In this video, I challenge one of the most deeply embedded assumptions in modern economics: the idea that there is a shortage of money.
No one in economics thinks there’s a shortage of money. Everyone agrees that it’s entirely possible to print more. Well, Duh!
There are quite a lot of people who insist that there can be a shortage of *useful* money, that’s true. Which is why we’ve all those chapters on monetisation of fiscal policy in the textbooks and so on. Effectively, descriptions of why Modern Monetary Theory doesn’t work from before Modern Monetary Theory was invented.
And thus is the strawman exploded.
Johanna und Johan lernen etwas über MMT.
Money isn’t the problem. How it’s spent is another matter entirely.
What there is to spend it on is more the point. The UK is terribly unproductive so getting anything done costs more and more £££ inputs.
It’s late stage gravity though.
…Neo-gravity.
Candidly, real gravity has not been tried, whatever the sophists may say.
The so-called ‘gravity’ we are persuaded that we experience is designed by the haves to prevent the have-nots achieving independent – and, crucially, carbon-neutral – air travel.
Gravity is a CIA plot to keep us all here on Earth.
You’re talking about one of the leading minds of our age Tim – as Robert De Niro said in ‘The Fan’
‘You should show me some respect’
Who else has this level of understanding of AI?
‘The issue is not about the technology that is on offer, or that AI is at fault when they decide not to invest. The problem is that current valuations imply extraordinary future profits from these investments, and those profits are incredibly unlikely when most of what passes for innovation these days is simply marginal improvement in existing assets or a form of rent extraction, which is what AI is going to be. It’s taken other people’s property, it’s put it into a database, and now it is charging us for the right to access the information they put into a database, but which frankly they did not create. That is a perfect model of rent extraction.’
Whom else has such a vast understanding of the issues facing the country?
‘The investment needs of our society are obvious and unmet. Across the UK, there is a need for investment in housing and energy systems, flood defences, transport infrastructure, schools, and hospitals. All of these are underfunded, as is environmental renewal, which requires sustained long-term capital commitment. The social return on these investments would be enormous, and the economic returns could be substantial too. But the money to fund all of this does not exist in the way that we need it because it’s sitting in bank accounts instead, and why is that? That is because governments are choosing not to act.
The constraint is not a lack of money. Currency-issuing governments can always create money by their spending. They can always find money to fund their investment plans, but even within fiscal rules, the real constraint is political and not financial.’
And we come to the crux of the matter – as always we have the solution.
Pension funds, ISAs, and other long-term savings vehicles could be directed differently. All we have to do is change the rules with regard to savings and pensions to encourage investment in real projects, rather than feeding speculative financial activity, which is what most savings do now, even though they have tax subsidy through tax relief, and we could rebuild our communities. We just need to make the proper social use of funds saved a condition of the tax relief that so many people enjoy as a consequence of the savings that they place with financial institutions.
The funds exist. The needs exist. What is missing is the political will to change the rules of saving. I set out detailed proposals for the changes to these rules in the Taxing Wealth Report. You can download it. There’s a link down below. Read chapters 25 and 26. The result could be substantial new flows of funds into the places that markets are currently neglecting.
The solution remains the same.
Who could demur from such analysis – surely only a ‘neoliberal’, ‘fascist’ or someone on the ‘Far Right’?
Well, if you want me to invest in housing and energy systems, flood defences, transport infrastructure, schools, and hospitals make it worth my while to invest in them.
Actually, I have spent my adult life investing in housing *BECAUSE* it was worth my while investing in housing, but because my knees are going and I’m no longer in my 20s I need to be dis-investing in housing and let somebody else take over So, make it worth my while.
“Across the UK, there is a need for investment in housing and energy systems, flood defences, transport infrastructure, schools, and hospitals. All of these are underfunded, as is environmental renewal, which requires sustained long-term capital commitment. The social return on these investments would be enormous, and the economic returns could be substantial too. But the money to fund all of this does not exist in the way that we need it because it’s sitting in bank accounts instead, and why is that? That is because governments are choosing not to act.”
Two of these are needed, maybe.
Housing? Nope, just let the private sector build and they will
Energy? Some nukes, sure
Flood defences? Dunno.
Transport? A few roads here and there, but no. We have all the rail lines that we need and in fact, far more than we need. I’ve even changed my mind on airport links. We have a few links into London, Birmingham and Manchester already and for everywhere else, coach travel works fine. We don’t need a metro link from Bristol Airport to Bath or Bristol because that’s a seasonal airport and the best way to deal with variable demands is with coaches that you can add for busy times. Some new runways might be a good idea.
Schools? Schools should simply be built at the point of demand. We have the sprogging data for Huddersfield or Manchester 4 years before they go to school. If you aren’t going to have enough places, build some more rooms on an existing school or build a new school. You’ve got 4 years. That’s very possible. And build them to a pattern so it’s simple, fast and well-priced.
Hospitals? Fuck no. The problem with heath is human capacity. A lot of health doesn’t need a hospital. It just needs a room. You need hospitals for surgery and for post-op recovery. That’s a whole lot of complicated, specialist buildings, For everything else, a room will do. My Covid jabs were at the railway museum in Swindon. I had a lump checked (benign) at a village hall. There’s plenty of buildings that can be used for health that are empty a lot of the time. There are lots of office buildings that can be used on a more permanent basis. That’s what private medicine does.
Environmental? Just stick a pigou tax on and let the market figure out what to build.
I think that generally, the era of UK infrastructure is over. We’ve got more railways than we need, we’ve got nearly all the roads we need, all the telephones and clean water pipes and gas and bridges.
“I think that generally, the era of UK infrastructure is over. “
Forget building more stuff, we need to maintain the stuff we already have. Shiny new railways aren’t much good when the roads look like African ones.