awesome Kerry Anne Mendoza posted a video on twitter made by two very definitely overprivileged girls talking about the evils of socialism. The two young ladies were Alice and Beatrice Grant, the privately educated granddaughters of the late industrialist and former governor of the Bank of England, Sir Alistair Grant. With their cut-glass accents and glazed, robotic delivery of their lines, they seemed to fit the stereotype of the idiotic Sloane perfectly, right down to the ‘Okay, yah’, pronunciation. Mendoza commented ‘I don’t think this was meant to be a parody, but it’s the perfect roast of the “yah-yah” anti-left.’

Absolutely. In fact, what the girls were describing as socialism was really Communism, completely ignoring democratic socialism, or social democracy – the form of socialism that demands a mixed economy, with a strong welfare state and trade unions, progressive taxation and social mobility. It also ignored anti-authoritarian forms of socialism, like syndicalism, guild socialism or anarcho-Communism. They were also unaware that Marx himself had said that, regarding the interpretations of his views promoted by some of his followers, he wouldn’t be a Marxist.

But it would obviously be too much to expect such extremely rich, public school girls to know any of this. They clearly believed, and had been brought up to believe, the Andrew Roberts line about capitalism being the most wonderful thing every invented, a mechanism that has lifted millions around the world out of poverty. Etc. Except, as Trev, one of the great commenters on Mike’s and this blog, said

If “Capitalism works” why are there a million people using foodbanks in Britain today? Not working that well is it? Why did the Government bail out the Banks using our money? Why did the Banking system collapse in the first place, was it because of Socialism? I don’t find these idiotic spoilt brats in the least bit funny, I feel bloody angry. When was the last time they ate food they found in the street? Bring back the Guillotine!

See: https://voxpoliticalonline.com/2019/08/14/these-young-ladies-of-brexit-need-to-be-seen-to-be-believed/

The two girls were passionate supporters of the Fuhrage and his wretched party, and were really looking forward to a no-deal Brexit. It shows how out of touch these girls are, as Brexit is already wrecking the British economy, and a no-deal Brexit and subsequent deal with a predatory America would just wipe it out completely. Along with everything that has made post-war Britain great – the NHS and welfare state. But these girls obviously have no connection with working people or, I guess, the many businesses that actually depend on manufacturing and exports. I think the girls’ family is part of financial sector, who stand to make big profits from Brexit, or at least are insulated from its effects because they can move their capital around the globe.

The girls’ views on the EU was similarly moronic. They really do seem to believe that the EU is somehow an oppressive, communistic superstate like the USSR. It wasn’t. And the reason anti-EU socialists, like the late, great Tony Benn distrusted it was partly because in their view it stood for capital and free trade against the interests of the nation state and its working people.

And they also have weird views on slavery and the EU’s attitude to the world’s indigenous peoples. To the comment by David Lammy, the Black Labour politico, who dared to correct Anne Widdecombe for comparing Brexit to the great slave revolts, they tweeted

“Lammy being pathetic as usual. The chains of slavery can be intangible, as amply shown in China, the Soviet Union and the EU; to deny that just shows your ignorance and petty hatred for the truth”.

To which Zelo Street commented that there two things there. First of all, it’s best not to tell a Black man he doesn’t understand slavery. And second, the EU isn’t the USSR.

They were also against the Mercosur deal the EU wishes to sign with the South American nations, because these would lead to environmental destruction and the dispossession and exploitation of the indigenous peoples.

“As usual the GREED and selfishness of the EU imposes itself using their trade ‘deals’ in the name of cooperation and fake prosperity. The indigenous tribes of the Amazon need our protection not deforestation”.

To which Zelo Street responded with incredulity about how they could claim environmental concern for a party headed by Nigel Farage.

And they went on. And on, going on about how the EU was a threat to civil liberties. And there was more than a touch of racism in their statement that Sadiq Khan should be more concerned to make all Londoners feel safe, not just EU migrants. They also ranted about how Labour had sold out the working class over Brexit in favour of the ‘immoral, money hungry London elite’. Which shows that these ladies have absolutely no sense of irony or any self-awareness whatsoever.

In fact, Zelo Street found them so moronic and robotic, that it dubbed them the Brexit party’s Stepford Daughters, referring to the 70s SF film, the Stepford Wives. Based on the novel by Ira Levin, the films about a community where the men have killed their wives and replaced them with robots.

See:  https://zelo-street.blogspot.com/2019/08/brexit-party-presents-stepford-daughters.html

There’s a lot to take apart with their tweets. And perhaps we shouldn’t be two hard on the girls. They’re only 15 and 17. A lot of young people at that age have stupid views, which they grow out of. But there is one issue that really needs to be challenged.

It’s their assumptions about slavery and the genocide of indigenous peoples. Because this is one massive problem to any assumption that capitalism is automatically good and beneficial.

There’s a very large amount of scholarship, much of it by Black activists and researchers, about slavery and the emergence of European capitalism and the conquest of the Americas. They have argued that European capitalism was greatly assisted by the profits from New World slavery. Caribbean historians like Dr Richard Hart, in his Blacks in Bondage, have shown that transatlantic slavery was a capitalist industry. For the enslaved indigenous peoples and the African men and women, who replaced them when they died out, capitalism certainly did not raise them out of poverty. Rather it has done the opposite – it enslaved them, and kept them in chains until they were able to overthrow it successfully with assistance of European and American abolitionists in the 19th century.

And among some left-wing West Indians, there’s still bitterness towards America for its constant interference in the Caribbean and Central and South America. America did overthrow liberal and progressive regimes across the world, and especially in the New World, when these dared to challenge the domination of American corporations. The overthrow of Jacobo Arbenz’s democratic socialist regime in Guatemala is a case in point. Arbenz was overthrown because he dared to nationalise the banana plantations. Which upset the American United Fruit Company, who got their government to overthrow him in coup. He was replaced by a brutal Fascistic dictatorship that kept the plantation workers as virtual slaves. And the Americans also interfered in Jamaican politics. They were absolutely opposed to the Jamaican Labour party politician, Michael Manley, becoming his nation’s Prime Minister, and so did everything they could to stop him. Including cutting trade.

And then there’s the enslavement and genocide of the indigenous peoples.

Before Columbus landed in the New World, South America had a population of about seven million. There were one million people in the Caribbean. I think there were similar numbers in North America. But the indigenous peoples were enslaved and worked to death. They were also decimated through diseases carried by Europeans, to which they had no immunity. The Taino people were driven to extinction. The Caribs, from whom the region takes its name, were able to survive on a reservation granted to them in the 18th century by the British after centuries of determined resistance. The conquest of the New World was a real horror story.

And Britain also profited from the enslavement of indigenous peoples. I doubt the girls have heard of it, but one of the scandals that rocked British imperialism in the late 19th and early 20th centuries was that of the Putomayo Indians of South America. They had been enslaved by British rubber corporations. It was this abuse of a subject people that turned the Irish patriot, Roger Casement, from a British civil servant to an ardent Nationalist.

On the other side of the world, in the Pacific, British imperialism also managed to dispossess an entire Polynesian people and trash their island. This was in the 1920s. The island was rich in mineral deposits, and so moved the indigenous people out, ultimately relocating them to Fiji. Their island was then strip-mined, leaving it a barren, uninhabitable rock. In the 1980s the survivors were trying to sue the government over their maltreatment, but with no success.

This is what unfettered British imperialism and capitalism did. And what I’ve no doubt Farage and other far right British politicians would like to do again without the restraints of international law. It’s why I believe that, whatever the demerits of the Mercosur agreement are, it’s probably better than what individual nations would do without the restraint of the EU.

The girls are right to be concerned about the fate of indigenous peoples. But they are profoundly wrong in their absolute, uninformed belief that unregulated capitalism will benefit them.

It doesn’t. It enslaves, dehumanises and dispossesses. Which is why we need international organisations like the EU, and why the Brexit party isn’t just a danger to Britain, but to the world’s weaker, developing nations and their indigenous peoples.

The Strange Case of the Missing Money

Published by Anonymous (not verified) on Sun, 11/08/2019 - 11:58pm in

Woman holding coins and "make a change" written on a scrap of paperPhoto by Kat Yukawa on Unsplash

“Economics lie at the very root of practical morality”

Josephine Butler, English feminist, social reformer and campaigner against injustice.

Boris Johnson has been distributing largesse. Well, not quite distributing it; it’s still in the pot of promises. There will, apparently, be extra money for the NHS, money for policing and education and even some to manage Brexit. If it were true then potentially it’s a good thing, but of course like everything the devil is in the detail.

After 9 years of being told endlessly there was no money and that cuts were necessary to deal with Labour’s economic mismanagement suddenly it just appears out of nowhere. Shouldn’t someone be asking how are they going to pay for it? Has someone checked out their fully costed budget? If it were Labour doing the spending then, of course, these are exactly the questions that would be being asked, even though they don’t represent monetary realities.

Of course, in the lexicon of monetary orthodoxy, aka household budgets, we can all thank the previous Chancellor who squirrelled away money in the ‘rainy-day fund’ for just such an event! Except, of course, that the question of how we pay for it doesn’t reflect how money works at all; the rainy-day fund is a figment of former chancellors’ imaginations because governments don’t spend like households and neither have nor don’t have money; they cannot put money aside or save for future expenditure. Those of us who know how it works might suppose it is simply missing knowledge on both sides of the political divide but maybe it is just a torturous game played out in the Houses of Parliament over the despatch box to deceive the public and deliver political agendas.

On the other hand, the new Chancellor Sajid Javid doesn’t seem to get it at all – or maybe he does. Whilst Boris Johnson is going on a spending spree of promises to keep the nation sweet in the run-up to a possible election, deal with the initial fall-out from Brexit and avoid the possibility of recession (currently being blamed on Brexit by media pundits whilst carefully ignoring the impact of 9 years of cuts to public spending on the economy), Javid said this week that he’s not expecting a recession at all (he’s checked with the orthodox economic oracles). He has claimed that increased growth will allow the government to meet its spending pledges (despite a contraction in the economy between April and June). Presumably, he’s counting on the additional tax that will be poured into the government’s coffers in the event of the engines of the economy perking up. Just how that miracle will occur is anyone’s guess given that the government actually has to spend before anyone can even pay their tax! If he knew this long kept secret (except he probably does but must keep to the business of government’s fiscal discipline) he could increase spending at a stroke of a computer key to avoid or lessen the worst effects of any potential recession which of course he is denying is a possibility.

Apparently, according to him, ‘the fundamentals of the British economy are strong – wages are growing [and] employment is at a record high”. Did anyone tell that to the funeral director offering budget funerals in this the final episode of the BBC programme Broke who is working a variety of jobs over 120 hours a week to keep his and his family’s heads above the water? Or those other people featured in the programme series who struggle every day working long hours on low wages, on zero hours or in the gig economy to keep their household budgets balanced and out of debt or indeed live on the beach for want of proper accommodation? There is a huge dissonance between the spoutings of government ministers and the realities on the ground for ordinary people.

Now let’s get back to that extra money Boris Johnson was talking about. Boris made his announcement in an article in the Sunday Times saying, ‘It is thanks to this country’s strong economic performance that we are now able to announce £1.8m more for the NHS to buy vital new kit and confirm new upgrades for 20 hospitals across the country’. So here we are again back to the idea that a healthy economy with higher tax revenues allows a government to spend (not withstanding that the economy is currently spiralling downwards along with other economies across the world). The suggestion is that the Conservative government has been fiscally prudent and that its economic policies which have resulted in higher tax revenues allow it to spend more. Again, a typical household budget response to government spending which is a cynical deception to cover its ideological intent.

However, not long after this announcement it became clear that this £1.8bn cash injection for the NHS capital budget which covers buildings and equipment isn’t extra money at all. It isn’t even new money, and nor will it be sufficient to make up the loss of NHS funding after 9 years of cuts to public spending. Krishnan Guru-Murthy from Channel 4 in an excruciating interview with the health minister Chris Skidmore suggested that it was money hospitals had saved by cutting services that they were now able to spend on capital projects. Trying to get Skidmore to admit the truth he said:

“I’m trying to work out where this money has come from. Hospitals up and down the country have been saving money for years but have not been allowed to spend it. And the understanding from experts like the Nuffield Trust is that this is an accounting exercise which now releases that money to be spent. Money that they saved by cutting on services that they’re now able to spend on capital projects.”

It turns out that Trusts couldn’t spend the cash they had saved until of course Boris Johnson claimed in a fanfare of trumpets that he was giving the NHS more money. This is nothing but yet another act of sleight of hand meant to put the government in a good light in the event that it will have to fight an election.

And let’s not forget either that small issue of Boris Johnson’s big red bus and his promise of £350m a week for the NHS if we voted to leave the EU?  People may have thought it sounded a great deal of money when multiplied up but it wouldn’t even cover the real costs of the cuts the government has already made over the last nine years and is a few specks in the ocean compared to the annual government expenditure on the NHS which in 2017/18 was around £122bn, of which £108bn was spent on day to day running costs.  The well-being of the nation and the economy, which depends on a well-funded publicly paid for and managed NHS, has been at stake for the past nine years, while the government has pretended there was no money for our health service and pushed through reforms designed to irrevocably change it and finish the work of successive governments. The NHS has lost its ‘N’; services and treatments are being cut left, right and centre, hospitals closed or downgraded and ‘care in the community’ has become the next big byword for change to cut costs as private healthcare companies no longer taking over through the backdoor are brazenly and openly charging now through the front door.

In another analysis this week, on Johnson’s funding pledges for education it would also appear that things are not quite as they seem. The Prime Minister committed to ‘invest in our schools and close the opportunity gap in our country’. However, new research published by the Education Policy Institute this week has not only found that the pledge would cost double what the government has promised, but also that it would disproportionately benefit the least disadvantaged schools thus reinforcing the educational inequalities that prevent many children from getting the best start in life.

Furthermore, the proposed extra money fails to take account of the real-life circumstances of children who won’t only lose out from an unfair distribution of education funding. Combined with the cuts to public spending on services, reforms to the welfare system, poor wages, insecure employment, homelessness and poor housing not to mention children in temporary and unsuitable accommodation or coming hungry to school, the effects can equally compromise a child’s future life chances and ultimately that of the nation itself. Government cannot continue to ignore the social determinants of a healthy society which cuts to public spending have undermined.

GIMMS might have missed it, but the one spending commitment that seems to have been left off the list is the environment. If anyone can tell us differently then we would be pleased to stand corrected.

The most pressing issue that we humans face is global climate change and in the last few weeks our planet has been displaying extremes of heat, storms and flooding and wildfires in the Arctic. Professor Michael Mann at Penn State University, one of the world’s leading climate scientists confirmed in an interview last year that the impacts of global warming on our planet ‘are now ‘no longer subtle…[and] we are seeing them play out in real time’.

Scientists who were meeting in Geneva earlier this week are soon to publish a stark warning about the damage also being done to the land surface of our planet as a result of the human activities which have led to soil degradation and erosion, expanding deserts and the destruction of forests and biodiversity.  Land which has been an asset in combatting climate change has now been turned into a major source of carbon as the battle for land increases to grow biofuels, plant material for plastics and fibre, timber for paper and furniture and food for growing populations.

As citizens of planet earth, we should all be concerned about the lack of real action by governments across the world. Whilst we all can make our personal contribution to changing our own behaviours, the reality is that it is only government with its sovereign spending and legislative powers that can drive the level of change we actually need to save ourselves.  We have a choice, as Professor Mann explains, we can keep on walking out into the minefield or we can reverse course and get off as quick as we can.

When politicians and think tanks ask where the money will come from to invest in addressing climate change, it is the wrong question. We should instead be asking what the consequences will be of inaction, as increased consumption and growing world populations put ever increasing pressures on nature’s resources which are being depleted far faster than the planet’s ecosystems can renew them. This is the only overspending that we should be concerned about.

Arguments about the size of deficits and debt should be put aside for the more important arguments about how we address these challenges. We must identify what resources we have and how we can use them effectively, not only to preserve planetary life but also deal with the increasing poverty and inequality that has arisen as a result of both a flawed economic system and a warming planet, which are already increasing the pressures on land and water use.

An understanding of how money works combined with an appreciation of what a Job Guarantee is and a discussion about the Green New Deal are an important start to the public conversation about where we go from here. Certainty is an impossibility. Life doesn’t deal in chocolate boxes, but we have to start somewhere and as Professor Michael Mann said we have a choice we can keep on navigating the mine field or we can reverse course.

In a recent article, Larry Elliott and Richard Partington posed the question “Boris says he’ll spend but who will pay? Will they break with austerity even if that means higher public borrowing they ask? The article notes that the Institute of Fiscal Studies has indicated that Johnson’s tax promises are expensive commitments which could cost £9bn a year. The authors quote the OBR which said that it would push government borrowing and debt up from the levels in their forecasts adding that there was no war chest or pot of money set aside that would make them a free lunch. They refer to Gordon Brown’s ‘golden rule’ only to borrow for investment (now where have we heard that before?) and George Osborne’s pledge to eliminate the deficit within five years and quote the UK’s ‘total debt pile’ and the fact that the deficit is still a ‘problem’. They even refer to John McDonnell, who has suggested that Labour would ‘raise spending with greater responsibility, as the party would increase taxes on high earners and businesses.

This is the false language of household budgets and quite simply does not apply to a sovereign currency issuing country. A government that is monetarily sovereign neither needs to tax or to borrow in order to spend. And yet our politicians, many journalists and institutions hang on to outdated concepts, regardless of the realities of modern money. The discussion hangs on deficits and debt, balanced budgets and surpluses when these are no more than red herrings which take no account of the economic context, the economic record of the government or the consequences of government policies on the lives of citizens.

If the government is us then it is beholden on us to use our power to change how things work. Let’s not pay the price for not doing so. There is an alternative world out there if we choose to stand against the tide. The first small step is understanding that a government is defined by the spending choices it makes and that there is no scarcity of money, only lack of political will.

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The post The Strange Case of the Missing Money appeared first on The Gower Initiative for Modern Money Studies.

The barbarians may be inside the gates, but we can still defeat them

Hand reaching towards the sunrise over a lakePhoto by Marc-Olivier Jodoin on Unsplash

The French have a saying “plus ça change, plus c’est la même chose.” With the events of the last few days, one might consider that nothing had changed; the Tories are still in the driving seat albeit with a new leader. However, with the election of Boris Johnson to the post of Prime Minister, followed by an ignominious line up of hard right, heavily male, privately-educated Cabinet appointments one can say, at least for those of us with a progressive disposition, that the country has reached a moment of even more uncertainty and fear for the future.

In his first speech as PM, Johnson promised a ‘new golden age’. Given previous history and his leadership campaign, one must ask the question “a golden age for whom?” Johnson and his friends are dyed-in-the-wool, free market fundamentalists who favour a deregulatory free-for-all. They individually, or collectively, support capital punishment, fracking, GM crops, a watering down of employment rights and privatisation of key public services such as the NHS (although the latter, of course, is vociferously denied) and worse still are climate change deniers.

Unless they have had a collective Damascene moment, which seems highly unlikely, the golden age will be about continuing to serve their corporate masters and the further weakening of democracy, not the public purpose. With little mention of our failing public services, a fiscal stimulus maybe but in whose interests? Twenty thousand new policeman sounds good but with so many police stations closed, the time it takes to train police officers along with the need for training facilities and trainers to train them, this will be a dead duck in the water. Furthermore, Johnson has failed to address the consequences of the Conservatives’ austerity policies on society as a whole which, without doubt, has increased the pressures on law and order. It’s all nothing but rainbow coloured whitewash or is that hogwash?

In all this, one might think that the appointment of Jo Swinson to the leadership of the Liberal Democrats is a side story which is unconnected. And yet it is. Whilst most would jump immediately to the Brexit connection, given the stands of both parties on this issue, the reality is that it is that something far more insidious links them – economic ideology and austerity.

Some have, of course, claimed that austerity created the conditions for the Brexit vote, but the working-class discontent related to reduced standards of living and increased poverty and inequality predates 2010, going back over 30 years. It is as much linked to the ideological agendas pursued by successive governments since Thatcher as it is to the last 9 years of austerity.

This has been a bubbling cauldron of long-term dissatisfaction which has driven people to want change. Brexit has been the expression of that desire – a rejection of the economic orthodoxy which has deprived them of good, well paid jobs and security and a rejection of the political and economic structures which have brought it about and led dangerously to the rise of the extreme right and nationalism in the UK (as well as in the US and Europe).

It is regrettable, however, that in the political maelstrom which is dividing the country the subject of austerity and the reasons for people’s discontent have taken a back seat as Remainers and Brexiters fight it out in an increasingly vicious war of words which often fail to promote cogent reasons for either.

Boris Johnson and Jo Swinson have one thing in common – they voted for austerity. Their voting records and actions whilst in coalition government attest to that fact and we must not forget it. The Liberal Democrats enthusiastically supported the false belief engendered by George Osborne in the Treasury and David Cameron that the financial crisis had been caused by too much government spending by Labour, rather than being one created by bankers and speculators. Public sector workers as a consequence bore the brunt of cuts to public spending.

The party gave the Conservatives every helping hand they could, including supporting the government’s Health and Social Care Act which was yet one more step in the creation of a two tier American style healthcare model, went back on their promise to oppose increasing student tuition fees and put disabled people in the firing line of austerity cuts as the campaigner Frances Ryan notes in her new book ‘Crippled’ mentioned in last week’s MMT Lens. And these are just a few examples of the way in which the Liberal Democrats shamefully enabled the Tory political agenda. The words ‘thirty pieces of silver’ come to mind.

When asked during her leadership campaign, Swinson said that she had no regrets about her party’s role in austerity, claiming that there had been no alternative in order to get the country back on its feet. Never mind the realities of an economy which has shrunk by £100bn since 2010 or the pain, suffering and financial hardship that has been caused by those in acting in Coalition on the false notion that the public finances had to be put back in order and that the cuts were necessary.

And yet puzzlingly, in a tweet in May, she praised Jacinda Ardern’s well-being ‘budget’ saying:

“Economic transformation is about putting people and planet at the heart of our economy. We should be building on our existing work on wellbeing & making it central here too.”

A change of heart? One must question that in a world where politics is less about serving the people and more about gaining the power to pursue one’s own interests and serving global corporations through revolving doors. It is instructive that she accepted cash from a fracking businessman after having campaigned to save the environment. Her campaign tagline ‘Build an economy that puts people and the planet first’ seems a little less shiny with that knowledge in mind. She also failed to support proposals in Westminster aimed at fighting climate change and voted in favour of cutting the subsidy for electricity generated via renewable or low carbon schemes.

It is as if Swinson cannot or chooses not to make the connection between government deficit spending and delivering public purpose by putting the planet and people at the centre of economic, environmental and social policy. As Frances Ryan notes “austerity has harmed millions of people in Britain and continues to wreck lives.” Not to mention the economy!

Not only did she show herself to be impervious to the suffering caused by her party’s support for Tory policies, she also demonstrated the usual political ignorance about how the government’s finances work.

As the economist, Ellis Winningham said in a recent podcast (here)

“The only fiscal rule that should exist is one that targets prosperity. What I mean by that is plain and simple. Deficits should be targeted at full employment and public purpose. The people’s well-being should be looked after 100% at all times.”

Swinson’s words and actions have been in complete denial of this rule.

In these uncertain times, serving public purpose has been replaced with serving self-interest and in doing so well-being has been replaced by suffering and hardship. There cannot be many whose lives have not been touched in some way whether personally or via friends or family by government- imposed austerity. The collapse in social care and mental health services are just two examples. The lie of “care in the community” from support for elderly sick people being discharged from hospital to those suffering from mental health difficulties is being exposed on a daily basis and it is shameful. All of us hope that the services will be there in case of need, but increasingly they are not.

The social and economic impact of cuts to spending, both at national and local level, are leaving the most vulnerable without the care they need and leaving already financially hard-pressed families to take up the strain of looking after their loved ones. Those working in social care, which is often provided by private, profit seeking companies, are equally stressed with increasing workloads and poor pay and many are choosing to quit their jobs. In turn, local government with cuts to its budgets struggle to meet the costs of privately provided care and those care companies are increasingly thinking about exiting the sector as the public funding stream dries up along with their profits.

In mental health both for adults and children, the situation is equally grim. Premature discharge, either from community care or hospital, often leaves the vulnerable and marginalised to cope without adequate support or even any support at all. Sick people seen as troublemakers or attention seekers are abandoned to their own devices if they ‘fail’ to comply, or those with complex issues are off-loaded into private profit-driven facilities miles away from family and friends. In many cases families are left to take the strain.

In a target driven world where figures and balance sheets are more important than people’s lives, all serve to hide the actual scale of the problems being faced by people behind closed doors or on the street as a result of political and economic ideology. The health of the public finances has been used cruelly to justify austerity.

As noted in last week’s MMT Lens, we still have politicians, journalists and institutions who are living in fantasy land about public debt and deficit and woe betide any government that spends beyond its financial means. Fiscal Credibility Rules rule!

One such article appeared this week in the Guardian written by the economics editor Phillip Inman entitled “Labour and Tories both plan to borrow and spend. Is that wise?” Inman compares the British to the Italians who are proposing a fiscal stimulus on borrowed money, where of course no comparison can be made since Italy is the user of the euro as a foreign currency and has to issue debt in that currency to fund its spending, unlike the UK which has to do neither in order to spend.

Inman then proceeds to claim that whoever is making spending promises or tax cuts, Conservatives or Labour, it will require a huge increase in government borrowing. He claims that higher borrowing will put the public finances at risk and that in the light of worsening public finances and the coming ‘economic chill’ it would be better to ‘hunker down’.

With the nation mired in excessive household debt and the consequences of 9 years of austerity which has decimated public and social infrastructure, surely Phillip Inman might by now have come to the conclusion that hunkering down has not revitalised the economy. Instead, it has demolished it and worse harmed the lives of those who have had to live through it; from those who have the misfortune to be involuntarily unemployed to those with disabilities, the chronically or terminally ill, those without a roof over their heads and parents who struggle to feed their children. (For an excellent critique of Philip Inman’s article follow the link here.)

The public doesn’t need to take a degree course in economics to grasp the simple realities of how a government spends, or that it neither needs to get tax or to borrow before it can do so. These are elemental ideas. What the public does need to know is that government has deliberately made political decisions to cut investment in public infrastructure and spending on the services on which we all depend as well as deny those in need adequate financial support to live without fear.

The public needs to ask serious questions about why there is no money for the public purpose but plenty for buying arms, pursuing wars and bailing out banks, not to mention the many billions which find their way into private profit for delivering public services like the NHS. These are surely the clues that the public has been hoodwinked by a lie about balanced budgets being more important than the state of the economy and people’s lives. The answer to the question ‘where will the money come from’ is simple. The government spends it into existence. No tax or borrowing required.

Just imagine the revolution there would be if the public knew the truth. Just imagine how that knowledge could make the difference between saving or destroying the planet and creating a healthier, more well-balanced world for its citizens, where resources are more equally shared and political and economic solutions to poverty and inequality can be sought.

Modern Monetary Theory is but a description of how money works and of course, in itself, is not a magic bullet. There are no certainties. The rise of right-wing extremism in the US, the UK and Europe is worrying indeed, but that is no reason not to hope for something different. We have to start somewhere. Certainly, we can only work with what knowledge we have already, but that shouldn’t stop us using the full force of our human imaginations to create a better world for us all.

Note: If you want to learn more, GIMMS has a simple to read introduction to Modern Monetary Theory, along with plenty of other resources to inform and challenge the prevalent narratives of how money works. (link here)

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The 2019 Zelizer Award for Best Book in Economic Sociology goes to ‘Starving the Beast’ by Monica Prasad

Published by Anonymous (not verified) on Tue, 23/07/2019 - 8:34am in

Northwestern University scholar Monica Prasad is the winner of the 2019 Zelizer Book Award given by the American Sociological Association’s Economic Sociology section for an outstanding book in the field. Prasad will receive the Award for her superb book Starving … Continue reading →

‘I’ Newspaper: Aristocracy Have Doubled Their Wealth in Past Decade

The cover story on Saturday’s I for 20th July 2019 was a report that Britain’s landed gentry had doubled their wealth in a decade. Beneath the headline declaring that very fact were the lines

  • Dramatic surge in fortunes of British nobility since the 2008 financial crash, I learns
  • 600 aristcratic families now as wealthy as they were at the height of the British Empire.

The story on page 12 of the paper by Cahal Milmo was based on the research of two academics, Dr Matthew Bond and Dr Julien Morton, lecturers, sociology lecturers at the London South Bank University, who had examined probates, or settled wills, of 1,706 members of the aristocracy going back to 1858. However, the article made the point that these wills only represented part of the aristocracy’s immense wealth, and their real fortunes is likely to be much higher because their lands, property, art collections and business investments are very frequently held in separate trusts which cannot be examined.

The article stated that

A hereditary title is now worth an average of more than £16m – nearly twice the value it stood at proior to the 2008 financial crisis, I can reveal. their fortunes contrast starkly with the decade experienced by the vast majority of Britons, whose inflation-adjusted wages remain stuck at 2005 levels.l Since the Thatcher era, the value of a hereditary title has also increased four-fold.

The academics’ research also

shows that the minimum value of one of these (aristocratic) titles now stands on average at £16.1m. The same figure, adjusted to reflect current purchasing power, stood at £4.2m between 1978 and 1987.

The four-fold increase suggests the aristocracy has prospered spectacularly under the era of financial deregulation and economic liberalisation ushered in by Margaret Thatcher when she came to power in 1979.

The I also stated

The figures represent a sharp recovery in the fortunes of the nobility, which went into a decline during the Second World War and the post-war consensus, which brought in more progressive taxation and the welfare state. From a pre-war high of £23m, average fortunes fell to £4.9m by the 1980s.

The data suggests that Britain’s wealthiest aristocrats have more than weathered the economic problems caused by the 2008 financial crisis, apparently using existing assets to take advantage of low interest rates to buy up stocks and shares and other investments which have rocketed in value. In the decade to 2007, the average wealth of the nobility stood at £8.9m – suggesting it has nearly doubled in the decade since. (pp. 12-13).

The article also looked at the educational background of the ten richest toffs. And what a surprise! They nearly all went to Eton and Harrow, before going on to Oxbridge.

Of the ten largest probates between 2008 and 2018, seven of the deceased attended Eton or Harrow, with the remaining three also attending major public schools. Six of the 10 went to either Oxford or Cambridge universities. (p. 13).

The newspaper also asked the Labour MP, Chris Bryant for his views about this. Bryant was the author of A Critical History of the British Aristocracy, published two years ago in 2017. He responded

“For more than a century the landed aristocracy have been moaning about their terrible impoverishment. Ostentatiously sitting in dilapidated drawing rooms with buckets and pails catching drips from the beautiful but bowed stucco ceiling, they have extended the begging bowl.

“Yet the last century has seen many do remarkably well. The end result is that eh great old landed, crested and hallmarked families of the UK are still in possession of most of the land and a large part of the wealth of the nation.” (p. 13).

The I was at pains to state that the study itself takes no view on the social role of the aristocracy, whose fans argue that it plays a valuable role supporting rural communities through fishing and farming. It quoted Morton as saying

“It may well be that having a rich and vital aristocracy is good for the country. We are interested in understanding this group as objectively as possible.”

Well, that might be the case, but they’ve also been severely bad for the rest of us. The I doesn’t mention it, but one of the ways the aristocracy has almost certainly increased their wealth is through the massive tax cuts the Tories have given high earners. They’ve been enriched through the Thatcherite doctrine that taxes and government spending have to be cut, the welfare state destroyed and everything, including the NHS privatised, in order to benefit the upper classes. Their wealth will then magically trickle down to the rest of us, as they open new businesses, pay higher wages and so forth. Except they don’t. They simply take the money and put it in their bank accounts, where it stays. And far from opening new businesses, business proprietors simply carry on as before, laying off staff in order to enrich themselves and their shareholders. The Young Turks and a number of other left-wing American internet news shows, like the Jimmy Dore Show, have put up videos about various companies that have made thousands unemployed after they were given tax cuts by Trump.

As for the British aristocracy, way back in 1988 Private Eye published a very critical review, ‘Nob Value’, of Hugh Montgomery-Massingberd’s The Field Book of Country Houses and their Owners: Family Seats of the British Isles, as well as the-then emerging ‘heritage’ sector. Massingberd, who wrote a ‘heritage’ column in the Torygraph, was a massive fan of the aristocracy to which he belonged, and, of course, Maggie Thatcher. In this book he loudly praised her policies, and looked forward to a ‘social restoration’ that would see the blue-bloods return to power. The Eye wrote

The ‘heritage’ mania has softened us up for a return to inherited wealth. Hugh Montgomery-Massingberd may be a richly Wodehousian figure, but his book, lauding the privately owned, is symptomatic. It is the correlative to Peregrine Worsthorne’s recent articles about the desirability of large inheritances and the return of a rentier class: the desirability in short of ‘a social restoration’. Come the day, of course, Massivesnob knows where he will be – in his seat again. But the fans of his snufflings seem curiously unaware of where that leaves them: which is sat upon. 

In Francis Wheen, ed., Lord Gnome’s Literary Companion (London: Verso 1994), 320-2 (322).

Quite. It’s as true now as it was then, after Downton Abbey on the Beeb and now with the Tory party dominated by two toffs, Boris Johnson and Jacob Rees-Mogg, coming after another Eton educated aristo, David Cameron, all of whom very much represent the interests of their class against the poor.

The only chance for the rest of us to shake them off, and go back to having a society where ordinary people have a decent standard of living, can enjoy good wages, proper welfare support and a truly national, and nationalised health service, is by voting for Corbyn.

Hands up anyone who wants to save the planet and live in a fairer, more equitable world!

Published by Anonymous (not verified) on Sat, 20/07/2019 - 9:02pm in

Silhouette of a woman with her fist raised at sunsetImage by Miguel Bruna on Unsplash

While the Conservatives endlessly laud their economic achievements from the parallel universe they inhabit, their fantasies are countered by the growing evidence that all is not well. The stories of the rise in child poverty, homelessness, hunger and destitution are rarely out of the headlines these days and those affected by their policies struggle behind closed doors often alone or supporting families to keep their heads above the water.

 

Disability campaigner Frances Ryan’s recently published book ‘Crippled’ charts the tragic personal stories of those affected by reforms to social care and the benefits system; stories that are an indictment of the Tory austerity regime which has hit hardest those in most need, causing suffering and financial hardship. Politicians and the media have not only combined to make the case that the unemployed, sick and those with disabilities are a drain on the public purse, but they have also shamefully and cruelly demonised them; transforming compassion into hatred, encouraging verbal insult and violence.  The language of “scroungers” and “benefit cheats” versus “hardworking taxpayers”.

 

We live in the fifth largest economy in the world and we have a government that is in denial about the consequences of its austerity policies. When asked to comment and defend its policies it does so with words that contradict the stark realities of people’s lives; it has consistently ignored the views of those organisations, working locally and nationally, who witness at the sharp end the destructive effects of cuts to public spending on those they are trying to support. Philip Alston noted in May, when he published his final report on the State of Britain, that the government response was that it was a ‘completely inaccurate picture of our approach to tackling poverty’ and had claimed instead that the UK ‘was among the happiest countries in the world’.  In response, Alston stated that the government was in denial about the extent of the poverty, inequality, unaffordable housing or hunger which had been caused by the decision to cut public spending on public services and social programmes along with the cuts to benefits paid to those in need.

 

He commented:

 

What is most puzzling to me is why the government is so defensive. Starting in 2010, it pursued a radical re-engineering of the welfare state, making poverty and its related outcomes foreseeable. If the government is being honest, it should “own” the consequences and say “yes, poverty is rising, inequality has increased, economic and social insecurity are rampant, and children are going hungry, but this is the price of trimming the budget and incentivising work.” Instead, it is denying the predictable effects of its own policies.”

 

Last week the charity Buttle UK published its report (you can read it here) following a survey of 1,200 support workers which brought home the scale of the tragedy being played out in homes across the country.  Amongst its findings were that:

  • 60% of support workers are often (i.e. more than once a week) seeing families who are unable to afford the basics (food, household items, fuel).
  • 50% of support workers are often seeing children fed breakfast and/or dinner at school because families cannot afford to feed them themselves.
  • 48% of support workers are seeing families unable to afford the costs of children’s clothes and shoes.
  • 53% are seeing families unable to afford food and childcare during the holidays.
  • Support workers report that 54% of families being supported are living in destitution, and nearly three quarters of these support workers (74%) have seen an increase in the number in the last year.
  • 49% of support workers see families who are working but are not earning enough to make ends meet more than once a week, and 21% of workers see this problem on a daily basis.
  • 18% of support workers have seen an increase in the number of families needing financial support when at least two people in the household are working, and 39% have seen an increase where one person in the family is working.

These statistics are a savage indictment of this government’s austerity policies. Something has gone very wrong when more than 4 million children are living below the breadline because their parents are unable to meet their material needs from their financial resources.

 

Figures also show that there are as many as 1.8m million children at risk of hunger in the UK and this is particularly in evidence during the summer holidays. In Wales, food banks reported a 14% increase in the number of parcels handed out last summer and they are expecting a further rise this year.  For many, food banks are the difference between being able to feed their children or going hungry. The Metro also reported last week that teachers in a school in Tower Hamlets, one of the most deprived boroughs in the UK, will be providing breakfasts to tackle holiday hunger in partnership with Magic Breakfast. This is not an isolated incidence; it is a scenario which is being repeated across the country. Parents are being reduced to relying on charitable donations in order to feed their children.

 

What we are witnessing today are the harmful consequences of cutting public spending and the public has swallowed the line that there is no alternative because the government had to repair the ‘public purse’.  Who wouldn’t when the public compares it to their own finances? A government in deficit by our own household budget definition of being ‘in the red’ is regrettable, but a government in surplus sounds very positive and to be commended. The irony is that the public, through the relentless repetition of a false narrative, has got the wrong end of the stick about how money works in the real world. These wrong-headed ideas have allowed governments to justify cuts to public spending with horrendous costs to human life, whether through involuntary unemployment, having the misfortune to fall sick or having to manage a disability not to mention the consequences for the public and social infrastructure which underpins a healthy society and economy.

 

As Bill Mitchell explains:

 

“One of the principles of modern monetary theory is that a particular value of a fiscal balance a deficit or a surplus is a meaningless thing without a context and it’s the context that is important, not the actual figure and so this idea that has emerged in the neoliberal era that the actual value of the fiscal balance is something that is all important and can be considered in isolation of the context is leading to poor economic decisions being made.

 

You can watch the video here

 

It is regrettable that even those institutions such as The Resolution Foundation, along with many journalists reporting on key issues of poverty and inequality, do so using a household budget framework which seems to suggest that the potential for manoeuvre is limited by the health of a government’s finances, rather than a government’s political choices. Yesterday’s public finance figures from the OBR focused, as might be expected, on borrowing, taxing and public debt. The Resolution Foundation’s own analysis of the OBR’s figures is yet another tale of household budget style income and spending, borrowing costs and debt. It added to that the claim that the UK policy makers ‘do not have quite the same room for manoeuvre as they did ahead of the Global Financial Crash’ because the debt to GDP ratio had jumped from 35% in 2007/8 to nearly 85% in 2017/18 (never mind that post second world war it jumped to 248% and nobody blinked an eyelid and the government didn’t go bankrupt then, any more than it can today!) They are worrying about the wrong debt and should be concerned rather with the burden of private debt on the economy and people’s lives.

 

They also claimed that there are ‘few weapons left in the armoury, with interest rates at record lows and national debt up by 72% since 2018.’ Whilst it acknowledges that the scope for conventional monetary policy (interest rate management) to reduce the effects of a coming recession is limited, the elephant waiting patiently in the room, known as fiscal policy, is mentioned in passing but not directly and is still scarcely on the radar as an option.

 

It is a matter of regret that such journalists and Institutions, whilst reporting on the effects of cuts to public spending and its consequences, still talk about the size of the deficit and debt as if this were an appropriate measure of a government’s economic record. The real questions they should be asking are:

  • What is the context of the deficit or indeed any surplus?
  • Have government taxation and spending policies delivered a healthy economy and societal well-being or have they increased inequality and the gap in wealth distribution?

Instead of looking at the accounts as if they were by themselves a measure of economic health, they need to make the connections with the state of the nation’s well-being.

 

The narrative of tax and spend is also still firmly entrenched in the political and institutional description of how money works. Indeed, with Boris Johnson’s leadership contest proposal to cut taxes on the wealthiest, the discussion focuses on its potential effects on the government’s finances, reducing what it sees as tax income rather than the effects of reducing tax on the wealthy in terms of equity and wealth distribution. The reality is that if you give ordinary people a tax cut, they then spend it into the real economy.  Give it to the already wealthy or big corporations on the basis that wealth trickles down then you just reinforce wealth inequality.

 

The government’s announcement this week that the public sector is going to get an above inflation pay rise was countered by the news that the rise would, apparently and according to the BBC, come from existing budgets. The idea that the government must rob Peter’s department to pay Paul’s or that governments have budgetary constraints is yet another distortion of how governments spend. The pretence is that there is only so much money in the tax pot and therefore hard decisions will have to be made about how the money is redistributed, meaning in effect there will be winners and losers. It cannot be stressed too many times that the government is the currency issuer and has no income arrived at through taxation, nor does it need to borrow in order to spend. While such misrepresentations continue to be employed by politicians, the media and institutions we will deny ourselves the ability to deal with the pressing issues of our time.

 

With so many challenges ahead, from the climate and addressing poverty and inequality, it is vital that we work hard to bring about the necessary shake-up in thought aimed at shifting the current paradigm towards one that firstly recognises how money works in the real world and secondly what options this offers for government policies and delivering a progressive agenda.

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The post Hands up anyone who wants to save the planet and live in a fairer, more equitable world! appeared first on The Gower Initiative for Modern Money Studies.

Labour Should Not Fall For The Tory-Led ‘Costing’ Trick – Here’s Why

Published by Anonymous (not verified) on Mon, 15/07/2019 - 12:15am in

Ellis Winningham portraitAs the GIMMS team was busy preparing for its social event in Abergavenny this weekend we didn’t have time to write our usual MMT Lens. However, we are delighted to reprint a blog from the economist Ellis Winningham written in 2017 on the subject of costed budgets. Ellis explains why costing is nonsense and a fraud in a country like the UK’s which is monetarily sovereign.

Were Ellis an advisor to Jeremy Corbyn he would ask that he included this short passage in his speeches:

“Now then, the Tories wish for me to discuss costing. Fine. I will oblige them.
I should like for us all to ask what are the costs of seven long years of Tory-led austerity? What are the costs of long-term unemployment; of low-wage underemployment; of the rise in illness both mental and physical; of NHS privatisation efforts; of the number of deaths resulting from benefits sanctions; of the damage to our educational system; of the rise in crime rates and harm to our communities due to police reduction; of our crumbling infrastructure; of our nation’s real resources left deliberately idle?
If the Tories wish to discuss costing, then let us start there, shall we?”

Originally published here on June 1, 2017 .

 

This Tory-led ‘costing’ theme currently running rampant throughout the UK is pure political nonsense, the lot of it. Costing has absolutely nothing to do with anything when it comes to the UK.

The UK Government is monetarily sovereign. It has the exclusive, monopoly authority to issue British pounds. Pounds come from nowhere else. When the UK Government spends, it is literally spending pounds into existence to ‘pay for’ programmes. So, the question of ‘enough money’ is entirely irrelevant to the UK. When it comes to government spending, it is always a question of real resources: Enough workers, enough steel, enough food, enough hospitals, enough medicines, enough cars, enough of everything but ‘money’. Pounds are merely a voucher that the government manufactures to purchase goods and services created by the private sector.

Because the government taxes and declares a punishment for not paying the tax, people are then forced to obtain pounds. They do that by selling their goods and services to the UK Government and the government then manufactures pounds to pay for them. By being the sole, exclusive issuer of the Pound Sterling, the UK Government always ensures that it can purchase whatever it needs to function as government in perpetuity without fear of going ‘broke’. This is the entire point of the British pound – to provision the UK Government with goods and services.

Try to understand – a national government is set up with the intention of being durable, lasting into the ages. It has to be durable, otherwise the nation will no longer exist. Therefore, the responsibility falls upon the UK Government to find a way to obtain what it needs to survive throughout the ages. There are two ways the government can do this:

 

  1. It can simply walk into the private sector and take what it needs by force, or
  2. It can operate a monetary economy. It lays a tax payable in the government’s own currency (The Pound Sterling) and declares a harsh punishment for not doing so, which then causes the private sector to sell the government goods, services and labour in order to obtain the pounds necessary to pay the tax. Two things now happen:

 

  1. As long as the UK Government can enforce its tax collections, the private sector will demand pounds. Because the tax drives the demand for pounds, the UK Government can now purchase anything that it needs to function as government in perpetuity as long as it is for sale in Pounds Sterling.
  2. Since the private sector demands pounds to pay the tax and accepts the government’s pounds as payment for goods and services, wide-spread acceptance of British pounds is achieved and so the production of and the buying and selling of goods and services will take place in the private sector priced in Pounds Sterling.

 

In short, British pounds are manufactured by the UK Government when it spends to access the nation’s real resources, and then the pounds are used by individuals in the private sector to access those real resources for their own use. This is called a modern monetary economy and the UK Government alone commands both the pound and the economy. So, are there enough real resources for the UK Government to spend pounds into existence for the NHS, schools, benefits and other public purpose initiatives? The answer is yes. There always has been enough.

Since there are enough real resources, then should the government not spend enough pounds into existence, some of those resources will lay idle. Examples of idle resources are unemployment and vacant factories.

I wish to be very clear here: This ‘costing’ talk is utter nonsense, It is a sham; a fraud designed by the Tories to redirect discussion away from the need for a return to fully-funded public programmes such as the NHS, a return to full employment, and away from the damage done by seven years of Tory austerity.

Lastly, the Global Financial Crisis of 2008 had absolutely nothing to do with Labour’s spending. It is clear that the GFC was a global phenomenon that began in the US. Blaming Labour’s spending for the Global Financial Crisis was an outright fraud perpetrated by the Tories – full stop. The resulting austerity was opportunity-driven, conducted by the Tories with malice aforethought in order to privatise everything imaginable for the benefit of their wealthy friends.

This ‘costing’ nonsense is yet another Tory fraud; one in which the Murdoch-driven media is willfully complicit mind you. The intent is to force Labour to play on the defensive and to keep the voter confused and in the dark concerning the real issues facing the British economy, so that the Conservatives can finish the job they were paid to do by their wealthy friends many years ago: The butchery of Britain.

So, were I an adviser to Jeremy Corbyn, I would ask that he include this brief passage in his speeches:

“Now then, the Tories wish for me to discuss costing. Fine. I will oblige them.

I should like for us all to ask what are the costs of seven long years of Tory-led austerity? What are the costs of long-term unemployment; of low-wage underemployment; of the rise in illness both mental and physical; of NHS privatisation efforts; of the number of deaths resulting from benefits sanctions; of the damage to our educational system; of the rise in crime rates and harm to our communities due to police reduction; of our crumbling infrastructure; of our nation’s real resources left deliberately idle?

If the Tories wish to discuss costing, then let us start there, shall we?”

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The post Labour Should Not Fall For The Tory-Led ‘Costing’ Trick – Here’s Why appeared first on The Gower Initiative for Modern Money Studies.

Alberta must find alternatives to cutting social spending

Published by Anonymous (not verified) on Fri, 05/07/2019 - 5:13am in

I have an opinion piece in today’s Edmonton Journal about Alberta’s current fiscal situation.

Points raised in the blog post include the following:

-The Jason Kenney government will almost certainly announce cuts to social spending in the near future.

-Yet, more than 80% of Alberta’s kindergarten through Grade 3 classes currently exceed the provincial government’s own class-size targets.

-Tuition fees as a share of university operating revenue have roughly tripled in Alberta over the last 30 years.

-Social assistance (i.e., welfare) caseloads have risen substantially in Alberta since the start of the economic downturn.

-Alberta still has, by far, the lowest debt-to-GDP ratio of any Canadian province.

-Albertans are also taxed less than any residents of any other province.

-Meanwhile, Alberta remains the only Canadian province without a provincial sales tax.

The link to the opinion piece is here.

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