Austerity is a political choice, and with political will we can have a fair and just society for the many.
This is why the right wing parties, and the UK media owned by ultra-rich, reviles Jeremy Corbyn and Labour’s superb manifesto. They know it is the truth, that there are infinite funds, and that tax is not required for funds, but as a tool for redistribution and to control inflation. Money can never just ‘run out’.
We can invest and build anything we want, as long we have resources and people to do the work. We have plenty of both, so what are we waiting for? Let’s build a society which prioritises people before privilege.
Most voters accept that the Tories are the party of privilege, and when presented with a manifesto, often refer to it as a ‘wish’ list promised just to achieve power, and feel it is unaffordable and therefore the Labour Party has unrealistic aspirations. What is true, is that there does need to be a government with the political choice to oppose austerity, and to invest in people’s lives. What is untrue, however, is that we are limited by affordability.
Few people would disagree that we need homes, health, education, a good standard of living, and to protect our planet in a Green New Deal. The Labour Party has the political will to deliver this, but needs to have an overall majority in parliament to oppose those who act in self interest and to challenge those whose politics are designed to benefit for a few ultra wealthy individuals and not the vast majority of ordinary people.
ACCEPTING THE TRUTH:
The first thing in achieving a fair and just society is to realise two shocking facts:
- Firstly, we have been sold the greatest and most effective political lie ever told. It was been repeated relentlessly for as long as most of us can remember and in reality for even longer.
- And secondly, the fact that the
UK Government’s supply of money is **LIMITLESS!**
** NB ** INFINITE as long as there is a sovereign currency, as we do in the UK. Countries like poor Greece, in the €uroZone do not.
Yes, we have an unlimited supply of funds to achieve our aim, but unbridled spending does depend on adequate resources and inflation control.
1) Resources: Trained personnel, natural resources and energy
There needs to be adequate planning of training and natural resources in order to invest. This is not limited by funds, but still limits what can be achieved. Boris Johnson’s ill fated claim that he would build 40 hospitals may have been affordable, but it would be pointless without sufficiently skilled medical personnel to staff them. In simplistic terms, there is no point in building a diamond mine without any diamonds. Or to promise every citizen a diamond when limited by availability of diamonds.
2) Inflation is caused by too much cash in the system, and allowing those with the cash to bid higher and higher for resources, hence prices rise. The solution to avoidance of inflation this is either:
a) Austerity- put less cash into the system or
b) To tax more cash out of the system hence it’s called a “tax return”.
Austerity is a political choice. It makes a horrible mess of society. It destroys lives, decimates public services, and the estimated unnecessary deaths from the Tory/Lib austerity programme is 130,000 lives, and most likely is many more.
Austerity is not and never was necessary. It was never designed to ‘fix the economy in the national interest’. After WW2, so many homes were destroyed, yet even when there was a shortage of resources, the Labour government set about building the 750,000 homes needed.
The Tories’ concern is not about the economy, but a cynical diversion of cash in the system to the billionaires in their tax-free-islands who already have more wealth than they can ever use.
The alternative way of limiting inflation is to reduce the cash in the system by taxation, by retrieving some of it, but not by taxing the poor. So many of the rich and wealthy are avoiding paying any or little tax.
Taxes have three functions:
✅ control inflation
✅ redistribute wealth (progressive/ regressive)
✅ Influence public behaviour (i.e. reduce smoking, fines for speeding etc.)
❌ Taxes ARE NOT required to fund public expenditure. We can print infinite cash.
Dispelling the Myth
So we need to break free of this crazy “household budget” analogy; it’s a falsehood. Margaret Thatcher justified her economics by putting government expenditure on the same footing as household budgets. This idea is accessible because it’s something we all need to do if we are to survive. But the idea that governments depend on some kind of biscuit tin full of cash, hidden at the back of some gigantic larder is ludicrous. In the past there was a limiting factor when currency was tied to Gold Reserves. Since the link was broken, ( MMT), cash is infinite and created by fingers on keyboards instantly. So the idea that the government is spending the taxpayers’ money and needs them to pay for it is absurd, and framing language in this way is a deceptive politically device.
It is difficult to accept that truth because of that great effective lie which has kept the obscene wealth owned off-shore by the ultra rich untouchable for generations.
That cynical Tory lie is unravelling as they come unstuck by their own sudden alarming availability of funds for dubious reasons, while denying the affordability for projects which most people would find admirable.
The Tory lie is coming unstuck when they:
- Bribe DUP £1bn
- Can’t explain where cash is coming from for spending promises (because it will undermine the lie)
- Can pay £600m to repatriate Thomas Cook customers but …
- Won’t pay £450m to save Thomas Cook and save people’s jobs (saving £600m)
We should not think of money being “spent” or “wasted”. All are transactions, so money (much like energy in physics) cannot be destroyed, just transferred. It then becomes a simple matter of analysing the transfer:
* from rich to poor people
* or from poor to rich people?
Households have to earn cash and if they spend more than they earn they go bankrupt but governments (with sovereign currency) can never go bankrupt; that is an impossibility.
The unhelpfully named ‘National Debt’ is not a debt owed by Government or by the nation but it is cash lent by Central Bank, to society, to facilitate exchange of resources.
Ever since August 15th 1971, states have created money out of thin air by typing on keyboards at the Central Banks. Those keystrokes make the balance of accounts in private banks go up when a person or company receives a payment, and they make those balances go down when a person or company pays taxes to the state. Therefore, the state can’t run out of its own money and the idea of it saving its own currency becomes nonsensical. Companies and families do need to save because they are users, not issuers, of money, but the state doesn’t save in its own currency because it can always issue as much as it wants and it can never run out of it. In this way, money stops being a commodity and becomes a mere accounting entry (Wray 2012). Furthermore, the capacity of the state to spend stops being dependent on the collection of taxes or on the issuing of debt (Mosler 2010). However, taxes keep on being necessary, but not to finance the current spending of the state, but to accomplish a double function: they give value to money and they control aggregate demand (consumption capacity). Through the first function, they assure that state money will be accepted as a payment means , and through the second, they control inflation.
In terms of resources, there is a link between economics and current politics which concerns immigration. It is not an issue about whether immigration is good or bad. There has always been a movement of people since time began; in fact it is necessary in evolutionary terms.
But the issue is how people are being utilised. If wages are undercut and held back, if there is not an investment in training and in education in local populations, then the labour resources are unsustainable, and so is the standard of living.
The government has kept wages low. There is inadequate work for people to enable them to afford homes and food for their families. Short term employment – often of an hour a week – falsifies employment levels, and people on short-term or zero-hours contracts have little or no employment rights and protection. In reality there is unemployment and underemployment which is intentional, artificial and political, and so wages become more and more depressed.
In contrast, while there is insufficient well-paid work, skilled staff are in short supply because of a failure of the government to invest in education and training. For example, there has been a cut to bursaries for nursing staff to train, and to provide adequate childcare for workers.
There will be a shortage of staff beneficial to society such as trained nurses and doctors because of under-investment in training and education, and therefore without further immigration those skills are unavailable.
It is no way anti-immigrant to argue that human resources and skills are underdeveloped and underused in the local population, people who are unable to afford tuition fees for training, and who cannot live and support themselves or a family without maintenance grants. However, it is understandable when people are living in poverty and are paid less than it costs for housing and food become resentful and that they feel the cause is immigration, when in fact the cause is economics and utilisation of people. It is arguable that there should be greater investment for training more local people who are otherwise unemployed or underemployed rather than draining skills and labour from other countries.
Objections are not anti-immigrant but anti-exploitation and it is questionable (if all things were equal) whether there would be mass immigration of people from their homelands and whether freedom of movement is a true liberty, or that it is simply driven by economic and sociological conflict factors.
Movement as a choice, rather than movement resulting from having no alternative, is a different issue and separating families as we have seen as result of recent anti immigration policies is appalling and must be rejected.
** In the UK, we have the ability to turn our economy around to benefit the people, and not the billionaires, because we still have our own currency. Because of the Euro, the Greek government could absolutely go bankrupt, as per the household budget analogy as they had no sovereign currency, i.e.) they couldn’t print the cash to meet obligations to the EU.
It was a false comparison to scaremonger the UK electorate with Greece, and it is false scaremongering in the news that the expectation of the EU is for UK to join the Euro. Those states who signed up to the Eurozone are trapped within it.
Fiat socialism is a name for an open and prosperous society ruled by the principles of the modern monetary theory and functional finance. It is a society without unemployment or poverty, in which everybody has a decent job (either in the private sector, or in the public sector) which allows him or her to fulfil all basic needs and coordinate working and private life because of reasonable time schedules. A society in which public services, education and health access are of the highest quality, and in which the level of prices remains stable.
From Think Left:
- Is world-leading NHS healthcare an affordable proposition?
- Can we please drop the nonsense of ‘tax payer’s money’?
- Corbyn’s Investment Bank – A step towards Rational Fiscal Policy
- Thatcher’s economics has generated ‘poverty in the midst of plenty’
- “Corbyn’s Economic Policies are Sensible” (Letter in FT)
- Margaret Thatcher’s Biscuit Tin – and Austerity
- NHS plc The Privatisation of Our Health Care: Allyson M Pollock
- The Courageous State: Richard Murphy
- Treasure Islands Tax Havens and the Men who stole the World: Nicholas Shaxson
- Tax Havens How Globalization Really Works: Palan, Murphy and Chavgneux
- School Wars The Battle for Britain’s Education : Melissa Benn
- The Plot Against the NHS: Colin Leys and Stewart Player
- Bad Pharma: Ben Goldacre