(cont)

Some of these powers are already in the hands of Government, and only the will and vision are lacking … despite these encroachments by the Government on the sphere of private enterprise, the main controls of the economic system remain in the hands of those whose actuating motive is private profit. It is to the securing of these controls for the service of the community that the Labour Government will turn its hand.

He then addressed the question of first “importance …financial power” and wrote (p.179):

Over and over again we have seen that there is in this country another power than that which has its seat at Westminster. The City of London, a convenient term for a collection of financial interests, is able to assert itself against the Government of this country. Those who control money can pursue a policy at home and abroad contrary to that which has been decided by the people. The first step in the transfer of this power is the conversion of the Bank of England into a State institution.

He noted that The City had been running a scare campaign opposed to the nationalisation of the bank – for example, “to seize the savings of the well-to-do”

Significantly, even though Attlee succeeded in nationalising the Bank of England, in 1998 Tony Blair “gave the central bank total independence”.

Blair also:

… changed the voting system in the chambers of the CLC by authorizing that businesses could vote alongside the City of London residents. This, in fact, handed power over to the business vote due to the relative population sizes: 7,000 residents versus 24,000 business representatives.

So the Labour Party, which continually expresses fear of The City, used their legislative power while in office to give The City even more power.

The Labour Party also still play along with the Mansion House charade – which is when the Chancellor of the British Government is “invited each year to appear before the Lord Mayor at the Guildhall (in the City of London) and at the Mansion House (the Lord Mayor’s residence) to justify his or her actions and present their plans for future financial policy.”

The City thus makes sure that government policy will always promote The City.

In another 2014 article I read by Sukhdev Johal, Michael Moran and Karel Williams – Power, Politics and the City of London after the Great Financial Crisis – (published in Government and Opposition, Vol. 49, No. 3, 400-425) – we consider “two dominant questions” that “have shaped power relations: what is to be the relationship between the City of London and the (formally) democratic system of UK government in which it is embedded; and what is to be the role of competition in the workings of financial markets?”

A clue is that in the recent decades “we can see the City organizing itself as a conventional professional lobby designed to ensure victory in struggles over overt decisions.”

And “Finance may still be dominant, but its power is increasingly precarious because it now fights on terrain not of its choosing, where outcomes are uncertain.”

https://theconversation.com/everybody-has-not-won-trickle-down-economics-was-an-...

‘Everybody has not won’: trickle-down economics was an idiotic idea. How do we fix the inequality it causes?

While the US is an extreme example, it reflects the dominant trend in fiscal policy across the liberal-democratic world. Among the G20 countries, the highest tax rates have fallen by around a third over the past 40 years. Meanwhile, the share of national income sequestered by the wealthiest 1% has grown by 45%.

Time for change
Taken together, Alfani and Robeyns yield two critical conclusions.

The first is that the extreme inequality represented by the ultra-wealthy is a significant social problem, and it is getting worse. The pivotal historical point at which this turn for the worse happened was the advent of globalised neoliberalism some 40 years ago.

Inequality has since become so ingrained in the contemporary world as “normal” that, for some, it is thought of as a natural outcome of a meritocratic system. For others, inequality is a sad reality that cannot be changed, no matter how unjust and undesirable.

Fortunately, reading Alfani and Robeyns together yields a second conclusion. Their work resists both neoliberal triumphalism and cynicism. Inequality, they show, is a social and historical phenomenon, therefore it is not immutable.

Change towards greater justice may be difficult, but there is no reason to believe it is impossible. We know now definitively that the idea of a trickle-down economy is as idiotic an idea as it seems on face value. That people ever accepted it is reason for embarrassment. That some people are still backing it is insulting to all.

Forty years of the neoliberal experiment have created a world of vast and increasing inequality rationalised by the false promises of a global free market. But this can change, and it should change. Most importantly, as these two books attest, there is a growing will to change and to create fairer societies, where the material benefits of the world’s wealth do not accrue to an extreme minority.

.....

Only two choices for meaningful change; return taxation rates back to Keynesian welfare state levels, eg, 90% marginal tax rates on high incomes; or free the currency-issuing  government from the idiotic orthodoxy of raising public revenue from taxation on median (and  even average) incomes, and/or the idiocy of borrowing from rich people (via selling bonds) - which amounts to welfare for the rich (via a secure income stream,  ie the interest rate on the government bond).

Tweet from Bernie Sanders:

In the richest country in the history of the world 25% of our seniors are trying to get by on $15,000 a year. Try it sometime…And then you hear people talking about cutting Social Security.

Conservatives talk about the "politics of envy", but their's is the politics of indifference.

Economist Richard Denniss, from the 'Australia Institute' spruiking an "Unequal Australia" tour, says:

"The only time unemployment benefits rose above the poverty line was in the middle of the COVID crisis. Because we thought middle-class people might become unemployed."

"It's government choices that cause inequality."

That's true Richard, but like I told you, politicians have to get elected, and the public don't like paying higher taxes.

Meanwhile in the UK, a desperate Sunak is appealing to voters' self-interest by claiming the Labour Party will increase taxes on all Britons by 2000 pounds, as Starmer is claiming all his policies are "fully funded" - code for saying we won't raise taxes nor spend money to improve public infrastructure.


Silly adversarial politics creating zero real change, as usual.

From Prof Steve Keen:

Two parties obsessed with government debt

In the UK it doesn't matter who you vote for in the July election, you'll have a government prepared to compromise public services and risk future growth because of an obsession with government debt.

Imagine if Keir Starmer, the UK Labour leader, had said, let’s not get too obsessed with government debt. If we go down that road we won‘t be able to provide the public services we need, our infrastructure will crumble further and we’ll simply see the country’s productivity erode further by the day.

Unfortunately, he didn’t say that. Instead, he has pledged himself to the temple of 'fiscal responsibility', just like the Conservatives. That means, whichever party is in power the UK can expect something akin to the austerity that plagued the last 2010s.

.......

Sad: the currency-issuing government is limited by availability of resources, not debt. 

But  private financiers/lenders demand  the sole privilege of creating money which they lend at interest, while government is forced to tax or borrow in order to spend.

Note to inflation freaks: price controls and rationing (if necessary) can contain inflation, in a central bank - zero interest scenario.  

Fom Marxist economist Michael Robert's  blog:

Fixing the climate – it just ain’t profitable

....

But  Michael misses the point: who creates money (for profit, ie  governments or bankers,  is more important than who creates goods (for profit) ie,  workers or capitalists.

Currency-issuing governments will have to 'fix the climate',  in a green transition funded with free public money issued in national treasuries. 

Meanwhile the Oz parliament is arguing over whose climate policy is the most 'cost effective'.

But neither side will be able to transition to the zero emissions economy quickly enough, while taxpayers don't want to pay higher taxes and fossil price-gouging companies (profit-seekers)  don't want to let go of the fossil-fuel gravy-train.

Ouch.   

Great article from Prof Steve Keen, including disagreement about the consequences of man-made CO2:

Richard Werner is, like me, a critic of Neoclassical economics, and a developer of an alternative monetary approach to economics. He was also, like me, invited to undertake a research project at BC4LS, which resulted in his book How to Achieve Long-Term Sustainability (Werner 2023) being published by BC4LS in February 2023.

I respect Werner's work on the dynamics of money and banking enormously, and I have frequently referenced him in my own work on these topics. His contributions on money and banking, both in this book and previous works (Werner 1997, 2011; Werner 2014, 2016; Mkhaiber and Werner 2021), are original and important, and his work and mine on money and banking are both compatible and complementary—especially on the role of credit in aggregate demand for both goods and services and asset price speculation.

There is also much else in his book with which I agree, such as the need to ensure an equitable distribution of income, the need for credit guidance so that money is directed towards investment rather than speculation, the importance of other forms of environmental damage apart from global warming—especially biodiversity loss—and the capacity of innovation to reduce the damage we do to the environment.

However, there are two critical points where he makes unscientific claims that cannot go unchallenged. These are his claims about the role of CO2 in global warming (Werner 2023, p. 22) and the relevance of the laws of thermodynamics to service sector output (Werner 2023, p. 31).

Taking the second first, he claims that "the virtual world … is not … subject to the laws of thermodynamics":

the transformation from manufacturing to services has been more pronounced than predicted in the 1970s. This also contributes to a diminishing pressure on finite resources: the services sector, including IT, is increasingly expanding in the virtual world that is not limited by the parameters of this planet nor subject to the laws of thermodynamics. (Werner 2023, p. 31. Emphasis added)

This is as scientifically valid a statement as saying that a mouse, because its mass is tiny, is not subject to the Law of Gravity. Any entity with mass is subject to the Law of Gravity, and any process that uses energy is subject to the Laws of Thermodynamics. Though "the virtual world"—say, a virtual reality tour of Angkor Wat experienced by someone in New York—may consume less energy than flying that individual from New York to Cambodia, it still requires energy to create the virtual reality simulation. The question is how much energy the virtual world requires to create the simulated outcome, compared to using energy in the real world to achieve the real outcome.

Werner subsequently does not consider the questions of energy or resource availability in his book, so that this scientifically false proposition becomes an extreme form of the "decoupling" hypothesis, that an increase in services output relative to manufacturing will mean that economic growth is "decoupled" from both energy and raw material inputs.

Individual countries—such as the UK—have apparently "decoupled" their GDP from energy, but this is only because they have outsourced production to "Third World" countries. The evidence I presented in Chapter 13 shows that, at the global level, though the ratio of GDP to energy has risen over time (from 3.4 billion 2015 US$ per MTOE in 1971 to 5.8 billion in 2019), producing more output still requires more energy.

Chapter 4 of Decoupling debunked: Evidence and arguments against green growth as a sole strategy for sustainability (T. et al. 2019) also compiles the evidence that the increase in the service sector relative to manufacturing has had only a muted impact on resource usage. Growth in output will require growth in energy and raw materials inputs, but Werner ignores these issues in his advocacy of a high-growth strategy for sustainability.

Werner's claims on the role of CO2 in causing global warming are also unscientific. He states that "by far the most important greenhouse gas is water vapour", claims that it accounts "for over 90% of the warming … while carbon dioxide causes less than 4%" and that "the evidence remains limited that man-made CO2 emissions are intrinsically the cause of the extinction of species and the destruction of nature":

The United Nations' Intergovernmental Panel on Climate Change (IPCC) has emphasized the role of man-made factors and especially CO2 emissions. However, by far the most important greenhouse gas is water vapour (see, e.g., Rakoczi and Ivanyi, 1999-2000), accounting for over 90% of the warming produced by all atmospheric greenhouse gases, while carbon dioxide causes less than 4%.(Carter, 2008). Other researchers have pointed out the role of particulate pollution in affecting global temperatures (Herndon, 2019; Herndon and Whiteside, 2019).

More research efforts are needed to examine the various research hypotheses scientifically. Meanwhile it can be said that the evidence remains limited that man-made CO2 emissions are intrinsically the cause of the extinction of species and the destruction of nature. (Werner 2023, p. 22)

While the first claim is true, this mechanism is well-known by scientists: CO2 matters not because it is the major greenhouse gas, but because it is the most abundant long-lived greenhouse gas.

cont.

They never did even when inflation was accelerating.

It was a total scam run by the policy makers to cover their tracks.

The Federal Reserve boss still claimed that:

Our restrictive monetary policy stance is helping to bring demand and supply conditions into better balance and to put downward pressure on inflation.

Given the data that statement is just nonsensical.

Total spending in the US is booming and, now, that is mostly because of the rate hikes.

The rate hikes around the world have precipitated a massive redistribution of income away from low-income mortgage holders who are being squeezed relentlessly, towards high-income financial asset holders, who have enjoyed huge income gains from interest income.

The US government is also spending heavily on net interest payments as a result of the relatively elevated levels of outstanding public debt and the rising interest rates.

The Federal Reserve boss then tried to stake out the importance of his work:



This statement received the press attention but should not have.

It is clear that that monetary policy is relatively ineffectual in moderating aggregate spending despite the continuing posturing by central bankers who are pressured by commercial bankers to push rates up because the increases push profits into the private corporations they represent.