I persist in being deluded about this

I persist in believing that if there is to be economic recovery in the UK post Brexit then something like the Green New Deal will be an essential part of the process.

Unemployment at under 5% does not indicate the excess capacity which makes the following work:

The essence of the Green New Deal is a Keynesian stimulus. It recognises an essential truth, which is that the way to solve any government funding issue is to create well paid full employment. When you have that any government can fund itself without difficulty. Until you have that most inflation risk (excepting that from devaluation) is small.

Rather missing the point that that devaluation is a huge bolus of stimulus to the economy anyway. And GND isn’t standard Keynesianism either. It’s phantasy funded by the Magic Money Tree.

Still the international expert in political economy speaks, eh?

23 thoughts on “I persist in being deluded about this”

  1. I figure that the UK will be about £15 bn a year better off after a hard Brexit just from savings in EU membership costs and the ability to either charge tariffs on imports from the EU or to shop around elsewhere for lower prices (and after deducting the £5.2 bn cost of EU import duties on our exports.

    Isn’t that enough stimulus?

  2. The essence of the Green New Deal is a Keynesian stimulus. It recognises an essential truth, which is that the way to solve any government funding issue is to create well paid full employment. When you have that any government can fund itself without difficulty.

    The consistent budget surpluses run by UK governments between 1950 and 1975 are a vivid and candid illustration of this essential truth.

  3. It recognises an essential truth, which is that the way to solve any government funding issue is to create well paid full employment. When you have that any government can fund itself without difficulty.

    Whut?

  4. And didn’t the Soviet Union famously have full employment, albeit not well paid. Weird, then, that they had serious issues funding themselves. Perhaps the state wasn’t courageous enough?

  5. Alex – the question is will the country be better off?
    If government income drops by 50 billion as people and companies move overseas but the government save £15 billion elsewhere I’d say that was a net loss.

  6. I mean this is just priceless

    ‘The Green New Deal explicitly recognises that in an open economy the risk of the multiplier being dissipated by imports is high. That is why it focuses on local investment, in housing, local infrastructure, insulation, local green generation capacity and providing finance to the SME sector. Local investment spending has the highest possible growth impact on the UK impact.’

    Those unemployed will be building your house! It’s an unskilled job……

    ‘In the process it creates jobs (and housing) in every constituency: this is blatantly about meeting the needs of people in the county, for work, income, housing, energy, transport and the capital for local enterprise.’

    He will create businesses in every sector – manufacturing, transport, construction. It will be magnificent – and best of all it has never been tried before. I mean, I have had long exposure to Murphy’s total historical ignorance but it still does beggar belief. It’s as though the last 40 plus years passed him by and he has no interest in learning about what went on before either.

    I would think if the goal is to create a post Brexit state that looks like North Korea then by all means take the Green New Deal off the shelf and knock ourselves out. Otherwise, it should really only be examined as a guide to what NOT to do

  7. It recognises an essential truth, which is that the way to solve any government funding issue is to create well paid full employment. When you have that any government can fund itself without difficulty.

    Can we see some detailed proof of this assertion, please?

  8. I never understand why he persists in being so niggardly with his green deal.

    It doesn’t cost anyone anything, it has no ill effects, so why stop at mere billions?

    Create gazillions and let us all have luxury yachts and piss off the Abramovitches of this world.

  9. …create well paid full employment. When you have that any government can fund itself…

    That does rather depend on what the well-paid full employees are actually doing, does it not?

    For instance, if they’re just pushing government paper around, then it’s hard to see how anything would work.

    But of course, he’s not suggesting that. Is he?

  10. Rob – the way to solve any government funding issue is to create well paid full employment

    If you assume an arbitrarily large flow of income to every individual, then the Government gets around 40% of that income as tax and NI. You therefore have an arbitrarily large source of Government income, that can pay for anything you like.

    Where the original flow of income flows from is outside the scope of this question: to solve the problem we need only assume that it comes from somewhere.

    Andrew Duffin’s suggestion that it wouldn’t work “if they’re just pushing government paper around” is therefore incorrect. Having them paid to push paper around is fine. We might have a problem if they were being paid by Government, but as noted above we can assume that the original income comes from an arbitrary source.

  11. He wants massive investment, but also favours incredibly punitive taxation to “discourage consumption” and push people down to a standard of living enjoyed by the working class in Sunderland in 1951.

    What IS the point of this investment? To just build stuff? Roads, railways, airports. To what end, if consumption is verboten?

  12. Bloke in Costa Rica

    Well, Rob, Murphy and his ilk will still be able to shop at GUM while everyone else has to queue for their potato ration.

  13. I used to wonder why a credible mainstream economist hadn’t publicly handed him his arse yet.

    Then I realised that no mainstream economists are credible.

    So all we get is an embarrassed silence.

  14. @Rob

    There’s a misalignment in Murph’s world view.

    To the sane, the point of production is consumption.

    To murph, the point of production is jobs for the workers, so they can toil under his mirthless gaze, whilst he swans about the place congratulating himself on finally making economics work.

  15. “Unemployment at under 5% does not indicate the excess capacity which makes the following work:”

    It does indicate excess capacity, because “unemployment” doesn’t mean what it used to mean in our very fortunate young day. In those days, most people had a full-time, permanent job that paid a living wage, and if you weren’t offered one of those you were unemployed. Nowadays, you’re not classed as “unemployed” if you have a zero-hours contract, or if you’ve been sanctioned for refusing to take a job shovelling shit for six hours a week.

    Cue a crowd of elderly men with large incomes or generous pensions shouting “Lazy scroungers! Fake degrees in meeja studies! They want it all on a plate …!”

  16. @ Spiro Ozer
    No, <5% unemployment does *not* indicate excess capacity because the National Minimum Wage prices *more than 5%* of the workforce out of employment.
    Reported unemployment is less than 5% because many of those earning between JSA and NMW have taken up notional self-employment.
    I don't know how old you are but when I was young most women weren't in paid employment or had a part-time job that didn't pay a living wage but helped to supplement their husband's wages and there wrre numerous seasonal workers.
    Cue elderly man who started work on £6 a week muttering "Spiro Ozer is talking through his hat"

  17. There’s a correlation between higher energy taxes, and higher levels and quality of insulation.
    You’d be a fool to assume causation, but I’d rather take my chances on setting VAT on domestic fuel consumption at 20%, raising the applicable amounts on benefit claims by an equalising amount so the poor are no worse off, and then letting the market do its thing.

  18. “In those days, most people had a full-time, permanent job that paid a living wage”

    You hear this a lot, but exactly when was this exactly?

    You can forget pre-war history, and unemployment and decline was certainly evident in the 70’s.

    Jobs didn’t all pay “a living wage” either. At least, not in comparison to today.The 50’s were very austere indeed.Employment rights were also thin on the ground.

    There maybe fewer jobs that men can feel genuinely manly about, but that’s about all you can say.

  19. It’s a trade off…. People live in draughty houses and consume more power. People live in insulated houses and consume less power but the utility wants the same income. Is it such a surprise that lecky has risen in price?

  20. When you have that any government can fund itself without difficulty.

    What the fuck is this man blathering about?

    Full unemployment doesn’t mean any government can fund itself. It might mean that its a little easier (due to higher tax income) to fund itself but it doesn’t, in any way, guarantee that any government can cover its bills.

    You know what does guarantee a government can be fully funded? Keeping a budget that spends no more than it takes in. Period.

    Nothing else does that.

    How does this man have a job in academia? He’s not a *Studies major and he’s so far off the plantation even hardcore Keynesians and socialists think he’s got problems.

  21. Martin
    November 7, 2016 at 12:00 pm

    Alex – the question is will the country be better off?
    If government income drops by 50 billion as people and companies move overseas but the government save £15 billion elsewhere I’d say that was a net loss.

    Net loss to who? The government? Because if companies are moving overseas because of cheaper tax and labor costs then those costs get passed on to you – the consumer.

    What exactly do you think the government would be providing for that extra 36 bill? I’m thinking that it probably funds a lot of Health and Safety or Race Relations departments. I don’t think you’re really getting value for the dollarpound with those guys though.

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