The reality is that the fundamental pension contract, which is the collective acceptance of responsibility to provide for those in old age, is not reflected in the savings-based model of pension provision.
Petitio principii. He reaches his conclusion by the assumption he makes rather than proves.
If you assume that the base idea is the collective provision then anything which is not collective provision fails, doesn’t it?
Sigh.
The penny is dropping. Reeves’ denial of reality is no longer sustainable. As I have been saying for weeks, Trump and Netanyahu’s war is likely to deliver an outcome requiring a response at least as great as that required after WWII.
We face shortages of gas, oil, other raw materials, and components for many manufacturing processes. The impact will already last for years, given that no immediate end to this conflict is now in sight.
Hardship, poverty, potential famine, business and personal bankruptcy, recession, and a resulting collapse in government revenues, and more, are very likely to result.
We need rationing, much more progressive taxation to balance enhanced social security payments, and major institutional reform to create resilience as a core element of defence policy to achieve the outcomes we need.
We might have a recession. So, increase taxes.
Spud now bemoans the cost of regulation:
HMRC’s claimed logic is that, by imposing this obligation on businesses, with serious penalties soon to be attached for failure to comply, businesses will secure a supposed benefit as a result of them knowing their own real-time accounting performance. This claim by HMRC embraces, with an arrogance that borders on the profoundly presumptuous, the claim that these businesses would not otherwise know how they were doing financially, when, as I well know from my own experience of working with them, a simple range of heuristics is normally enough for most small businesses to be able to completely appreciate the performamce of their businesses.
And let’s not pretend the requirement isn’t extremely onerous.
So why have I put up a chart of the oil price? That is because it is utterly baffling that those supposedly tasked with making rational decisions in speculative markets can be so utterly stupid that they actually appear to believe what Donald Trump says, as if it might either represent the truth or have any bearing on what might actually happen when there is not the slightest evidence that either might be the case.
If markets are meant to appraise available evidence, the fall in the oil price last week records their incompetence. They have one job to do, and they do it very badly. The fact is that they trade sentiment and not evidence. What is clear is that these markets, in which the world’s leading banks are major players, are a major disruptive influence. Far from revealing prices or providing mechanisms for trade, they appear to exist slowly for the purpose of permitting high-stakes gambling at enormous cost to society at large. The volume of trades to actual goods delivered is the clearest indication of that.
What can be done about this? My suggestion is that we need a variation on a financial transaction tax, called Spahn taxation, to deal with this situation. This does, first of all, require that a financial transaction tax at a low rate be charged as a matter of course on all trades in markets such as these, and that an additional tax rate be charged as market volatility, indicated by significant price variations, increases. That would be designed to tax speculation heavily and would provide an incentive for everyone to take a step back, examine the evidence, stop short-term speculative thinking, appreciate what is really going on, and trade only when necessary.
Markets disagree with Spud. But Spud is right, obviously. Therefore markets need to be screwed, by Spud.
The core purpose of government is to provide freedom from fear. That means freedom from physical threat, Freedom from want, freedom from discrimination and freedom from the deliberate chaos that destroys the social fabric on which democracy depends.
Couple of hundred million dead people would like to point out that freedom from government is also of value….
The vast majority of this sum has been paid, as will be noted, since the Bank of England decided, wholly unnecessarily, to increase the Bank of England base rate from 2022 onwards, with the supposed goal of tackling inflation in the UK economy, on which those interest rate increases did not, and could never have had, an impact, because the inflation in question was imported from international commodity markets, where prices were inflated as a consequence of the actions of financial speculators, some of them undoubtedly based in UK commercial banks, who artificially inflated commodity prices after the onset of war in Ukraine.
Must be the shortage of tin foil bringing that level of economic understanding on, no?
Lord George Robertson – a former Labour defence secretary, and former Secretary General of NATO – has made a claim about the UK’s defence capability that is not merely wrong; it is dangerously wrong.
His argument is that the Iran War now justifies higher defence spending, and that social security is the obstacle standing in the way of a proper defence strategy for Britain. This video explains why that argument is the precise inversion of the truth.
Defence is not about weapons, budgets, or protecting elite interests overseas. Defence is about protecting people. It is about ensuring people enjoy freedom from fear, including from physical threat, from poverty, from want, and from the social instability that erodes the fabric of a nation from within. By that definition, which is the only definition that actually serves the majority of British citizens, social security is not the enemy of defence: it is the foundation of it.Consider what a serious defence requires. You need a fit population. You need people who are healthy, well-nourished, mentally resilient, educated, and able to serve.
You do not build that population by cutting the systems that feed children, heat homes, and provide security in times of illness and unemployment. You destroy it.
Cut social security, and you cut the recruitment pipeline for the armed forces themselves. You weaken national resilience precisely when you claim to be strengthening it.
So when the Mad Mullahs launch atomic bomb tipped rockets at London our defence is “Hey, look at our Gini!”.
when we were both members of the Progressive Economic Forum, which eventually proved itself to be anything but progressive on the issue of modern monetary theory, as a result of which I was expelled from membership.
My assumption is that he couldn’t get his resignation in in time, unlike that accounting body.
Unsurprisingly, the reaction of markets to the UK situation has been adverse. Alongside Italy, it has seen the biggest increase in its potential government borrowing costs as a consequence of this war. They have increased by 0.5% as a result. Apart from Italy, France is the only other large country to see an increase of broadly similar scale, with its market interest rate increasing by 0.45%.
Interest rates going up by more than other places. OK.
Firstly, the sheer size of the London financial market-based economy is one reason why we will always have excessive market speculation against perceived government courses of action in the UK. When you provide a few people in the City of London with a toxic weapon, in the form of control over other people’s money, with the opportunity to speculate against the best interests of their government, whose thinking they believe, with good reason, will be excessively rigid when it comes to issues of economic management, you provide those few people with the opportunity to undertake speculative trades from which it is almost certain they can profit, at cost to both the country where they are resident, the government whose activities they are undermining, and the people whose funds they are using to undertake this activity.
It’s a conspiracy! The Joooos!
Actually, it’s that the UK has a vast budget deficit and an equally vast national debt. The former of which leads to inflation – as even MMT says. So, higher inflation, higher nominal interest rates. No conspiracy required.
Seventhly, there’s also a chance that the obvious corruption of the Orbán years might be addressed. So blatant has been the devotion of funds to his own family that it must be hoped that Orbán himself will be prosecuted. That would be an exceedingly useful precedent, not least in the message it might send to the White House.
The reason you don’t prosecute those leaving power is that if you do then those fearful of being prosecuted won’t leave power…..
No doubt terribly unfair and all that but realpolitik is a thing.
The extension of this idea into supermarkets is, however, what truly worries me. As Steve Keen and I discussed today in our podcast/video, the risk of potential famine, including in the UK, is high right now.
Famine? Jeebus.
It is easy to imagine where this might be most easily achieved. I suspect, in view of the current uncertainties over petrol and diesel supply, the likelihood that these will be subjected to dynamic pricing quite soon is very high indeed. We are already used to the price of these products changing regularly,
And, so, pricing which changes is a disaster because we’ve already a system in which prices change?
The reality is that we are very likely to need food rationing and price controls this year to ensure the supply of essential items to everyone in the UK.
Wholly flipped.
even in a country such as the UK, where there is a high likelihood of there being sufficient food to go around if properly allocated,
We can imagine who will be doing the allocation here, can’t we? As with the Soviets – the party vanguard will require higher rations given the importance of their work.
a reliance upon rationing by price would represent reckless irresponsibility on our government’s part.
But price is the efficient method of rationing. Both by people reducing demand – no, it is not possible to state that every calorie currently eaten by a Brit is necessary – and also by increasing supply. Potatoes rise in price, more people plant potatoes in the back flower verge. And yes, everything happens at the margin…..
Starbucks’s UK retail arm received a £13.7m corporation tax credit last year, even as its sales increased 6% and it added more than 90 stores.
The credit, which can be used to offset future tax bills, comes after losses widened to £41.3m in the 12 months to the end of September – almost matching the £40m it paid in royalty and licence fees to its parent company.
Starbucks said price increases, new loyalty schemes and the introduction of “freshly baked in-store food” had helped to increase sales to £556.3m, accounts filed at Companies House show.
Paul Monaghan, the chief executive of the Fair Tax Foundation campaign group, said: “This all feels so very Groundhog Day. As per a decade ago, Starbucks UK reports annual growth in income and store numbers, whilst at the same time declaring a loss due to the payment of hefty royalty fees to other Starbucks subsidiaries. The end result, no corporation tax is paid.”
As when Murph was complaining about Starbucks all those years ago. The issue is indeed transfer pricing. Starbucks does franchise out the name in some territories. In order not to move profit around Starbucks must therefore charge its own stores that same amount. That’s what the transfer pricing rules demand – subsidiaries, related companies, are treated as if they are third party and are charged the same prices as third parties.
That is, this is all known as “obeying the law”. Obeying not just the jot and tittle of it but the intention, meaning and spirit of it.
Yes, HMRC did have an investigation into the prices Starbucks was charging. They said they were fine.
The Fair Tax Foundation is one of those little groupuscules Spud founded. Wouldn’t it be nice if a groupuscule Spud founded actually grasped tax law?
Steve’s data shows that the correlation between energy availability and consumption as expressed by GDP, or rather gross world product, which he calls GWP, is very clear and direct. If energy availability is reduced, so too will GWP fall, and the rather ridiculous neoliberal belief that there are alternative supplies to turn on to replace the lost capacity is based on the idea of efficient markets, which can always supposedly react in a moment to price signals, with time to create capacity never being a constraint. That assumption is going to be cruelly exposed at this moment as the nonsense it really is.
The efficient markets hypothesis does not say that markets are efficient. Not in the sense that Murph is using here that is. We all agree that there are some things markets do not do efficiently, just as there are things they do do so.
The EMH says that markets are efficient at processing the information about what prices should be in a market.
Thus, as so often, Spud is chasing a strawman.
No, me neither. Just can’t be arsed.
I assume that, somwhere, there’s a claim that while Mazzo is thinking along the right lines it’s actually Spud who has the right answer and therefore…….but can’t be bothered to check that.
The threat was made by a US president and appears to have been real. It seems likely that Iran took it seriously. That such a thing could happen, and that the words that he used, suggesting that he would annihilate a civilisation, means that Trump should now be treated as the pariah that he is by all other states around the world. He threatened one of the most serious crimes known to humanity with the apparent intention of undertaking it. That was, in the terms of politics and international relations, unforgivable.
So all those insisting upon the eradication of Israel, we get to hang them then, right?
But Spud, consistency…
Hence, the Herman Daly Question: If the economy is a subsystem of the biosphere, and the biosphere has limits, why do we organise economic policy around the assumption that growth can continue indefinitely?
Well, I actually had this discussion with Daly himself. In which I pointed out that GDP is value added, growth in GDP is therefore an increase in value added and that – therefore – the ecology is not the binding limit upon economic growth. Knowledge of how to add value is. His response was splutter.
I did not come up with that point, obviously, it’s just the standard economic point to make about it.
Sure, sure, the number of copper atoms on the planet is a – large – fixed number so there’re only so many copper atoms we can use while remaining on this planet. So, sure, the environment produces a limit for us. As does the supply of fresh water, the temperature, the existence of bees and so on and on. They are indeed limits to growth along certain axes.
But they are not the binding limit. As we can actually derive from Daly himself. Imagine we achieve that steady state economy – which he defines as one in which we do abstract new resources but only as a sustainable rate. OK, does growth therefore cease? Nope, it continues to grow at the speed at which we gain new knowledge about how to add further value to whatever limitation of resources we face.
Economic growth is dependent upon knowledge, not resource availability. Therefore resources availability is not the binding constraint upon economic growth.
Daly distinguished between growth and development. He argued that growth means an increase in the physical scale of the economy, involving more extraction, production, and consumption. Development, however, means improvement in quality, requiring better technology, better organisation, and greater wellbeing without necessarily expanding material throughput.
All Daly has done is insist upon the same thing as standard economics. Which I pointed out to him and the response was splutter.
Imagine my surprise at Spud not getting this.
The Financial Times has reported that EU officials are urging governments to prevent member states from offering support to households and businesses in response to the latest energy shock stemming from the US/ Israeli assault on Iran. The concern, it is said, is that excessive intervention might trigger a “fiscal crisis”.
That claim needs to be challenged. It is wrong in theory, dangerous in practice, and revealing in intent.
First, the idea that governments face a binding fiscal constraint in a crisis is simply untrue. Modern Monetary Theory (MMT) explains what should by now be obvious: governments that issue their own currency cannot run out of money. Their real constraint is inflation, not an arbitrary financial limit. The EU’s persistent claim that there is “limited fiscal room for manoeuvre” is not an economic fact. It is a political choice.
This is only true of governments which issue their own fiat currency. The EU states do not, being in the euro. Thus…..
Fourth, neoliberalism denied complexity. It insisted that markets could solve problems that are, in reality, social, political and ecological.
Markets do solve some problems that are social, political and or ecological in origin. They also don;t solve some other problems from those sources and some others from opther sources. The trick is in knowing which is which, a problem markets can deal with or one they cannot.
Take, say, the ecological problem of climate change. Stick up the tax on petrol so people use less of it. A market solution – even if only in part – to an ecological problem.
It’s not whether, it’s when.
If neoliberalism has contributed to the failure of the Enlightenment, then the task is not to abandon the Enlightenment. It is to recover it and develop it.
That means, first, restoring the role of evidence in public decision-making.
Doesn’t that just screw Spud’s suggestions then?
This Easter, the message of hope, renewal, and resurrection stands in direct contradiction to the world being built around us.
Sigh.
The ideological roots of this agenda lie in neoliberal economics, shaped by Friedrich Hayek and Milton Friedman, and actively promoted today by organisations such as the Atlas Network and the Tufton Street network of think tanks. Their programme deliberately weakens social cohesion, normalises inequality and insecurity, and strips public services to the bone. The Tory government between 2010 and 2024 put this into practice as a matter of deliberate policy and Labour has done precious little to reverse it.
UK govt currently spends 45% of everything. Stripped to the bone. All on instructions from St Milt and Uncle Freddy.
Sigh.
And of course the theology is wrong too:
Easter’s core command is not complicated: love your neighbour as yourself.
No, it’s about Jesus, sacrifice, not this world but the next and so on.
….while at the same time one third of the MPs in the cabinet and one quarter of MP’s altogether receive funding from organisations sympathetic to Israel.
There is a massive problem with the purchase of influence within the UK government, but it does not come from Iran. The problem is with Israel, which can now be quite reasonably described as the biggest rogue state on earth, and is undoubtedly a greater threat to UK security given the current consequences of its actions in the Middle East.
Sigh.