John Healey began his first speech as Chancellor by making four big claims.
He said:
fiscal control is the first duty of any Chancellor,
fiscal credibility delivers economic stability,
fiscal credibility creates growth, and
growth delivers national security.
Those ideas sound reassuring, but what if every one of them is wrong?In this video, I explain why those four assumptions have already failed Britain before and why, if John Healey governs on the basis of them, he is likely to fail as Chancellor as well.
I argue that:
putting fiscal control ahead of outcomes means confusing accounting with economic management.
The whole point of MMT is that it uses fiscal control over inflation, not monetary policy. Yet leading MMT Guru insists fiscal control is a bad idea.
As per my comment yesterday, he doesn’t know what any of this means, does he?
I tried to make a comment on the last Spud post but the comments system ate it, said it was spam FFS. Sort it out!
What I tried to say was that we often hear from the likes of Spud etc that the State should offer everyone a job if they want one. And we all fall about and laugh. But I’m coming to the conclusion this could work as a way of cutting welfare. Because the last thing those on welfare want is a job. They want free money and housing so they can sit on their massive sofas in front of massive TV’s smoking dope and drinking Stella. The last thing they want to do is get up at 7am and make themselves presentable and go to work to be told to do stuff they don’t want to do by people they don’t like.
So if you offered the ranks of the unemployed and depressed etc a full time job that paid the same as minimum wage, and said ‘That’s it, you take this job or no free money for you’ how many takers would you get? A lot less I suggest than take the free money/sofa/Tv/dope/Stella option we allow today.
Now of course the problem is a) what to do with them, and b) making them turn up etc. (a) can be solved by just providing make work jobs – rent a cheap office block (there’s plenty around) and give everyone a pen and some paper and tell them to write out the Bible in longhand (or the Koran, this is an equal opportunities workhouse). (b) is harder, but as the work itself is irrelevant, the real thing is to make the person have to turn up to work 5 days a week like a real job. Thats the disincentive to claim that will drive the slackers away. I’d just have a 3 strikes and you’re out policy – fail to turn up to ‘work’ 3 times in say a month and you’re ‘fired’. No more money for you.
It is really my other welfare reduction plan (the Welfare Barn™ where you turn up and sit in a big warehouse doing nothing for 8 hours a day and get paid your ‘earnings’ at the end of the day) dressed up in the clothes of the Left. Job Guarantees etc. But I reckon it would reduce welfare claims by a massive amount. At the very least it would weed out all those working elsewhere, as you can’t be in two places at one time. Ditto fraudulent claims for people that don’t exist. And would be so dull that people would be forced to get other real jobs just to avoid doing it.
Mmm. Two problems:
1 It does nothing about those who have managed to make themselves medically unable to work. Yes, even huge fat fuckers on mobility scooters can do something but they’ll soon learn to make themselves too “anxious” to work.
2 My music career would never have got off the ground. On first moving to London I was signed on while getting myself started and learning my trade. Couldn’t have afforded to do it any other way. When I started working regularly for actual money I signed off. I’ve paid it all back in tax, with knobs on.
So you were participating in the black economy Norm. Yeah I know a lot musicians do it. A friend’s son did. But being a musician doesn’t make it virtuous. It’s also done by the building trades, the delivery industry, right across the arts, farming & horticulture, retailing… It’d be an endless list.
Not saying I anything whatsoever against the black economy. I’m a supporter of it. I think we should all be in the black economy. Cut the government off from revenue.
‘Course I was, BiS, and had no qualms about it. Either it was going to work, and I’d be paying it back in tax, or it wasn’t, I’d have to get a proper job, and be paying it back in tax. I had to support myself somehow whilst learning how to be worth paying in studios, and there was no other way.
So you were a benefit scrounger Normal.
1) Yes the land whales are a problem. But given we pay them PIP etc to ameliorate the problems they have created themselves, and they get free cars etc, I see no reason why the ‘disabled’ shouldn’t have to turn up like everyone else. The mental ‘elf problem is solved simply by saying you can only get out of it all if you have a serious mental health issue that requires serious medication (happy pills do not apply). Ie schizophrenics etc. Depression/anxiety/ADHD etc etc might still get you extra money but you still have to turn up to your ‘job’ No workie, no payee. And reality is getting out of the house everyday would be the best treatment for minor mental health issues anyway.
2) How many people these days do you think are using welfare as stepping stone to a productive career? A vanishingly small number I’d say. Its hardly the basis for a welfare policy.
The history of the last 40 years does not exactly show that allowing people to sign on while they ‘learn a trade’ works as a policy to reduce welfare claiming. Yes it worked for you, but for every you there’s probably 9 others who have been on welfare since the 1980s.
It used to be the way a lot of businesses got started. Work the black until the advantages of being legit & the disadvantages of staying black made it worthwhile going legit. Now there’s few disadvantages on the one side & multiple & endless disadvantages on the other. What do you expect people to do?.
Asylums; you can work, or go and live in an asylum.
Some people will who don’t really need to be in one, but it’s probably better to get them out of the way.
There can only be a few who use benefits as a springboard, or as a safety net. For most it’s a trap. Benefits paid my rent and bills for many years while I concentrated on my career as an alcoholic, coke sniffing degenerate (it was fun until it wasn’t). And as a safety net for the first 12 months when I got sober. I couldn’t wait to get off them and move on with my life but I meet people who are 10 years sober and still sitting on their arse on benefits and I wonder why they bothered, they replaced one trap with another
while I concentrated on my career as an alcoholic, coke sniffing degenerate (it was fun until it wasn’t).
I love that line Boddicker. No coke in my case, just serious alcoholism, which has been cut back in the last ten to fifteen years or so. No, I’m not sober, but I’m functional.
I totally understand your desire to get out of the welfare trap as soon as you could. Somehow I’ve stayed in productive employment all that time and have never had to do that. Don’t ask me how, my memories of my thirties are pretty sketchy.
Actually, the land whales are solvable.
“Here’s where the job is. You’re getting paid PIP to make you independent despite your massive girth. The building your job’s in is accessible even for a lardarse on a spacker chariot. You want your money, turn up and work like we’re paying you to be able to.”
Too “anxious” to turn up and work? Then you’re obviously too “anxious” to be able to collect your salary and benefits, and we’ll withold then to avoid worsening your fragile mental state until you feel better – as evidenced by your turning up to work. If you’re too “anxious” to leave the house to work you don’t need any mobility PIP since… you’re too “anxious” to leave the house.
Can I get the contract to make the posters of V I Ulyanov, aka “Lenin”, with a caption of “If you do not work, you do not eat”? to annoy the lefties?
The maxim originated with St Paul, who in, 2 Thessalonians 3:10, wrote “…if any would not work, neither should he eat” [KJV]. St Paul was admonishing Christians who ceased to work and were living off church charity because they believed the Second Coming was imminent. Lenin was threatening the bourgeoisie who did no physical labour but lived off profits, rents and investments.
The make work idea is just plain nuts. A work qualification to receive benefits is a good idea and has a lot of support. Time limits on benefits is another good idea and is practiced in some Nordic countries. Disability is a minefield, but it’s obvious that only radical surgery will work.
One good thing about the Irish system is that those on benefits (quite a lot better than ours) is one scheme whereby they have to put in two days a week doing stuff in their own towns and villages. Cutting grass, painting, sweeping up etc etc. It’s not regulated but the Irish are far more community-minded and, in rural areas the unemployed are comprised mainly of those who have lived there all their lives, so they’re well known. Consequently, if Paddy isn’t pulling his weight, he gets “noticed”.
The payoff is that if they’re on the scheme, then they’re allowed to do any other work free of tax for, I think, two days a week.
Thats never going to work in a mass urban society like the UK. The problem with actually getting productive work out of the welfare classes is that they really don’t want to work and would do anything they can to escape doing so. Plus you have to train people, H&S etc etc. Its just not viable to even give them a litter picker and get them to pick up rubbish, they’d say their back wouldn’t allow it etc etc. There isn’t pure grunt work you can give people these days, and even if there was their health would preclude them being able to do it.
I genuinely believe the way to solve the welfare issue is to make getting free money as easy as pie, but dependent on the claimant having to go in person everyday and spend a working day not at home, maybe doing SFA, but not free to do what they want. The only morally and politically defensible weapon the taxpayer has is to make welfare just like work, only less actual labour and more boredom. Make getting welfare boring and less people will claim it.
Look up the Oz program Work for the Dole Jim. It’s not much different from what you’re suggesting. Except it looks like it’s voluntary.
https://www.dewr.gov.au/work-dole
It would be even better to make them turn up for make-work and tell them to bloody stay there because the house they live in will now be free for productive poole to use.
I’m sure I’ve heard of that system before, somewhere.
Your work qualification won’t solve the problem of those who won’t work.
I always thought we do Jim’s Welfare Barn first:
That very quickly weeds out several groups, including the ones with multiple identities, the ones who are working and claiming simultaneously, and the ones who won’t leave the sofa in front of the telly.
Then after a few weeks/months it weeds out the ones who could work but would rather not; they’ll get fed up turning up to the Welfare Barn at 9am every morning and decide they may as well get a job.
Then, after a few months, once you’ve got rid of those, that’s when you start looking at work experience and qualifications for the ones who are still turning up every day and claiming. By that point you’ve got the ones who are willing to work but can’t, which is the group your work qualifications will really help.
Exactly. The Welfare Barn™ concept should perhaps more be seen as a filter. We have a massive population of people who are currently claiming benefits, and we have no idea how many are even real, who are working on the side, who could work but are just swinging the lead, and who are genuine claimants who need help. The WB would allow a large number of the scroungers and fraudsters to be stripped for the system entirely voluntarily, with no need for the State to have to get heavy handed with people. All its asking in return for the free money is you turn up and sit down for 8 hours a day. A bit like actually working. And would allow funds and assistance be directed at those who really need it. It would also act as a deterrent to anyone thinking a life of welfare would be a good idea.
Its also incredibly flexible for the claimant. Payment could be done on a daily basis, so if someone has a life crisis that means they have no employment all of a sudden and need money to live you can go from working in a factory on Friday to the WB on the Monday and have ££ in your pocket by Monday evening. No need for a massive bureaucracy processing claims etc. It would return power to the individual rather than the State. The only downside is its grindingly boring & dull. Just like work really.
(Actually thinking about it, it really should be called the Welfare Warehouse™, sounds far better!)
I put this one forward before re immigrants who are coming here to better themselves and find work. Fine I said. Rather than financing for them to live in hotels and not allowing them to work put trackers on them, give them work on the farms etc who have been screaming out for labour, pay them a wage, they pay tax, they contribute to society, start to build a meaningful, life, then when they are processed, if they are allowed to stay, they’ve already got a foot up. I was told I was a disgusting Fascist advocating forced labour.
I’d go for this with added corporal punishment for those who kick off, followed by transportation to South Georgia for recidivists. They can come back after a year and see how their attitude has changed. I’ve had enough of the fuckers, to be honest.
I’ve always liked that as an idea.
You could start it in July, at the start of the school holidays, and so use all the empty school buildings. After 6 weeks the numbers should have dropped off substantially, making it easier to find big enough places for the remaining ones.
You’d need specially designed and prepared premises I think. It needs to be secure. You can’t have
inmatessorry claimants clocking in at 9am then just disappearing off site for the day, then coming back at 5pm to clock out. That would negate all the advantages of the system. It would need special security infrastructure to allow people to be signed in and out. And would need to be big, you’re talking thousands of people in a decent sized town. Old office blocks might work, though keeping an eye on everyone would be difficult, which would allow criminal and anti-social behaviour to flourish. The ideal venue would be a massive warehouse, with just rows and rows of chairs. Easy to keep and eye on whats going on then. Police on site all day to keep order. And thats another benefit – wanted criminals would refuse to go anywhere near them for fear of being picked up.This Healey chap seems to have his head screwed on. Shame that Andeh is about to cut him off at the knees.
On Murphy’s website “A leading MMT Guru” ~ Tim Worstall
Come on, Murphy won’t claim to be “a leading” anything. He has to be “the leading…”
John Healey is the new Chancellor of the Exchequer of the UK, appointed by Andy Burnham on Monday, and as far as I can see, he is a man on a mission to fail. He made his first speech as Chancellor this week. He made it to his team in the Treasury, and very small parts of it got broadcast and commented upon in the media. But in what he had to say, he made four assumptions about his job that nobody else has questioned, but I will.
It’s remarkable how you’ve obtained this level of insight which has eluded the Entire fourth estate and the blogosphere. £2/£3 certainly isn’t adequate reward
In this video, I’m going to say he got everything wrong. He said fiscal control is the first duty of any Chancellor, and I don’t agree. And then he said fiscal credibility delivers stability, growth, and security, and again, I don’t agree. The media treated all these claims as obvious common sense, but in truth, they’re a chain of dubious economic assumptions, all of which require deep scrutiny. And that’s what I’m going to do in this video.
Set out your stall as you mean to continue
The first assumption that John Healey made was that fiscal control is his first priority. But why? That’s the question I’m going to ask. This is a man who thinks that he’s an accountant or maybe even a bookkeeper. Nothing wrong with either of those roles, but he’s just become Chancellor of the Exchequer. His role is not to be an accountant. He can rely on others to do that. His role is to be a finance director, somebody who ensures that the government can deliver. It is not to make sure that the books balance.
The removal of his ICAEW membership really did sting – especially as the denizens of this blog said its almost impossible to get kicked out.
So, why is he saying that controlling government finances is his first duty when that comes way down the list?
Possibly because his physical age is close to his mental age and he doesn’t think Bond markets can just be ignored?
Why isn’t he talking about the more important things that he should be enabling through fiscal policy?
Why isn’t he talking about full employment or rising living standards?
Why isn’t he talking about tackling climate change or rebuilding infrastructure?
Why isn’t he talking about building the homes that people in this country need?
There’s other cabinet roles that do at least some of these things – badly admittedly but his speech served a purpose
None of those came up on his list of priorities. Balancing the books did.
He’s got the ordering wrong. Governments and Chancellors of the Exchequer should be judged on the outcomes they deliver, but he isn’t. He is talking about prioritising a tool, not an outcome. And in that case, he’s confusing the map with the territory. He has got his job priority wrong, and that is seriously worrying.
As Tim makes the point you have just contradicted yourself. I know it happens almost daily – but for someone who sets so much stall by MMT – dismissing its opponents as ‘flat wrong’ then parts of it seems to evade his attention.
His second assumption was that fiscal restraint creates stability, and this is just nonsense. Stability depends upon much more than public finance, and all the crises we’ve had of late have arisen from something other than a breakdown in financial or fiscal stability.
Energy shocks did not come from excess government borrowing. Financial crises like that in 2008 did not come from government borrowing. They came from excess private borrowing.
And Brexit was not caused by government borrowing either, nor, come to that, was a pandemic.
He really is the anti- Bastiat. Second order consequences have no meaning to him. The pandemic in particular has caused a huge rise in borrowing that was completely unfunded and has sever long term consequences, not least that when China or the WEF try COVID Mark 2 people’s expectations will be that governments do more of the same. What Brexit has to do with the price of fish is irrelevant but if he really feels Government borrowing has had no impact on Eurozone stability then he hasn’t been paying attention for arguably 4 decades,
Stability requires resilience across the whole economy. So why is he claiming that fiscal restraint is what creates stability when there is quite simply no evidence that it does? He’s wrong, and that assumption is also wrong, and he shouldn’t have been talking about it.
Beyond the usual rant that stability involves unlimited public expenditure, some of which accrues to him and recognises his unique genius this is just a word salad. Pisspoor- even by the low standard he sets.
John Healey’s third assumption was that fiscal credibility creates growth. This is the old Treasury View. The Treasury View was created in the 1920s and 1930s in the UK. And it is wrong because it was based upon the gold standard. The gold standard limited the amount of money in the UK to the amount of gold that we supposedly had in the vaults of the Bank of England. But that has not been a constraint since 1931, when we left the gold standard. And most certainly since 1971, when the USA did, taking the whole of the world with it out of this old order.
That therefore is not a view that should be presented as a reason for fiscal credibility creating growth now. There is no competition between the state and private sectors for the creation of money. And how do we know that? It’s because the crowding out story has always failed.
There’s competition for spending and there’s huge – an actual mountain – of evidence that Government expenditure has been catastrophically non productive. The lanyard class, Welfare rolls, MOD procurement, Local government scandals, the NHS, DFID. The list is literally endless. A strawman on a continental scale
We know that the government creates money when it spends, and we know that the banks in this country create money when they lend. The Bank of England has said so and has done so since 2014. So, why doesn’t our new Chancellor of the Exchequer say that?
There is no competition for money. If we need money in this country for constructive purposes to buy things that this economy can deliver, we can always have the money in question. Therefore, the whole basis of this claim, that fiscal credibility, which in these terms means a shrinking government, creates the opportunity for private sector growth is just wrong.
There is significant competition for money. Which is why the Labour MPs are hoping that the chancellor can be persuaded to increase welfare expenditure or spend money on the lanyard class. They know their political survival depends on the creation of state spending addicts. For once think of politics, rather than your bizarre version of economics.
And we also know that because it hasn’t worked out in practice, and we know that in reality, that’s because private businesses have been given every opportunity, including all the funds created by quantitative easing, to invest since 2010, and they haven’t. But at the same time, what we also know is that public investment has been kept in short supply, and as a consequence of that, we’ve had a shortage of education, health, transport, and a green transition. And they all create demand, value, growth, and spending. And so, in fact, government spending actually crowds in investment by creating the customers who want to spend with the private sector, giving them the reason to invest. John Healey got his logic wrong, and that’s really worrying. If he’s going to get something as basic as this wrong, what else will he get wrong in the future?
Welfare expenditure will solve an imaginary climate crisis. Spending on lanyards will create the economic growth we need. Well it hasn’t worked since the mid 90s . What makes him think it will suddenly yield additional growth. Also – the myth of austerity is an outright lie. The government is spending £1.3 trillion per annum. Money despite your absurd assertions we don’t have.
N.B The 4th assumption denouement is so bad I won’t even bother to put it here. Those with a strong stomach can visit FTF for the full horror
So, if he’s got all these assumptions wrong, what should he be doing to be credible? Credibility is not about pleasing financial markets. That is what John Healey thinks, but he’s wrong because financial markets are dependent upon the government: the government is not dependent upon financial markets. Financial markets need government bonds to operate. Credibility is then about delivering public purpose and not keeping market operators happy.
It isn’t solely about pleasing financial markets but look at what happened to Kwarteng when he decided the UK could defy financial markets. Not long for the role…
Credibility means full employment and stable prices.
Pouring money in without the goods to buy it – which is being practised and which you advocate even more of will deliver stable prices. I think you need an MMT refresher
It means resilient public services and investment in infrastructure.
Yes because even with £1.3 trillion of expenditure it’s still not enough
It means tackling climate change and making sure that people feel safe in their homes for the long term.
Everything comes down to Climate change in the end, right?
It means creating confidence in society.
Anyone know what this means?
That is what real credibility means. That is what John Healey should have been talking about, but he didn’t. And this shows how seriously he has misunderstood his job. In fact, he defined his job in the way that George Osborne might have done in 2010, and look what happened to him, oh, and all those Chancellors that followed him.
Do you remember Philip Hammond? Do you remember Kwasi Kwarteng? Do you remember Rishi Sunak, who went on to become Prime Minister? All these people failed, as did Rachel Reeves, and John Healey is going to fail in the same way because he’s using the same ideas as they did in exactly the same fashion. And you cannot succeed where others have failed by repeating their ideas. That is the definition of madness, as Einstein once put it.
They failed , ‘candidly’ because as the great BiS puts it – it’s your world – we only live in it. Unlimited expenditure over the course of decades without the goods to purchase has created a catastrophic doom loop. As many on here make the point, consequences take time to manifest. The state we find ourselves in is directly due to the policies pursued arguably since Major. Public expenditure on frivolities like DEI and others. Excessive regulation, much of it related to Climate change. All of these you supported – so have a direct responsibility for.
So, the real problem we face is with Treasury ideology. Healey’s statements reflect orthodox Treasury thinking. These assumptions are treated as unquestionable truths, but they aren’t. They’ve been wrong in some cases for more than a century, and all of them are political choices and not economic laws.
Westminster rarely challenges these frameworks, nor does the mainstream media, but that is Britain’s real problem. We have no thinking going on about economics in this country. We are not short of money. We are short of ideas, and that’s why this channel exists. That’s why we are doing what Westminster won’t.
One thing we haven’t been short of for over a century is bad ideas. ANY Left wing ideology is a bad idea – that’s why we need the ‘bonfire of the inanities’ as quickly as possible – and to hit all these hotbeds of left wing thought with a ‘scorched earth’ attack.
That’s my opinion. You may disagree with it. If you do, there’s a poll down below. Let us have your comments. Please share this video. Please like it. Please subscribe to the channel. Ring that bell because that means you get notifications about every single video we produce. And at the same time, if you’d like to buy Tom and me coffee, that would be great because creating these videos costs money and we rely upon your support.
I’d sooner wear a ‘Vote Starmer’ badge. Or advocate a vote for ‘Crash and Burn’em’
And at the same time, if you’d like to buy Tom and me coffee, that would be great
Nice to see he’s showing his son the family business of begging for money from the internet, tomorrow’s lesson = how to scam a grant, next week = con your way into academia
The Great Mendicant of Ely
OT, but to our host:
https://pme.uchicago.edu/news-events/news/cleaner-route-purifying-rare-earth-elements
Sounds like the proverbial free lunch, yet if it works, does it change the environment (ha) around producing RE at volume outside CN?
Interesting or smoke?
This specific method, well, dunno. But for 15 years I’ve been arguing that a new method here is the trick to weaning off China. I know of a couple that will work – but whether they will be economic is the thing.
“After two cycles of purification, researchers could get a neodymium sample that was 97% pure.”
That’s a damn good result.
Because he doesn’t know what MMT means.