Although Campbell is right to point out that markets do play a significant role in government spending, Polanski is on to something deeper that could help reframe the debate around the UK economy. While Rachel Reeves might be celebrated for scrapping the two-child benefit cap, the latest budget doesn’t go nearly far enough in delivering the change that Britain desperately needs. Austerity has scarred the UK for the last 14 years. If it wants to finally break free, then it’s time for a radical new approach. And that starts with rethinking how government finances work.
Possible soft paywall - I got round it by opening in private tab / using reader mode
The real voodoo is the national headfuck that austerity has caused. Working people don’t want to spend or invest because nobody knows if there will be a safety net to catch them if it doesn’t work out.
I’ve been clinging onto my savings for dear life the last few years. I wouldn’t give a toss if they got wiped out by inflation if I could believe in earning them back again though.
Something is going to have to give eventually, either fiscal or monetary. I’m glad the Greens are talking about both because it will have to be addressed - it’s just a question of whether that happens instead of a rightwing nightmare or after one. I personally don’t want to have to wait until the mid 2030s to find out what is left to pick over.
Realistically there isn’t a safety net to catch you, or at least …all the tension has gone out of the net and you hit the ground first.
Housing is so expensive that anybody renting a reasonable place, or having a mortgage from the last 10 years, will lose their home very quickly if they are unemployed for any length of time. It’s not even close.
Archive link for the Modern Monetary Theorists of us.
An interesting article. I hadn’t heard of MMT before this. Well… at least not stated in such a way.
Spend too little while resources sit idle (unemployed workers, empty factories) and you condemn the economy to stagnation.
So is this suggesting that we should rapidly ramp up spending? And that will bring the unemployed back to work? I think that’s rather simplistic, no? People are unemployed for a multitude of reasons, not simply that there isn’t enough work to go around.
It’s not just about providing work itself, but also giving people the support they need to get into work. Eg, 40% of people on out of work benefits are on a NHS waiting list.
It’s worth noting that MMT is highly contested. I don’t know enough to know who’s right, but I’m aware of the argument.
I would have thought people who were proponents of the original formulation that said inflation is not affected by government spending - because of globalisation and China - would have egg on their face after we had >10% inflation immediately after all the covid spending.
Well, yeah, the spending has to be targeted. Increased spending is a necessary, not sufficient, condition. It has to be in areas that will significantly affect investment and employment.
