The crisis in the NHS is overwhelming this week. It has reminded me of conversations I had with my late father on how to manage within the state sector. I think they're worth sharing.
My father worked for the nationalised electricity industry from the late 1940s to late 1980s. He spent much of that time as a fairly senior engineer. He was committed to what he did. He believed electricity supply was a human right. And he sought to delver it.
He left the industry and retired when he realised that privatisation challenged what the believed in. The priority was no longer supply. It was, instead, profit. He had a clear example of the difference this made. It was about emergency management.
I know that I am in denial about what is going to happen over the next few weeks as the NHS is overwhelmed by Covid 19 and tens of thousands of people die, unnecessarily. But I should not be. I should be nurturing my anger that our government has chosen to let this happen.
They were too late last March, too early in June, wildly optimistic in the summer, irresponsible in September, feeble in November, reckless about Christmas and too late again in January. Whenever they could make this crisis worse that’s exactly what the government’s done.
Why has that happened? Three reasons. First, this government has never cared about the NHS and the people working in it. They treat them with the contempt they have for all private sector employees. Several in the Cabinet have been open about wanting to privatise the NHS.
I am bored by being patronised by those telling me ‘don’t you know Remain is dead?, closely followed by ‘Move on.’ I can tell you, I have. That’s why I want to Return. To Europe, for sure. But to something much more than that.
I want to also Return to a positive politics. That’s the form rooted in compassion, care and genuine concern. But it’s also one that’s also learned that economics has moved on from what was taught by that subject in the 1980s, as has our understanding of the environment.
I want a politics that is not based in materialism. Or jingoism. Or nationalism. Or populism. Instead, I want a Return to the principles of mutual respect, tolerance, acceptance and co-existence, with each other and the rest of this world, human and otherwise.
I am bemused by those who demand that we repay the UK government’s debt. It makes me wonder, do they know what it is? And how do they think it can be repaid? And do they appreciate the consequences? A thread is coming on......bear with me, because I think you need to know this.
First, what is the UK government’s debt? I’ve immersed myself in this issue and can confidently say the Office for National Statistics’s figures are wrong, most especially because they claim that the UK government is in debt by owing money to itself. That’s not possible.
Whatever the Office for National Statistics like to claim, money you owe yourself is not debt, and so quantitative easing cancels about £800 billion of UK national debt right now. There are other mistakes in their numbers, but I’ll just stick with this one for the moment.
I keep hearing people complain that the ‘mainstream media’ does not understand economics and that we’re talked down to as if everything must be explained as if the economy is a household. In this thread I explain all you (and they) need to know. Economics in one thread then....
Very few people seem to understand how money is created. Mainly that’s because when they’re told it seems so simple that they can’t believe something that’s so important that we’re willing to pay a lot to get it is created so easily. This thread explains how money is created.
What this thread also explains is that if we understand money we can completely reimagine how the economy really works, which is the pathway to rebuilding from the mess we are in. Which makes this a pretty big deal. I make no apology for its length as a result.
As those I know best could confirm, I have long feared a No Deal Brexit. I could not see how Gove and Johnson could or would agree to anything else. But now it’s apparent that it is going to happen I am still shocked.
I am shocked even though in one way this does not impact me. I have had an Irish passport for decades. I am one of the lucky ones. So are my close family. We can all still enjoy freedom of movement. But I am still bereft. England has been my home.
I am ashamed of England tonight. I am pleased that Scotland and Northern Ireland held out against Brexit. I could never blame the Welsh. Brexit is an English initiative. The exceptionalism that underpins it is England’s alone. And that is why it is of a England that I am ashamed.
As some will have noted, there were a lot of reports yesterday on the fact that £50 billion of banks notes are missing in the UK economy. This got me thinking. And as a result I have to suggest that finding that £50 billion of cash would not be hard. Here’s how to do it.
As the Public Accounts Committee of the House of Commons has noted, around £50 billion of banknotes in issue have no explained use. In other words, they do not appear to be used for regular cash transactions. What their alternative use might be is not known.
Some could be in the possession of tourists, who have not bothered to exchange them on leaving the country. But the amounts involved would be small.
I’ve tweeted more about quantitative easing than I really thought to be decent of late. However the questions still keep coming, so here is another QE thread, on the use of QE funds and (especially) the link to the Green New Deal.....
The question I have been asked is does it matter what QE money is spent on, and the honest answer is ‘it’s complicated’. But, maybe not so so complicated if it’s understand that QE came in three stages, each of which is quite different.
Stage 1 QE lasted from 2009 until 2016, when the last round of this stage took place in the UK. The aim at this stage was simple. As always, new money was created by the Bank of England, and mainly government bonds (gilts) were bought. That’s what QE does, in essence.
I have been asked by a number of people, from MPs onwards, to prepare answers to the types of questions being commonly asked about the economy in the Covid era. I can’t see why these things shouldn’t be shared. This thread provides some suggestions.
Should we raise taxes to pay for Covid 19?
Right now, definitely not. We’re facing an economic downturn in 2021. Almost nothing can prevent it. And increasing taxes will take more tax out of the economy, and make the town turn worse. So definitely don’t raise taxes now.
Does that mean we don’t need any tax changes?
No, it doesn’t, but overall taxes mustn’t increase. Tax the wealthy more then, and reduce tax for the poorest. That increases overall spending power in the economy because those least well off spend all their income. But that’s it.
There is an obsession that the national debt must be repaid. Assuming it is properly calculated (and I have real doubt about that) it’s coming on for £2,100 billion. Knowing what makes this up is really important. Then we can decide if we really want to repay it. Stay with me….
Around £200bn of the national debt is made up of National Savings & Investments. That's things like Premium Bonds and the really safe savings accounts older people tend to appreciate. So why do we want to force these people into riskier savings accounts? I don't think we do.
Around £400bn of the national debt is owned by foreign gov'ts. That's cool: they want to fund us. They do that because they want to hold our currency. That's because that helps them trade with the UK. Would we want to force them to take their money back in that case? I doubt it.
There’s massive misunderstanding about what QE is and what it does. So please forgive a long thread on one of the most important tools used in modern economics, which if used properly might provide real hope for a better future.
Outside Japan QE was unknown until 2009. Since then the UK has done £845 billion of it. This is a big deal as a consequence. But as about half of that has happened this year it’s appropriate to suggest that there have been two stage of QE, so far. And I suggest we need a third.
Stage 1 QE started in 2009 and was last used in 2016. It created £445bn of new money. That was used to buy £435bn of government bonds, or gilts, and £10bn of corporate bonds, which we can ignore. There were three goals to first stage QE.
Rarely has the UK faced an existential crisis like the one it does at this moment. The relationships between its member nations are uncertain. We face meltdown with the EU, even if we get a deal. And the special relationship with the US is anything but that. This is unprecedented
What has now happened in this mess? The architects of it, secure in the knowledge that the damage they sought to create has been delivered and their consulting futures are secure, have walked out of government. Is that by chance? No. It’s deliberate distraction.
The Brexiteers aim has always been apparent. It has been to maximise the chance of disruption. That’s because they believe financial capitalism works best in such conditions. And they are right. Moments of chaos are times when hedge funds have greatest chance of making money.
The government is going to do £450bn of quantitative easing (QE) this year. That should more than cover its total borrowing fir the year, meaning the actual sum owed to third parties will fall, and so will real national debt as well as a result. 1/-
Saying this, I know that much of the new money created by the Bank of England to fund QE ends up back on central bank reserve accounts held by U.K. High Street banks and building societies with the Bank of England. And that interest is paid on their balances 2/-
The interest paid in those balances is 0.1%. That rate is controlled by the Bank of England, and will not be changing for a long time to come. In effect then the government is paying banks and building societies 0.1% to make them hold new money that cancels the national debt 3/-
In the summer of 2015 Jeremy Corbyn used a pile of my ideas to help him become Labour leader. By spring 2016 his team were telling me they were sitting out Brexit as it was just a Tory fight. 1/
At that moment I knew this was a man who played politics, and not political leadership, and I walked away from any association. I did not regret it. Whatever he said, or was said for him, he was always posturing 2/
Politics is about tough decisions. About finding the way to real answers. There is a lot Labour is still getting very wrong, on Covid, the economy, electoral reform and more. But Corbyn was never the answer on any of those issues either 3/
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.
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?
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.
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.
@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.