Few topics in contemporary British economic debate attract more sustained criticism from Richard Murphy than fiscal rules. For the better part of three decades, successive Chancellors of the Exchequer have reached for these self-imposed constraints as proof of their financial seriousness. Richard Murphy’s view is simple and consistent: fiscal rules are not laws of economics. They are political inventions, dressed up as economic necessities, and they have caused serious and ongoing harm to public services, living standards, and democratic accountability.
Hmmm
A defensible fiscal framework would also accept the monetary reality: that a sovereign government issuing its own currency is not revenue-constrained in the way a household or local authority is. It is resource-constrained. The question is not whether the government can afford to spend, but whether the real economy has the capacity to absorb that spending without generating inflation. That is the discipline that matters. Everything else is theatre.
That is, of course, a fiscal rule. When inflation appears either stop the spending or increase taxes. A fiscal rule.
“a sovereign government issuing its own currency is not revenue-constrained in the way a household or local authority is.”
It can keep deferring going bust until nobody will lend to it any more, or will lend only at an eye-watering rate. Which isn’t all that different from a household, is it?
Maybe The Murph thinks governments have a secret supplier of payday loans.
A sovereign government can get away with stealing money until some stronger power wages war on it.
They usually steal money from the Jews.
Historically it was reneging on loans from bankers like the Medici and the Fuggers as well. Why those guys though that medieval European kings were good risks for war loans is rather surprising.
I’m naturally thinking of my favourite African country, Zimbabwe!!
Boganboy
I’m fairly certain he said that Zimbabwe didn’t discredit MMT – and lo and behold – here it is!
‘Let’s look at Zimbabwe. What happened in Zimbabwe? Go back to 1980 and Zimbabwe under Robert Mugabe declared UDI, a unilateral declaration of independence, which basically made it an independent country within Africa because it turned its back on the UK, which had been its governing power, and set itself up in contravention of what was then thought to be international law. Whether that was right or wrong doesn’t matter. Sanctions were imposed upon the left-wing government that was put into place in Zimbabwe, and the world turned its back on the place.
Zimbabwe 101 – And totally wrong. The Sanctions regime was relaxed fairly soon after. Sanctions were levied against Zanu PF individuals rather than the country. Links between the UK continued until 1990s.
At the same time, and probably unwisely, Robert Mugabe decided to throw the landowners off the land in his country and put in their place the people who previously worked for them as farm workers.
Unfortunately, the collapse of agriculture followed because there was simply a lack of organisation and managerial ability to make sure the production remained in place.
So we allow our own state which has proven marginally less criminally incompetent untrammeled power and control? Jesus Christ – I hadn’t realized this was such weak fare from him.
What was the consequence? Zimbabwe couldn’t trade internationally. Its currency was not internationally acceptable. There were trade sanctions against it. It couldn’t buy the resources it needed to make good the domestic shortfall, and its currency collapsed as a result.
Is anything like that happening in any country in Europe, or the USA, or any other developed place in the world right now? No. Therefore, that situation isn’t replicated.
It’s very much close to happening here snd if Polanski gets in would occur in short order. The road to Harare is very very short indeed. Between Starmer, presiding over the worst government in human history and Polanski who manages to be even worse we are teetering on the edge of complete collapse.
UDI was declared by Ian Smith. Sanctions were imposed by Harold Wilson, a WW2 civil servant, who described the volunteer RAF pilot as one of a group of “small, frightened men”
In retrospect the unseating of Ian Smith was one of the worst things to happen to sub Saharan Africa.
Right up there with the unexplained deaths of all the other leaders of KANU/KAPU apart from Mugabe
John
They were – don’t demur from your analysis and trust me while I have Starmer as the number one most incompetent government in history I do feel Wilson is right up there. It’s purely the personal impact of Starmer who has basically said that my family and I really need to fuck off and die which puts him in the top spot. The direct experience of that pure evil raised him, but I know others like you who experienced Wilson and many still have the psychological scars to this day.
My point here is that Murphy’s history is out by 16 years – of course with someone this eminent he will point to questioning who needs the merest details? Neoliberals, one and all
Under Wilson I seriously expected to die before I reached 40 (and I am part of a seriously fit and healthy family) so I set up insurance policies to benefit my younger sister in case her husband, who has suffered from Type 1 (hereditary) diabetes since he was 22, died. [He is still alive and active thanks to a level of self-discipline that I find hard to contemplate and feel sure that I should not be able to maintain].
You must be a very strange person, John. Wislon was the sixties* before disillusion set in. The zeitgeist in the sixties was, barring nuclear armageddon, we were all going to live for ever. Since Harold had FA influence on atoms & they weren’t an insurable risk, why?
My memory is that the public was divided on Wilson. Some thought he was a spy for the KGB, some for the CIA, some for Mossad, and some for the South Africans. But the bulk of the public assumed he spied for all four.
Wislon was, of course, Oxford. Nothing more needs to be said,does it?
You have a chip on your shoulder about Oxbridge and also IQ tests. Displaying either chip says more about your insecurities than about Oxbridge, IQ tests or your evident intelligence.
As I’ve said repeatedly, Theo, all but 3 of UK Prime Ministers since Churchill were Oxford graduates. And they have presided over the decline of what was a great world power to what you see today.
As for IQ scores, I’ve little doubt every current sitting MP has an above average scored IQ. Including David Lammy & Diane Abbott..I rest my case.
We should be thankful that, for today at least, he accepts that it’s a resource constraint issue and not just a matter of printing more and more money with nothing more to buy.
Go back to 1980 and Zimbabwe under Robert Mugabe declared UDI, a unilateral declaration of independence
Nope! Ian Smith declared UDI in 1965. I was in Salisbury just before (with a broken aeroplane) and left 2 weeks before the event with a bomb bay full of High Commission paperwork.
I taught in the Zimbabwe School of Signals straight after independence as part of a team helping to integrate the various factions.
It was obvious then that the only independence Mugabe would declare would be to be independent of democratic controls.
It was a shame because it’s a beautiful country with lots of potential. Under different circumstances I’d have been happy to leave the Army and settle there – there being Bulawayo.
That is the discipline that matters.
Discipline? From government?
Everything else is theatre.
This movie has been showing for over a hundred years.
I suppose it’s easier to get confused between money and value if you’ve never produced any value.
Austerity never – that’s a spud fiscal rule. For him it means that deficits never reduce. Even if government spends only on the right things, prisons, public infrastructure, defence, it must always keep finding ways to increase spending relative to last year.
OT…I see that plonker Rupert Lowe is standing a Restore candidate – a local woman – in the Makerfield by-election. Does Lowe want Burnham to win?
Yeah, I’d say the optimum for either party is that Two Tier continues in office. Any change in Labour leadership will produce an “under new management” boost but it’s likely to be stronger with the Underpants Queen which could continue to ’29 whereas Starmer has more chance with the other two tossers. Since Restore won’t stand an earthly, why piss on the bed at this early stage?
By the way:
A Blairite, a Brownite and a Corbynista go into a pub. The barman says, Hi Andy!
The perfect outcome imv would be something like Labour 30%, reform 29%, restore 28%. Burnham gets to be an MP but Labours spend 3 years schitting themselves because the opposition that controversially believes the british government should be run for britishers benefit can wipe them out with a tiny amount of cooperation. Imv, of course.
Anyone else think it’s f-ing deranged for Spud to get AI to write about his thoughts in the third person? Bearing in mind it’s coached AI anyway, so you know it’s just what Spud wants to hear about himself?
Is it preferable to the imaginary conversations he cites with people or his ‘economics of the corner shop’?
For me he jumped the shark back in 2010