There are *Infinite* Government Funds For Anything we Need. So what’s stopping us?

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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.
    1. 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.

Tax

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.

INSTANT MONEY

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.

IMMIGRATION

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.

EUROZONE

** 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.

Further Reading

From Think Left:

Published Books:

  • 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

References

 

@Dave Gillian Twitter https://threadreaderapp.com/thread/1178436669789356033.html 

https://braveneweurope.com/carlos-garcia-fiat-socialism

Mad Friday reveals last year 900,000 ambulance calls answered without paramedics

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GMB investigation on ‘Mad Friday’ reveals 900,000 ambulance emergency calls were answered without paramedics last year.

Information from GMB has exposed the critical shortage of ambulance staff as a result of government policy has resulted in almost one million ambiance calls responded to without trained  paramedics. As a result of austerity, lack of investment in public services, stress to public sector employees, pay-caps, and moves to privatise the NHS, evidence shows service levels are unsafe and wholly inadequate.

Police forced to take patients to hospital due to shortages in more than 1,000 incidents of 999 ambulance calls

On the day dubbed ‘Mad Friday’, an investigation by GMB, the union for ambulance staff, reveals at least 900,000 emergency calls for ambulances were not attended by a paramedic in England last year.

And in more than 1,000 confirmed cases trusts were forced to ask the police to take injured patients to hospital due to ambulance shortages. The real figure is likely to be as high as 5,000.

‘Mad Friday’ – the last Friday before Christmas – is one of the busiest days of the year for amulance staff as many people celebrate finishing work for the festive period.

GMB submitted a freedom of information (FoI) request to all 10 ambulance trusts in England asking: ‘How many 999 calls to your trust were attended only by emergency care assistants, or other non-fully qualified paramedics rather than with a fully-qualified paramedic in the financial year 2016/17?’

The nine responding trusts disclosed that there were a total of 882,465 incidents last year.

However, the true figure is likely to be significantly higher as East of England Ambulance Services refused to respond, claiming it would take them too long to find the information.

South East Coast Ambulance Service had the highest number of non-paramedic responses with 190,813 incidents.

North East ambulance service’s response revealed 155,902 incidents, of which 650 were in response to the most life-threatening ‘Red One’ calls.

The trust also revealed 887 incidents where the police took patients to hospital due to a shortage of ambulance staff.

Tim Roache, GMB General Secretary, said:

“It will send shockwaves through the country that hundreds of thousands of patients, some of them involved in life-threatening incidents, are not being attended by a trained paramedic.

“Proper support for our overstretched ambulance services is literally a matter of life and death.

“GMB members are performing miracles every day but the system is failing because funding just hasn’t kept pace with demand.

“Paramedics and other ambulance staff regularly work 12-hour shifts or longer. They have no more to give.

“This must be a wake-up call for Jeremy Hunt.

“It is vital that our ambulance services are given the additional resources they desperately need.”

Kevin Brandstatter, GMB National Officer for Ambulance Staff, said:

“How many people will die this Christmas because the Chancellor refuses to properly fund our ambulance services?

“Is anyone in this Government prepared to apologise to the patients given inadequate care by over stretched and under-trained staff?

“Is anyone in this Government prepared to apologise to the families of those who die because of staff shortages? I bet not.”

[1] Results of GMB Freedom of Information Request to NHS Ambulance Trusts in England:

[2] The National Audit Office found in January 2017 that in the 2010 – 2015 Parliament funding for ambulance services rose by 16 per cent but demand rose by 30 per cent:“Increased funding for urgent and emergency activity has not matched rising demand, and future settlements are likely to be tougher. Between 2011-12 and 2015-16, income for ambulance trusts’ urgent and emergency care activity increased by 16% from £1.53 billion to £1.78 billion. Over this period, activity (ambulance calls and NHS 111 transfers) rose by 30%. Commissioners have warned that, given current financial challenges in the wider health service, future funding settlements are likely to be tighter (paragraph 1.12).”National Audit Office, NHS Ambulance Services, 26 January 2017, page 7: https://www.nao.org.uk/report/nhs-ambulance-services/

 

Failed By The State – The Struggle in the Shadow of Grenfell (Part 1)

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This is a ‘must watch’.  Explains the mechanism seen across London and other big cities of social cleansing. It’s the same one as is being used on the NHS, education, Fire service, police etc…. run them down, privatise and sell off the land.  It’s the dispossession of high value land from low income people.  It’s primary accumulation.  It’s ‘Disaster Capitalism’.  It’s redistributing wealth upwards and offshore.

It is the nature of Crony Capitalism and it is lethal.

Published on Nov 16, 2017

redfish presents its debut: An exclusive grassroots report into how austerity and gentrification caused the Grenfell tragedy, one of the deadliest fires in recent UK history.
Part 2 – Thursday 23th Nov Part 3 – Thursday 30th Nov #redfishstream

Jeremy Hunt ‘upsets’ NHS doctor …

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(HT https://skwawkbox.org/2017/10/25/nhs-campaigner-stefanovic-sets-hunts-twitter-schooling-to-video/)

Is world-leading NHS healthcare an affordable proposition?

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Re-posted with kind permission from Progressive Pulse 14th October 2014

Authors:

David Laws, Consultant Anaesthetist, City Hospitals Sunderland NHS Foundation Trust, Sunderland, Tyne & Wear, SR4 7TP

Professor Charles S. Adams, Department of Physics, Durham University, Durham, DH1 3LE

Introduction:

The unquestioned assertion that a highly developed currency-issuing nation cannot afford high quality healthcare [1] is based upon a set of inter-related and almost universally-held false assumptions:
  • Money is in limited supply (as there is no ‘magic money tree’).
  • Taxes fund government spending.
  • Private banks lend out pre-existing savings.
  • NHS spending is a burden on the economy rather than a boost to the economy.

 

1) Money is created ‘out of nothing’ on bank computers

In 1973 the Bretton-Woods international exchange rate system, where currencies were ultimately pegged to the price of gold, was formally ended. Since that time we have used an international fiat monetary system where the value of each currency is determined by the workings of international financial markets. Fiat (Latin: ‘let it be made’) money is created from nothing on the basis of a promise – a promise to deliver goods or services in the future. Only if we believe in these promises and the systems that support them, does money have value.

The following description of the monetary system and its components is highly schematic to aid elucidation of the underlying principles. Money is created either when the government spends or when a bank makes a loan.[2] We can think of government spending and bank loans as the beginning of two interconnected money circuits. The government and bank circuits form the duopoly of money creation, rather like the pulmonary and systemic circulations of the cardiovascular system only in this case the circuits work in parallel. Both circuits are supported by the central bank which creates a unique type of money held within the bank known as electronic reserves (Figure 1). To extend the analogy of the cardiovascular system, the central bank is akin to the heart, individual bank accounts would be equivalent to the capillaries and the wider economy would be the working cells of the body.

The two monetary circuits commingle through banking transactions so bank money and government money become indistinguishable to bank account users. After money is created it flows through the economy and eventually returns to the issuer.

 

Figure 1: Schematic diagram of the monetary system of a sovereign nation. Bank account users cannot distinguish the origin of their deposits.
.

 

2) The government money circuit – taxation removes money from the system

In the government circuit, money is spent into the economy and is effectively cancelled when it returns to the government via the payment of taxes. The collection of taxes is not a prerequisite for government spending as many people assume, but exists at the end of the government money cycle when taxes removed prevent too much money being created. Taxation mainly helps to control inflation and alter peoples’ behaviour in a way that should be beneficial to all. The net result of deficit spending is to leave savings in the form of Government Bonds in the hands of the private sector (Figure 2).

Figure 2: The government spend and tax circuit with a deficit. The difference between spend and tax equals private sector saving and is known as the deficit.

 

Conversely a government surplus (where taxation exceeds spending) would destroy these savings. The superficially sensible idea of running a balanced government budget simply prevents saving in the private sector. This is illustrated in models a) and b) within Figure 3. In a) the government injects money via a fiscal stimulus in year zero. Taxation means that over time all this money is returned. In b) the public choose to save a fraction of their income which leads to the deficit. Savings simply delay the return of money in the circuit. In other words, the private sector is only able to save money because the government supports this activity by running a deficit. The government circuit is leaky by design. For example, people are encouraged through tax breaks to save for their future (e.g. pensions & ISAs). Therefore, the national debt is not what we currently owe but what we currently own.

Figure 3: (a) model which shows that after government spend (fiscal stimulus) if people do not save then all the money comes back as tax, whereas if people save this leads to the deficit (b).

 

3) The private bank money circuit – banks create credit and don’t lend out savings

Most of our money is created in the form of bank loans (credit). When a loan agreement is signed the bank creates a new bank deposit to the value of the loan in the borrower’s bank account. Money is returned to the bank by the repayment of the loan plus interest (Figure 4). Similar to government spending, bank lending influences private sector behaviour but the allocation of money creation is not democratically controlled. The primary purpose of bank lending is to enable individuals and businesses to function and to generate profits for bank shareholders, both over the short and long-term.

Figure 4: The bank circuit where loans concurrently create bank customer deposits and private debt leading to bank profits.

 

Banks must have a licence issued by the government to create money in this manner and aspects of their activities are regulated. However there are no formal economic, social or environmental responsibilities associated with the creation and allocation of bank credit despite the significant influence these decisions have over our lives. Bank credit creation is predominantly distributed towards land (property) and financial asset speculation which dwarfs their support for entrepreneurship. The majority of UK small businesses are actually self-financing.[3]

As the proportion of unproductive private debt increases in an economy a correspondingly increasing proportion of economic output is directed towards servicing this interest-bearing debt. Consequently the private bank money circuit tends to be inherently destabilizing as it drives assets towards the already wealthy making the economy increasingly fragile.

What are the outcomes when the two circuits combine?

If all the money was returned to the issuers the quantity of money would go back to zero (the balanced budget illustrated in Figure 3a). In practice the rate of new money creation is usually higher than the rate of money cancellation and the total amount of money in the economy grows over time to support economic growth (Figure 5). Ideally growth in the money supply should match the growth in economic activity, such that prices remain roughly stable and we maintain confidence in the value of our currency unit. Control of the rate of money creation and destruction in the government and banking circuits are known fiscal and monetary policy, respectively.

Figure 5: UK Money (M4) Supply 1987 – 2017. Source: Bank of England.

 

The money supply increased significantly in the decades prior to the Global Financial Crisis (circa. 2007) primarily through bank credit expansion. In contrast, between 2009 and 2014 net credit was negative.[3] As bank credit creation wavered from 2008 onwards, government deficits rose to prevent a deflationary depression. The actual sector balance data for the UK is shown in Figure 6 and there is similarity with the simple model we presented in Figure 3. Note that the rest of the world is a net saver of UK money (these savings have to be spent in the UK ultimately). Note also that when these three sectors combine, the balance is near zero as this is nothing more than an accounting identity.

Figure 6: UK sectoral balances data from the ONS. The inverse correlation between Private and Public sectoral balances. Private sector savings mirror the public sector deficit as illustrated by the model in Figure 3.

 

Why two circuits?

Why do we need this duopoly of both a government circuit and a banking circuit? Why do we need both fiscal and monetary policy? As money is a collective good, should we transfer all money creation powers to government and demote private banks to the role of intermediaries as some propose? Or could we hand over all money creation to private banks as free-market fundamentalists would prefer?

Put simply, the commercial bank circuit serves private needs while the government circuit serves collective needs. The bank circuit exists to serve individuals and ‘capitalism’, while the government circuit exists to deliver on democratically controlled promises.

Economists often call our collective interests public goods. The failure of the private interest bank circuit to provide public goods is easy to understand by exploring healthcare. The market solution is to cater for the patient offering to pay the most. Even worse, the market may deliberately create a scarcity in order to charge a higher price. A market cannot operate effectively in matters of life and death. Kenneth Arrow a highly-respected pioneer of neoclassical economics and winner of the Nobel Prize in Economics in 1972 wrote ‘the laissez-faire solution for medicine is intolerable’.[4] In situations where competition is not viable, where demand is unlimited like health, and supply delivers societal benefits, then collective democratic control is the optimal solution. The House of Lords Select Committee on the Long-term Sustainability of the NHS report in April 2017 reaffirmed that the principal method of funding the NHS should be via government spending.[5]

What has gone wrong?

The art of economic management is to balance fiscal and monetary policy. An over dependence of one or other is doomed in the long term. The core failure over recent history lies in the inability of politicians and central bankers to regulate the banks and to use fiscal policy appropriately. There now exists UK Department of Health data to support the assertion that government austerity may be the primary underlying cause for the deterioration of health inequality measures in England.[6]

‘In her present condition, Great Britain resembles one those unwholesome bodies in which some of the vital parts are overgrown…and through which an unnatural proportion of the industry and commerce of the country has been forced to circulate, (which) is very likely to bring on the most dangerous disorder upon the whole body politick’. When one considers the unhealthy dominance of the financial sector within the UK and global economy today, it may be surprising to discover that Adam Smith wrote these prescient words in the Wealth of Nations over two hundred and forty years ago.[7]

In a similar vein, using central bank monetary policy alone to rescue the global economy has been misguided. In 1969, the world-famous economist, Milton Friedman said ‘The available evidence . . . casts grave doubts on the possibility of producing any fine adjustments in economic activity by fine adjustments in monetary policy’.[8] More recently, Mark Carney, the Governor of the Bank of England, reinforced this point in his ‘The Spectre of Monetarism’ speech published in December 2016 where he stresses that monetary policy needs to be in ‘better balance with fiscal and structural policies’. [9] The sudden change to no money growth after 2010 in Figure 5 is evidence of the complete failings of recent monetary and fiscal policy.

 

4) NHS spending boosts the wider economy in excess of the money spent

Fiscal policy is very powerful but needs to be carefully managed. The NHS was conceived and built in times of high national debt. This could occur because creation of money is not an inherent constraint. Thanks to the government spend and tax circuit, the NHS nurse, doctor, physiotherapist or pharmacist need not cost anything as long as (they serve a useful purpose and) the money spent on them is also spent. In fact, it is more likely that society will profit through ‘crowding in’ more economic activity through NHS employees’ subsequent spending and a healthier public.

It is estimated that the fiscal multiplier for UK healthcare spending currently lies between 2.5 and 6.1. This means for every £1 spent on the NHS approximately £4 of economic activity results.[10] If you had a cash-back card that gave you £4 back for every £1 spent, you would not cut back on your spending! Only when we reach a position of over supply when NHS staff wait forlornly for patients to present do we reach a point where the multiplier falls to below one. We are, at present, an unsafe distance from a workforce oversupply scenario.

As a sovereign nation, the UK can always afford high quality universal NHS healthcare. Money is essentially an accounting system designed to facilitate our collective activities and development. Fiscal policy needs to be activated to meet the needs of our society as there is now observable failure of the prevailing reliance on monetary policy and preservation of rent-seeking private interests. It is evidently wrong to assert that healthcare access and quality is limited by the availability of money. The constraint, in truth, has never been the potential availability of money, but the desire to resource the NHS appropriately. In the words of John Maynard Keynes, ‘Anything we can actually do we can afford’. [11]

References

[1] Department of Health annual report and accounts 2016 to 2017 https://www.gov.uk/government/publications/department-of-health-annual-report-and-accounts-2016-to-2017 (accessed August 2017)

[2] Money Creation in the Modern Economy. Bank of England Spring Bulletin 2014

http://www.bankofengland.co.uk/publications/Documents/quarterlybulletin/2014/qb14q102.pdf (accessed August 2017)

[3] Bank of England interactive database

http://www.bankofengland.co.uk/boeapps/iadb/newintermed.asp (accessed August 2017)

[4] Uncertainty and the Welfare economics of medical care. Kenneth J. Arrow. The American Economic Review December 1963. http://www.who.int/bulletin/volumes/82/2/PHCBP.pdf(accessed August 2017)

[5] House of Lords Select Committee on the Long-term Sustainability of the NHS. The Long-term Sustainability of the NHS and Adult Social Care Report Published 5th April 2017. p44. https://publications.parliament.uk/pa/ld201617/ldselect/ldnhssus/151/151.pdf (accessed August 2017)

[6] David Buck, King’s Fund  https://www.kingsfund.org.uk/blog/2017/08/reducing-inequalities-health-towards-brave-old-world (accessed August 2017)

[7] Smith, Adam. An Inquiry into the Nature and Causes of the Wealth of Nations. p468-9. Edited by S. M. Soares. MetaLibri Digital Library, 29th May 2007 (accessed August 2017)

[8] Milton Friedman and Walter W. Heller, Monetary vs. Fiscal Policy, W. W. Norton and Company Inc., New York 1969.

[9] ‘The Spectre of Monetarism’. Speech by The Governor of the Bank of England. December 2016. http://www.bankofengland.co.uk/publications/Documents/speeches/2016/speech946.pdf (accessed August 2017)

[10] Does investment in the health sector promote or inhibit economic growth? Aaron Reeves et al. Globalization and Health 2013. https://doi.org/10.1186/1744-8603-9-43

[11] The Collected Writings of John Maynard Keynes. Vol. 27 p270. Activities 1940–1946: Shaping the Post- War World: Employment and Commodities ISBN 978-1-107-65156-2

We can’t Afford not to Invest in a Better Society.

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How we Afford a Better Society – and How to Recognise it

When someone asks you , “How can we afford to spend more on our public services”, the simple answer is, “We can’t afford not to.”

Every day we see the effects of austerity policies, from boarded-up, depressing High Streets, poverty, and hungry children to decimated public services. We can’t go on like this.

Austerity was always a political ploy, unnecessary, and intentionally cruel, and it is a policy which propels us  further in a downward gloomy spiral. No one really benefits, no one is really happy in an increasingly divided society, where the only solution is to blame one another, where in reality we are all missing out, from what society could be.

And the only way out of this is to invest in our society towards better lives for us all.

We are not short of labour, resources or land in order to invest in a society in which we can thrive, where people can live fulfilled lives. But people are without jobs, land and property is underused, held back by those in power, because it suits the Tory, capitalist philosophy, where it creates division, competition, greed – and ultimately war and hate too. And rich pickings for the very few.

We just need the political will to rebuild, to build a better society.

The government has the ability – and responsibility – to release money into the economy right now to get our economy moving efficiently again.

As a sovereign state, the UK government controls its own currency, and can release as much as it needs, and so it should. It’s not like a household budget waiting for payday. I imagine the flow of currency like running a bath, you can run as much as you need, then turn off the tap when you’ve enough. And rather like a bath with an overflow, excess funds can be drawn off – and that’s where taxation comes in, preventing inflation, but in a fair, balanced way so that everyone is benefitting from the investment in the new and better society, and everyone is that bit happier.

Screenshot 2017-10-15 14.50.49.png

The state’s currency is indeed the People’s money, but not ‘taxpayer’s’ because we don’t need to pay tax to use it. It’s there already. Money can be created by a computer keyboard whenever the government chooses to. Tax is not needed to pay for resources, because tax results from previous government spending, and is a way of ensuring a fair distribution.

Screenshot 2017-10-15 14.54.36

When adequate money is circulating in the economy it doesn’t stay hidden away. People spend, and so it means more jobs, and so what comes around, is shared around. Like cycles in nature, water or carbon cycles, money circulates as it makes things happen. In a successful economy, no person or place is left behind. Poverty is unacceptable, and it is avoidable.

A better society is one which puts people first, is sustainable, where every person can reach their potential, to learn, to enjoy leisure time, to enjoy good health and a good home.

We can envisage a society where everyone is caring for one another, everyone can contribute and participate, rather than blaming one another for the ills of a society caused by a flawed economy, backed only by the myth that funds are non existent. And this vision can be realised by a Labour government, determined to ensure an economy which really works for the many, not the few.

This was realised by the 1945 Labour government after the war, when despite the ravages of war, and rationing, there was investment in people, providing an NHS, homes for all and the welfare state, providing a safety net for all of us in times of misfortune. It was possible then because people came together with a strong will to build a better society. The people had seen the effects of divided people, greed, and mistrust. People came together by a united will for peace. And it worked. A whole generation benefitted from opportunities never seen before in their families.

The right wing media frequently use a Shock Doctrine to keep people fearful and divided. Deprivation and fear can mean people look to blame each other rather than see it is caused by the flawed and unjust system and so hold back from change . This is why scare tactics are used by the wealthy establishment, reinforced by the right wing media who repeat the same adages so often they believe them to be true.

But as we have seen, out of adversity, out of fear and desperation, comes a determination to change society for the better for us all. We cannot afford to carry on with an economy which is leaving people homeless, dying on our streets, leaving children hungry. We cannot afford an economy which benefits the few, and not the many.

 

At Labour Party Conference 2017, Naomi Klein said:

“Moments of crisis do not have to go the Shock Doctrine route – they do not need to become opportunities for the already obscenely wealthy to grab still more.

They can also go the opposite way.

They can be moments when we find our best selves….. when we locate reserves of strength and focus we never knew we had.

We see it at the grassroots level every time disaster strikes.

We all witnessed it in the aftermath of the Grenfell Tower catastrophe.”

When we witness the potential of humanity, of hope and determination, we know we can achieve a better society.  We can afford a better society, and to make better use resources at our disposal.

There is so much potential in the people of Britain, and of the wider world.

We can’t afford not to use it. We can’t afford to waste any more lives.

Can we please drop the nonsense of ‘tax payer’s money’?

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Can we please drop the nonsense of ‘tax payer’s money’?  The phrase is just political advertising, intended to manipulate us in to accepting cuts and constraints which are not good for us or the economy.   (Christopher Bacon explains why it’s a nonsense in his article ‘The Myth of Tax Payer’s money’ which is copied below.)

However, like all successful advertising slogans, the phrase ‘tax-payer’s money’ invokes what psychologists call a schema…. a whole body of emotions, experiences and knowledge which mediate our response.

Hence, ‘Tax payer’s money’ is intended to create a direct link between government spending and the individual.  You are invited to visualise your hard-earned pennies being frittered away unwisely ……. which is hugely convenient for a politician intent on running down public services, so that they can be privatised.  Also implicit in the schema is the threat that if the government spends more, you’ll have to pay out, depleting even more of your income.

And like so much of neoliberal-speak, it is contaminated by deliberately confusing government spending with household spending.  The phrase ‘tax-payer’s money’ comes from the same stable as ‘maxing out the credit card’ or ‘mending the roof when the sun is shining’. It is bunkum.  Government is not like a household.

And of course, you know that really, when you actually think about it …. Government spending is nothing like our own.  But as Drew Weston wrote in ‘The Political Brain:  The Role of Emotion in Deciding the Fate of the Nation’, …..‘the nature of political campaigns are where “rational minds collide with irrational thinking”

Drawing from the fields of psychology and cognitive neuroscience, Weston, a clinical psychologist and political strategist, demonstrated the extent to which candidates’ speeches and political ads, are emotionally laden with words and images designed to provoke strong feelings…. And by re-writing the actual speeches using alternative wording, he was able to illicit a very different set of responses.

Weston explains that these messages activate networks in the brain and become the avenues down which true or false political messages travel, connecting to the unconscious emotions of the voter in a nano-second and involuntarily triggering us to react emotionally and without ‘thinking’.

So let’s keep ‘thinking’ and not allow the Right to infect our minds with their manipulative false analogies….  and can we please drop the nonsense of ‘tax payer’s money’.

 

The Myth of tax payer money Christopher Bacon

We are told, time and time again, that the government should spend taxpayer money wisely, efficiently, and sustainably.  Often these pronouncements are followed by promises to use taxpayer money well by cutting government spending and making efficiency improvements.  There is an assumption behind these statements that is utterly inaccurate and dishonest, however.  Namely, that there is such a thing as “taxpayer money.”

Not only is there no such thing as taxpayer money, it is not the case – ipso facto – that the government spends taxpayer money.  To see how this is so, assume that taxpayer money exists and assume that the government spends it.  As we shall see, these assumptions actually lead to a paradox.

In this world, where the government spends taxpayer money, the following situation holds. The government invokes a tax on the population – say, an income tax.  This income tax takes money from the people who qualify and adds it to the Treasury account.  The Treasury, then, takes that money and spends it on whatever the government wants to buy: a new hospital, school, submarine, or whatever.

Where does this money come from, assuming God does not randomly drop it from the sky?  Well, it is “taxpayer” money.  So the money, presumably, belongs to the taxpayers – so it must come from them (i.e. the taxpayers must issue/print it).  Well, that is all well and good, but it does not represent this world.  Taxpayers, in the UK, do not print pound sterling. That would, of course, be a criminal offense.

In order to tax someone, there must be something there to tax.  Since taxpayers do not print their own money, there is nothing there to tax.  And in order for the government to spend, the government must first tax.  But since there is nothing there to tax, the government will never collect tax and so will never spend.

Clearly, this description is not one of our world.  In this world, the government does spend, and taxpayers do pay their taxes.  Something has to give – our initial assumptions must be wrong:  there is no such thing as taxpayer money and/or governments do not require taxes to spend.

If we jettison the second assumption, then it turns out that the government must spend before it collects taxes.  This is because if it does not spend, then there will be nothing to collect – remember, taxpayers do not print their own money and it does not magically fall from the sky.  Spending precedes taxation, by necessity.  Now that we can see the money in circulation is government money – money issued by the government – it follows that taxpayers do not own it; so the first assumption is jettisoned.  Therefore, the notion “taxpayer money” ceases to have any content.