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The Fight for the NHS/MMT economics

Discussion in 'off topic' started by ks.234, Oct 26, 2021.

  1. ks.234

    ks.234 pfm Member

    The Labour Party, the SNP, the greens, anyone you can think of, must all be able to see how the government has been financing a Covid response.

    It has not been a secret,

    there has been no borrowing,

    there has been straightforward money creation to spend.

    Its extraordinary they haven’t seized on it,

    that nobody is saying loud and long,

    ‘Well there’s nothing to payback, of course this isn’t falling on our grandchildren shoulders…

    …we’re not borrowing”.

    There is no reason whatsoever that the money that’s currently being spent has to be displaced by a borrowing requirement.

    Do we have inflation?

    Have we have got a serious problem?

    Do we need to withdraw money from the economy?

    Well. No.

    It’s the opposite.

    Deborah Harrington

    (Health Campaigner, Writer and co founder of the organisation of Public Matters)

    The above is from the podcast (Deborah Harrington. The Fight For the NHS)

    Deborah Harrington makes a compelling analysis of the current state of the NHS and the lies and misdirections from all parties that have led us to where we are today and the lies we keep being told about how the NHS needs to be funded in the future.

    How do we get the message out there that what we’re being told about funding public services is not true?

    Or do we believe the government when they say, "where's the money going to come from?", "we can't afford it"?
    Last edited: Oct 26, 2021
    Spike55 and PhilofCas like this.
  2. Bananahead

    Bananahead pfm Member

    Let's start a new political party with the manifesto pledge "We will remove all taxation that pays for public services".
  3. ks.234

    ks.234 pfm Member

    Taxation does not pay for public services.

    That is very much the point.
  4. Bananahead

    Bananahead pfm Member

    Is that based on government documents? Or do they "pretend" that it does?
  5. ks.234

    ks.234 pfm Member

    A good start is to listen to the podcast.

    The podcast is part if an extensive series of podcasts about Modern Monetary Theory.

    MMT is more an observation of what is and what has been for the last 40 years or so rather than pretending to be anything. Like the theory of Evolution or the Copernican theory of the Universe, it is not so much a theory of what might be, but a description of what is and has been for ages. Both were revolutionary in so many ways in their time

    If you want government documents there is the Bank of England itself when as long ago as 2014 made it clear the in , from memory, 'Money Creation in the Modern Economy'

    What MMT makes clear is that government spending is not dependant on income, as it is in our own every day experience. In fact, it's the opposite. The government does nat have to wait for income before it can spend, it's the other way around. It spends to create money which it then taxes. It isn't taxes first, available money second. It's the opposite. Government spends then it taxes.

    It has to be that way around, money has to be issued before the government can tax you on it.

    If you are genuinely interested to find out what MMT means I would urge you to listen to the linked podcasts.

    They are truly revolutionary in that they require you to turn your thinking on its head.

    Just as the sun does not go around the earth, it is opposite, so tax does not come before money, Its the opposite

    A though experiment: If the government wants to spend a £120b on a high speed railway, then if all it does is instruct the Bank of England to credit the appropriate banks accounts belonging of the appropriate builders of the high speed railway, and the Bank of England then puts £120b in the governments debit column. And if some of that money, let's say £60b, comes back as tax. Then £60b is taken off the £120b leaving £60b in the government's debit column.....

    .....who then owe's who what?
  6. Bananahead

    Bananahead pfm Member

    I know the argument.

    My point is that if the current taxation justification is partly based on public services funding then that part can simply be eliminated.
  7. ks.234

    ks.234 pfm Member

    Sorry, not entirely clear where you're coming from. The current tax justification is that taxes need to be put into some sort of central piggy bank that public services are then funded from. This is not so.

    If you mean that taxes are merely existing money being deleted off the government's debit column, the we agree.
  8. Sue Pertwee-Tyr

    Sue Pertwee-Tyr neither here nor there

    I’m going to listen to these because I want to understand more about MMT, but thinking about the example above, I’m presuming that if the government simply let the debit column build, while it could do that, there would be consequences in terms of the value of sterling, or something? So there are real world limits to the ability to create money, and they boil down to the degree of confidence people have in their ability to sustain that balance sheet?
  9. ks.234

    ks.234 pfm Member

    I can’t recommend the podcasts enough. They have been a revelation to me

    Yes. There are real world limits, inflation is the big one. But inflation is a consequence of government overspending, while unemployment is a consequence of government underspending. We live in an economic culture where politicians sufferer electoral consequences for inflation, but not for unemployment. (And it’s more recent manifestation in under employment)

    MMT is about spending up to the limit of available resources, in the case of Human Resources that means full employment, but not over the limit of available resources so as to cause inflation.
    Sue Pertwee-Tyr likes this.
  10. Tony L

    Tony L Administrator

    There’s a Wikipedia entry on MMT for those who prefer to avoid political podcasts etc.

    PS I can see aspects that make sense, but I’m not buying entirely as I just think full employment is now a myth/daydream. We are very rapidly moving to a world where we do not need mass labour and as such need to move beyond 20th century thinking. MMT makes some sense as a way of viewing the balance sheet, and none of this should be read as my agreeing with the hopelessly distorted Tory propaganda of ‘household economics’ etc, which is clearly bollocks aimed at their lowest-IQ voter-base, or as a smokescreen for the party’s criminality.
  11. ks.234

    ks.234 pfm Member

    Yes, do agree about the whole household economics model. Government spending is the opposite of household spending. We need an income before we can spend, Government spends money into existence.

    Unemployment needs to be seen in a historic perspective. There was a time when full employment was a measure of a government’s economic competence. Post war Tory government’s subscribed to full employment. Thatcher made inflation the measure. Both Labour and the Tories, and everyone else, has bought into the right wing agenda that accepts unemployment as a price worth paying to control inflation. But there is no necessary connection between the two.

    Look up Warren Mossler on Transitional employment if interested in what full employment would look like under MMT
  12. Tony L

    Tony L Administrator

    Agreed, but this all predated real automation, computerisation etc. We are only maybe a decade away from full self-drive vehicles now, most of the manufacturing jobs that remain in the UK (car manufacturer etc) are largely robot based, the major retail arms (Amazon etc) are moving to largely automated picking. There just isn’t the need for low-skill mass-labour anymore, and that should be seen as a good thing. We just need to rebalance as a society to adjust to it. A human working in a warehouse, as a cleaner, on a supermarket checkout or whatever should be viewed with the same repulsion as sending a child up a chimney. It’s now obsolete and no one should be forced to do it eight hours a day through economic hardship. As I’ve stated many times I back Universal Basic Income and as much technology as possible. Far too much politics just feels like the Luddites, people utterly determined to live in the past. This is another reason I have a hard time with the ‘minimum wage’, it just seems like an answer to the wrong question entirely.
    Dozey likes this.
  13. ks.234

    ks.234 pfm Member

    Not really. MMT is about the economy today, absolutely not about an industrial past. The shift from full employment to worries about inflation have more to do with the ideology of Thatcher and monetarism than historic necessity

    Apart from the NHS, there is a lot that needs to be done to tackle climate change. When we hear about the costs of tackling climate change, we need to remember it’s nonsense. Money can be created to tackle climate change and that money can be used to employ people in new climate change industries. To come back to the NHS, there is a massive shortage of nurses and doctors, if money is created to solve that resource shortage, then the NHS and employment is improved
    Sue Pertwee-Tyr likes this.
  14. Tony L

    Tony L Administrator

    I see it more along the lines of FDR in many ways, e.g. borrowing for investment in infrastructure and creating employment in a recession in the process. The NHS staff shortages is obviously partly Brexit related. The simple reality is the skillset isn’t there at present and the Tories have shut the door on importing suitably skilled labour. Sure, investment in training would be good to see and has fallen behind in recent decades.

    As I say I think MMT has aspects of interest, but I’d need to see how it relates to private business, investment, inflation etc as things shouldn’t just be viewed through a public sector lens. Basically where I am is I know the Tory model is wrong, and clearly so, but I’m not entirely convinced this is right.
  15. stevec67

    stevec67 pfm Member

    I thought it was a shoebox.
  16. Ponty

    Ponty pfm Member

  17. Bananahead

    Bananahead pfm Member

    I am the government of an African country. I need to procure a supply of Covid19 vaccine. I can print some money to do so.
  18. ks.234

    ks.234 pfm Member

    The problem there is that as usual, opponents don’t understand what MMT actually is so instead posit what they think it is, and attack that.

    The article claims that MMT is about printing money to cover deficit. It isn’t. Second that creating money inevitably leads to hyperinflation. It doesn’t. The third is a re hash of the second.

    Finally the claim that Callaghan had to call in the IMF because of MMT is clearly nonsense
  19. ks.234

    ks.234 pfm Member

    MMT describes what happens in a country with sovereign currency. As such that means that in the UK for example, the government cannot run out of GDP’s and can afford to buy in GDP’s whatever resources, goods or services it likes.

    An African country would have to buy it’s supplies of vaccines in a foreign currency, likely $’s
  20. Bananahead

    Bananahead pfm Member

    I am going to use my currency to buy $'s. They are just a resource.

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