British Labour has to break out of the neo-liberal ‘cost’ framing trap

The other day I read a report in the UK Guardian (April 6, 2017) – Jeremy Corbyn: add VAT to private education fees to fund school meals – which appeared to signal that the world has gone mad. Today, I read a story in the Financial Times (April 11, 2017) – NHS looks to hedge funds to finance possible improvements. They both tell us how entrenched the erroneous neo-liberal ‘cost’ framing is. Modern Monetary Theory (MMT) emphasises real resource availability as the demarcation of fiscal space and rejects the way in which ‘costs’ are framed in the mainstream debate. Statements such as the ‘nation cannot afford the cost of some program’ are never made when the military goes crazy and launches millions of dollars of missiles to be blasted off in the dark of the night. But when it comes to public health systems or the nutritional requirements of our children, the neo-liberals have their calculators out toting up the dollars. However, the actual cost of a government program is the change it causes in the usage of real resources. When we ask whether the nation can afford a policy initiative, we should ignore the $x and consider what real resources are available and the potential benefits. The available real resources constitute the fiscal space. The fiscal space should then always be related to the purposes to which we aspire, and the destination we wish to reach. British Labour needs to learn those basics fast and to break out of the neo-liberal ‘cost’ framing it is trapped within.

On February 21, 2017, the peculiarly British institution, The King’s Fund, which historically has operated to “allow for the collection and distribution of funds in support of the hospitals of London”, released a report – Delivering sustainability and transformation plans – which examined the so-called Sustainability and transformation plans (STPs).

The STPs are “five-year plans covering all aspects of NHS spending in England” and were introduced in the NHS planning guidelines in December 2015.

Essentially, England has been subdivided into 44 geographic areas (with an average of about 1.2 million population in each although the range is from 300,000 to 2.8 million) and plans, based on identified local needs, were drawn up.

The plans must identify the “key priorities” in the following “headline issues”:

1. “improving quality and developing new models of care”.

2. “improving health and wellbeing”.

3. “improving efficiency of services”.

The plans have been submitted and are now (as of April 2017) competing for so-called “NHS transformational funding”. But while some might see the plans as outlining more effective ways of attending to these headline issues, the reality is that they are cost-cutting plans, which aim to rationalise health service institutions – such as closing the number of acute hospitals in certain areas, reducing face-to-face consultations between doctors and patients, and ‘coach’ patients in treating themselves.

The import of the STPs is that they “represent a shift in the way that the NHS in England plans its services”.

The Tory Government’s 2012 Health and Social Care Act aimed to “strengthen the role of competition within the health system”, which means forcing outsourcing, tendering etc and more competition between units within the NHS.

That model has clearly failed and now a new model is being imposed on the NHS.

This UK Guardian article (September 7, 2016) –
STPs: Radical local modernisation plans or the end of the NHS as we know it?
– provides some criticial viewpoint on the plans.

The STP proponents claim it is a collaborative, integrated approach to increasing efficient use of resources. Whenever I read ‘integrated’ in this neo-liberal era I think rationalisation, closures etc.

The Guardian article presents the view held by many that the STPs “are sinister schemes that will see parts of, or even entire hospitals shut, fewer beds, the number of GP surgeries drastically reduced, NHS land sold to profiteers and private healthcare firms treating more NHS patients”.

There is always special pleading involved from units within the big policy departments of any modern government service. But when I hear neo-liberal managers talking about efficiency and improvements I always suspect the worse – cost-cutting and diminished services and longer hours for staff with less growth in pay.

The UK Guardian article wrote that irrespective of which view one takes of the STPs they:

… are the most important issue in the NHS and the thing that will do more than anything else to decide if it is still a viable and well-functioning healthcare system that can live within its means by 2020.

Which sets the ideological slant doesn’t it – “live within its means”. We are talking about a public health system here. In what sense would we talk about ‘living within its means’?

Especially, when the NHS has been given to 2020 to “make the £22bn of savings”.

There is little historical precedent to establish the proposition that a health system saves funds and maintains (much less improves) service scope and quality by closing hospitals, reducing the number of hospital beds available, and outsource essential support services.

There is good research on that issue by the group 38 Degrees.

Think about the “living with its means” comment by juxtaposing it with the additional military outlays that the British government has made in support of various dubious military campaigns.

In 2014, data was published which documented the outlays – the additional British outlays in conflicts since the 1990s

We learn that in addition to the “regular yearly running costs of the military”, the British government spent (in 2012-13 prices):

1. £20,646.4 million in Afghanistan.

2. £9,559.1 million in Iraq (the illegal war based on falsified evidence).

3. £1,541.6 million in Bosnia.

4. £1,064.3 million in Kosovo.

Including other conflicts not mentioned above, the total since the 1991-92 was £34.7 billion.

I do not recall any of the normal pundits crying out “where is the money coming from” at the time of these adventures. In fact, in the last week the US launched 59 missiles onto a Syrian target – each one requires an outlay of $US1.59 million.

That is $US94 million gone up in smoke and flames. Where did the money come from? I haven’t heard the Peter Peterson Foundation asking that question since the launch.

And, one could not say that the outlays have made the world safer, reduced the growth of terrorist groups or improved the well-being of many people – other than the elites who get the bloated procurement contracts etc.

The point is that the “means” that are available to the British health system include qualified staff, bricks and mortar, and consumables.

That is the way we should think about that concept.

Modern Monetary Theory (MMT) emphasises real resource availability as the demarcation of fiscal space and rejects the way in which ‘costs’ are framed in the mainstream debate.
We often hear or read statements such as:

1. Costs to taxpayer

2. The nation cannot afford the cost of that program

If we were to take a public employment program that required government to spend $x billion in wages, capital equipment, administration and oversight, we might reasonably ask about the cost of that program. The conservative frame tells us that the cost is $x (the figure that appears in the annual fiscal documents against the program).

An MMT frame considers the $x in the fiscal papers to be of little interest.

The actual cost of the program is the change it causes in the usage of real resources – more consumption by the unemployed workers, some equipment etc. An additional cost would be the opportunity costs of such a program, which are minimal, given the unemployed are idle.

In fact, in this frame, the increased use of the real resources provides benefits to both the individuals and for society so the use of the term ‘cost’ would be misleading.

When we ask whether the nation can afford a policy initiative, we should ignore the $x and consider what real resources are available and the potential benefits. The available real resources constitute the fiscal space. The fiscal space should then always be related to the purposes to which we aspire, and the destination we wish to reach.

So if the economy is at full employment, then political decisions have to be made about whether the nation needs more real resources being diverted into, say, health care and less into bombing the hell out of Iraq or wherever the bombs are falling now.

The national government is never revenue constrained because it is the monopoly issuer of the currency. So it can buy whatever real resources that are for sale in the currency it issues.

Which means that it the nation determines through the political process to drop bombs and leave sick people sick then it can financially accomplish that goal without issue.

But it also means that if the political force is to have a first-class health system and the real resources are available to accomplish that task then the government can always make that happen.

The NHS is starved of funds because the political process determines that – the support for the NHS and the political voices its musters (presumably within the British Labour Party) have not been strong enough.

In part, this is because the Labour Party has bought the false framing about ‘costs’. It has adopted the neo-liberal frame and thereby has weakened its capacity to argue for the NHS.

The King’s Fund report cited above studied the NHS funding issue closely. It is generally not opposed to the STP process but concluded that:

… lack of funding to support transformation is the area of greatest concern … Without this funding, it simply may not be possible to put in place improved and expanded services in the community and accelerate and spread the development of new care models at the pace and scale needed to transform the delivery of care. Continuing staff shortages resulting from failures in workforce planning will also slow or stymie the ambitions contained in STPs to manage rising demand outside hospitals.

The British Medical Association (BMA) released a press briefing (February 14, 2017) – Capital crisis: STP money fails to materialise – which calibrated the shortfall in funding necessary to ensure the STP are implemented effectively.

The Report said that:

Controversial plans to transform and integrate health and social care services require at least £9.5bn of capital funding – but NHS leaders don’t have the cash and will ask for demands to be ‘reviewed’ and ‘refined’ … vast sums needed just to create the infrastructure to deliver the projects, with costly building projects and investment in community facilities vital to the plans … the process was doomed to failure all along owing to inadequate funding and a lack of political will to transform services properly – with politicians and health leaders instead focused on making savings.

As many who seek to defend the NHS have suspected all along (and it fits my rule of thumb noted above), the STP process has just “become a vehicle for £26bn of covert savings – yet another crippling blow dealt by a Government with a vicious austerity agenda and lacking the gumption to come up with properly funded solutions for a health service in crisis” (in the words of the BMA).

We learn that “health bosses” are also raiding “capital budgets” to plug gaps in operational expenses in hospitals to cover the shortfall in government funding.

Over the last two years, the capital budget for the British health system has transferred funds to cover daily operational shortfalls. Around 25 per cent of the 2016-17 capital budget has been diverted in this way (£1.2 billion).

The myopia of neo-liberalism. Cut maintenance and infrastructure spending and sooner or later the whole ‘bridge’ falls down.

I have written about this before in different contexts:

1. Mental illness and homelessness – fiscal myopia strikes again.

2. British floods demonstrate the myopia of fiscal austerity.

3. The myopia of fiscal austerity.

4. The myopia of neo-liberalism and the IMF is now evident to all.

5. Austerity is the enemy of our grandchildren as public infrastructure degrades.

6. We starve the state and public infrastructure development at our peril.

Then we get to yesterday’s Financial Times report that – NHS looks to hedge funds to finance possible improvements.

And at that point you realise that: (a) the whole debate has gone mad; (b) the political Left is bereft for not being miles in front in the polls on these major public interest issues.

The FT Report basically says that:

The NHS is considering borrowing from hedge funds to pay for new buildings and equipment because of public spending cuts.

Apparently, the hedge funds are “keen to lend to the NHS” – of course they would be – they smell big, easy-picking profits. And they have zero concern about the long-term viability and quality of the service.

Recent history is littered with these Private Finance Initiatives (PFI) with respect to essential public sector infrastructure. They typically inflate costs, reduce service scope and quality and in the case of buildings etc leave inferior infrastructure to be dealt with by the public authorities long after the hedge funds have counted their cash and gone their merry way!

Public health is a huge issue and one that the Left typically has more popular propositions. Which makes this on-going health funding crisis in the UK more puzzling – well not really.

While the Blair government certainly was an improvement on the Thatcher public health disasters as she tried to impose the ‘market system’ on the NHS, New Labour never abandoned that flawed model.

Blair allowed the ridiculous and largely unaccountable ‘Hospital Trusts’ to remain in place and the ‘market paradigm’ to dominate.

New Labour also continued to underfund the NHS and where funding growth occurred it was tied to ‘efficiency dividends’ (aka cost cutting and reduced service).

New Labour also continued the ‘privatisation’ agenda within the public health system – allowing private, profit-seeking parasites to access parts of the system in the name of efficiency.

This included the PFI push.

So the political Left was already without impact during the years British Labour was in power.

And now, with the Labour Party being lead by Jeremy Corbyn, one hoped that the New Labour agenda would disappear and that Labour would articulate a differentiated agenda for the voters.

Health and education is a perfect battleground because it goes to core values and affects most people.

But Jeremy Corbyn still operates within a neo-liberal ‘cost’ frame. So the best Jeremy Corbyn appears to be able to do is to announce that it will tax the rich to raise funds to ensure children have adequate nutrition.

Why not just instruct the relevant policy department (Education?) to buy some food and hire some cooks and related staff and be done with it?

The UK Guardian article (April 6, 2017) – Jeremy Corbyn: add VAT to private education fees to fund school meals – says it all.

The Labour leader announced that he would:

… fund free school meals for all primary school children by adding VAT to private school fees … the policy would benefit children’s health while ending a subsidy for the privileged few.

It might be desirable to have less purchasing power in the hands of parents who send their children to private schools. That case would need to be made because that is the only reason that raising the costs of private education would be reasonable.

But to link that to public health issues and the nutritional requirements of children, especially disadvantaged ones who are particularly challenged in this regard, is to fall into the trap of neo-liberal ‘cost’ framing.

It is clear from all the evidence that:

… offering universal access to free school meals improves pupils’ productivity and enables them to advance by around two months on average.

The British kids are its future. There will be massive returns if correct investments are made in their development – including feeding them properly and providing a sound educational system.

When I lived in Britain, I was particularly impressed with the school meal program. It clearly helps kids from poor backgrounds get at least one decent meal a day.

The ‘cost’ of doing that is really the extra food they eat, the infrastuctures (kitchens etc) that is required to deliver the food etc.

The government outlays to make that happen are not a ‘cost’ in any sensible construction.

So it is sheer madness to suggest that proper nutrition for kids in Britain is dependent on some ‘tax base’ or another.

That is how far the neo-liberal con has evolved.

Decent people like Jeremy Corbyn are totally besotted by it.

And as long as the Left leadership is framing these important social issues in the erroneos neo-liberal ‘cost’ terms the longer the NHS will be starved of funds and poor kids will go hungry.

Conclusion

Madness.

That is enough for today!

(c) Copyright 2017 William Mitchell. All Rights Reserved.

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    30 Responses to British Labour has to break out of the neo-liberal ‘cost’ framing trap

    1. Neil Wilson says:

      “Decent people like Jeremy Corbyn are totally besotted by it.”

      Corbyn’s best mate John McDonnell is besotted by it and he’s having his strings pulled by neoliberals and ‘socialists’ economists in the same frame. The likes of James Meadway and Simon Wren-Lewis.

      What’s even more amusing is that it isn’t even required in the Bastardised Keynesian model these people follow. If the government announces a big spending program that is supposed to alter expectations and the central bank function responds by pulling its one and only interest rate lever to make space for the spending and ensuring the multiplier impact is 1.

    2. Brendanm says:

      On the other hand a job guarantee would fix most of the malnutrition problem in a far cleaner manner. At the very least you could just directly charge either the child or the parent with confidence that they had a living wage available to them.

    3. Simon Cohen says:

      The inability of Corbyn and the Left to articulate a better fiscal narrative is destroying them -however, they are (without being conscious of it) between a rock and a hard place)

      1) The myths about spending and a ‘shortage of money’ have become mental wall paper and very hard to remove if possible at this juncture of supremely dumbed-down debtate. SO even if Labour adopted MMT overnight the press would savage them even more and BBC etc journalists rant on about the inter-generational debt blah…blah….

      2) By adopting the neo-lib narrative but adding the ‘spending creates income’ Keynesian bit they still walk into the same trap and the public are told the usual trash about Labour being spendthrift.

      No win either way for Labour despite polls showing the country WANT rail nationalisation/houses/ NHS improved.

      As a social care disaster approaches and doctors leave in droves and student debt piles up people like Theresa May shout at Corbyn about him ‘bankrupting the economy’ and there is NO reply!!!!!

      I’ve promised myself that I won’t let this drive me to drink!

    4. Simon Cohen says:

      Dear Bill,

      Do you have a date for your talk at the Labour Conference later this year ?-I would like to go to it if I can.

      Thanks,

      Simon

    5. bill says:

      Dear Simon Cohen (at 2017/04/12 at 5:29 pm)

      This information is tentative at present but the dates are fairly solid.

      1. Talk at Labour Conference, Brighton – Monday evening September 25, 2017.

      2. Talk at Launch of my next book, London – Tuesday September 26, 2017 – probably early evening (after work function).

      3. Another talk London or Manchester (maybe) – Wednesday, September 27, 2017.

      4. Talk Madrid – Thursday, September 28, 2017 (evening).

      5. Tentative Berlin – Friday, September 29, 2017.

      6. Talk – Rome, October 1, 2017.

      7. Talk – Milan, October 2, 2017.

      8. Talk and other functions – book launches etc, Helsinki, October 3-5, 2017.

      9. Tentative event Brussels – October 6, 2017.

      Once dates and times and locations are known for sure I will post the information.

      best wishes
      bill

    6. MrShigemitsu says:

      “British Labour needs to learn those basics fast and to break out of the neo-liberal ‘cost’ framing it is trapped within.”

      Dear Bill, I just hope someone ties John McDonnell to a chair in the front row of your talk at the Labour Party Conference on 25 Sept.

      But is he even smart enough to get it, or brave and determined enough to spend the next 3 years proselytising the MMT message? I very much doubt it.

      What a waste of time; he could have been doing it for the last two years already, and cutting through the inevitable rightwing criticism. It’s enough to make you despair.

    7. Jeff L says:

      Hope you come to Manchester Bill, would be great to see you up here.

      Alas, I think I commented on this subject the other week, in the car on the way home I was listening to a shadow minister confidently excoriate the government for cutting police resources – the interview continued in this vain for 2-3 minutes with her offering her alternative vision based on investment, until the killer question arrives – ‘how would you pay for it’ ?
      There proceeded the usual embarrassment, 2-3 minutes listening to someone flail around like a fish out of water gasping for life. It was pathetic.

      There is no hope with Corbyn & McDonnell as it stands, and it goes back to the first few weeks after the first leadership election. They swung from talking about investment in public services to then balancing the books in the space of a few days – it was clear they were clueless.

      And this is the problem – you need someone with the intellectual heft to not only understand, but also explain clearly to a lay audience how government spending works. None of them are capable – so they regress to the safe zone of just saying we’ll ‘borrow to invest’ or tax private schools ‘to pay’ for free school meals. Or they’ll balance the books ‘later’.

      I do wonder if there is a single MP in the house who understands all this, particularly those of a progressive persuasion.

    8. Simon Cohen says:

      Jeff -‘you need someone with the intellectual heft to not only understand, but also explain clearly to a lay audience how government spending works. ‘

      In the U.S Stephanie Kelton is doing just this and doing it effectively (worth checking out her You Tube presentations). Unfortunately, in the U.K there seems to be no-one resident with the expertise to do this which is why Bill’s occasional visits are so important but we really need economists here in the UK to get the message across. Hopefully, there are some Universities using Bill and Randall Wray’s book. I agree with Mr. Shigemitsu that if labour had got this debate going two years ago it would have been at least a start even if the media would have ridiculed it.

      As an ‘ex-Mancunian’ good to here that MMT is alive and well in Manchester!

    9. Pat Berkhold says:

      The Global Financial Crisis should have provided such a wake-up call to analyse what was wrong and look for alternatives. That and being made redundant certainly did for me. Yet Labour has wasted the years since. Every year the argument is trotted out that they have to appeal to the laughably named middle ground (which has been shifted radically to the right) yet they don’t win enough support, neither do they work at the long term task of presenting a useful alternative. The Greens meanwhile are besotted with a Universal Basic Income. I despair.

    10. Jeff L says:

      @Simon – to be honest I was thinking of political expertise. Neil does a great job from a UK perspective and I enjoy reading his blogs, but what is really needed is somebody able to agitate for it in parliament, to raise awareness amongst MP’s. To wield some political power, to publicise it. We’re missing that step – even one MP would be a start (no pressure Bill !)
      Look at the effect one Green MP has on the wider progressive consciousness, even if some of it is misguided.
      With no political platform its easily ignored – neoliberals really do not want to argue this stuff as reality is not on their side. Getting them to argue in the first place would be a start.
      Progressive politics is in a death spiral and if it carries on being neoliberal lite it deserves to die. The lack of intellectual curiosity is simply astounding as Pat alludes to, I’m not sure whether its political expediency to blame or if they’re just not very bright.
      It’s hard to tell but it is very frustrating at times

    11. Willem says:

      @Simon Cohen

      The debate in Britain on the NHS i think proves the power of the government budget – household budget analogy. The ease with which the BBC parrot the official line that NHS funding is no longer certain without cuts, it begs belief. This thinking has been so entrenched in British media, that i suspect a leader who would tell the people they’ve been duped by this finite finances hoax, could lose the vote for telling the truth. Nevertheless it needs to change one day. Already people are dying because of lack of adequate resources. In february several people died waiting for care in the hallway because so many care facilities have already been closed.

    12. Ikonoclast says:

      Bill,

      I particularly liked your first paragraph. So brilliant, so true. Why can’t these people (neolibs, neolib cheer squads and neolib dupes) understand that only real quantities are real? Real materials, real energy, real resources, real activities, real services, real goods etc. Nominal accounting quantities are just, that nominal not real. They are used for comparisons and trading. They essentially have those purposes and those purposes only. They are in every sense virtual and not real. Along with the other fallacies you rightly decry, like the fallacy of composition, I think you could frequently and trenchantly criticise (if you have not already) the fallacy of reification.

      “Reification (fallacy). Reification (also known as concretism, hypostatization, or the fallacy of misplaced concreteness) is a fallacy of ambiguity, when an abstraction (abstract belief or hypothetical construct) is treated as if it were a concrete real event or physical entity.” – Wikipedia.

      This is the problem. People treat money as if it is real, not just real in an accounting sense and social acceptance sense, but as real on a plane fully equatable with physical reality. This primitive, literalist, reification, thinking is like “Doh! No petrol, car won’t go. No money, economy won’t go.” It is just so foolish and banal. Once one sees the obvious material realities one can see how absurdly fallacious such thinking is. It’s amazing and sad how indoctrination into the most fallacious tripe stops people seeing the reality in front of their faces. It is fashionable now in faux intellectual circles to ridicule any mention of false consciousness. But sadly it is a very real phenomenon and it is intensifying (being deliberately intensified by the corporate rulers and manipulators) under late stage capitalism.

      Snog’s song Capitalism is quite brilliant I think, especially when paired with this montage.

      Bill,

      I particularly liked your first paragraph. So brilliant, so true. Why can’t these people (neolibs, neolib cheer sqauds and neoliberal dupes) understand that only real quantities are real? Real materials, real energy, real resources, real activities, real services, real goods etc. Nominal accounting quantities are just that nominal not real. They are used for comparisons and trading. They have that purpose and that purpose only. They are in every sense virtual and not real. Along with the other fallacies you rightly decry, like the fallacy of composition, I think you could frequently and trenchently criticise (if you have bot already done so) the fallacy of reification.

      “Reification (fallacy). Reification (also known as concretism, hypostatization, or the fallacy of misplaced concreteness) is a fallacy of ambiguity, when an abstraction (abstract belief or hypothetical construct) is treated as if it were a concrete real event or physical entity.” – Wikipedia.

      This is the problem. People treat money as if it is real, not just in an accounting sense and social acceptance sense, but as real on a plane fully equatable with physical reality. This primitive, literalist, reification thinking is like “Doh! No petrol, car won’t go. No money, economy won’t go.” It is just so foolish and banal. Once one sees the obvious material realities one can see how absurdly fallacious such thinking is. It’s amazing and sad how indoctrination into the most fallacious tripe stops people seeing the reality in front of their faces. It is fashionable now in faux intellectual circles to ridicule any mention of false consciousness. But sadly it is a very real phenomenon and it is intensifying and under late stage capitalism.

      Snog’s song “This is Capitalism” is quite brilliant I think, especially paired with this montage.

    13. Ikonoclast says:

      Sorry for the double post of the text above: a mis-click of some kind on my part.

    14. GLH says:

      I suspect that the fact that Corbyn wants to tax the real economy instead of the wealth extractors shows where his financial support is coming from. Also, instead of borrowing money from the hedge funds Britain should be taxing the hell out of them. Corbyn could use that money for public health and not hurt the real economy at all.

    15. john doyle says:

      Dear Biil, this turned up in a blog by George Monbiot this week.
      Do you know anything about Kate Raworth’s idea of a Doughnut Economy?
      It doesn’t compete with MMT, but it does tie in resources with economics,
      which I see you are also doing, for instance writing today that the Output Gap is the available real resources, rather than the comparison between the state of the current economy versus its potential at full employment etc.
      It’s a good idea to include resources still in the ground as valuable. That might stop the idea that it’s valuable for us to dig up all our gold and sell it off, all for a few numbers in accounts, and call it export dollars as if were a good thing! It will strengthen MMT’s idea that exports are a cost, not a benefit.

    16. Steven Watson says:

      I get your criticisms of the proposed policy on adding value added tax (VAT) to independent school fees in order to pay for universal free school meals for primary pupils. However, there are wider considerations here. Although, I see economics from a Modern Monetary Theory perspective, I see the immense amount of work that has to be done to change the public view. Most people I speak to, even educated liberal and progressive-minded folk, see the economy as tax, borrow and spend. Analogous to their own finance. Many are incredulous at suggestions of alternative perspectives. They go off in some furious tailspin citing Venezuela, Zimbabwe or the Weimar Republic.
      On the other hand, many people on the left are beginning to get MMT and are learning how to explain it and counter the arguments against. I have found your blog and textbook really helpful in this.
      The Labour Party has been in enormous transition this last two years. I estimate that 60 or 70% of the 500,000 membership are anti-austerity/ anti neoliberal. However, amongst the MPs some 70 or 80% are neoliberal or doing the bidding for neoliberals. The machinery and bureaucracy of the party is controlled by them at present. There is one hell of a struggle going on in wards and constituencies in which grassroots members are trying to open the party up, to make it open, democratic and transparent.
      Meanwhile the leadership, Jeremy Corbyn and allies on the shadow front bench, are isolated. They are on the same page as MMT, I am sure. Shadow Chancellor John McDonnell has been touring the country with various heterodox economists and holding public conferences. A very good thing in reaching out to a wider audience, in my view.
      Back to the policy. I see it as a progressive taxation and separately an increase spending on free school meals. But the messaging is that one pays for the other. This has been very well-received, because it is a progressive taxation and an increase in public spending. If it is lumped together as a hypothecated taxation then I see your point. However, where we are in the Labour party and in terms of the wider electorate, it is necessary to take a steady run up to the introduction of heterodox economics. Ever tried explaining MMT on the doorstep? It’s not easy.
      However, this policy proposal has prompted lots of beneficial and productive discussions about the economy. This was prompted by people’s concern about the efficiency of universal welfare as opposed to means-tested. The latter is a real neo-liberal view, a cost framing view. I and others have been able to introduce alternative economic arguments in this discussion.
      So, many of us on the resurgent British left are on the same page, economically. But we got a lot of work to do in educating the electorate (and ourselves).

    17. Jeff L says:

      @Stephen – the problem is that you’ll never be able to explain it on the doorstep if the public have never heard of it in the first place. It starts with political leadership, either a single MP or a number of MP’s arguing the case.
      Continuing to make the neoliberal case that taxes ‘pay’ for services is directly playing into the opposition’s hands. You’re actually making *their* case for them. It’s a trap the left keep hurling themselves headlong into. I’d argue that the left is only on the same page economically in terms of its opposition to austerity (parts of the PLP excepted) – they’re completely confused about the solutions. Read any Guardian comments section BTL and you’ll see advocates for UBI, Keynesianism, Tax & Spend, soak the rich, join the Euro, more free trade etc etc.

      Why not argue for reality, instead of wasting time continuing to argue for something that is harmful to progressive politics, harmful to the people they represent and is simply untrue ?

    18. Nigel Hargreaves says:

      Eighteen months or so ago, Bill, you were enthusing about Corbyn. A month or so ago you announced you were taking time out to speak to a group of people in the British Labour Party whilst in London. What has gone wrong?

      I too saw the nonsensical proposal by Corbyn to “fund” free school meals by imposing VAT on private school fees. Eighteen months ago he was espousing Peoples Quantitative Easing. His Economic Advisory Panel has now been disbanded. What has gone wrong?

      Clearly Corbyn is being brought to heel by some means or other. Could it be membership of the Privy Council, I wonder? Or could it just be that he is trying to find a way to make himself electable which at the moment he certainly isn’t. Constructing a dialogue that included MMT and could be understood by the media and the public at large would be nigh on impossible. And politics is all about rhetoric.

      This is an excellent post pointing out how resources are the thing at issue, but I’m afraid there is no hope our leaders will ever understand that.

      Simon, there is a guest flat in my block that costs only £7.50 a night. You are welcome to stay here and come down to Brighton with me. I intend to drive there and back in the day. You’ve got my email address.

    19. If all the MPs were onboard I would agree. But with 70 or 80% actively promoting the status quo, it is not possible at the moment. Corbyn can only move in that direction, while the work is done by grassroots supports in taking over the machinery of the party. If all the MPs were committed I would say go full throttle. Corbyn has opposition from Tories, the MSM and his own MPs. We have to be tactical here. But the left is growing in strength and efficacy.

    20. Hi Bill,

      Re the hedge fund horror, I managed to get this in the Independent. “Deborah Harrington, also of the National Health Action Party, told The Independent: “There is nothing good about this plan. The cheapest and most effective way to fund public services is directly from the Treasury. It’s not that the Government can’t, it’s that they won’t. It is yet another cynical handover of public assets to the private sector… now we will have hedge funds joining the feeding frenzy.”

      It isn’t the full Monty, but it was better than nothing. We keep plugging away.

      You refer in passing to 38 degrees. They do some good stuff, but sadly on the NHS they pay large sums (raised via their subscribers) to Incisive Health for their information. They are private health sector lobbyists run by Bill Morgan, the SpAd to Andrew Langley who wrote the privatising Health & Social Care Act for the Coalition. 38 falls into the trap of not differentiating between different kinds of health ‘experts’ and it led to them doing a survey (which looked remarkably like a market research piece) based on a series of questions about what people would be prepared to pay for the NHS. Starting with 1p on income tax or extra ‘sin’ taxes on cigarettes and alcohol the choices led down a path which progressed further and further towards co-payments, I am told, or as 38 described it ‘more controversial options’. I didn’t get further than round one. Instead I wrote on their page explaining why they were not only mistaken in their choice of advisers and their economic paradigm but that their framing fed directly into the privatisation agenda.

      http://www.independent.co.uk/news/health/nhs-plans-borrow-10-billion-hedge-funds-healthcare-desperate-treasury-gp-infrastructure-jim-mackey-a7675751.html

    21. Steven Watson, I am afraid that Corbyn and McDonnell do not seem to be making moves towards understanding MMT or using its arguments. McDonnell has been talking about hypothecated taxes for the NHS. That is a retrograde step indeed, but undoubtedly one which resonates as ‘understandable’ with the public. it will remain ‘understandable’ as long as people keep talking as if it is sensible and true. It is neither.

    22. larry says:

      “So the best Jeremy Corbyn appears to be able to do is to announce that ”

      Announce what, Bill?

    23. Neil Wilson says:

      “Shadow Chancellor John McDonnell has been touring the country with various heterodox economists and holding public conferences.”

      He has been going around spinning the socialist worker line economic line from the 1970s – ably supported by those who can only do static analysis and are only interested in smashing the rich rather than elevating the poor. The policy on small business payments was the same old Labour – lots of angry words about everybody doing the right thing and yet more ineffective regulators. Small businesses can already use the small claims court to get payment and interest. That doesn’t speed up payment times.

      What would speed up payment times is if small businesses could factor an unpaid, unchallenged, invoice via HMRC on a non-recourse basis – with HMRC enforcing payment and interest on the larger suppliers. And that requires the deployment of state financial power to break the payment chain.

      McDonnell is the problem. He still thinks he’s running the finance for the GLC. Labour have not abandoned core beliefs that have been shown time and again to be false.

      People won’t do the right thing and the Left relying on that “let’s all have a big hug” has crippled policy since 1945. Even Beveridge talks about firms and unions agreeing to work for the common good. And guess what, they didn’t. They operated in group self-interest just as people always do.

      The response to how do you pay for it is to say ‘by spending the money’ and then bridge onto real resource discussions. In the private school debate I would be asking whether private schools should exist in a time of teacher shortages. Why should the rich be able to reserve teachers for their own children when so many other schools are suffering a major shortage?

    24. Neil Wilson says:

      “McDonnell has been talking about hypothecated taxes for the NHS.”

      Deborah,

      The NHA party needs to decide its position on private healthcare. Because then it can say that the resources the NHS require are tied up on the private healthcare system. Why should the rich be able to reserve medical resources for themselves because they have money ahead of other citizens who have a real medical need?

      Even in real terms we’re in a bind. The Tories have spent the seed corn and we need to reduce supply capacity to get the training system up to the level we require to supply new people into the Health Service.

      We can’t have a policy of taking medical resources from the rest of the world. They need them as much as we do.

    25. Simon Cohen says:

      ‘We can’t have a policy of taking medical resources from the rest of the world. They need them as much as we do.’

      This is absolutely spot on Neil, as are many of your other observations. I like your phrase ‘they have money ahead of other citizens’ which challenges the whose time flow of access to money.

      I think we had a discussion about the end of the ‘one world’ approach of global capitalism on a blog a few weeks back. of course the reasonable and rational approach you advocate here would require a ‘one world’ approach to resource governance but with an emphasis on ‘local’ need for reasonable resources and jobs via the job guarantee. In the end wouldn’t it be a question of humans becoming more rational and realising the give and take required here to avoid the beggar thy neighbour zero sum game? Ironically, if we were to develop such a governance it would be a form of job creation in itself with meaningful work in a more economically connected up world.

      The technology is there to do it with the information flow -but where is the psychological shift? Bit of a lag there!

    26. David Kelley says:

      This article answers my request to you to help us out in the UK! I know this is not a reply to me, but it is a very clear statement of where we are now. I only recently got to know of MMT, through jimmurphysbrassneck on the Guardian. Who referenced you among others to follow. Thanks.

    27. Salford Lad says:

      One cost which is hidden is the $24 million given by the UK to the White Helmet pseudo Red Cross and propaganda arm of DAESH.
      They are also the producers of the false flag Khan Shaykun chemical weapon atrocity scenario in Syria, which has brought the world to a high tension with a stand-off between the nuclear powers of US and Russia.
      Figure out the cost analysis on that conflagration.

    28. Kevin Harding says:

      All this is true.The left have made a rod for themselves without tackling the household
      anology head on .Working in the frontline of the NHS I can only dream of the resources
      the government could acquire.
      BUt the ability of the government to acquire resources is a direct,real threat to the wealthy.
      They want access to those resources they do not want the government or the poor to
      threaten that access.Capatalism tends to oligarchy.The left, Corbyns team , the neo liberilsed
      centre left have no coherent answer.Common ownership resulted in its own corruption
      and elite animal farm style.
      The truth is the MMT platform of fiscal stimulus and Job guarentees will threaten
      the wealth hording of the few and will be ruthlessly opposed and if implemented gamed for
      their advantage.Without challenging the inequality of spending power social justice will never
      materialize .
      Fiscal stimulus even with low unemployment as Japan shows is not enough to reverse the rise
      of oligarchy .Without increasing fiscal transfers the growth of inequality and the fall of
      social mobility is inevitable.
      Yes the left have no coherent policies to deal with this and the acceptance of state monetary
      power is essential to start to reverse capatalisms natural tendancy to oligarchy but I am
      afraid there is no coherent policies for fiscal transfer within MMT sites.

    29. Neil, I agree with you about resources. NHA has this on its front page article about the global branding of the NHS: “With increasing waiting lists for treatments across hospitals in England, with the double shock last week of the deaths in the Worcestershire Royal Infirmary and the Red Cross being called in to respond to the ‘humanitarian crisis’ in the NHS, these are questions which need urgent answers. It isn’t just about the money received – it is a question of the use of resources. Doctors, nurses and other clinical staff are required for these expanding private facilities whilst the NHS services literally next door in most cases struggle to fill their rotas.”

    30. Keith Newman says:

      Further to comments by Kevin Harding and others regarding class interests (the wealthy vs the rest of us), it is now clear a full ten years into the financial crisis that our hope politicians would see the MMT light will not happen. They need to feel the heat. And that will only come by mobilizing millions of people on the ground demanding the public services and jobs we need, based on the real resource arguments made by Bill.
      This will not happen by itself. Bill, and other MMTers, have played a brilliant role in explaining why we can have these things and giving us the understanding and confidence to demand them. It is up to the rest of us to get our unions, municipalities, retiree, anti-poverty, immigrant, etc., etc., groups to demand them with a uniform message across the country that brushes aside the household finance arguments. This can be done. It requires convincing the leaders then the rank and file (or vice-versa) of the MMT truths. It requires working out simple, effective messaging and time and perseverance. We must be relentless, single-minded, and repeat the same message over and over, just like the Right. Relying on convincing politicians will not get us there. Even the best amongst them operates in the four year election cycle and will lose focus if they face defeat. We need to take a long term view and realize it may take 10 or 20 years to achieve. Perhaps sooner if another crisis materializes.

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