The Poverty of Brexit

No I didn’t vote Brexit - the piece is written by a man who did -it was in the Independent. The title of the piece was the line at the bottom.

I understand the first part of your argument, separately , but I can't see how the second part about Mrs T's finite handbag follows from the first, which I don't quite understand and agree with. I wish I could understand.

Just ignore it then Alexa

Someone was saying that the vast majority of new voters are for remain. So with us lot popping off

Blimey, ww. Last time I said anything to that effect on Gnet I was flamed

Hopefully no one will notice

whitewave They say that voters become more Conservative with age. Isn’t it over 45s who gradually change over to voting Tory?

Will it be different with Remain/Leave? It’s more of an emotional conviction (almost a religion). So if new voters favour Remain will the existing Remain voters will stay convinced or will they become Leavers as they age?

And this assumes that most of the oldies dying out voted Leave.

Unfortunately, unless we have another Referendum we’re unlikely to ever find out.

Maisie, I am one of those who are backward at economics who believes this as above in the quote from you. Yet I count myself a socialist.

It's really nothing to do with socialism, alexa. It's basically Keynesian economics and looking at how 'money' is actually created. Keynes was an economist of the mid 20th C. His basic message was that in a depression the government has to put money into the economy in order to stimulate job creation and spending (both spending on infrastructure, investing in manufacturing, and consumer spending). This will bring greater returns to the government in the form of tax receipts from taxes on businesses and income tax (and any other taxes such as VAT) . It's a perfectly respectable theory. The 'neo-liberal' economist believes that in a recession governments must cut back on public spending in order to get more people working in private industry and to encourage the creation of private businesses, to create more 'wealth' in the country which will then come back to the treasury via taxation.

The problem with the neo-liberal theory is that cutting public expenditure, welfare benefits etc. actually diminishes the tax base as public employees lose their jobs and the private businesses that supplied the public sector lose their custom and so their income/profits. That really is what Krugman's long article was all about.

The other aspect is how 'money' is actually 'created'. This is not as 'respectable' as Keynesianism and there are those on Gnet who completely pooh pooh it, but it has a logic to it.

Until the middle of the 20th C 'money' was backed by a government's gold reserves. so it was 'finite'. But since the 'gold standard' was abolished there is nothing to stop a government that has a sovereign currency (i.e is in complete control of it) just 'creating' its own money and putting it into circulation. That's what happened with quantitative easing. Officially the government, via the Bank of England, issued bonds for sale, which offer investors a low but dependable rate of interest. but it's noticeable that the BOE not only sold bonds to investors to raise money but they also 'sold' them to the government. In effect, they lent money to themselves... nothing owing...

The problem with such money 'creation' is inflation, too much money chasing too few goods leads to price rises and can get out of control. This is what all the neo-libs get incensed about. Quite ignoring the fact that we have had some £200 billon of quantitative easing since 2008 but we don't have runaway inflation...

Of course, that might well be because very little of that money has trickled down to us ordinary folks via investment in infrastructure and new businesses. A great deal of it has been used to play the money markets (which is a like a parallel economy which really benefits only people who have the money to play with stocks and shares)

In this theory of money inflation is controlled by taxation and interest rates. If there's too much money sloshing around the economy just tax a bit more of it back. Which, as the government has provided the money in the first place, seems to be a perfectly reasonable thing to do. It does, though, require people to look on tax as a positive thing, rather than an attempt to steal 'their' money! Inflation steals your money anyway...

I think that the social aspect of money is important, too.

Do you believe in fairer shares in the profits that you, as a worker, have helped to create? Do you believe in supporting the weak and defenceless in society? Do you believe that things like universal education and universal health care are of great benefit to society? (I'm not asking you personally, by the way, the 'you' is general) Or do you think that everyone is an individual who must make their own way in life and the weak and ineffective have to go to the wall? I think questions like this very much affect how people think of 'money' and society.

Could someone explain to me whether the EEA could be described as "a customs union" which it seems there may be a majority vote for in parliament? There is a paragraph in an article in The Economist that I find interesting. It says:

Moreover, the EEA model for Britain is one the EU would be happy with. As far as Brussels is concerned, it works. Norway is treated as a friend - unlike Switzerland, which in place of the EEA has a laborious set of bilateral deals. The EU hates the Swiss set-up because it is not dynamically updated to changed single-market rules and there is no agreed disputed settlement mechanism. Diplomats in Brussels are clear the Swiss model is not on offer to the British ... Besides it excludes most financial services.

Any factual clarity would be appreciated.

Sorry Maizie, I have swung away from economic theories. That was a brilliant explanation.

Don't apologise, GG! Threads wander...

As I understand it 'the Norway Model' still involves a border with customs posts and checks. So unacceptable to Ireland, both the ROI and NI.

Embedded services

pbs.twimg.com/media/DVbpmZyX4AEE98J?format=jpg

Which is why the single market is so important in our relationship with Ireland.

I think Kier Starmer is definately making all the right noises.

Thank you very much Maizie. I appreciate the trouble you took to make all this comprehensible to me, and I hope any others at my stage of comprehension will benefit too.

Thanks to you I now understand the difference between Keynsianist and neo-liberalist.

I will have to take more time and rereading to understand the effects of demise of the gold reserve, and money creation.

My view of human nature is similar to yours. I mean that I believe that appreciation of fairness and cooperation are inherent. I also believe that welfare opportunities for all increase the efficiency of any workforce; even automata need maintainance. Carrying on the analogy with automata, workers who have been educated( in the sense of additional to vocational training) are enabled for future changes.

Regarding automation I'm a prudent Luddite.

Just to back you up Maizie, that was a very clear explanation of economics, and I too hope others will read it :-)

Excellent post maize as always.

I would like to also add to the “social” aspect.

Climate change and resultant destruction of our environment means that the continual push for more and more economic growth will have to be slowed/changed drastically - this is something that needs to be fed into the economic model. I am also aware that the Keynesian model may have outlived some of its usefulness in a global world where climate change needs factoring into the equation.

Whtewave, I too wondered that about the Keynesian model. That is part of why I am sort of a Luddite. Neoliberalism is not a viable alternative. Is there a third possibility?

Climate change and resultant destruction of our environment means that the continual push for more and more economic growth will have to be slowed/changed drastically

I agree, ww but the push for 'growth' all the time and the desire of developing countries to emulate the standard and style of living of 'developed' countries doesn't give me much hope for change any time soon.

Have you got an idea alexa you appear to have got your head around the two theories remarkably quickly - I am in awe, it took me years of study!!

maize yes but there are ecologists and climate change scientists working with politicians and economist to try to square the circle.
I’m not at the moment optimistic though.

I wouldn't take my account of Keynesian v neo-lib economics as definitive, though! It's just an attempt to lay out the bare bones...

I think that Keynesianism could work in the UK to reinvigorate the 'real' economy in the short term so long as it's accompanied by an understanding that government borrowing/money creation isn't a Bad Thing but there's also the problem of the 'parallel economy' which seems to me to be just people taking money out without producing anything to benefit the economy.

I'm also concerned about what seems like 'economic imperialism' whereby other countries invest in a country in order to take profits and have influence. China has been doing it for years in places like the Caribbean How does that skew a nation's economy? What hold does it give the investing nation over the nation they're investing in? I'm sure it's certainly not disinterested.

I think it's difficult not to think globally these days.

Going off at a slight tangent here, but I've just been told that Question Time this week was from Uttoxeter, and the building was full of JCB's [Bamford being a great supporter of brexit, obviously because he must have such problems selling his diggers worldwide #idon'tthink]. Is it not wrong for a BBC programme to have blatant advertising for a company?

It's really useful when someone asks a question, even if it means pulling together several people's knowledge to get an answer. At work, if we were doing any training, we always used to hope for "an American in the room". It didn't have to be an American but we had a few US colleagues and had found that, while he Brits would sometimes sit quietly and nod the "American" would ask a question, at which point half the room would look very relieved and listen very carefully to the answer . Everyone has something to contribute, even if it's the question everyone else is thinking and there is a lot of knowledge on GN that can be patch-worked together.

Yes that is exactly the problem. Keynesianism has has difficulty when it comes to a global market, and absolutely nothing to say (for obvious reasons) about climate change and its causes.

Neo-liberalism and it’s support for a small state and maximisation of economic growth is in direct opposition to the phenomena of climate change, which is why you will find so many professed neo-liberalists like Trump and Lawson claim to be climate change sceptics. It simply doesn’t sit well with their world view.

Maizie, thanks for the answer about Norway and "a" single market.

Sorry I took so long to reply my post was to maize