Rachel Reeves has said in the Daily Mail today that:
Economic growth only comes from businesses: big, medium and small. Government's role is to give them the stability they need to invest and to remove the barriers to make it harder to do business. That's the model to grow the economy I believe in – and it's the only one that works.
I seriously doubt that Milton Friedman, in one of his most deluded moments, would have said anything so stupid.
The presumption is that the following can add no value to the economy if provided by the state:
- Education
- Healthcare
- Social care
- Social housing
- Public transport
- Energy supply
- Essential services
- Public utilities - like water, which are state-controlled in Wales and Scotland
- The justice system
As a result, and assuming growth is what we still want on a finite planet where its pursuit has created the climate crisis, then none of these things are worth investing in, according to Rachel Reeves.
Nor, very obviously, should the state invest in the Green New Deal. That would, very obviously given her opinion, be dead money.
And you can easily see why Wes Streeting sees it as his job to privatise the NHS - because, quite bizarrely, only then will it add value.
Meanwhile, the millions of people who actually supply these immensely valuable services - and others - for the state, which underpin our prosperity and society - will feel utterly disenchanted at knowing their prospective new boss thinks them to all be a drain on society and that the best thing they can do is quit and join the private sector.
I think Labour will have a severe retention problem with staff if anyone says anything quite so stupid again.
Meanwhile, let's recall that GDP, or our national income, is made up of a formula that is written as:
Y = C + G + I + (X-M)
Where:
Y = GDP
C = End consumption of goods and services
G = Government spending excluding transfer payments like benefits and pensions which are reflected in C
I = Investment
X = Exports
M = Imports
So, if Rachel Reeves knew anything about the most basic economics, she would know that her claim is both crass and wrong.
We have to conclude that she does not know the most basic thing about economics, which is worrying and justifies everything I have to say about Labour's economics policy on this blog.
Thanks for reading this post.
You can share this post on social media of your choice by clicking these icons:
You can subscribe to this blog's daily email here.
And if you would like to support this blog you can, here:
The only assumption I can make is that Rachel Reeves is playing to Daily Fail readers who do not know anything about the most basic economics and really do not care to know anything about the most basic economics when all the problems of the UK can be blamed on small boat people.
Everything she’s said so far points to Reeves not playing to anyone, but Reeves actually thinking what she said.
I can’t wait for this whole election business to be over and for Labour to win because I’m really interested how Starmer/Reeves are going to go forward, how long they’re going to last and what’s coming after them. In quite a few respects they’ve positioned themselves to the right of 2019 Johnson. 1997 Blair would’ve been far left for that pair. Public expectation is completely different to what they’re offering. It really is fascinating.
If this was a TV drama it would be interesting
It isn’t. Real people will suffer for this
“Mz Reeves and the Economy” seems the apt working title.
Reeves has only ever stuck to *one* policy position across her tenure as shadow-chancellor: she’s resolutely remained committed to the BoE raising rates to tackle inflation.
In order for that policy to work the way it says it does, she needs to believe that unemployment needs to increase which means she is indeed committed to the idea that government spending is bad both because it will “cause inflation” but also because it will reduce unemployment, something she for whatever bizarre reason thinks needs to be higher.
She is a deeply orthodox thinker, but worse, unthinkingly orthodox in a way that should have everyone terrified.
“The presumption is that the following can add no value to the economy if provided by the state: Education”
What is the explanation for “not getting or not having a school place”?
In the USA there is no such thing as “not getting or not having a school place”.
It’s the old Tory lie that the private sector creates wealth, and the public sector spends it.
The tragedy is that by accepting, rather than challenging such misconceptions, by adopting in fact the language and world-view of your opponents, even if you win the next election, you help move the overton window of ‘common sense’ gradually their way, and it gets harder and harder to get any other view, or indeed the truth, across to people.
Jet engines and radar developed for the RAF , made world wide tourism possible.
Satellites developed by NASA and its associates around the world, made possible accurate navigation, world wide TV, accurate mapping , better weather forecasting and monitoring of natural resources
And von Braun’s rockets were developed to get them there-we’ll pass over that one.
DNA enabled a lot of medical understanding and applications
the computer -developed into the internet by the US military-was expanded by CERN to give us the internet, enabling Amazon, Facebook, research and even a blogger in East Anglia to give but a few, perhaps mixed benefits!
The Universities often funded by governments and the EU, created all sorts of things which have been commercially viable.
And this woman is make decisions about our economy?
Worrying, isn’t it?
Mariana Mazzucato wrote a whole book on this subject “The Entrepreneurial State” ten years ago, and she will be face-palming like its going out of fashion at this utter nonsense from Reeves.
Surely she cannot be so ignorant of economics 101, let alone unfamiliar with MM’s work, so what can thos deliberate disinformation agenda possibly be ?
Agreed
As James O’Brien quotes in his book How They Broke Britain “As long as the general public is passive, apathetic, diverted to consumerism or hatred of the vulnerable, then the powerful can do as they please. Those who survive would be left to contemplate the outcome. Chomsky” It’s a call to Action for each one of us for we are ‘the General Public
Agreed
Don’t forget ARPAnet, developed by the US defence department in the 60s. Developed all the protcols that allowed for the Internet to come into existence.
Yep, the state can’t create growth, lol.
regards
Actually it was US military’s DARPA that developed the Internet. Berners-Lee at CERN addd the World Wide Web. But your point still stands… it was fiscal monies that funded them both.
Mariana Mazzucato thoroughly debunks Reeves stance in The Entrepreneurial State.
Agreed
Its extremely worrying that neither of the two big parties understand economics, particularly with Rachel Reeves. Apart from being incorrect, as you said Labour will annoy all those working in the sectors you mentioned. She would probably find it difficult to get to grips with concepts like ‘public goods’ or externalities.
I think your last comments are right
“We have to conclude that she does not know the most basic thing about economics”
Agreed, & thus she is perfect for the LINO job. She was/is a vessel to be filled with neo-liberal thinking.
The puff in the Daily Heil is part of the LINO normalisation process – aimed at making Uk serfs comfortable with ticking “LINO”.
Normal service has been resumed, baton passed, LINO is Tory/Tory is LINO.
The overall aim: ensure that LINO fails, hard, in gov & then the UK moves to the next stage.
UK serfs a resource, to be used. Jack London/Iron Heel stuff.
PS: “And this woman is make decisions about our economy?” I doubt she could make a decision on how to cook a meal.
She (& the other LINO rabble) are ciphers, facades, just following orders. Which leaves the open question: whose orders……follow the money.
Corbyn et al – we canned cos they were not biddable (no need for corp funding with loads of small subs) – not so with the current LINO crew.
But the chilling thing is that she knows she won’t be queried or challenged by BBC, or any other media. Even a mild question about whether investing in doctors & nurses doesn’t add anything to the economy could throw her off kilter . Or maybe ‘you mean only private companies like Thames water ‘ ?
Or ‘what the hell do you mean by ‘sound money’?
Its as though our national dialogue in the election period is some kind of ritual verbal sparring – each side’s slogan against the other’s slogan – while never actually engaging with the basic ideas underlying them – ‘is it really true there is no money’?
I think Thames Water is the complete answer to her nonsense
Any chance that Rachel Reeves sees your comments, or any others showing other views. How can she just ignore what is made so obvious by those who know a bit? Is she no better at all from those of whom we hope soon to see the back?
Could you not message her politely?
I am pretty sure my blog gets to her
So????????????????
What a dreadful person she must be.
Maybe someone should tell her that British businesses have oodles of cash, some of it (according to Prof Leaver of Sheffield) due to very creative accounting, but choose not to reinvest it in the business but to pay it out as dividends to shareholders and executives.
Just look at the water companies.
Rachel Reeves is an idiot. She won’t acknowledge the biggest issue with the UK economy at the moment is the damage Brexit is doing and then discuss ways to address that. It’s a terrible reflection on our electoral system we will have no opportunity to vote for anything we support but will just have to pick the ‘least worst option’
Political messaging gets dummer and dummer. Anyone who has the gall to question whats going on is woke or an extremist. Mandleson and his chums must be saying “Job done!”
Terrifying.
People are going to vote for this Reeves nonsense in droves. You can’t take them seriously as worthy of having a vote! Even the idiot Observer/Guardian Oligarchic Press has this comment as a pick:-
“There won’t be much change, simply because there’s no money left. For the first time UK general government gross debt in £ (2,720.8 billion) was higher than the German general government gross debt in € (2,622.7) in Q4/2023. Oh, and the rise of the debt in 2023 as a share of GDP was a whopping six times higher in the UK than in Germany, 9% vs. 1.5%.
When even Brexiters like Dyson and Ratcliffe leave the country under a Tory government, then higher taxes for the rich under a Labour government will most likely cause an exodus.”
https://www.theguardian.com/commentisfree/picture/2024/may/25/chris-riddell-on-rishi-sunak-calling-the-general-election-cartoon#comment-167764959
As you suggest, utterly absurd
I agree with your comment ref: nonesense. But the G/O “pick” and its figures raise the question: who owes what to whom? Is this gov owing the BoE?
The “pick” is thus part of the grooming campaign asserting that there is no money left (boohoo) and that LINO is utterly helpess (oh dear, collective hand wringing).
Most of the press is now onboard wanting a Starmer regime – with the underlying narrative of no money.
UK serfs being groomed a-go-go.
I can already see that the levels of ignorant claptrap are going to go off the scale during this election.
Labour, like the Tories are a hollowed out shell of a party repurposed to serve monied interests alone.
Presumably, she will measure growth using the figure for GDP – but doesn’t seem to know how it is calculated.
“That’s the model to grow the economy I believe in[.]” (RR) A matter of belief!
“[I]t’s the only one that works.” (RR) No need for any discussion at all. Back to Thatcher.
She referenced her…..
So, we are being asked to vote for the Labour Party which claims it will undo the damage done by the Tories to the economy, shown clearly here to be led by economic illiterates. Truly, we are in O’Casey’s “state of chassis.”
It’s funny how you bring out the economic formulae when you think it supports a point you want to make, but ridicule economic rules and principles when they don’t.
Regardless, what do you think she means by “Government’s role is to give them the stability they need to invest and to remove the barriers to make it harder to do business”?
It seems she’s referring to providing the basic in terms of a healthy, educated population for one thing, and strong infrastructure for another, as well as personal and corporate security for a third.
Of course that’s the obvious interpretation of what she said, but I’m not trying to invent things just to justify my opinion on a blog.
Your position is clearly quite different.
I am well aware you are trolling – and it is very unlikely you will get the chance to reply – but even if your assumption is right about what she means (and I doubt that) how is she going to provide a trained and educated workforce by spending nothing more than now – which is what she is promising? Yo may not have noticed this, but nothing is working right now.