The UK is in a war economy, and most people don’t realise it yet. The Middle East conflict has already cut global oil supplies by around 20% and gas supplies by roughly 30%. With approximately half of all UK food imported, and global fertiliser supplies under severe pressure, the shortages hitting our shelves and energy bills are only the beginning.
Markets cannot solve this. When supply collapses, markets ration by income and those with money survive; those without do not. That is not a policy choice. That is a failure of government. The energy crisis and emerging food shortages demand an active UK state response.Drawing on Lord Keynes’s approach at the start of World War II, and John Kenneth Galbraith’s wartime work in the United States, this video argues that the only credible response to this supply chain crisis is a combination of government-led rationing and a serious redesign of the tax system.
That means rationing oil, aviation fuel, heating oil, and food.
It means equalising capital gains and income tax rates, extending national insurance to investment incomes, and adding VAT to financial services.
I’ve now found an excuse to do everything I’ve always wanted to do.
This is nothing like WWII and the situation Keynes was in, because although there is a war on, we are not heavily (or perhaps at all) involved in it, so we are not facing huge additional military spending.
So the only potential problem is the oil & gas shortages.
If government is going to get involved in that (of course we would rather they didn’t, but if they are) then there are two options for helping the poor:
The second may well need additional government revenues, so arguably tax system reform. The first doesn’t (other than a bit of admin).
So the response isn’t “a combination of government-led rationing and a serious redesign of the tax system”. If a government response is needed, it is rationing to keep demand down or more taxes to fund subsidies. Not both.
So Murphy could use this situation to satisfy his Fat Controller urges as fuel rationing tsar, or his ‘moar tax’ fantasy of him redesigning the tax system. But both at once doesn’t make sense (not that we expect sense from him).
They wanted their Net Zero. Now they’ve got it and it doesn’t look quite as rosy as expected.
Is the UK recycling potato peels into gunpowder and cars into guns?
No? Then it’s not a “War Economy”…
In time-honored fashion, the UK has sent a gunboat because the natives are getting restless. How does that become a war economy?
The Tories, bless their little hearts, would have solved the Hormuz problem quite easily by imposing windfall taxes.
The UK has had a naval presence in the Gulf for decades with mine countermeasure boats stationed in Bahrain to keep the Strait of Hormuz clear. This ended at the end of February this year when the last of of mine hunters was withdrawn and returned to the UK. It had been planed for a long time, but in retrospect the timing was poor.
I’ve been asking myself why the US Navy has been so averse to keeping a decent mine-sweeping force. I wonder if it’s because no one can imagine a John Wayne film about mine-sweepers.
Well, a bit of food rationing wouldn’t do him any harm.
Extend national insurance? So you can pay in more money you won’t see again when the pension system collapses?
Nothing much is happening, and we can adapt. Of course, high energy prices are intentional, that has been government policy for decades.
Mr Murphy doesn’t seem to have ever understood that markets always operate. You might impose cconditions on them but markets will work round them to deliver solutions in a way the fat controller did not plan for.
If it’s all over in a fortnight, will all his special measures still apply? Forever? Thought so.
The Joy of War.
Communism is the answer.
The price of fuel wouldn’t be so high if the Government wasn’t cashing in on it. If they locked in the take from a litre of petrol or diesel to what it was prior to the problem arising, then we would see less than half the increase we are seeing now.
National Insurance is a tax on work. I though investment income was *unearned* income. Or was that a Tuesday?
Maybe he forgot about daylight saving time?
“The UK is in a war economy, and most people don’t realise it yet. The Middle East conflict has already cut global oil supplies by around 20% and gas supplies by roughly 30%. With approximately half of all UK food imported, and global fertiliser supplies under severe pressure, the shortages hitting our shelves and energy bills are only the beginning.”
In real terms, how poor does this make us? 1990s? 1970s?
How much in real terms has transport fallen in cost because of various efficiencies? How much has retailing fallen in cost?
And a lot of money can be saved in transport if you accept some inconvenience. Maybe fresh pineapples disappear for a while and it’s just the tinned stuff that costs less to transport. If it’s expensive to drive to work, maybe you see if someone can share a lift. Petrol is a cost. Inconvenience is a cost. If petrol rises in price, you’re more likely to accept the inconvenience.
Or, we could just bin Net Zero and fire all the bureaucrats trying to implement it. Win win!
There’s a potash mine being developed near where I live. They’ve being putting it into maintainance mode as there’s a global glut of potash, Canada is swimming in the stuff. If there is a real shortage of fertiliser our locals will be ramping up production.
Its nitrogen fertiliser thats going stratospheric, if you can even get it. Because its made from natural gas. And its the most important of the NPK group. Stint on the P and K for a year or two, yields will hold up OK. Stint on the N and yields are going through the floor straight away.
Could you spread Ed Milliband on your fields, Jim?
Is bullshit a workable substitute for cowshit?
You’d need a ricer made from some product deriving from petrochemicals.
I actually axed someone about this, someone who knows about this kind of thing. She thought about it, in her guileless way, and then came up with the idea of the ricer (but speculated that it might need to be made from hemp). And she wanted a butter knife the size of one of those things used to put pizza into ovens.
Bless her. She was elected head of state in some funny Balkan place a day or two ago.
But yes, in theory, you can spread Ed Miliband provided he has been stewed enough first.
Too toxic. Would contaminate the ground so severely it would be declared unfit for growing anything for consumption. We’d have to declare a sort of Chernobyl exclusion zone around it.
It’s not as if the current price of fuel is anything out of the ordinary.
We are living in a war economy. That’s not a future possibility. It is our present existence.
The Middle East conflict is already creating supply disruptions in the UK.
We’re seeing oil prices rise.
We are seeing the price of jet fuel rise, and therefore of flights rise.
We are seeing shortages now becoming visible across multiple sectors of the economy, and that systemic risk is going to increase.
The government cannot leave the management of this problem to markets. That’s the point of this video.
I was under the impression that no flights would be allowed anyway under your version of ‘Net Zero’ so that problem resolves itself. As for the shortages, they are most likely best solved by allowing substitution effects and market participants to adapt (and they will, as they did during COVID and the Ukraine imbroglio)
We know this is true. Lord Keynes, the greatest economist of the 20th century, pointed this out at the beginning of World War II. Writing in the UK and suggesting how we might manage the victory over Germany, and the economic resources required to achieve that goal, his core point was that consumption must therefore be deliberately limited; otherwise, markets allocate resources by price and income, and the result is injustice, instability, and political risk.
His answer was rationing plus taxation changes to control demand, and my suggestion now is that we need to be thinking in exactly the same way. He was right. We don’t need to rewrite the lesson. We need to simply learn from it and implement the necessary changes.
There is no parallel between now and 1939 – the argument is manifestly ludicrous and designed to either:
A – foment panic amongst the people. (This may be your intent given you have publicly endorsed Hamas and other Islamic extremists with your fake complaints around Israeli genocide)
B – act as a cover for a much more insidious agenda
I think in this case both might be true
War does sometimes divert resources into military priorities. That could be the consequence of this war in due course because our governments may decide to divert resources into new defence spending. But the current shock is not because of that. Our current shock is because of physical collapse in supply chains resulting from the war that is being conducted by the USA and Israel against Iran.
We know that oil supplies are going to be down around 20% as a result, and gas supplies worldwide are going to be down around 30%. Those two facts in themselves will create constraints on productive capacity, but that is not the whole story.
Those constraints are already being worked around, and without shedloads of overly paid, restrictive bureaucrats being employed to facilitate it.
I’m limited in time today but thought I’d give a favour of the broader article. It’s a mixture of hubris and ignorance, but no doubt it will garner the usual retinue of imbeciles on Youtube,
“Lord Keynes, the greatest economist of the 20th century”
Lord Keynes was basically wrong about everything and is probably the single person most responsible for the dire state of public finances in all of the west
Commie dick Murphy loves Keynes because he was government centric. Keynes had a government prescription for the economy regardless of what state it was in.
There should not be a big problem with gas as at this time of year as the winter undersupply moves to oversupply. The industry has had oversupply since the early 2020’s due to the anti gas ideology. This lead to plans for a couple of extra LNG export terminal in Texas being abandoned. Pitty.
Will National Insurance on my investment income provide a replacement income stream if my dividends are cut as a result of Murphy’s “War”? If it does not it is not “Insurance”.
I do not believe that Beveridge intended to provide such protection for those with “unearned income”.
NB my “unearned income” is from savings from my earned income.
The logical next move for Murphy is to levy “Narional Insurance” on pensions.
You could argue (although I’ve never seen it done) that the state pension is actually larger, but before you get it, the state has deducted National Insurance !
No, he’s on to something, he really is. And while he’s on to something, I’m sure he’ll agree that the best way to ration fuel usage is to ration electricity use. I’m sure he’ll agree that we should restrict internet access and put a temporary ban on all blogging activity and utube videos.
Yep, I’m sure he’ll sign up to that. Cos he’s not a hypocrite, is he.
Yeah, and ban that major source of electricity consumption, toy train sets.
And close all coffee shops for a while. The transport , the lighting, those machines…
+99
Why does government get to do the rationing. Spud has repeatedly said that they are incompetent, venal, ignorant of tax and economics, don’t understand MMT, won’t censor the internet, won’t call out a genocide, why on earth would you entrust these bastards to get rationing right. But today he thinks they can pull it off.
I can only think it’s like the believers in an all-powerful and all-good God who can’t explain why there’s so much suffering in the world and stand idly by saying sort it out yourselves humans.
Which rather negates the argument for God being all-powerful and all-good. Spud can’t get round to seeing the State as being a bad way to run things, public goods excepted.
Nah. Commie dick Murphy is about destruction. You project your own decency on him.
But today he thinks they can pull it off.
Spud’s goal is power. He couldn’t care less if rationing is done right. Done wrong would please him.