Keir Starmer, yearly review

Ilovecheese

I can understand why the Conservatives can't admit that austerity didn't help the country, in fact made things worse, because it was their idea. But I can't understand why Keir Starmer doesn't say it loud and clear, and present a different way.

I guess because he doesn't want to scare off the voters who think that anything which smacks of Keynesianism is a dirty word.

Reference was made above to needs and wants. A need is something that is needed to survive whilst a want is something that someone desires but may or may not be able to afford.

Maslow's pyramid of needs has Physiological at the base, followed by Safety, Love/Belonging, Esteem and at the top Self - actualization.

He considered that once the Physiological needs (air, food, clothing, shelter and warmth) had been met the individual will then turn to Safety - financial, freedom from fear, social stability, property, health and well being.

I won't elaborate upon the other needs and you can decide for yourselves what wants are.

I would like a govt that ensures that the two lowest hierarchies are met and my hope is that Starmer will do his best to achieve my hopes for the UK.

If you sat the relevant exams for this, you would not be allowed to put forward theories as facts,

Try telling that to a scientist, DaisyAnne.

Do you contest Darwin's Theory of Evolution?

Try telling the Bank of England that they haven't 'created' £billions for Quantitative Easing since 2008, or that they don't 'create' money when they order the printing of bank notes or the minting of coins. Try telling the commercial banks that they don't 'create' money (under licence from the BoE) for loans.

Try telling the expert researchers who spent a great deal of time examining government accounts and accounting practice that their empirical findings are just an opinion.

It's a shame that the word 'theory' was used because it has a different meaning for the lay person from that of the scientific community.

In everyday use, the word "theory" often means an untested hunch, or a guess without supporting evidence. But for scientists, a theory has nearly the opposite meaning. A theory is a well-substantiated explanation of an aspect of the natural world* that can incorporate laws, hypotheses and facts.

www.amnh.org/exhibitions/darwin/evolution-today/what-is-a-theory

(clearly not just the natural world)

Dinahmo - whilst not aware of the Maslow model, this aligns with my thoughts on need and want. I’d also like to admit that I’ve no idea of how a government really decides on spending nor where it gets the money from other than through taxation. I’m Mrs Average I suppose. I’ve always been right of centre (largely due to nothing shaking the doctrine I grew up with) but I haven’t always voted that way. I have a reticence about Starmer as, over time, he’s seemed so bleh… perhaps if he had the fire of Andy Burnham I could be more trusting. It seems that the next election will be all about the struggle for power rather than an honest approach on who could run the country better and that troubles me. It all implies we’re in for a continued lack of stability and yet years of further turmoil. Maybe the past 40 years have been a golden age and we won’t be getting them back anytime soon, however much we might ‘want’ it.

Just a snippet from the AQA A level Economics spec:

"Students should appreciate that governments may deliberately run budget deficits and surpluses to try to influence aggregate demand"

.I’d also like to admit that I’ve no idea of how a government really decides on spending nor where it gets the money from other than through taxation.

I've been trying to explain, ExperiencedNotOld. Governments can create their money. Or they can 'borrow' it from the public by offering bonds and savings vehicles like National Savings accounts. (there's a whole thread somewhere on Premium Bonds winnings; the money paid for the bonds goes to the government). They also issue Treasury bonds which are bought by investors, both institutions, such as pension funds, or individuals. That's government 'borrowing'.
Governments have done this for decades; centuries, even.

Taxation just takes excess money out of the economy.

growstuff

Just a snippet from the AQA A level Economics spec:

"Students should appreciate that governments may deliberately run budget deficits and surpluses to try to influence aggregate demand"

I don't see how a government surplus can stimulate aggregate demand as that is just taking money out of the economy. Or so I understand. And government surpluses are extremely rare.

But I get the drift of the snippet...

ExperiencedNotOld Imagine a society, in which everybody is producing "stuff" or is prepared to offer services, such as caring for others, gardening cleaning, etc etc.

It would be unreasonable to expect people to produce stuff or offer services for free (why would they bother?) That relies on a market to buy the goods, but there's a problem if people don't have enough money to buy anything other than absolute essentials. That happens when there's gross inequality because the people hoarding the money can't spend it.

Such a situation leads to the producers being unemployed or bankrupt. They're going to end up with stock they can't sell and the economy will go into recession. In the worst case, people want to produce stuff, but there's no point.

In order to stimulate an economy and get everything going again, a government can create money, which gives people an incentive to work.

If it looks as though there's too much money in the economy, which could be inflationary, the government can tax. It can choose how it raises taxes, so can balance out the economy, so that money is shared more equitably. Taxation effectively takes money out of circulation and destroys it.

MaizieD

growstuff

Just a snippet from the AQA A level Economics spec:

"Students should appreciate that governments may deliberately run budget deficits and surpluses to try to influence aggregate demand"

I don't see how a government surplus can stimulate aggregate demand as that is just taking money out of the economy. Or so I understand. And government surpluses are extremely rare.

But I get the drift of the snippet...

It doesn't say "stimulate". It says "influence", which isn't the same thing.

The point I was trying to make is that A level students are expected to understand MMT. They're not expected to make a case for it, but they should recognise how money is created.

I think you'd be awarded an A*, if you mentioned it and showed how monetarists would not agree with it.

ExperiencedNotOld I admired Andy Burnham until he stood for leadership of the LP. He angered me because all his references to the poorly paid were those who worked in the public sector. There was no mention of those who were poorly paid and working in the private sector. Many of those employees had much poorer security that those in the public sector. I think that all workers should be considered whenever a politician makes pronouncements about workers.

Now that I live in France I do not take much notice of the regional councils and mayors etc (apart from Sadiq Khan as I lived I London for many years) but I am aware that Burnham is very well thought of.

One reason, if not the only reason, why MaizieD, I and others are occasionally rattled (if that's the right word to use) is because we have explained many times how the Debt came into being at the end of the C17th and beginning of the C18th. It was to finance war with France and lead to the formation of what became the Bank of England. It was repaid and then grew with the Napoleonic Wars, repaid and grew again with WW1 and similarly with WW2.

The borrowing is funded by govts issuing, for example, Loan Stocks, or Gilts. These are not just taken up by pension funds and other professional organisations but also by individuals because they are a very safe method of saving.

Growstuff - thank you. I do know the majority of what you very clearly set out - but as Mrs Average, I have a problem with the following statement “In order to stimulate an economy and get everything going again, a government can create money, which gives people an incentive to work.”
Like the simple fool I am I used to think our wealth was represented by a pile of gold (well, not quite but something tangible) and I really cannot understand how money can just be created. I can’t disappear into the utility room snd come out with some wonga - how can they? That of course depends on the whole monetary system being based not on a reality but a fantasy.
I appreciate it if someone refrains from a snappy quote of some economic policy. It’s around 46 years since I last studied such things. I’m just an ordinary person, fairly intelligent at that, that just wants to understand.

By the end of the Napoleonic Wars in 1815, the UK's national debt was over 200% of GDP. Nobody ever talks about the country being "bankrupt", although borrowers were falling over themselves to lend the government money.

In the century which followed, the UK became the richest country in the world. The national debt isn't the huge problem some people seem to think and is certainly not a reason for austerity.

You can't create wonga because you're not a sovereign country.

These days, the Bank of England can quite literally press a couple of keys on a computer and create money to pay for anything the government wants. It's not even physical money - it's just numbers on a balance sheet.

Pitt first introduced income tax to pay for the weapons in preparation of that war.

So all us Averages falsely (?are lead to?) think our wealth is based on reality whereas it’s just one step away from Mugabe-like behaviour. I’m shocked.
I do have a very good knowledge of history up until George I. I recall Henry VIII gained from reducing the precious metal content of his currency. We’ve come a long way!

On second thoughts, you could theoretically create money. You could print off some notes and use them to pay your window cleaner, who could pay his cleaner, who could pay the gardener, who could pay you for doing babysitting. You could then destroy the notes if you want.

You would have created a currency and all of you would benefit from being able to buy somebody else's services.

growstuff

On second thoughts, you could theoretically create money. You could print off some notes and use them to pay your window cleaner, who could pay his cleaner, who could pay the gardener, who could pay you for doing babysitting. You could then destroy the notes if you want.

You would have created a currency and all of you would benefit from being able to buy somebody else's services.

Like bitcoin which is also not a fiat currency.

growstuff which economic theories are A level students supposed to get to grips with?

Presumably classical, Keynesianism and Marxism - what about those developed from these theories?

ExperiencedNotOld

Growstuff - thank you. I do know the majority of what you very clearly set out - but as Mrs Average, I have a problem with the following statement “In order to stimulate an economy and get everything going again, a government can create money, which gives people an incentive to work.”
Like the simple fool I am I used to think our wealth was represented by a pile of gold (well, not quite but something tangible) and I really cannot understand how money can just be created. I can’t disappear into the utility room snd come out with some wonga - how can they? That of course depends on the whole monetary system being based not on a reality but a fantasy.
I appreciate it if someone refrains from a snappy quote of some economic policy. It’s around 46 years since I last studied such things. I’m just an ordinary person, fairly intelligent at that, that just wants to understand.

I can only agree with the "ordinary person" bit. Lots of reading went into my being in a position to be told how wrong my opinions are.

As for printing money, I don't/can't think it is as simple as some have made out to be.

Currency no longer relates to gold. However, it must relate to the economy. If you have currency valued at "x" and you double this overnight by printing money and freeing it into the wild, I have a strong feeling your currency will lose value overnight.

I agree that there are some things you can spend some extra money on that will be seen as an economic "good" and not trash your economy. Even then, this has to balance against a future percieved growth in the economy. Receiving money against your future income is generally called "borrowing". Why shouldn't it go on being called "borrowing"? Most of us understand that.

Yes, Daisy Anne, this is the simple view that I was alarmed to learn isn’t quite how it really is. It gives me even less faith in our political masters who must have colluded over many years to allow this to occur. Or should we blame those in the senior civil service as they’re the ones with the wit behind running the country? To be perfectly honest how can we expect the motley bunch in parliament, whatever their political bent, to truly understand this debacle. And one that occurs worldwide, I’m sure.

DaisyAnne

I think the question is - do you want a Labour Party that is in power and appealing to the widest possible audience or a Labour Party that agrees with the view of a, possibly small, proportion of the party members and is out of power? That may be difficult for Labour Party members, such as yourself, but some factions will disagree and agree with you within your party too.

I responded earlier to your post - but either forgot to press "Post Message" or it's just disappeared into the ether. It was a bit 'wordy' so I'll not repeat it.

However, in regard to your above comment, I must point out that I am NOT a member of the Labour Party.

And for further clarification, I don't automatically vote for them either during an election.

I think you have assumed my political bias based perhaps on your own - or maybe what I have written gives the wrong impression (and that could be my fault for not being clear enough). I do espouse some left-wing policies / manifesto pledges, and that's maybe where the confusion has arisen.

Briefly, I don't want a Labour party in the hot seat based simply on the fact that it is the Labour party. I want a party that is above all else wedded to the idea of a more equitable and egalitarian society than the one we have now. A party that encourages sustainable growth, and one that will recognise that public services - health and social care, mental health, etc - are, first and foremost, services rather than business opportunities or commodities, but services that are vital to the nation's health and wellbeing. And the same with education which is just as important.

Hear hear Dickens. That represents exactly what ordinary people want. In fact, I think most are fed up with factional politics as presently represented. I’m doesn’t have to always be this way.

I will add my “here here” to that.

ExperiencedNotOld

So all us Averages falsely (?are lead to?) think our wealth is based on reality whereas it’s just one step away from Mugabe-like behaviour. I’m shocked.
I do have a very good knowledge of history up until George I. I recall Henry VIII gained from reducing the precious metal content of his currency. We’ve come a long way!

How about reading the first article in this Bank of England Bulletin? It tells you all about 'money'.

The second deals with money creation.

They aren't complicated reads.

www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/quarterly-bulletin-2014-q1.pdf

Dickens

DaisyAnne

I think the question is - do you want a Labour Party that is in power and appealing to the widest possible audience or a Labour Party that agrees with the view of a, possibly small, proportion of the party members and is out of power? That may be difficult for Labour Party members, such as yourself, but some factions will disagree and agree with you within your party too.

I responded earlier to your post - but either forgot to press "Post Message" or it's just disappeared into the ether. It was a bit 'wordy' so I'll not repeat it.

However, in regard to your above comment, I must point out that I am NOT a member of the Labour Party.

And for further clarification, I don't automatically vote for them either during an election.

I think you have assumed my political bias based perhaps on your own - or maybe what I have written gives the wrong impression (and that could be my fault for not being clear enough). I do espouse some left-wing policies / manifesto pledges, and that's maybe where the confusion has arisen.

Briefly, I don't want a Labour party in the hot seat based simply on the fact that it is the Labour party. I want a party that is above all else wedded to the idea of a more equitable and egalitarian society than the one we have now. A party that encourages sustainable growth, and one that will recognise that public services - health and social care, mental health, etc - are, first and foremost, services rather than business opportunities or commodities, but services that are vital to the nation's health and wellbeing. And the same with education which is just as important.

I'm afraid you can't blame my bias for this Dickens. I thought that you (and others) must be members because you are so sure of your right to tell this membership party what to do. If you are not, then it's a bit like telling the local WI, when you don't belong, how to run their club.

If a Party says they are going in this or that direction I can understand someone saying they will or won't vote for them. I can understand them saying they will vote for them if ... or they will vote for them when ... .

I wouldn't vote for or want a Labour Party under many circumstances and I cannot imagine voting Conservative. If we want to create change, we would have to get in there and help bring it about or you are left making a decision on what they offer. We can't change it.

But that's just how I see it. I'm sure others join you in believing they can change things from a GN forum. I think I have more influence filling in a YouGov Poll.

(You could always form your own party )

Currency no longer relates to gold. However, it must relate to the economy. If you have currency valued at "x" and you double this overnight by printing money and freeing it into the wild, I have a strong feeling your currency will lose value overnight.

It loses value if there is nothing, or very little to spend it on. A responsible government wouldn't just 'print' money for no good reason. In our current economic situation we have plenty to spend it on.

But money does devalue over time, anyway. £1 today won't buy anything like what it would buy 50 years ago. But if resources available for purchase remain in good supply and income keeps pace with inflation, so the proportion of income spent on a commodity remains the same, then the effect doesn't alter, you just spend a greater quantity of 'money'.

The biggest inflationary 'shocks' of our lifetime have been caused by profiteering (OPEC whacking up the price of oil) or supply shortages, not money creation.