Ragging on Ritchie

By increasing its borrowing and spending, the state absorbs excess private saving and recycles them back into the economy through wages, public services, income support, and investment. This prevents a collapse in demand and provides confidence that incomes and institutions will be maintained.

The Covid crisis illustrates this clearly. As private spending fell and precautionary savings surged, the UK government significantly expanded its deficit. In doing so, it did not “run out of money” or displace private activity. It provided the safe asset the private sector demanded and used the funds to sustain the economy, with the institutional support of the Bank of England.

He’s claiming that the Bank of England having to buy newly issued gilts – because no other fucker would buy them – is proof that lots of people wanted to buy newly issued gilts.

Asset price inflation alone does not constitute income

Spud’s now insisting that capital gains tax must have an indexation allowance.

Odd he left that out of his taxing everybody into penury report, eh?

Finally, and seventh, it looks as if Scotland might elect a strongly pro-Independence parliament, again. For how long this can be ignored by Westminster is now a very real question, and in the event that Reform did form a government in Westminster, the conflict between that government and the government in Scotland might become so severe that the move towards independence might be reinforced, albeit in ways that are unpredictable.

Who doesn’t want the Scots to fuck off after all?

In this final talk in my Christmas series on light, I draw together the ideas explored over the past few days to argue that light is a public good — one that modern economics routinely ignores.

Is light rivalrous? Sure, that which falls on me does not fall on you. Is light excludable? Sure, we can indeed lock someone away from the light.

Therefore, as light is not non-rivalrous and non-excludable light is not a public good.

This may well be a recurring theme for 2026.

Probably so, yes. For I doubt Spud is about to crack open an economics textbook and inform himself in any useful manner.

In this fifth video in my Christmas series on light, I explore the relationship between light, healing and health — and why modern work patterns deny people access to the very conditions they need to recover and thrive.

Light regulates sleep, hormones, mood and immunity. Yet long hours, commuting, shift work and poor housing mean many people barely see daylight at all. Artificial light cannot replace what we lose.

Hmm.

We suffer from a lack of sunlight if that is something that isn’t available to us, and shift work also creates this suffering, and commuting steals our time outdoors. The way that we work, the way that neoliberalism demands that we work, has consequences. In fact, you can say that capitalism steals light from us. Time is extracted, rest is minimised, daylight becomes scarce to us.

Capitalism and neoliberalism have shortened working hours. Dramatically over the centuries and still not, yes, in recent decades.

Productivity is prioritised whilst health is secondary

Productivity being defined – defined, note – as producing more in the same hours, or producing the same in fewer hours. And this is also why working hours have been falling – it’s normal for humans to take some of the benefit of rising productivity in shorter working hours.

Which leaves us gawping at where Spud gets to. Assume he’s right, we all need more sunshine and so on, fewer working hours would get us to this. Increased productivity would do this for us, wholly naturally but increased productivity is the very thing Spud rails against.

Sigh.

First, we must abandon fiscal rules

Well, OK.

In practice, tax yields may need to follow government spending quite closely (but not perfectly) to manage inflation

That is a fiscal rule you blithering idiot.

Longer expanation here.

Growth economics also ignores physics. It treats the planet as just another variable. Energy is simply one of those things that is provided to us free of charge, according to neoclassical economics. But it isn’t like that. Energy is not substitutable.  You cannot deregulate sunlight. You cannot financialise thermodynamics. Limits   exist, whether markets like them or not. And infinite growth in this world is a fantasy. You cannot, literally, grow forever on a finite planet. That’s not pessimism, it is arithmetic. Ignoring this reality has created crisis and denial.

We anywhere close to the limit of insolation that we can use? No? Then it’s an irrelevance to current decision making, isn’t it.

Renewables diversify the control of energy; we could all make our own.

I’ll just knock up my own solar cells, shall I?

Distribution matters more than accumulation in that case, and energy transition is social transition. It must be planned, it must be just, and it must be democratic.

Ahhhh. Everyone must therefore do it the Solanum Way.

This insight has profound implications far beyond biology. Schrödinger showed that order is not natural or free. It is costly, fragile, and temporary. It must be actively sustained. Decay is the default. Maintenance is not optional. And without continual energy and care, all systems, whether biological, social, or institutional, fall apart.

Economics, however, largely ignores this truth. It treats growth as automatic, equilibrium as usual, and maintenance as secondary. Schrödinger’s work exposes this as a fundamental error.

No, this ignorance goes deeper than normal with Spud. You know how his insistence is that pensions have to be invested in *new* stuff for the next generation? What’s he missing? That much of the capital investment of a society has to be put into maintaining the current endowment…..

And yet here he is insisting that economics doesn’t and, well……Sigh.

Spud never does grasp the difference between net and gross in investment flows, does he?

US companies have sold $1.7tn of investment-grade bonds in 2025, a near-record sum stoked by a rush of borrowing to fund AI infrastructure that has spurred concerns over a debt glut.

OK.

AI-related borrowing now accounts for around 30 per cent of net investment-grade issuance,

OK.

Now Spud:

Second, your pension fund will have little way of avoiding bonds issued by AI companies as a result of them now representing 30% of investment-grade issuance.

No, gross investment grade is the $1.7 tr. AI’s 30% is of net issuance, after subtracting the amount that is to refinance or rollover.

We can check this:

As cloud infrastructure providers move toward AI and data center expansion, their issuance of roughly $121 billion in new debt this year

From which we can back calculate that net issuance this year is of the order of $400b, mebbe 450b.

This is the man who would redesign our entire pensions system for us. Unable to distinguish between net and gross.

1) What do I mean by “surplus income or wealth”?

I am not using a moral or abstract definition when using this language.

A surplus exists where:

spending power is not required for a decent standard of living, and
where additional income or wealth is primarily saved, speculated with, or used to extract rents rather than meet needs.
In practice, this is observable. Indicators include:

High savings rates.
Ownership of multiple assets.
Low marginal propensity to consume, and
The ability to absorb shocks without cutting essential spending.
That is why taxes on higher incomes, accumulated wealth, land, monopoly profits, and excess corporate margins can reduce inflationary pressure far more effectively than taxing wages close to subsistence. The test is behavioural and macroeconomic: does taxing here reduce demand without causing hardship?

If we tax what isn’t being spent – that surplus – then this will reduce the inflationary pressure of spending.

This is just abject stupidity.

No, we know this one:

In real-world housing markets, and in particular, in the UK’s highly supply-constrained one, landlords often pass costs on through rents. Without rent controls, strong tenant protections and major planning reform, LVT risks falling on occupiers rather than owners. At that point, it stops functioning as a wealth tax and becomes another charge on living somewhere, disproportionately affecting renters and lower-income households.

Back when development zones were made free of business rates. Rents rose to match the reduction in rates. Rates are thus incident upon landlords as would LVT be.

This is the usual Spud. Never actually checking whether anyone else already knows the answer.

“This is the chart of the latest United Nations Human Development Indicator” etc etc and the UK is, as he says, in hte top 20. Then:

My point in posting this, however, is simple. If you are at the top of the pile, there is no excuse for poverty in your country. The resources to prevent it, by definition, exist. In that case, if it is prevalent, as it is in the UK, it is by choice, and not by accident or chance. And in that case, we could eliminate it.

But the poverty measure being used inside the UK is not the same as the one used in the UN.

So, no.

Christmas is really weird, economically speaking, that is, because in a sense it breaks every one of our normal economic rules.   We accept that fact without question, and that should make us think, because if we can break the rules of economics at Christmas, when else could we do so?

Apparently leisure is breaking the rules of economics.

Ho Hum.

I admit that this does not feel like a video idea to me: YouTube rewards excessive techniques with low views. But it did feel worth answering, so I have written two glossary entries on full reserve banking (which is currently technically Green Party economic policy) and on reserve requirements.
They are as follows, nd please note all the hyperlinks in this post are to glossary entries:
Full reserve banking
Full reserve banking is the proposal that banks should be required to hold reserves equal to 100 per cent of their customers’ demand deposits, preventing them from creating money through lending. Deposits would be fully backed by central bank-created money, and banks would only be able to lend money that already exists.

No, it isn’t.

Full reserve banking is:

Full-reserve banking is a system of banking where banks do not lend demand deposits and instead only lend from time deposits.

Which is a problem for Spud. Because of course he denies that banks do lend out deposits therefore he cannot use that definition of full reserve banking, can he? For to him – not lending out deposits – the current banking system already is full reserve…..

Why were the natural interventions that can manage cancer risk not discussed? And they’re remarkably similar to those, by the way, for type two diabetes: cut out the ultra-processed food, cut out the sugar, cut out the alcohol, take more exercise, go outside more, do more cold water immersion. All these things have proven medical track records of success in preventing cancer of the sort that the person in question had recurring. But that wasn’t mentioned; it was just “You will take a drug.” The alternative was not discussed.

In that case, why is patient agency so weak? And why does the government stay silent? Because surely the government should want to cut costs by asking these questions.  But they don’t because pharmaceutical activity boosts GDP, and GDP growth is what governments want above all else.   And chronic illness sustains growth, bizarrely, and regulation would reduce profits.

So the NHS has become a delivery mechanism for what is, in effect, pharmaceutical industrial policy. Patients are just the cogs in the machine. We were once the subject of healthcare, but we are now just units of demand to consume the products created by the pharmaceutical industry, supplied to us via the NHS. The NHS is, in fact, being used to manufacture and sustain chronic illness rather than to try to cure it.

You cannot do anything you like with your life – a pint, a doughnut – in order to Save The NHS.

Sigh.

He also notes that we’ve an increasingly aged population. Then fails to cross-connect this with an increasingly aged population placing greater demand on healthcare for chronic diseases. Everything has to be age adjusted dimbo…..

The analysis I did earlier this week on a Financial Times article on autism and ADHD, to which they have not yet provided any response, delayed that.

So the FT is not providing a response to non-commissioned articles from Spud then, eh? The bastards.

Three things stood out for me:

James Meadway is obsessed with keeping bond markets happy.
He has no theoretical narrative of change to back up any of his suggestions.
This means that he appears to have no alternative explanations for how the economy might work, barring some very standard left-of-centre economic favourites right now, like a wealth tax. He is, therefore, offering a view that is hard to distinguish, except in detail, from that of the current Labour government, or that which the Treasury might prescribe.

Given that I’ve already explained everything to Zack how dare he speak to someone who differs?

There is that thing that if you never do speak to someone who differs from Spud then your conversational circle is going to be fairly restricted….

Most people think that economics is about money, that government spending is constrained by tax, and that public services must always come second to “balancing the books”.

All of that is wrong.

Quite, it’s not about any of those things. It’s the study of the allocation of scarce resources. Which is why “solving money” isn’t as grand an insight as some seem to think.

Nordhaus deserves mention precisely because he demonstrates that it is possible to win the Nobel Prize in economics for being catastrophically wrong.