This is good, which you'd expect from Steve Keen:
Well worth a few minutes of time to make the key point that if the government runs a surplus it is taxing more than it spends - or over-charging in other words.
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The video is very good – but does not explain why Tories want to run surpluses. It hints at it with respect to private debt. I’d suggest that the medium/long term aim of the tories is the financialisation of most/all gov functions. Osborne talked about smaller gov’ – that usually also means much larger private, & in turn more costly and poorer service. The down-sizing physically & in capability of HMRC could also be classed as something the Tories are doing deliberately to allow them to say – look taxes ain’t big enough to pay for XYZ – we need to privatise ABC & let the privaet sector run it (whatever “it” is) more efficienctly (= code for efficiently extract profit for a lesser/poorer service). Interesting con trick & interesting that the UK pop is so badly informed that they fall for it.
I have always felt shrinking the state was the real issue
What’s really worrying is why the economic journalists don’t ;pick up on this and tear the whole surplus nonsense to bits -the notion that there can be a prediction of either a deficit/surplus in eight years time is beyond illiterate nonsense and implies that you can apply a linear process to an economy that receives exogenous shock and buffets regularly.
Why aren’t the journalists tearing this apart -more groupthink?
Yes, Simon…and not just economic journalists. But bear in mind that the failure to to answer that ‘How are you going to pay for it?’ properly/robustly/with appropriate scorn was and remains a deliberate political choice. Miliballs dismissed the suggestion that they should do so in,I guess, the way Professor Keen has as being something ‘the public’ wouldn’t understand…and yet until we get past that ‘household budget’ misconception (one deliberately ‘planted’ by Thatcher and her ilk) we’re still weeing into the wind.
‘The deficit’s a good thing. A necessary thing’ is a vid I’ve put up here before – https://www.youtube.com/watch?v=p8OzJ0OgUXY. I know Richard thinks it has some flaws (on the other hand it does have Louis Armstong!) but I have shown it to some of those people who ‘wouldn’t understand’ and suddenly they get it. Enjoy.
They probably wouldn’t have a job for very long if they did. I’m reminded of how after a world-famous football manager died, sports reporters for the first time spoke openly about how he’d made it plain that reporters who asked difficult questions would be excluded from all future dealings with the media. This would have made them useless to their employers, and thus he restricted their ability to accurately report. I have no doubt that economics journalists face similar restrictions in what they can and can’t discuss and write about. When the subjects of journalism can affect the income journalists depend on, there can be no independent reporting.
More on how the Tories are ‘liberal’ in regard to having hands in the till:
“This fast-growing market is dominated by Legal and General in the UK (29pc market share), of which a major shareholder is Capital Group, of which a key UK executive is Philip May, husband of Theresa May.”
Mr May is certainly a Capital Group shareholder, as described in this Guardian article. The headline may be a candidate for the Graun‘s ‘corrections and clarifications’ column because Capital certainly holds shares in Legal and General, and if L&G ends up selling the “products” the Conservative Party claims will be available for people facing the Dementia Tax, then it seems unlikely he has taken the “back seat” after all.
Perhaps he is a back seat driver?
Most probably the best most succinct explanation on why Governments should run a deficit. Once people understand this it changes the debate.
Reading this as I am listening to LBC gloat over Abbots’s attempt to explain the cost of employing 10,000 police. The prima facie cost was £300 million per year, Abbot said the cost was £300 thousand.
Vox pop now belives that Abbot was wrong and LBC right.
Whereas around 40% of the £300 million would come back to the treasury over the year in employers and employees NIC and employee income tax and a further, say, 10% would come back in VAT. A further percentage would come back to local authorities in terms of local taxes charges etc and the rest would enter the local economy and, in turn, generate further returns to the Treasury.
Abbot was correct (but probably did not know it).
How can we discuss economics where it matters – in everyday life – if the media deals in soundbites?
Keith
Also, if 10,000 more police on our streets result in only a modest 5% reduction in the cost of crime to the economy – currently estimated to be 60 Billion – then they will more than pay for themselves.
For most of the written press it’s simple slavish adherence to right wing dogma. For the supposedly more neutral broadcast media it’s groupthink. 7 years of the same relentless message has made the “necessity” to eliminate the deficit and pay down the national debt into a default assumption.
So much so that in 2015 Miliband didn’t even try to challenge it; he simply claimed he’d do the same only without the nastiness.
Simple. They don’t tear it apart because they also believe it. The ones that don’t are not given air-time or are publicly rubbished by ignorant bullies like Andrew Neil and Nick Ferrari. The Mafia are currently running the show. Takes courage and patience to get rid of them.
And both are bullies
I know
You did a great job standing up to the ghastly thug Neil if I remember, Richard.
He didn’t like the way you anticipated his ‘Weimar/Zimbabwe/Venuzuela’ response to Your presentation of ‘QE for the people.’
I think you said something like ‘oh, not the Zimbabwe thing..’ Neil looked quite aggressive at that point as his credentials as an ‘economist’ were looking rather shakey.
It was quite fun to be honest
I gave not been asked back
I love the way this site leaves so much unanswered:
‘A good government doesn’t run its accounts like a household budget, therefore we need to spend more’
“How does a good household run its budget?”, ask the enquirer
You really have not paid attention, have you?
Please do not waste my time
“…if the government runs a surplus it is taxing more than it spends — or over-charging in other words.”
Is that a good argument to use, Richard? After all, a neoliberal could reply, ‘And if the government runs a deficit it’s spending too much — or undercharging in other words.’
People do not want to be overtaxed
But if they think that, we must persuade them otherwise: paying tax should be a joy – a contribution to the beneficent state and public services
If the government deficit exceeds what is necessary to stimulate employment and demand, you get inflation. This, in one sense, automatically corrects the problem by bringing the purchasing power of money down to the correct level. However, there are unwelcome side-effects. The trick is therefore to run a deficit which is not too big, but not to small either.
I’ve always been rather keen of Keen.
At one time I was worried that all the best heterodox economists seemed to come from Australia.
Then I found this place.
Thank goodness – you can’t beat a bit of home grown.
Thanks for the clip.
I like the way he manages to contradict himself within 1 minute. I know there are some analysts who can pull off this trick in faster time, but for a full Professor, it’s still impressive.
He says there have been two times when the USA has run sustainable surpluses. He then links those directly into causing the Great Depression and the Financial Crisis. So not sustainable at all then.
Do you have a life?
Thank you for this Richard. I have sent it to a friend in Swansea who is a newly elected Tory councillor. We have interesting discussions. I know he is a good man but he really believes that our country should have no debt whatsoever. He is very comfortably off with his own business and believes that doing what he does providing jobs will boost the economy and that we need austerity measure to cut public services as we cant afford them and get rid of debt.Just had a reply that he will look at it tonight… watch this space!