We have to face the possibility that our government is planning economic destruction for its own political ends – which are the demise of the state as we know it taxresearch.org.uk/Blog/2020/09/1… Does the government actually want mass unemployment and is setting out to achieve it?
Before our government chose to become a pariah state, and before it was clear it planned to fail on Covid testing I expected UK unemployment to exceed five million next year. But now it may be very much worse. And I beginning to fear that is exactly what the government wants.
We find it very hard to comprehend a government that chooses to create unemployment. But remember Thatcher did just that. She created unemployment to destroy unions and manufacturing so she could create a different type of society. Is Cummings now planning something similar?
Could it be that this government wants staggering levels of unemployment as its excuse to take on all the instruments of power that it hates: Parliament, judges, civil society and democracy itself? Do they really think that catastrophe will let them reshape the UK forever?
If you wanted to create massive unemployment could you do better than end free trade, crush our export focussed industries, deny our service sector access to the EU and stoke inflation all at the same that Covid 19 brings the SME sector to its knees? I doubt it.
So why would you want that mass unemployment? Could it be to create the despair that might provide the support for your extremist crack down on all the liberties that once underpinned life in the UK? Can you think of any better way of generating that support?
But I foresee a problem with this plan. I have little doubt that Cummings thinks he can keep control during the chaos he is seeking to create. So did those who created the French Revolution, and within months many of them had lost their heads,and I don’t want that for anyone.
The problem for Cummings is he may believe forecasts suggesting we’re heading for 3 million unemployed, and he imagines 4 or so million achieving his aim. But I already expected 5 million unemployed and expect many more now, plus mass corporate insolvency and a banking crisis.
Cummings wants chaos and despair to get what he wants. But No Deal plus Covid create the potential for total economic meltdown and simultaneous substantial inflation in the UK now which MMT cannot solve. We will be a failed state politically and economically in that case.
For Cumming’s plan for the transition to the state he wants to work he has to maintain the appearance of a functioning state whilst subverting the purpose of every agency within it. This is how fascist takeover happens. But this continued functioning may not happen.
Massive unemployment - 6 million plus - means a catastrophic failure in demand and economic meltdown whilst the state pumps in millions in benefits payments which even so people may not be able to spend because goods will not be available to buy. Serious inflation could result.
At the same time No Deal Brexit will be trashing the value of the pound. This may be a previously unforeseeable double whammy that could break the UK economy. Britain will still pays its debts. But more importantly it may not be able to feed people.
There are three ways around this. One is abandoning No Deal. The second is making Covid testing work. The third would have to be a massive state backed work programme - beyond anything likely to be deliverable in the time required. Job Guarantees can work, but I doubt this fast.
I cannot see Cummings opting for any of the options that can save us from economic meltdown. He wants no deal. He wants herd immunity. And he wants unemployment. So we face catastrophe.
I suspect Cummings thinks he can maintain economic order by balancing the pound, unemployment, spending and QE. And without No Deal maybe we could. With it and a (likely) significant second spike his chances are remote. QE in this scenario tips us into chaos.
The result of the chaos is hard to imagine. But we’ve never seen a self imposed economic breakdown of the type our government is now choosing before so it’s really beyond the boundaries of extrapolation. What and who will survive it and how is hard to imagine. That’s its scale.
What are the odds of this chaos happening if we go for No Deal and have a Covid spike? I’d suggest they are very high indeed. I’d rate the chance of managing the economy in 2021 as very low in that situation. I expect the UK to be a completely broken nation as a result of it.
This can, of course, be avoided. Continued state support for business and employment is possible now. No Deal can be abandoned. Covid could be managed. We could become a willing partner of other states. We need not face turmoil. It will be a choice.
But, might this nightmare scenario that I think Cummings wants, without appreciating how bad it might be, play out? I think it might. And because I can now see that scenario developing I think it needs to be on the agenda for discussion. We have to know the risks we face.
If you thought things were bad, I suggest you think they could be much worse. That’s the only way to embrace the possibilities that deliberately provoked economic meltdown might create and to plan for managing them.

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More from @RichardJMurphy

24 Sep
The government is thought likely to offer a replacement for furlough today that will make employers pay a significant part of the cost of keeping employees on when there is no work for them. This will not solve unemployment. It will encourage it.
Let me offer a simple example. Assume an employer has 10 employees, all on £2,000 a month. The employer has enough work for five people. They could sack 5 people and save £10,000 a month. Or Sunak offers a scheme where all ten are kept.
Under this scheme the company pays for the work the employees do, i.e. £10,000. Then it pays 1/3 of the wages for the time they’re not working i.e, £3,333. The government then pays 1/3 of their wages when not working i.e. £3,333. And the employees lose £3,333 in wages in total.
Read 7 tweets
4 Sep
Rishi Sunak’s gov’t backed loan schemes mean that more than 1.2 million U.K. businesses - which may be more than 80% of all businesses - are laden with debt and tax bills they have to start repaying next year. That’s when they begin to fail and the recession gets very much worse.
Piling debt burdens on companies to get them through a crisis is one thing. To then think they’ll invest in new employment, products or sustainability when struggling to repay that debt is another. They can’t and won’t. Sunak has built a debt time bomb that will drive recession.
The Office for Budget Responsibility has suggested £33bn of the £53bn of government backed loans to businesses may not be repaid. The gov’t says it expects banks to take failing companies to court to recover the money. They’re literally planning to drive the UK out of business.
Read 9 tweets
26 Aug
It’s GERS day again in Scotland. That’s the day when we go through the annual fiasco of Unionist gloating about accounting that literally does not add up that delivers economic data that makes no attempt to record the reality of what happens in Scotland. Let me explain why....
First, let’s remember that GERS was intended to be divisive from the moment it was named, which name was not, I am sure, chosen by chance.
And let’s also remember that GERS was originally a Tory 1990s creation designed to suggest that Scotland could never be financially viable. It was never intended to actually show a true picture of Scottish financial affairs.
Read 9 tweets
23 Aug
@afneil posted a series of comments on Twitter yesterday, all aimed at taunting the SNP on which currency it might use after independence. He hit a target by doing so. This thread explores that issue.
Andrew Neil is right to raise this. He knows that without its own currency an independent Scotland would not be an independent state. It couldn’t control interest rates, borrow without substantial risk, or have real control of its fiscal policy. That would be intensely harmful.
Despite this the SNP leadership say they are committed to ‘sterlingisation’ as a policy post independence. That is the use of sterling for a considerable period post independence.
Read 19 tweets
19 Aug
The costs of coronavirus continues to mount.

There’s the lost confidence in exams

And the consequent alienation from education

Which is bound to continue as parents refuse to send children back to school, soon
Then there’s the cost of supporting some now over-subscribed universities, that will become Covid hotspots soon

And the cost of supporting those universities who have lost out from grade inflation but who we will definitely need next year
After which there’s the cost of finding 250,000 people who are going to evicted from homes for coronavirus related rent defaults very soon, all of who, will be without deposits to find new ones
Read 7 tweets
22 Jul
What taxes should we raise now? A video explanation taxresearch.org.uk/Blog/2020/07/2…
I am getting bored of the question ‘What taxes should be raised to pay for coronavirus?’ This thread explains why.
First, the question makes no sense. That’s because coronavirus is already paid for. It’s being paid for by money creation, albeit imperfectly via QE. And it’s being paid for by more people saving more with the government. Because that’s what gov’t borrowing really represents.
Read 17 tweets

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