But, but….

Graham Hewitt says:
July 5 2019 at 9:00 am
An example of SCA would be to charge to the accounts of, among others, the Oil industry the costs associated with global warming as a result of burning oil and oil derived products.

Richard Murphy says:
July 5 2019 at 9:54 am


Exxon already includes a carbon tax in its evaluations of new projects…..

Better be quick, he needs the money by September

The Corporate Accountability Network is a new idea. I am unashamedly looking for support, sponsorship and funding. If society is to be protected; accounts are to be meaningful; the local economy is to be promoted and people are to trade with each other with confidence then we need better data for the benefit of everyone. I am keen to hear from those who share that view.

A des res in Ely doesn’t pay for itself. Therefore sums equivalent to a full professorship are sought before staff are thought of…..

How strange of an accountant not to understand profit

The simple fact is that the Green New Deal and profit maximisation are incompatible with each other, and this is of massive importance and is an issue that cannot be ducked if the Green New Deal is to work.

Profit is the value added in an organisation. This statement is tantamount to insisting that we don’t want to add value in our economic activities. Which is rather the point of having economic activities in the first place really, to add value.

Quite explicitly, externalities such as environmental cost are ignored in this framework, which accepts the standard neoclassical line that natural capital is a ‘free gift of nature’. This is inappropriate in a world where we face the reality of climate crisis. The capital constraint that businesses now face does not come from finance – which is readily available to most of them at almost no real cost in the case of larger companies – but from natural capital, whose use we have to limit.

This all having been dealt with by Arthur Cecil Pigou in the 1910 to 1925 period. Which is why the Stern Review, William Nordhaus and all the rest advocate the carbon tax as they do. Include externalities in the price system and Robert’s your parent’s sibling of choice.

We already considered this, dealt with it, a century ago. But then those who know no economics are going to be constantly trying to puzzle through questions already answered, aren’t they?

Perhaps more reading and less staring out the window is required?

Truly great

But so too is it by another simple fact. Over 80% of UK personal wealth is made up of tax incentivised assets, either in the form of people’s homes or pension funds or ISAs. That is a staggering fact that makes clear it is the UK tax system that does help create the wealth inequality that we suffer in this country. In that case to tax the resulting imbalances in society makes complete sense.

So, 80% of UK wealth is in pretty mainstream savings schemes and pensions. Belonging to pretty mainstream people too.

This is thus evidence of vast inequality that must be taxed?

I am not saying we need start with a tax on wealth as such, although I see little reason why we should not on the wealth of the top 0.1%, with the sole justification being that they are exceptionally wealthy and that the imbalance this creates society requires redress for no other reason than that.

Well, there’s only the entirety of optimal taxation theory to tell us that we shouldn’t tax wealth. But then that would mean having to know about bits of economics that they awarded the Nobel for.

It’s a remarkable view of life

Of course such taxes are indeed regressive, but soft drinks are empty useless calories and serve no purpose whatsoever other than making profits for their producers – and us fat.

People enjoy them. Is that not reason enough?

Well, obviously enough, not if you’re a puritan, but still. Why Mozart? It’s just noise after all….

Richard Murphy says:
July 3 2019 at 9:26 pm
We agree…


Richard Murphy says:
July 4 2019 at 7:23 am
An advertising ban is the start

And then an enforced limit on the harmful contents has to be the case

And I simply cannot see why not

Ooooh, get her!

Terry says:
July 3 2019 at 1:06 pm

Making And Selling Coca Cola Is A Sin Says The Senior Lecturer

What do you think of his line of argument (putting aside the neoliberal bigger picture) and just focusing on logic?

Richard Murphy says:
July 3 2019 at 1:15 pm
My response is very simply: nothing Worstall has ever said is worth responding to


Nope, not even the fact that soda pop consumption is elastic with respect to price rather than the inelastic he based his argument upon.

Give me money for my new project and I will save the world

Using a few more electric cars, cutting air miles by a small amount a year and recycling the office waste is not the change we need now. Nothing less than a fundamental change to the whole business model of society is required. Tackling global heating has to be at the heart of that, and much of what UK business does increases the risk of catastrophe, rather than prevents it.

In that case a change in the purpose of all companies, imposed by law so that adaptation to the constraints of the climate crisis is their number one objective rather than profit, matched by the introduction of sustainable cost accounting so that we can appraise who is likely to be able to succeed at that process of adaptation and who will not, and aware capital appropriately as a consequence, is what is essential now if the economy, the country, we and the planet are all to have any chance of survival.

Ritchie’s current funding runs out in September. Expect – if you can even believe this is possible – a certain increasing shrillness in the call for new funding for the new project as the date approaches.

This is great

The cowardly state is the exact opposite of the Courageous State that I described in my 2011 book with that title. What happens in the cowardly state is that a neoliberal politician, obsessed by centralised macroeconomic control of the economy and a desire to shrink the state at all costs so long as it has limited impact upon their own political fortunes, will close, privatise, outsource and simply abandon public services where anyone but they can be blamed for this happening with an indifference as to the consequence that is profoundly sociopathic.

I would argue that this is exactly what has happened to local government since 2010. The impact of austerity has been offloaded by central government onto local authorities. Sixty per cent of central government funding for local services has been lost over that period.

So, those obsessed by centralised macroeconomic control decentralise economic control over local services and funding.

This is bad.

Ho hum, that expansion of the universities was a bad idea, wasn’t it?

This is not a situation that is easy to reverse, for all sorts of reasons. Good people are not attracted to be councillors when the rewards are low and the prospect of failure, for which you may well feel a personal responsibility even if that is inappropriate, is high.

Councillors used to be unpaid. Now they’re paid. The quality has gone up, has it?

Whilst funding, borrowing and the governance of local government have all to be reimagined to make sure that they are fit for purpose,

How about local people pay the local taxes they wish to have in order to pay for the local services they desire?


It seems that the time has come to state the obvious: I am a liberal.

Not a Liberal Democrat.

Nor a neoliberal.

But a liberal.

This means that I believe that my neighbour is as important as me.

Nobody does believe that. We might insist that they’re ass morally important, equally one of God’s Special Little Snowflakes. But absolutely no one does think their neighbour is as important as they themselves are. We’s all be around next door cooking their breakfast if we did.

Saying that makes clear the third aspect of being a liberal. We must have a criteria for determining what is just, meaning that it requires defence. My logic is that justice is blind. Something is right when it would be considered just from whoever’s perspective it is viewed.

Isn’t that cute? So, 80% tax levels. Doesn’t seem just from the point of the view of the person being taxed. That’s why they all bigger off when we try it. Therefore it’s not just to have 80% tax rates as it’s not, considered from the perspective of the person being taxed, just.

Gosh, this moral logic stuff is fun, isn’t it?

That is what law is for in a liberal society: to define the boundaries of the freedoms that we can enjoy.

Err, no, that’s the definition of illiberality. A liberal society is one where the law defines the boundaries of what we may not do.

How the hell do you deal with economics like this?

Victor Anderson -who has a long history as an environmental economist – presented the first paper on whether it is possible to measure the value of natural capital, or not. I think it is fair to say that it was concluded that it is not, and even more strongly that it may not even be desirable to do so. That might only encourage its use, which is not just undesirable but simply contrary to all our interests now.

If something doesn’t have a value then it’s valueless. Meaning that people don’t preserve it……

Ritchie’s latest

Jane McTavish says:
June 27 2019 at 8:32 am
I find it hard to imagine what such accounts would look like. Could you construct a simple example using a real business? For example Tax Research LLP?

Richard Murphy says:
June 27 2019 at 8:38 am
For Tax Research LLP the accounting would be exceptionally simple – but there would be a narrative

For Shell it would be very different

As yet I have not done this

If I get a grant I will

You must cross my palm with silver to find out what the future holds for you moi lass!

Ritchie doesn’t understand his own proposal

So, next downturn, we’ll get People’s QE. Huzzah!

Ambrose Evans Pritchard:

The Bank would buy the bonds as needed in any future QE. It would inject the stimulus directly into the veins of the economy through public works. The bonds could be sold again later to drain excess liquidity. This is how quantitative tightening has been working in the US.

The reality is the bonds will never be sold again: the point is inconsequential. What is relevant is that he appreciates that there is a real need to do this

If the bonds are never sold again – or rebought, to be accurate – then it’s not QE. It’s straight monetisation of the deficit. Which, in extremis, might be a good idea. Milton Friedman certainly thought so.

But then if it’s an old idea then it’s not Ritchie’s is it? And if it is some new idea then it’s not QE anyway.

People hire managers, therefore capitalism isn’t working

So, capitalism means that the peeps with the money run the show. But if they just hire managers to do that then the system doesn’t work, does it? Because managers just isn’t the same as real involvement?

Therefore socialism, obviously.

The issue is a simple one to summarise. Apparently about two thirds of all private owners of quoted shares in the UK now own their shares through nominee pooled funds. As such they are not recorded as the legal owners of these shares. They have no voting rights. And no right to attend shareholder meetings. They don’t even have the right to accounts. And they have given an institution, who does not own the shares in reality, the right to exercise their vote in the company.

This matters for a number of reasons.

First, this makes a mockery of shareholder capitalism. The company has no idea who its shareholders are. And it is wholly unaccountable to them. The idea that somehow shareholders are at the centre of corporate concern is shown to be a sham, yet again, by this.

People hire managers therefore capitalism doesn’t work.

Now we’re to change the entirety of accounting!

A lot of yesterday was spent on work I have been doing seeking to reconcile financial accounting as it is right now with the demands of climate change. The work has been done at the invitation of Rupert Read at the University of East Anglia and Aled Jones of Anglia Ruskin University. And, in a nutshell, I have not been able to achieve that reconciliation.

I will publish more on this next Thursday when I will be making a presentation on this issue at the Institute of Chartered Accountants in England and Wales. For now suffice to say that accounting as it now cannot survive if we are to bring the impact of climate change within it. Quite literally, IFRS accounting and accounting for climate change are at such odds with each other that only one can win, and it has to be the need to account for the consequences of climate change.

It’s actually very simple indeed. Stick on a carbon tax of the right social cost of carbon. All prices in the economy now reflect climate change, costs, benefits and risks. Thus all accounting done at market prices includes climate change.

This is rather the point of the carbon tax, that by the one change in market prices we’ve now incorporated climate change into every decision.

It’s OK for people to leave a political construct if they want to

Second, irrationality has become the norm. Although I have still to meet anyone who can actually explain what the benefit if Brexit might be, barring a mistaken belief that this will give us back the control over migration we have always had and not used, the Tory membership is apparently willing to impose substantial economic cost on everyone to secure that non-existent gain. Rational thinking has, then, departed. Blind faith in mythology is taking its place. That is the foundation for toxic populism, and worse.

Third, this is a gift to Scottish, Welsh and Irish nationalists. The repair being observed is very largely English. My belief that the Union is nearly over grows by the day. And I am increasingly convinced that Scotland at least will not wait for English permission to depart.

Anyone not English can leave the English dominated political construction. The English aren’t allowed that freedom – seems to sum it up really.

To a point Senior Lecturer

Normally I have a lot of time for the Public Accounts Committee. Over the last decade few committees have done better work. But this is far from its finest hour. There are three reasons why the NHS is in trouble. They are:

The internal market, which creates massive costs and enormous inefficiencies
A lack of funding
Brexit, which has harmed recruitment

Just to address 1).

NHS England has more internal market than NHS Wales and NHS Scotland. NHS England has been getting more productive faster than NHS Wales and NHS Scotland. A reasonable conclusion thus is that internal markets improve productivity.

That is, the costs and inefficiencies of internal markets are less than the benefits they bring.

Someone who knew economics would know that…..

That Green New Deal and travel

I have mentioned I was out and about whilst doing some thinking today. One of the things I was sketching out were the objectives of the Green New Deal. I came up with this. Comments welcome:

The objectives of the Green New Deal shall be:

To create a net zero carbon economy
To protect against habitat and biodiversity loss
To ensure every building in the UK is as energy efficient as feasibly possible, and generates power if that can be accommodated within its design
To promote public transport for all journeys, including and most especially local ones
To encourage the building of new low and no-carbon housing to meet social need
To invest in new methods of power generation, transmission and distribution
To encourage alternative and reduced forms of consumption that reduce the demand on the natural resources of our planet

Etc, etc. Written by the man who did this:

It was pretty wet in Aberystwyth this morning. So, with plenty to read and a couple of computers in tow I caught the train to Pwllheli just to have a cup of tea. More than six hours of train ride for £8.50 – and amazing views.

6 hours on a diesel train for a cup of tea – to save the planet.

Once again, getting MMT wrong

This is pure ‘bond fairy’ nonsense. Even Paul Krugman (when not writing about MMT) has debunked this sort of scare-mongering, time and again. But let’s be clear why. First, people can’t dump money. Ultimately, it’s what they have to make exchange. So the idea that they exit money forever is absurd.


Money’s convenient, sure, fiat money works as long as it is so. But that money is a medium of exchange does not mean that fiat money of one particular flavour or government is the only medium of exchange available. It’s tough to buy things with confederate dollars these days. OK, so, the government doesn’t exist any more. The Feds do and continentals aren’t worth much either. Zimbabwe is still a country, still has a government. The $Zim 100 trillion note doesn’t buy much. How many zeroes have they knocked off the Soviet ruble now?

We might even concede that that departing money forever is difficult but that doesn’t mean that leaving behind one specific fiat currency is.