“When people live in a fair, caring society, where everyone has equal access to social goods, they don’t have to spend their time worrying about how to cover their basic needs day to day – they can enjoy the art of living. And instead of feeling they are in constant competition with their neighbours, they can build bonds of social solidarity.”
Jason Hickel – Less is More: How Degrowth Will Save the World
While the NATO-led war in Ukraine continues, and the US and EU ramp up their rhetoric against China, global instability grows and the geopolitical shifts in power are becoming sharper. The only winners in this totally unnecessary war are the industrial military complex which is raking in vast profits out of death and destruction, and big business which is already making moves to reconstruct a ravaged Ukraine, or what will be left of it, in its own image,
It is impossible to divorce the geopolitical forces at work from what is happening domestically. They are not stand-alone; they are interconnected. At home, this preventable human and economic catastrophe translates into more financial hardship and distress for citizens, adding to that already caused by the politics of austerity; and action on climate change is clearly slipping off the agenda as resources are ploughed into armaments and military action, and oil and gas companies open more oil and gas fields, to secure supplies.
All this, instead of investment in ensuring the future of the planet and all its inhabitants. Just imagine if those real resources were used to create a fairer and environmentally sustainable planet. Or better put, ensure the planet remains a viable vehicle for human existence. As research has recently shown, ‘species are being lost today faster than in any of the previous 5 mass extinctions that have struck the planet’. It also indicates that if this trend is not reversed, biodiversity loss could reach tipping points that send ecosystems into collapse. The very same ecosystems of which humans are a part.
On the subject of human well-being, these days it is also hard to miss media reporting which shows that something is seriously amiss. Beveridge’s five giant evils: want, squalor, disease, ignorance and idleness, which led to the setting up of the welfare state in 1948, are rearing their ugly heads once again, in a society which is descending into a state of economic and social decay. A society where thousands are dying every month without ever having received the social care they needed, and where there are four million children living in food poverty. People living the consequences of government policy, influenced by the toxicity of neoliberal ideology. Not accidents, but a deliberate pursuit of harm by government and a preventable state of affairs. And yet, when it comes to the blame game, rather than attributing the situation to the government, it is the NHS, teachers, unions and “lazy” people who are in the firing line instead.
This week, The Telegraph reported the findings of the Committee of Public Accounts, which said that the NHS’s three-year recovery plan will not achieve its ‘targets […], and that means health, longevity and quality of life indicators will continue to go backwards for the people of this country’.
Dame Meg Hillier, Chair of the Committee, commented rightly that it was simply shameful and unacceptable in a nation as wealthy as ours.
She might have added that the government, as the currency issuer with the power of the public purse, has been at the heart of this neglect, preferring, it appears, a disintegrating society to one that thrives and prospers.
Predictably, in its discussion, the Telegraph omitted one key factor when explaining the challenges being faced by the health service; the ten years of cuts to real terms funding, a shortage of more than 40,000 nurses and an exodus of health professionals as a result of a decade of pay squeezes and stressful working conditions, to which have been added the current inflationary pressures.
Since it has taken a decade to reach this level of decay, what makes the Telegraph or government think that an injection of funds is going to solve the underlying problems instantly? The damage is structural and has been caused by a government that has cut spending on health services and poured public money into private profit rather than patient care. Nowhere is the government mentioned as the prime author of this totally avoidable collapse of the NHS.
There is, of course, also a political reason to apportion blame onto the public health service, as the right-wing press often does, and that is to create more public dissatisfaction and push private or alternative insurance models. One cannot have missed the constant barrage on TV, radio and social media for private health insurance and health care. All part of the long-term plan of successive governments.
A functioning economy depends on many factors, one of which is the health of the nation. We are indeed going backwards and have been for a decade and more. That is a political choice but explained away to the public as a financial necessity, which it is not.
The suffering and deaths of loved ones during the pandemic, unacceptable ambulance waits, people left on trolleys in corridors or ambulances, record waits for cancer and elective care, and a decrease in the proportion of people receiving timely cancer treatments, all for the politics of austerity and the sham of monetary scarcity. You heard that right.
And now, we have the prospect of more public spending cuts, as suggested by the TUC last week, which fears that the government is hiding £28bn of stealth cuts to public services over the next five years. Paul Nowak, the TUC general secretary, rightly commented that ‘with a recession already expected this year, a new round of austerity would make a bad situation worse.’ The Chancellor, he said, should instead use the ‘power of government to lift us up and out of Britain’s economic slump’, which might translate better as using the power of the public purse.
Everywhere we look, evidence of this disintegration is unmistakable.
The Guardian reported last week on the record numbers of social workers who are quitting the profession due to stress, high demand and burnout. Ruth Allen, the chief executive of the British Association of Social Workers, was clear as to the reasons; “You’ve got much more inequality, many more people proportionally living in poverty and relative poverty, even destitution – those circumstances are stresses on families and create need of all kinds. The relationship between poverty and demand on services cannot be missed and this government will not talk about it.”
Add to that, the ongoing collapse of the social care sector resulting from a lack of staff, years of chronic underfunding, low pay and neglect by the central government. The Telegraph has reported that the problem is becoming so severe that the NHS is aiming to help plug the care staff shortages by recruiting foreign workers in India.
It’s a dismal comment on government austerity, that because wages have been squeezed in the public sector for over a decade, and working conditions have become intolerable, driving people to look for better-paid work, that the government thinks it’s ok to poach the valuable resources of other countries to fill the gaps caused by its own strategic failure to plan. Is it hoping it can pay them the same pitiful wages to keep the public cost down? As the article indicates, experts say that the underlying problem for retaining staff is low pay.
The only way forward is to remove the private, profit-seeking sector, bring social and elder care back into the public domain, pay attractive wages and offer good terms and working conditions. No need to look further afield. With the government as the currency issuer, all this can be achieved. It may take time, but the current situation has shown the flaws in marketised, private-sector provision, where profit is its motivator.
At heart, we as a nation have to decide on our priorities. How do we want our valuable but finite resources distributed? Do we want to serve the public good through creating a functioning public sector, which has a dual function to serve people’s needs by creating a healthy, educated nation, that provides support throughout their lives, and also serves to create a functioning economy? Or one that descends into social and economic decay? The place we have already reached as a result of a toxic economic system which has divided the nation and favours the few.
Of course, the government’s stock answer to bringing private services back into public provision is always affordability, based on the lie that businesses are more efficient, never mind that they are also profit seekers.
And yet, it is never a question of money. It is always a question of serving economic ideology and political priorities. So, it isn’t any wonder that the government remains silent, or uses the art of distraction to divert attention away from its policy decisions. Again, what we are witnessing here, not to put too fine a point on it, is the disintegration of society by political decree. This is the price we are paying for the politics of austerity and the political choices made by government.
We must wake up to the contradictions. The endless ‘porridge’ pot which churns out funding for wars and arms manufacturers, bails out the finance sector, and puts money into the pockets of corporations when it suits, but which strangely dries up when there is any mention of improving public services, investing in health and education and social care provision, implementing employment and wage policies that bring economic stability to people’s lives, creating a fairer and more equitable distribution of wealth and real resources.
They all suddenly become unaffordable, until we have reduced the public debt, or grown the economy to raise tax revenue to pay for stuff, or so the story goes, and only then will we be able to afford public services or a better life for ourselves and our children. Again, all part of the smoke and mirrors which dictates the narrative of fiscal unaffordability, while people go hungry or become homeless, and charity is left to fill the gap with increasing difficulty, or when people get into spirals of debt and its associated ills, trying to cope with the cost-of-living crisis. If only people understood that the author of the hardships they face justifies them with a false narrative about government spending, they would be beating down the doors of parliament and demanding better.
It cannot be right that the weakest and most vulnerable find themselves at the sharp end of government policy, on the basis of the same lies. The BBC reported last month that some people with disabilities had told them that they felt they had little choice but to live without home care, whilst others said they feared bailiffs being called in, over unpaid debts. Local councils, for their part, are clear about the reasons. A decade of central government funding squeezes, often stemming from a political objective to deprive opposition councils of adequate funding, means that many have no alternative but to take unpalatable action. And there it is. People, as a result, are unnecessarily driven to fear how they will manage their needs, even though the solutions are clear.
This is what it boils down to. Local government, as a currency user, relies on central government funding, local taxes, or finite reserves, to fund the services they provide. The UK Government, on the other hand, as the currency issuer, has the power of the public purse to remedy this situation tomorrow if it chooses to do so. It could pay councils more, remove means testing to make social care free at the point of use, and pay those that need it adequate benefits so they don’t have to live in fear of the bailiff arriving on their doorstep, being hungry or cold. It is a shameful comment on a government which has lost any sense of whom it serves as an elected body. It has used household budget accounting as a cover for its political aims, not just to promote a market-led economy, but also to strangle local government services such as social care, to push responsibility for its cost increasingly onto local citizens, whilst at the same time disrupting local democracy.
Shifting blame is always the modus operandi of this government, to take the heat away from its ideologically driven policies. Like a magician’s sleight of hand.
As long as government has a long-term strategy for social care provision, or any public provision for that matter, and the real resources exist, it can use its currency-issuing and taxation powers to shift those resources into the public domain, to improve people’s lives. The fact that it hides behind the lie of financial unaffordability is an indictment on government and demonstrates clearly where its priorities lie. Squeezing every last drop from citizens who are already burdened and struggling to make ends meet, acts as a form of control and keeps people compliant, while allowing the elites to continue to plunder the real wealth of the nation and maintain their power and influence.
In other news, while people stress over how to manage their finances, or choose what to give up – eating or heating – we have clowns like Ms ‘Let them eat turnips’ Coffey, suggesting that people struggling to afford food could work more hours or improve their skills to get a higher income.
Improving your skill set doesn’t necessarily mean you can get a better job, if the jobs aren’t there in the first place. If you are already struggling to keep your head above the water, the time for training or self-improvement may be out of reach. If you are a single parent, a carer, or a person with a disability, you might not be able to work extra hours, or you might not be able to find a job that fits your needs or skill set. Ms Coffey does not live in the real world.
The world in which we live is complex, and people’s lives are not straightforward. Why should you be penalised for something out of your control?
Last month, LBC reported that unemployed benefit claimants could risk losing key payments unless they take part in a new intensive two-week work training programme, under new plans being considered by the government. Again, the government putting the cart before the horse. Training might be good, but it doesn’t necessarily lead to employment. As Warren Mosler indicated in his story about unemployment, dogs and bones, ‘when you have a macro problem there is no way you can solve it at a micro level’.
How about, instead, if government legislates for a real living wage and pays its public sector better wages, so they don’t have to worry about paying their bills, feeding their children, or keeping a roof over their heads? How about a government that actually acts in the interests of working people, instead of shifting the blame elsewhere? Those lazy Brits should just get on their bikes or work harder, according to this flawed logic which puts the onus on the individual, instead of government, whose role should be to deliver an economy that works for everyone, in good times, and bad ones such as these, by using its currency-issuing and legislative powers to help people live productive, happier lives, instead of hindering them.
How about committing to a policy of full employment and a job guarantee, to smooth out the ups and downs of the economic cycle? And let’s not forget the obvious, people with more money in their pockets spend some of it into the economy if they feel confident enough to do so. It is the government’s role to create confidence in the economy through its spending and taxation policies. It seems to have forgotten that.
It can’t be emphasised enough at this juncture, that people don’t have to go hungry. That is a political choice. People don’t have to be unemployed, forced into precarious work or working all the hours god sends. That is a political choice. Both are borne out of the lie that government has no money of its own, and that its role is to be fiscally disciplined and serve the needs of business, regardless of the consequences for the economy.
And herein lies the fundamental problem.
The Establishment, political parties, institutions, government think tanks and orthodox economists ply the illogic of household budgets to a public ignorant of monetary reality. Such myths are regularly promoted by an equally self-interested media.
Let’s start with the IFS which published this week its ‘Fiscal Backdrop to the 2023 Budget’. In it, it considers the outlook for the public finances and what it might mean for the Budget, later this month. The entire premise of its publication is that government spends like a household budget. As if deficits by themselves, debt and borrowing, or the effects of growth or lack of it on revenues are sound measures of economic health. As if the government must make difficult choices when it comes to the public sector or pay, because there is a scarcity of money.
Instead of judging the government on its response to current economic conditions and how they have affected living standards, we are treated to a cynical use of a false narrative of how the government spends, as yet another distraction from economic reality, to keep people in the dark and focused on the wrong measures of economic health.
The IFS, like so many others, is promoting a lie and aiding and abetting the government to impose more austerity and more cuts to public spending, on the basis of an accounting spreadsheet, not monetary reality. Let’s translate that simply. It means more financial hardship for citizens, further breakdown of the public services we depend on, increasing poverty and inequality, all ultimately ending in the further fracturing and breakdown of society and its values.
A current case in point is the recent announcement of a budget ‘surplus’, which the media immediately jumped on, to discuss how it might be used as if it were a national saving. After the ‘deluge of cash’ that had flowed into the government’s coffers – welcome income, after it had spent hundreds of billions of pounds tackling the pandemic and the fallout from the Ukraine war, the Guardian predictably asked what would the Chancellor, Jeremy Hunt, do with this tax bonanza – cut debt or fund public services?
At the same time, the same paper reported in another article, without blinking or thinking, that a quarter of households regularly run out of money. Unsurprisingly, in the land of household budget accounting, no connection was made between the budget surplus and people running out of money for essentials.
But here’s the thing. Such discussion does not reflect monetary reality. The government has no more money to spend than it did before the surplus was announced, since tax revenues fund nothing! On the contrary, it is the currency issuer which holds the power of the public purse, to spend in service of those people that elected it to power. In economic parlance, the government’s surplus is the private sector’s deficit or the other way around. Let’s say it once again, in the words of Professor Mitchell. A budget surplus does not ‘create a cache of money that can be spent later … A budget surplus exists only because private income or wealth is reduced.’
The elephant in the room continues to crash about, even as people are unable to meet essential needs and fall into financial distress.
The Tories and their opposition are both wedded to the same spending narrative that hurts society, and there seems in recent months to be a doubling down of Thatcher’s handbag economics, with no sign of a reversal in thinking. The Liz Truss affair has politicians running scared to say boo to a goose, let alone challenge the market bullies. Or is this a race to prove their fiscal credentials as if these were a key measure of good economic management?
Keir Starmer and his Shadow Chancellor Rachel Reeves are two cases in point. Promoting their recent airy fairy five-point plan which displays no real substance, they both have been keen to make it clear that before anything, fiscal discipline matters, that Labour’s manifesto will be fully costed and fully funded.
As Ellis Winningham tweeted:
‘The reason why Labour’s economic plans are little more than paracetamol politics, is this “fully costed” nonsense. “Fully costed” matters a great deal to you in your personal finances. When it comes to UK government finances, it is an empty, meaningless idea. It is a Fallacy of Composition.’
This was further compounded in a recent interview aired on Channel 4, in which Starmer was clear, saying that ‘before I go to taxes, I know that the key here is growth because if we can get growth sustained across the country, that is the single best way to provide the revenue that we desperately need for our public services.’
The question one must ask is, why do we put up with the fairy tales that spew out of the mouths of politicians, more concerned with serving their corporate masters than the people of this country? Relying on growth is like asking how long is a piece of string? Jam tomorrow, maybe, possibly, never. There are no certainties in this very uncertain, unstable world, which is currently moving in uncharted territory. The implication is that Labour’s plan, which also involves ‘partnering’ with the private sector, may fail if they don’t manage to find the holy grail of growth. It would be ultimately the unnecessary creation of more gratuitous suffering.
If we have to say it once again, a healthy economy starts not with people paying their taxes, but with public infrastructure put in place first by a currency-issuing government. It is not an afterthought dependent on collecting taxes.
As for Labour’s proposed public/private partnerships, one should always remember that profits always come first, not social conscience. That is a Public Relations nice to have, but ditched in the event that such profits are threatened by economic conditions. The provision of public infrastructure, a legal system, education and health services, roads, public transport, social care, local government and a healthy economy, and responding to economic challenges, depends primarily on the State. It boils down to understanding the power of the pound. It doesn’t depend on big business. They are secondary to the good working of an economy.
We can’t say this too many times. Government is, correction should be, about spending for the public purpose, delivering functioning public services, and providing the means by which people can improve their lives – better wages, secure employment, good health care and education. It doesn’t require growth or taxes to achieve this. It requires political will and the distribution of real resources fairly through spending and taxation policies.
Just imagine a world in which our leaders, instead of beating the drums of war and pouring billions of public money into the industrial military complex, death and destruction, actually put the planet and its citizens first. Just imagine what that world could be. The next step is the understanding that government holds the key to beginning that likely imperfect journey but one we can’t afford not to embark on.
Upcoming Event
Our long awaited book Modern Monetary Theory: Key Insights, Leading Thinkers was published at the beginning of 2023. To celebrate the occasion the GIMMS team is proud to present its book launch in london on 20th April 2023.
Tickets are free and available via Eventbrite
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