UK
You can only support the current manifestation of late stage capitalism, if you believe that massive inequality of wealth is necessary to wealth creation, or if you believe that the total amount of wealth is unimportant so long as a very small minority are extremely wealthy.
“Trickledown economics” is at heart simply a statement of the idea that massive inequality of wealth is necessary to wealth creation. There is no evidence for it.
The truth is, of course, that the poor ultimately benefit only from the economic activity of the poor. But not nearly as much as the rich benefit from the economic activity of the poor.
Taking money off the poor does not lead to an increase in wealth creation. If you look at the billions the Labour government is seeking to remove from the disabled, that is not only money taken away from them, it is money taken out of the wider economy.
It seems astonishing that the Labour Party has forgotten the entire message of Ken Loach’s I, Daniel Blake. But then, the Labour Party expelled Ken Loach for opposing the genocide of Palestinians.
Those on benefits have a much higher propensity to spend than the more wealthy elements of society as they have no choice; they need to spend all their income to survive and enjoy a minimal acceptable standard of living. This income is spent on the local goods and services they need, again to a much higher degree than that of wealthier people.
Much of this spend benefits the landlord class, but it is almost all within the UK economy and it has a multiplier effect in economic activity. All of this is pretty obvious. By simply taking this money out of the economy (and it has no real relationship to taxes and revenue) the government is reducing the overall size of the economy.
This austerity is the opposite of pro-growth. It is absolutely anti-growth. It achieves the precise opposite of the alleged goal of Labour’s economic policy.
All this is designed to reduce the fiscal deficit, allegedly. But reducing economic activity will reduce revenue. It is a death spiral. If the aim was actually to reduce the fiscal deficit, taxing those who have money would be far more sensible than taking money from those who do not.
But actually that is not the object at all. The object is to convince the neoliberal finance system that this is a safely neoliberal government, willing to hurt the poor and leave the wealthy untouched.
That system brought down Liz Truss for failing to acknowledge orthodoxy on the fiscal deficit. The strange thing is that Truss was actually right on the non-importance of this shibboleth. Where she was wrong was in a desire to decrease still further taxation on the wealthy, rather than increase spending on the poor; but her attitude to deficit was not wrong.
A higher deficit only leads to an increase in interest rates if you wish to seek to maintain the value of your currency in international markets. But like so many of these economic targets, the justification of this is a matter of convention more than reason. I have seen massive swings in the value of sterling over my lifetime, which have had little impact on the UK’s steady economic decline, although a habitual tendency to over-valuation has contributed to the wipeout of British manufacturing industry.
We now have Rachel Reeves wedded to Gordon Brown’s doctrine on fiscal spend, that led to the horrors of PFI and paved the way for austerity. Yet when the Establishment want to bail out the bankers, unlimited money can simply be created, and when they want to boost the military, unlimited public spending is immediately possible.
New Labour’s economic policy is Thatcherism, pure and simple.
The truth is we do not really need economic growth. The UK economy produces enough wealth for everybody to live free of poverty and in real comfort. The problem is the distribution of that wealth. We live in a society where, astonishingly, 1% of the population own 54% of the wealth.
You can argue about the precise statistic but the massive inequality is clear. The cause of poverty is inequality. The answer is to reduce inequality in a variety of ways – not only by progressive taxation but also by changing the ownership structures of enterprises.
The purpose of reducing poverty and increasing comfort for the majority is to spread happiness. Eternal economic growth is not a necessity for this. Happiness is not merely derived from possession of stuff, and owning more stuff is not the panacea.
Happiness arises from comfort, good relationships, active and engaged minds and a balanced society. A society which prioritises the libertine wealthy over caring for its disabled can never be balanced and can never be happy.
By AFP
March 24, 2025
Finance minister Rachel Reeves will deliver a highly anticipated fiscal update on Wednesday - Copyright AFP Chanakarn Laosarakham
Clément ZAMPA, Alexandra BACON
Britain’s Labour government will deliver a highly anticipated fiscal update on Wednesday, with finance minister Rachel Reeves expected to detail billions of pounds of spending cuts to address the country’s struggling economy.
Under the pressure of a gloomy economic outlook, Reeves will reveal her Spring Statement, setting out plans to shore up the public purse including cuts to welfare payments and government departmental budgets.
Labour announced ahead of the update that it would slash the costs of running government by 15 percent over the next five years, targeting annual savings of over £2 billion ($2.6 billion) across Britain’s civil service.
“I would rather have people working on the front line in our schools and our hospitals, in our police, rather than in back-office jobs,” Reeves told Sky News at the weekend.
The measure targets 10,000 out of over 500,000 civil service jobs, though unions estimate the number could be as high as 50,000.
The government also announced contested cuts to disability welfare payments last week, which are expected to save more than £5 billion annually by the end of the decade.
Centre-left Labour, traditionally accused by the right of excess spending on benefits, says the cutbacks are essential to help fill a black hole of £22 billion it claims to have inherited from the Conservatives after last year’s election win.
The cuts add to criticism piled on Labour after it scrapped a winter-fuel benefit scheme for millions of pensioners last year.
– ‘World has changed’ –
The Labour government, led by Prime Minister Keir Starmer, launched a raft of economic measures after it came into power in July, including improved workers’ rights and minimum wages, a vast green-energy plan and proposals for mass building of homes to address a severe housing shortfall.
But the Treasury has said that since then, “the world has changed”.
Faced with a stagnating economy and global uncertainty over the fallout from US President Donald Trump’s plans for hefty tariffs, Labour has been left with little room to manoeuver.
Recent data has shown the UK economy unexpectedly shrank 0.1 percent in January, while inflation rose to three percent. The government also borrowed more than expected in February.
Reeves is also constrained by her own fiscal rules, which prevent her from borrowing to fund day-to-day spending, and which call for debt to fall as a share of the gross domestic product by 2029-2030.
Since she has also committed to not increasing taxes, sticking to the rules raises the prospect of spending cuts to some departments.
At the same time, Labour has recently said it would hike spending on defence, especially to deal with the war in Ukraine.
The government is already reportedly considering scrapping a tax on tech giants, which raises around £800 million annually.
The move would likely add further strain to public finances, but could help the UK appease Trump and avoid the worst of his tariffs.
Wednesday’s update comes as a business tax hike, announced in Labour’s inaugural budget, is due to come into effect in April.
Businesses heavily criticised the tax increase, warning about the adverse effects on hiring and wages.
Mel Stride, the opposition Conservative party’s finance spokesman, said Sunday that Labour’s latest reforms were “not bringing back stability to the economy, it’s deeply damaging it”.
“Business confidence has collapsed, growth has been killed stone dead, firms are slashing jobs and their borrowing splurge has pushed up mortgages for families,” he added.
"When it comes to applying cuts and changes, the government needs to really look at the lives of people with learning disabilities"
Interviews
“I feel it’s a huge concern, and it’s going to have a huge impact on people with learning disabilities,” says 47-year-old Ismail, who works full-time and receives Personal Independence Payment (PIP).
PIP helps Ismail to cover the extra costs related to his health needs and his learning disability.
“It helps me be part of my community and takes me to places I need to reach,” Ismail says. Through the Motability scheme, Ismail’s family member leases a vehicle, enabling him to get to appointments and participate in activities.
Last Tuesday, the Work and Pensions Secretary Liz Kendall laid out plans to make £5 billion in disability benefit cuts.
Labour has said it will legislate so people will need to score a minimum of four points in at least one activity to qualify for PIP from November 2026.
Currently, PIP eligibility is based on scoring at least eight points across 10 daily living activities.
Resolution Foundation analysis has indicated that up to 1.2 million people could lose between £4,200 and £6,300 per year due to the changes.
“There are lots of barriers around things I can’t do because of my health and also having a learning disability, and PIP just gives you that extra ability to be able to get out and afford things that you need to support your needs,” Ismail explains.
Labour argues that the reforms will ensure support is still available for those with the “greatest needs”. But Ismail questions the logic behind the cuts.
“The thing is people with learning disabilities don’t choose to have a learning disability,” he says. “A learning disability is not a thing that will go away.”
He adds: “If a learning disability is always there in their lives, then why should their benefits change?”.
Ismail highlights what he sees as widespread confusion about employment and disability benefits like PIP.
“I earn a salary, but my PIP isn’t about that, it helps me with daily life, my mobility, and living a fulfilling life with a learning disability,” he explains.
He explains that though he is working, he is still affected by barriers when accessing healthcare and social care. In addition, navigating society is more challenging for people with disabilities.
Whether accessing services or going to work, Ismail must disclose his learning disability and request reasonable adjustments.
As a result, he says that the government needs to think about the lives of people who rely on PIP.
“Money comes and goes, but people are more important than anything else,” Ismail says.
Ismail also questions whether the reforms will actually save the government money, suggesting they could lead to increased social care and healthcare costs instead.
“It would be completely heartbreaking if they took my PIP away, I would be shut away and confined to four walls, which would affect my mental and physical health.”
He emphasises the need to consider the people that would be impacted by disability benefit cuts. “When it comes to applying cuts and changes, the government needs to really look at the lives of people with learning disabilities,” Ismail says.
“People only have one life, and the government should consider that people with learning disabilities deserve to have a fulfilling life like anyone else.”
Olivia Barber is a reporter at Left Foot Forward
Labour targets disabled people in huge benefit cuts
Momentum report: “Liz Kendall has confirmed in Parliament that the Government intends to cut £5 billion from benefits for disabled people in the UK. This would be the largest cut in social security for a decade. Remarkably, the Government hasn’t even published impact assessments.
“Charities, trade unions and disability advocacy groups are united in speaking out against these immoral and potentially devastating cuts. The choice for Labour MPs couldn’t be clearer: if these cuts to disability benefits are made, more disabled people in Britain will be pushed into poverty. It’s absolutely vital to write to your MP urging them to oppose the cuts, including by voting against if they’re brought to Parliament.”
Work and Pensions Secretary Liz Kendall – who won 4.5% of the vote when she stood for Labour leader in 2015 – announced the cuts yesterday.
“Those unable to work will have their incapacity benefit cut,” Owen Jones points out. “That includes those with the most severe disabilities and illnesses you can possibly think of. Large numbers of disabled and sick citizens will no longer receive Personal Independence Payment (PIP) – a benefit which goes both to those in and out of work in order to, as the name suggests, ensure their independence.
“According to the Resolution Foundation thinktank, between 800,000 and 1.2 million people will lose support of between £4,200 and £6,300 a year by the end of the decade.”
The Women’s Budget Group expressed its “serious concern”, its Director Dr Mary-Ann Stephenson saying: “These cuts will have a devastating impact on some of the poorest and most vulnerable individuals, including Disabled women and carers – who already face significant barriers in accessing support and employment opportunities. Cutting their incomes will only exacerbate these challenges, leaving them without the essential help they need.
“The eligibility restrictions for PIP are especially worrying. As recent analysis by the Child Poverty Action Group shows, 870,000 children are living in families receiving PIP, with a third of them already living in poverty. PIP is also a gateway benefit for unpaid carers (the majority of whom are women) to receive Carer’s Allowance (CA). Therefore, specific eligibility restrictions placed on the daily living component will not only affect Disabled people, but also impact carers’ ability to claim CA.
“These benefit cuts could disproportionately impact disabled victim-survivors of domestic abuse by making it even more difficult for them to access the benefits necessary to work and be financially independent from the abuser. Disabled victim-survivors are nearly twice as likely to experience economic abuse compared to non-disabled women, and are nearly four times more likely to have a partner or ex-partner stop them, or try to stop them, accessing benefits that they or their children are entitled to.”
Labour National Executive Committee member Jess Barnard attended an NEC and National Policy Forum briefing from Liz Kendall today on the welfare cuts. At the end of an illuminating thread about how the meeting unfolded, she concluded: “I’ll be opposing the welfare cuts, as should you. Punishing disabled people while they sit on waiting lists created by Tory failure is not what the Labour Party should be about.”
Veteran MP Diane Abbott, who raised the issue at Prime Minister’s Questions today, tweeted: “Cutting disability benefits isn’t a moral crusade. It’s a political choice to balance the books on backs of some of the poorest and most vulnerable people in our society.”
Bell Ribeiro-Addy MP tweeted: “My inbox is filling up with emails highlighting the devastating impact of briefed cuts to disability benefits. Cutting support or reducing eligibility won’t push more people into work, it will only push more people into poverty.”
Former Shadow Chancellor John McDonnell MP tweeted: “The government’s plans to cut £5 billion from the support to disabled people will result in immense suffering and, as we’ve seen in the past, loss of life. I have asked Ministers what monitoring will take place and what level of suffering will force a change of their cuts policy.”
Momentum conclude: “Labour supporters, members, and trade unionists are appalled by these plans, which were not in the Manifesto Labour took to the electorate last year.
“It has been heartening to see MPs from across the Labour Party speaking out against the proposals, including Brian Leishman, Steve Witherden, Richard Burgon, Debbie Abrahams, Sarah Owen, Clive Efford, and Flo Eshalomi.
“But it’s not enough. We need all Labour MPs to come out in opposition to the cuts, making it clear they will vote against if the plans are brought to Parliament.”
Use Momentum’s lobbying tool to write to your MP and explain why they should oppose the welfare cuts. Take this motion to your CLP to build opposition to them.
War on Want have called a rally with Greenpeace, 350.org, Positive Money and others outside the Treasury, 1 Horse Guards Rd, London SW1A 2HQ on Tuesday March 25th at 5pm.
Spring Statement: Reeves ‘confident’ civil service could cut 10,000 roles as Blunkett decries fiscal rules
The former Home Secretary David Blunkett has urged the Chancellor Rachel Reeves to loosen Labour’s fiscal rules, as she said she was “confident” the civil service could be cut back by 10,000 jobs and prepared to slash administrative budgets by over £2bn a year this week.
Blunkett called Labour’s current fiscal rules “Treasury orthodoxy and monetarism at its worst”, in a notable intervention from a figure widely seen as on the right of the party.
The New Labour grandee becomes one of the most high-profile party figures to join the chorus of voices urging a shakeup of the self-imposed rules, which set limits on government borrowing to reassure government bondholders.
Blunkett told the BBC’s The Week in Westminster he would “raise the self-imposed rule by at least £10-15bn”.
He said relaxing the rule would allow the goernment to spend more on a “New Deal” for the unemployed, with a drive to get more young people out of work into jobs or training.
It comes only a few weeks after senior minister Anneliese Dodds expressed her disappointment that the government had not decided to “collectively discuss our fiscal rules and approach to taxation” in her resignation letter over huge cuts to her international aid budget. The pressure from Blunkett and Dodds is striking as many of those publicly backing looser fiscal rules to date have been further to the left of the party.
Reeves is widely expected to slash government spending plans in her Spring Statement to Parliament on Wednesday, with recent welfare cuts forming part of measures designed to get public spending forecasts in line with Labour’s current fiscal rules.
The FT reports cuts could total more than £10bn, with more than half filled by welfare cuts already announced but the rest set to hit other departments. The paper says Reeves’ statement will make “dismal reading” but will blame problems on a “changing world”, emphasise security and say public sector reform is also important.
It cites Treasury officials warning global trade war sparked by Donald Trump could worsen the picture in future further, potentially forcing more cuts and tax hikes.
The Sunday Times reports the welfare cuts alone may cover the amount needed to balance the books, but a Treasury source said she had “taken the choice to restore headroom” to reassure the markets by seeking further savings of around £5 billion.
It has been suggested cuts will average 4.7% to departments, with administrative budgets, which include civil service staffing costs, slashed by 10% or more than £2bn a year.
HR, office management, communications, travel and consultancy spending are among the areas briefed as potentially at risk as the government emphasises its hopes of protecting frontline services, though some will be sceptical about how far savings can be made without worsening outcomes.
The paper suggests as many as one in ten civil service jobs could be at risk, with one union official fearful tens of thousands of roles could face the chop, though Reeves said on Sunday it would be up to departments to identify savings.
It comes after Reeves told the BBC for a forthcoming documentary: “We can’t tax and spend our way to higher living standards and better public services. That’s not available in the world we live in today.”
The Treasury is also thought likely to announce a new crackdown on tax avoidance as well, however, in a move more likely to be welcomed by activists.
A plan to frontload more spending towards the next two years will also delay some of the cuts towards the end of the parliament, though it means they will be even steeper. The Sunday Times reports they will rise at a rate of just 1% by the time of the next election, which may prove challenging for MPs on the doorstep with inflation likely to outstrip spending.
However, the Tories similarly pencilled in steeper cuts towards the end of their borrowing forecasts, and it left many analysts sceptical about whether it would actually proceed with them. The move therefore potentially buys the Treasury time to hope for a better environment or plead changing circumstances in years to come in order to change course closer to the next election.
Reeves: ‘There are no shortcuts’ to turning economy around
Rachel Reeves was out pitch-rolling for the Spring Statement, which accompanies new Office for Budget Responsibility forecasts for the public finances, on the broadcast round on Sunday morning.
She said it was. “not right” to maintain government staffing levels expanded during Covid, and notably told Sky News: “I’m confident that we can reduce civil service numbers by 10,000.”
She added that she had asked every department to rank spending from the most to the least important to work out potential savings, saying such line-by-line spending had not been done for many years.
But she said there would still be spending increases every year, despite the planned savings, and said she rejected the idea – outlined in new Joseph Rowntree Foundation research – that the average family could be £1,400 worse off by the end of the decade. “I’m confident that we will see living standards increase during this parliament.”
On welfare, she told the BBC welfare was “in bad need of reform”, and acknowledged the economy “is not growing fast enough”.
“But we are making the changes that’s necessary to get Britain building again, to bring money into the economy…We’re turning things around, but it takes hard work and there are no shortcuts to getting there.” She denied her past “pessimistic messages” on the economy to date, in the words of presenter Trevor Phillips, had had a negative impact on the economy.
What Labour’s fiscal rules are – and the wider pressure to loosen them
The Chancellor is also expected to “raise the spectre of Liz Truss’ disastrous mini-Budget” in a bid to convince Labour MPs why she cannot further increase borrowing.
Labour’s fiscal rules, based largely on the Conservatives’ similar constraints, include a “stability rule” requiring tax receipts to exceed day-to-day spending by 2029. A further rule requires public sector debt, measured slightly differently as of Labour’s last budget to give slightly more wiggle room, to fall as a share of GDP in the fifth year of current forecasts. There is also a welfare spending cap.
Other figures calling for them to be loosened include former Bank of England chief economist Andy Haldane, who warned earlier this month: “There is a debate to be had about relaxing the UK’s over-rigid fiscal rules and frameworks to reflect a new world order and to prevent them being counter-productive domestically.”
Tom Pollard, head of social policy at the New Economics Foundation, also warned last week that welfare cuts “seem to have been designed to meet fiscal rules rather than people’s needs”.
But Reeves said her Spring Statement would show markets Labour’s fiscal rules were “non-negotiable”.
The false assumptions underlying the government’s fiscal rules
Steve Laughton explains how government spending really works.
“When we’re spending £100bn a year on servicing government debt, I don’t think anyone could seriously argue we don’t need to get a grip on government borrowing and government debt”. Rachel Reeves, on Bloomberg.
Think again.
“Piggynomics”
The principle that underpins Reeves’ concerns is that Musk is right: the state can run out of money and government debt burdens us all. This rests on the belief that when government spends, it gets its funds by either taxing us or borrowing from us. Governments, are like children: they have no money in their piggybanks until someone else has put it there. The government cannot create money, but taxpayers can.
Let’s think about this: taxpayers provide pounds by either paying taxes or lending money to the government. How do we taxpayers source the money?
We don’t create it ourselves. That would be counterfeiting.
In reality money, is not a thing or a commodity or a lump of precious metal. Since President Nixon abandoned the gold standard in 1971, currency is no longer exchangeable for gold or for anything else. Money is a measure of who owes what to whom, and only government or government-authorised institutions (banks) create it.
The government names its unit of account – pounds – and imposes taxes that must be paid in this currency. We get hold of pounds by selling goods or services to the government, which spends its currency into existence.
Those not directly paid by government get pounds by trading with those who are. Thus, government money circulates around the economy.
Imagine you were running a commune, issuing vouchers to members who provide services. They accept your vouchers because the commune imposes taxes payable only in vouchers. When they give you back the vouchers, they no longer owe anything. You cannot run out of vouchers. The vouchers are the commune’s tax credits. Sterling pounds are the UK government’s tax credits required for paying fines and taxes.
The constraint is that if you imposed a tax of ten vouchers and paid everybody twenty vouchers for anything they provided, they’d have no reason to do anything more for you. They would have loads of surplus vouchers with which to pay their next taxes. Secondly, the more vouchers you pay for something, the higher its price in vouchers. The constraint on government spending is the price it pays for purchases. The constraint is inflation.
Deficit Spending
If a government taxes £1,000 but spends £1,200, it leaves £200 in the economy. It fulfils its promise to wipe out our tax debt, andleaves us with £200. It has ‘deficit- spent’: its deficit is our savings. The government does not have to ask us to give back what it has left with us. The government ‘debt’ is just the accumulation of our savings since records began. Higher savings are no risk.
No deficit, no savings. While individuals can save by spending less than they earn, the entire private sector as a whole cannot have net savings, unless the government runs a deficit. To understand why, you need only look at banking.
Bank IOUs
Banks, regulated by government, create their own IOUs in government currency. Contrary to the recent Bank of England book “Cant’ We Just Print More Money”, when a bank grants a loan, it does not lend out savers’ money. Instead, it marks up your account with a deposit, matched by the loan. Loans create deposits, not the other way round. Deposits are liabilities for the bank but assets for customers. When loans are repaid that money no longer exists. The bank only grants the ‘loan’ because it charges you a fee or interest on the loan.
Private sector bank lending produces no net saving, because every deposit created is matched by a debt. While we can use this money when we get the loan, we owe it all back. We cannot save in the long run. By law, banks have to have some savings: positive equity. This puts the non-bank private sector in negative financial equity, unless the government deficit-spends. Running a balanced budget, or worse still a surplus, is highly irresponsible. Exceptions can occur when a country has a large balance of payments surplus, which brings extra money into the country. Suffice to say, the UK does not qualify!
Payment of Tax
The government promises that you can pay your taxes using bank IOUs, but the banks have to pay using their central bank reserves. Only the government creates these reserves. The banks send them back and the government eventually destroys them. The myriad of accounts used to do this are definitively described in The Self-Financing State by Berley, Tye and Wilson.
Thatcher and Piggynomics
Thatcher claimed there was no government money, only taxpayers’ money. She had it back to front: there is no taxpayers’ money, only government money. What we misleadingly call its ‘debt’, is merely money not returned in taxes. The clue is in the word revenue derived from the French revenir, meaning to come back. Tax Returns return the tax credits, extinguishing our debt to the government. Once returned, the tax credit ceases to exist, just as, when you pay back a loan, that debt no longer exists. Money is just this IOU promise: the government owes you the right to redeem your debt. When it meets that promise, its IOU no longer exists. The government can’t spend taxes.
A government never taxes and spends: it always spends and taxes.
The government doesn’t need our money: It needs our labour, and it is our labour that gives money value.
Government Debt is a Misnomer
Money issued by the government is recorded as its liability and our asset. When the government offers to swap our bank deposits for bonds paying higher interest, these bonds are frighteningly called Government Debt. But this debt is unlike debt as we understand the word.
Unlike private debt, the tax credits it leaves in the economy, whether in deposits or bonds, are merely promises to accept them back in payment of tax. It doesn’t’ borrow the promises from us, it can’t give them back or run out of them, any more than the commune can run out of its vouchers.
As Alan Greenspan testified under oath, regarding social security payments, it doesn’t pay them “with taxes” and it can’t run out of payments.
The first and last sign of madness: Government Surpluses
Only government, or institutions authorised by government can spend tax credits, that is central bank reserves, into existence.
After spending on essentials, most people who have money left, like to save for a rainy day or for some expensive purchase. Without government deficit-spending,private sector financial saving cannot exist. If the deficits are too small, our attempts to save cause a shortage of money, resulting in unemployment and private debt. This causes economic stagnation. Loans can’t be repaid. Banks stop lending. Extreme result: 1929 crash or 2008 financial crisis. Note that the 1929 crash occurred after the period in which Coolidge, like Clinton in later years, was boasting a government surplus.
Insufficient government spending crowds out private investment and encourages unsustainable increases in bank lending. Increased government deficits stimulate private investment.
A positive step by Labour has been the relaxation of borrowing restrictions for infrastructure investment.
Wealth Tax and the Piggybank Trap
Progressives who call for wealth taxes to fund spending, fall into the Piggybank Trap, reinforcing the idea that government depends on the wealthy’s money, that the rich hold the purse strings and we don’t want them leaving us; they control the markets which must be appeased. Why peddle a false narrative that supports the 1% and enfeebles governments?
An example of this was when during the Great Financial Crash many thought US dollar lending to Europe indicated helpless dependency on global capital. It actually aimed to lower LIBOR rates, which control US interest rates. The US wanted lower rates. We were not helpless.
Taxing the wealthy destroys money: it doesn’t’ provide the exchequer with more money. Taxing the rich should aim at reducing their power, or bearing down on inflation, if it appears they are spending so much that they are driving up prices (of Bentleys and superyachts?). We don’t need their money to spend on public services.
Responsible fiscal rules require a correct understanding of money. For two decades or more, centre-left parties globally have been losing ground to the populist right. In the UK, if Reform or the Conservatives expanded deficits (by raising tax thresholds) this would spur growth. The supposed economic crisis under Lizz Truss vanished as soon as the Bank of England behaved rationally. If she had understood money, she would have told the BoE to act appropriately before her tax cuts. But no, the myth of the all-powerful markets prevailed and the left encouraged it. This story of the bond vigilante ruse will be explored in a further article.
Fiscal rules based on a mis-conceptualisation of money are the pathway to even greater inequality, economic stagnation and electoral oblivion.
Steve Laughton Dip Econ/ MA Econ has been in the Labour Party since 1981. He was the Political Education Officer of Bournemouth East and Bournemouth West Labour for several years. He is a member of Momentum. Recently he has devoted his time to economics, and remains an independent philosophical economist, who believes current economic wisdom is deeply flawed and that centrist politicians who follow it are paving the way for their own demise.
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