Ragging on Ritchie

Take what comfort you can. The worst is yet to come.

Sorry, but it’s true. The country chose Johnson. The harm will last a very long time.

Bill Kruse says:
July 16 2021 at 2:01 pm
On the subject of money printing, indeed; mention it and everyone shouts Weimar and no-one riposts with Rentenmark. Can it be coincidence we are so poorly educated?

The point of the Rentenmark being to put a hard – and believable – limit on money issuance. Which isn’t quite the MMT point you want to make now, is it?

To explain the spleen:

“Would funders be better advised to redirect resources to the investigation of domestic
tax gaps, their causes, implications and the means to both assess them and tackle their
consequences?”

Grift that is, mere grift.

Why the Tax Justice Network is getting things wrong:

Pilgrim Slight Return says:
July 14 2021 at 8:54 pm
Bill Kruse is right and if you have read ‘The Road to Mont Pelerin’ you’ll know that that’s how the Neo-libs work – they infiltrate and influence and depending on whether they are in Government or civil society either promote neo-lib ideas or strangle anything that threatens to expose its hollow cod-intellectualism.

Either I, or Eamonn Butler, has infiltrated them…..

The P³ is now pissed at the TJN. Well, fair enough. It’s just that near all of his criticisms first appeared here as failures in the P³’s own workings.

Hey, maybe he does read here after all?

Steve says:
July 12 2021 at 12:56 pm
@Jonathan

The point is that QE money injected by banks can easily be unwound as and when the time is right.

Reply
Richard Murphy says:
July 12 2021 at 2:28 pm
If it’s so easy tell me why it has never happened?

And tell me what would be the consequence of it?

How would you make it work?

OK. So, we created more money and injected it into the economy through QE. Now, the crisis being over, we’ve got inflation as a result of injecting more money into the economy via QE. In order to get rid of the inflation caused by the rise in the money supply we can – should, could – reverse the rise in the money supply.

The way to do this is to sell the gilts owned by the Bank of England back into the markets. Collect the cash and feed it back into the computers in the basement where it was originally created.

A slightly lighter version would be as the bonds mature, instead of buying more of them simply don’t. Collect the maturing amount and feed into the computers. If government still needs to roll over the borrowing then they must issue new bonds to the market.

This has been done, the Federal Reserve did it for a bit. This is also why QE was designed the way it was, so that this could be done.

But then, you know, that requires some knowledge of monetary economics.

Richard Murphy says:
July 12 2021 at 3:55 pm
I did not ask how it might be do9ne

Why should it be done?

What would be the consequence be?

Could the economy survive it?

What would the interest rate consequence be?

Come on – show you know what you are talking about

Well, the effect upon the money supply would be just the same as the P3’s preferred solution. Less money in the economy because some has been withdrawn and cancelled and so less inflation. The macroeconomic effect is the same whether it’s tax which does this or reversing QE.

Except, of course reversing QE is finer, more granular, better controlled and so on.

I think I have a duty to say that this is complete and utter nonsense. As a co-founder of the TJN, as one of the two people who led it for a decade, who co-created with John Christensen all the policies it still pursues, and who has negotiated on its behalf many times in international arenas, I am deeply embarrassed to see its current chief executive issuing a comment that is so utterly ill informed, reveals so little understanding of political economy, and is simply wrong.

There might even be a lesson here:

My simple suggestion is that if Alex Cobham stopped the abuse of the OECD and others, which has become his stock in trade, and instead invested time and effort in talking to the OECD, negotiating formally and informally, learning the constraints, understanding the mechanisms and working out the arguments that might win rather than delivering the tantrums that can never work, then he might have influenced this process rather than watched it from the sidelines.

Who runs an organisation matters. Which is why CEOs do get well paid. Why people spend rather a long time doing that succession planning. Rather than just grabbing the nearest available unemployed NGO researcher.

TJN has undertaken no innovation since then. I should, however, note that this is unsurprising. Neither Cobham, or anyone else in the tight team he keeps around him, has any actual knowledge of tax, in which none of them have ever worked. Nor do they know anything about political economy. Or tax havens as far as I can tell. Or anything else that is much relevant to tax justice come to that. Their skills are only in NGO management

Well, you know, perhaps you shouldn’t have hired him then?

That paper about copper, Glencore and Zambia being perhaps a clue that he wasn’t very good?

The unfortunate fact is that TJN, and regrettably too many others in tax justice, simply does not understand tax.

That’s rich of course…..

if the increase in capital value was considered to be income (as it is)

Why are we even distinguishing between income and capital value if they’re both the same thing?

As it us, almost every firm of income from wealth is taxed less and enjoys more reliefs and allowances than income from work does. That is, straightforwardly, wrong.

An actual economist would go read about tax theory. Even, possibly, be aware of the bloke who gained his Nobel for explaining why we want to tax capital – and the income from capital – less than labour incomes.

But then that would mean knowing something about economics of course…..

How tax can shape society if we understand modern monetary theory

OK. But what if we disagree with your views on how society should be shaped, or reshaped?

Even, should we reject MMT because it would give you that power?

Richard Murphy says:
July 9 2021 at 3:58 pm
Banks create money solely because the government licences them to do so. They cannot do so otherwise. As a result the backstop of all money creation is the government

Banks create money by creating credit. OK – but anyone who creates credit is creating money.

Might well be money of greater or lesser righteousness, use, anonymity and so on but it’s still money.

To take a stupid example. We’re in a pub. We’re drinking in a round. First bloke gets the round in. That’s the creation of credit. The other three – this is only a small sessh – now owe our first bloke a pint. And on to stage two, one bloke has paid off that debt – destroying credit in the process – but the other two now owe two pints each and so on.

We have credit creation and destruction in the course of buying rounds for people. And there’s not a single government licence in view here, is there?

And if bank credit is money – which it is in the wider sense – then so is drinking in rounds.

Money creation might well be influenced by government rules, we’ll agree to that. But it is not dependent upon a government licence.

Richard Murphy says:
July 9 2021 at 9:43 pm
Narrative construction is not accidental

If you deny that the problem of understanding is all yours

It’s a useful excuse, isn’t it?

The response to “But you’re lying through your teeth” is to say “Yes, I’m constructing a narrative!”

I mentioned yesterday that Prof Andrew Baker, a colleague at the University of Sheffield, and I had won an award for our academic journal paper on “Modern Monetary Theory and the Changing Role of Tax in Society” in the academic Social Policy Association’s 2021 Awards round.

A prize, eh?

The SPA discussion of membership:

429 people, eh? A significant portion of UK academia.

The FT has just published a comment on recent market moves saying:

An investor consensus that took months to build, namely that robust economic growth and elevated inflation would bring about substantially higher interest rates, has been coming apart, and the pain for those caught in that trade has heightened with moves in the past couple of days.

Three questions.

First, who built that consensus?

Second, why did they do that?

Third, what did they hope to gain?

Could it be that there was organised action to bring pressure to bear for lower government spending that would harm the wellbeing of ordinary people but much enhance the wellbeing of the wealthy?

Surely not?

He believes that someone purposely builds views in markets. Rather than their being the aggregation of individual views….

So, taking only those organisations I know that the P³ founded or is a part of I make it 4 out of 12, or 33%, which are the P³. Of those organisations on that masthead that is.

Which is, I think we can all agree, a very wide range of NGO and civil society thinking, don’t you?

A group of NGOs and academics has ve signed a joint declaration. for audit reform. I have done so for the Corporate Accountability Network, which I direct

I have made that choice. I have decided we are ruled by psychopaths.

I will refuse to comply with their wishes.

I will wear a mask.

I will do so out of respect for others.

I will do so to show I care.

I will do so as an act of political defiance.

Of course the actual government action is that you may or may not wear a mask as you wish. Rather than being forced, by government, to wear one.

So, Spudimir, when do we storm the Winter Palace?

We need to make the gesture. We need to show we care. We need to upset those who do not want us to wear masks. We need to build a better view of living. This small continuing protest will be a step towards doing that.

Tonight?

This is near latest data on new Covid cases, comparing the UK and Europe, and using data from the FT:

OK

The UK is aberrational: remember the EU is five times the size of the UK in population terms.

Err, yes, but you’ve noted that the chart, from the FT, is rates per 100k? Rate, not number?

We are going to abandon all public health precautions, even though the growth in case rates suggests that there may be 70,000 cases a day by July 19.

Err, no, it’s a rate per 100k, not a reading of how many thousands of cases there are. He’s reading 30 as being 30 k cases a day, double that, add a bit, 70k!

I may of course be wrong,

Ya think?

And pharmaceutical companies gain. They are already guaranteed billions and maybe trillions in profit from Covid as a result of vaccine manufacture. The US and EU have refused to open up vaccines for all, for free: market interests have already come first. And now it seems that the aim is to make sure that new variants can develop. This will perpetuate demand for vaccines as any possibility of controlling and effectively containing Covid is abandoned. This then will create a demand for updated vaccines when an elimination strategy would remove this source of profit for the pharmaceutical companies.

So, we are to suffer the raw harshness of market-based logic so that some in that market, with rights reinforced by the state, can profit unduly.

Err, yes. Nurse, tinfoil shortage for hat-making in Ely!

I just have to look at the data and as an economist I think three things.

First, and glaringly obviously, this pandemic is not over yet. The risks of further waves because our vaccination programme is so poor is high. I say that because too few are vaccinated, children are not, and as yet none of the first batches of elderly people are scheduled for top-ups, and their immune systems may now be very vulnerable again, most especially if they had Pfizer. If anything, risks are now rising from the failure of the vaccination programme

Isn’t it still true that the UK has the best, finest, most advanced, large country vaccination programme anywhere? Calling Mr. Sowell then: “Compared to what?”

Pilgrim Slight Return says:
July 1 2021 at 8:59 am
Retrofitting on diesel and petrol cars because emissions is much needed in my view – it really needs to happen. There is a market there surely that some bright spark could satisfy and it should be cheaper than scrapping loads of cars and would allow a less steep decline in usage.

Sigh.

The Man decides to tell us all that covid is very much worse than ‘flu. In which he might even be right. But then:

So, maybe 600 ‘flu deaths a year. Right now we have seen more than 150,000 Covid 19 deaths. Let’s not pretend that there is any comparison or that because we can live with ‘flu deaths we can live with Covid deaths.

He uses as his data course this report. No, really, this is his source:

We often count “influenza and pneumonia” together because many cases of pneumonia are in fact caused by influenza.

So, looking at influenza only is not correct. We must look at both pne and ‘flu. It’s right there in the source.

Just for the avoidance of doubt yes, these numbers are “of” not “with”.

OK, yes, covid deaths are higher. Not exactly an exceptional finding in the middle of a pandemic:

Between 1 January and 31 August 2020, 52,327 deaths in England and Wales involved COVID-19. Out of these, 48,168 deaths were due to COVID-19: that is, COVID-19 was the underlying cause. This was 12.4% of all deaths for the period (389,835 deaths). In the same period 69,781 deaths involved pneumonia and 506 deaths involved influenza: out of these, 13,619 and 394 deaths were due to pneumonia and influenza respectively (3.5% and 0.1% of all deaths).

But note one more thing. He’s using the figures only from that middle of the pandemic. And – in what should not be a surprise to an economist – there’s substitution going on. Covid and pneumonia/influenza kill largely the same group of people. Those with comorbities and those with that comorbidity called age. Not exclusively, of course not, but the overlap is considerable.

As ONS, in the same report, points out:

It’s not entirely true that covid only kills those diabetic, fat, smokers over 80 waiting around for whichever ‘flu season will take them off but it is at least in part true.

The actual effect of covid is therefore, at the population level, the number killed by covid minus those not killed by pneumonia and influenza in the same time period. Or at least that’s a far better estimate than the absence of influenza deaths in the middle of this pandemic.

And, note, all of this is for the period when there were no vaccines. So, once we vaccinate, as we largely have, then the numbers are going to be…….

I noted this in the Guardian this morning:

Figures from the Office for National Statistics show debit and credit card transactions fell by 5% over the week to 17 June, while retail footfall declined for the third week in a row at the tail end of a springtime boom after Covid-19 restrictions were relaxed.

Three thoughts.

First, is the post Covid boom already over? It might be. I have long suggested that after a treat or two people would return to caution. Historically that is the pattern and I see no reason why it should be different this time.

A few paragraphs later in The Guardian article:

On the dashboard in the past month, British retail sales have dipped as UK consumers swapped supermarket and online shopping for trips to pubs and restaurants after the relaxation of pandemic controls earlier this spring.

Substitution in spending is not the same as a reduction in spending.

On the credit and debit card spending:

These data series are experimental faster indicators for estimating UK spending on credit and debit cards. They track the daily CHAPS payments made by credit and debit card payment processors to around 100 major UK retail corporates. These payments are the proceeds of recent credit and debit card transactions made by customers at their stores, both via physical and via online platforms.

Retail corporates? And then:

OpenTable is a provider of data for online restaurant reservations, with daily data for the UK, London and Manchester being publicly available in its The state of the industry dashboard. These data show the impact of recent events and restrictions on the hospitality industry using a sample of restaurants on the OpenTable network across all channels, that is, online reservations, phone reservations, and walk-ins.

Figure 3: In the week to Monday 21 June 2021, the seven-day average estimate of UK seated diners was at 128% of its level in the equivalent week of 2019

Oh. Substitution then…..