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The Dangerous Fiction of the “Fiscal Black Hole”

ks.234

ks.234

Half way to Infinity

New research shows that the £50b “black hole” is down to which numbers the government chooses to consider, and that if we used the same numbers used before the Autumn statement of 2021, we would have a surplus, making the current talk of a “fiscal black hole” nothing more than leverage for austerity

Does pfm believe what our government tells us about the economy, or do we think we’re being sold bollocks in order to justify spending cuts and attacks on nurses who want decent working conditions?
https://progressiveeconomyforum.com/publications/the-dangerous-fiction-of-the-fiscal-black-hole/
 
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gintonic said:
Mainstream listening/viewing then?



No there isnt.....


Until it makes the breakfast TV mob on all channels - headlined in the printed press, this is going nowhere.
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Not much chance of making breakfast TV - thats all full of Matt Hancock having sh!t poured all over him.
Did anyone notice how easy it was for Hancock to perform his task of 'theft' in the Jungle camp?
He is obviously well versed in that kind of stuff though!
 
mind you it is the 7th most read thing on the BBC Website

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yes i know - had this ready for posting ^^^^^^

what is the real reach of the bbc news website? that section is below the fold, and needs alot of scrolling.
 
gintonic said:
indeed - it is no more than a small academic discussion in some corner of the internet.
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The bottom line is that we’re being fed lies to justify austerity. Even of it’s only highlighted in small academic circles, is that a reason to dismiss it, or is it all the more reason to highlight it?
 
It was the recent demonstration that UK economic policy is actually dictated by the IMF and the currency markets, no matter which party is in power or what promises have been made, that provided a reality check. All the domestic arguments are just window dressing. To pay nurses a living wage (and repair all the other public services) we need to raise taxes. Simple as that. BUT polls seem to show that the only party that would embrace that fact is still regarded by the majority of the electorate as financially incompetent.
 
ks.234 said:
The bottom line is that we’re being fed lies to justify austerity. Even of it’s only highlighted in small academic circles, is that a reason to dismiss it, or is it all the more reason to highlight it?
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Did i dismiss it? No, but it needs a much higher profile in the media. I said it was an "academic discussion" i didnt say it was discussed in academic circles.

It needs the daily fail etc to highlight to their readers the fact that one group of economists has a different version of the truth and that the government is ignoring it.....
 
davidjt said:
To pay nurses a living wage (and repair all the other public services) we need to raise taxes. Simple as that.
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No. Not that simple at all.

Funding for the NHS does not come from tax. The sooner we wake up to Thatcher’s lies about “government having no money of its own, it only has tax payer money” the sooner we will be able to afford a decent NHS.
 
gintonic said:
Did i dismiss it? No, but it needs a much higher profile in the media. I said it was an "academic discussion" i didnt say it was discussed in academic circles.

It needs the daily fail etc to highlight to their readers the fact that one group of economists has a different version of the truth and that the government is ignoring it.....
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Apologies, thought you were dismissing it as *just* an academic discussion, which technically it is I suppose, but that shouldn’t stop it from reaching a wider audience.
 
ks.234 said:
Funding for the NHS does not come from tax. The sooner we wake up to Thatcher’s lies about “government having no money of its own, it only has tax payer money” the sooner we will be able to afford a decent NHS.
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Don't understand this. Where does NHS (or any other) funding come from? Maybe there are income streams from other, non-tax sources, but surely they've got to be relatively insignificant. If we can't 'wake up' to finding explanations espoused 30 plus years ago, no alarm clock is going to be up to it. Must've been very small beer then and now.
 
ks.234 said:
No. Not that simple at all.

Funding for the NHS does not come from tax. The sooner we wake up to Thatcher’s lies about “government having no money of its own, it only has tax payer money” the sooner we will be able to afford a decent NHS.
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As I read it, don't think davidjt was necessarily saying funding for the NHS comes DIRECTLY from tax. However, significant extra spend on the NHS (like any major spend) is potentially inflationary (because it leads to more purchase power for NHS infrastructure and NHS staff via salaries), and increased taxation may therefore be necessary to compensate for it. Of course there is political choice in this - not saying its the wrong thing to do at all - but extremely wrong to argue that we can increase NHS spending without material cost elsewhere.

MMT is far from a universally agreed doctrine, but even MMT advocates agree that taxation is necessary tool to control inflation (since inflation broadly comes about when spending power rises relative to supply).
 
Mike Reed said:
Don't understand this. Where does NHS (or any other) funding come from? Maybe there are income streams from other, non-tax sources, but surely they've got to be relatively insignificant. If we can't 'wake up' to finding explanations espoused 30 plus years ago, no alarm clock is going to be up to it. Must've been very small beer then and now.
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Government is the currency issuer, the money for the NHS comes from government issuance. It is not funded from tax. There are a number of sources that will go through this if you’re interested, Stephanie Kelton is probably the best.
 
gustavm said:
As I read it, don't think davidjt was necessarily saying funding for the NHS comes DIRECTLY from tax. However, significant extra spend on the NHS (like any major spend) is potentially inflationary (because it leads to more purchase power for NHS infrastructure and NHS staff via salaries), and increased taxation may therefore be necessary to compensate for it. Of course there is political choice in this - not saying its the wrong thing to do at all - but extremely wrong to argue that we can increase NHS spending without material cost elsewhere.

MMT is far from a universally agreed doctrine, but even MMT advocates agree that taxation is necessary tool to control inflation (since inflation broadly comes about when spending power rises relative to supply).
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Of course tax is necessary for a number of reasons, but not to fund spending.

And yes, if we paid nurses so much that they went out spending beyond our means to produce the stuff they demand, then there would be inflation, but at present their situation is some way short of that. If spending meets a need and that need has the resources, then spending on those resources, in this case paying NHS staff a living wage so they don’t need a food bank or to steal patient leftovers, that will not be inflationary.

The idea that tax would have to go up if nurses get a pay rise is not true. Neither is the Milton Friedman mantra that all spending is inflationary.
 
ks.234 said:
Of course tax is necessary for a number of reasons, but not to fund spending.

And yes, if we paid nurses so much that they went out spending beyond our means to produce the stuff they demand, then there would be inflation, but at present their situation is some way short of that.

The idea that tax would have to go up if nurses get a pay rise is not true
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I said NHS spending, not specifically nurses pay alone - potentially the amount needed to bring the NHS up to the standard we would like is hugely more than just a few % on nurses pay. June headcount figures show NHS staff figures at more than 1.2Million FTE - a significant proportion of the entire UK workforce. Pay increases for one group can obviously lead to (justifiable) demands by other sections within the same organisation or indeed other organisations - as you will have noticed, there are many other pay disputes looming.

I know many NHS workers very well, and know the terrible stresses they are under, and how undervalued (financially) so many of the core staff are are compared with other sectors.

I agree there is a valid debate as to what the "correct" level of government spend should be, and there are political choices to be made on spend versus inflationary and other risks. BUT - I'm just saying, I think it is naive to argue that Government spending isn't always subject to very severe constraints, so I think phrases like "attack on nurses" are somewhat misleading, and implies an over-simplification of the real difficulties in managing an economy.

I too have zero faith in the competence and integrity of this Government and the Tory party in general but that doesn't change the fundamentals.
 
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