Austerity means “living within your means”. If you live beyond your means, you have to borrow money, or in this case, print it. If you borrow money you have to repay it sometime. In government terms that means your children will have to pay it – and possibly your grandchildren. How generous to leave them a debt! If you print money you are putting more money out there in excess of the supply of goods. That means the goods will cost more. That means inflation. That means we all have to pay more in order to match the money printing (“quantitative easing”, “helicopter money”, call it what you will.) Wise men practise austerity. Fools print money.
I would be prepared to bet several hundred pounds that a majority of people in the UK do not understand that the government is required to pay interest on the national debt.
UK Gvt needs to fund the Demand side and make big proper meaningful infrastructure investments and reduce taxes so as to fund massive GROWTH, which will in turn generate increased tax revues to pay down debt. Interest rates should go up to circa 3% to make a real cost of capital and to support the currency given all the printing.
David Bell
4 years ago
“Government needs to be ready to own (and manage) more of the economy than it has done for decades.” No kidding Sherlock! There is a reason the government do not own and manage more of the economy – they are absolutely useless at it!!
Civil Servants do not know how to manage factories, Civil Servants do not know how to run railways and Civil Servants don’t know how to buy next years fashions.
The government should supply selective support to help business back to normal but they must not take major shareholdings and control. The private sector must get it’s own house in order and those business that can’t survive must go to the wall. People talk about the “new normal” after lock down, well government can’t try and stop that for the sake of socialist dogma. Business will go under, people will become unemployed, then new business will emerge and new employment will be created. We cannot stop evolution, lets not spend billions trying!
National Rail is a public body and they make running a RoC impossible!
Michael McVeigh
4 years ago
This is Project Fear Version 3. The author does not know how exactly the economy will go in another 6 or 8 weeks time as more & more scientific advice starts showing the opposite of Ferguson’s blunder.
Jean Noir
4 years ago
Is the deal with unherd that you can’t say the article is rubbish?
David Booth
4 years ago
On the economic part of Peter’s piece, I think it really is time for him and everybody who comments on his arguments to mug up a bit more on modern monetary theory: Wray, Modern Money Theory; Mitchell and Fazi, Reclaiming the State, or Stephanie Kelton’s forthcoming (June) The Deficit Myth. It’s not credible to call for no more austerity without explaining what was wrong with the justifications for austerity given by previous Tory (and Labour) governments. It makes it even less credible if you repeat some of those same errors yourself, as if they were self-evident (danger of Sterling collapse, hyperinflation, need to pay off ‘national debt’ etc.). It is true that all these standard objections are in the basic, and even some of the not-so-basic, economics textbooks; but Wray, Mitchell and Kelton have shown comprehensively how we have been miseducated by these textbooks. The unthinking majority of economists are stuck in a time warp and have failed to adjust to how macroeconomies are actually managed in countries like the US and UK today. On the political leadership, the A-Team we need are people who understand all this and are prepared to lead a paradigm shift. I am not at all persuaded that the pre-Boris Tory old guard are likely candidates in this regard.
Thanks for nothing David. Fat lot of good telling everyone to understand something then fail to offer even an outline, in quite a lengthy post, of what you’re on about. Perhaps something as simple as “shake the magic money tree” might have, at least, given us a clue.
Great comment, lots of people commenting here seem to be basing their views on seriously outdated economic theory that has proved harmful to people and planet. We need to do things differently and remind ourselves what and who the economy is for.
As Roger Bootle has pointed out, modern monetary policy isn’t modern, it isn’t really monetary and it isn’t a theory. https://www.telegraph.co.uk…
nigel roberts
4 years ago
“Peter Franklin is Associate Editor of UnHerd. He was previously a policy advisor and speechwriter on environmental and social issues.”
In other words a mouthpiece for leftie orthodoxy. I knew what the article would say before I read it. I read it anyway in the hope I was wrong but wasn’t.
Nigel Clarke
4 years ago
Of course, the A-team would, for their part, have to toe the government line on Brexit. They’d also have to put aside any ideological hang-ups about government intervention
…and there is the problem. Latterly, ideology trumps reason and rationality, need and necessity, truth and reality.
sean9
4 years ago
Peter, you have clearly been drinking the LibDem Blairite masquerading as ‘Conservatives’ Kool-Aid…. !
May, Cameron, Gauke, Clarke…. have you lost the plot! NO WAY! May as well make Olly Robins PM…. and give the EU the whole of the UK…
One Problem with Bojo’s Cabinet, is too many ‘Remainers’. Voting ‘Remain’ was about a ‘Mind Set’ and a LACK of ‘UK plc & Self’ Confidence to thrive as an Independent Sovereign Nation, NOT just about ‘Brexit’.
Another Problem with Bojo Cabinet is that he did not include more experienced and strong and business minded proper “Conservatives” like John Redwood and Steve Baker.
Fine for Penny Maudant, BUT what the Cabinet needs immediately is Steve Baker, John Redwood and more MPs of same calibre and skill set.
juliandodds
4 years ago
This a very long winded article that could be replaced with “we should have stuck with the original plan” which also happened to be the stated policy of all 4 UK country governments, the NHS and it’s scientific advisors for 9 years. The NHS pandemic infuenza plan, written in 2011 says ‘we will not be able to contain a new virus’. What it should have said was ‘we will not be able to contain a new virus without totally f*****g up the country and people’s lives for years and years to come’. That plan expected babies, children and mothers to die in equal measure, nothing like the incredibly kind Coronavirus that blows through healthy under 45s like a Tsunami of warm air.
nickandyrose
4 years ago
Had I seen this four weeks ago, or even three weeks ago, I would be thinking time to go for it. Too late now. Far, far too late. It’s going to be a hungry winter.
Dougie Undersub
4 years ago
And you were doing so well, Peter. Bring back Theresa May? I usually try to respond to articles with something considered and polite but, in this instance, I can only say, are you mad?!!! First, Penny Mordaunt is not on the backbenches, she is Paymaster General. Greg Clark was a complete nonentity at BEIS. Saj is bright but totally lacking in charisma – we’re much better off with Rishi. Cameron is quite an attractive personality but does he have any particular skills? I’m not sure chillaxing is in great demand at the moment. And Gauke spent several years at the Treasury seemingly enjoying putting Britain’s small businesses out of business by championing IR35. He was totally captured by HMRC and is the last person we need anywhere near our economy right now … or indeed, ever.
Daedalus
4 years ago
Bring back the Maybot, the Broone and Bliar????????? I think not. Although I would agree that the front bench needs beefing up with the likes of Maudant.
haroold.stewart078
4 years ago
it took you a long time to try to make your point can you honestly say that are you objective with no political bias
Robert Price
4 years ago
I think we must do better than bringing back Cameron, May, Gauke and Clarke.
sean9
4 years ago
Another thought….:
Given how successful and efficient the Army were at building the Nightingale Hospitals…., and that Healthcare is clearly now part of National Defense for Bio-Warfare…
Maybe the NHS should report into and be run by the Army….
and ex Forces people should run and staff the a new Border Force.
ex Forces people should also fill the Civil Service ranks
Tim Beard
4 years ago
I have a new financial idea that will help fix this
David Cameron (bad) and Theresa May (worse) were awful Prime Ministers. David Gauke was a dreadful minister. None of this lot should be let anywhere near the corridors of power ever again. You may as well go on to suggest that they ask in John Major, Tony Blair, Gordon Brown, Ed Miliband and Jeremy Corbyn. Some others, like John Redwood and Peter Lilley would be well worth asking back.
Your point on vulture capitalists buying up distressed assets is well made. We should not allow either China or Germany (who bought a lot of Greek assets during their crisis) do this.
AC Harper
4 years ago
Is this a teaser for running a ‘Fantasy Cabinet’ competition? Or perhaps it is a camouflaged version of ‘hate Brexit, hate Boris’?
Otherwise bringing back politicians who resigned or were sacked would undermine the authority of the present incumbents, especially the PM. The last thing we need during a crisis.
Peter are you having a joke?
Bring back Teresa May – perhaps in charge of Brexit negotiations?
Well that article went down the toilet half way through didn’t it!
Why not say what you really mean and ask for Blair?
Hint – you won’t get him!
It did, didn’t it!
Austerity means “living within your means”. If you live beyond your means, you have to borrow money, or in this case, print it.
If you borrow money you have to repay it sometime. In government terms that means your children will have to pay it – and possibly your grandchildren. How generous to leave them a debt!
If you print money you are putting more money out there in excess of the supply of goods. That means the goods will cost more. That means inflation. That means we all have to pay more in order to match the money printing (“quantitative easing”, “helicopter money”, call it what you will.)
Wise men practise austerity. Fools print money.
Fools print money to address structural issues. In an emergency, “fools say fools print money”.
I would be prepared to bet several hundred pounds that a majority of people in the UK do not understand that the government is required to pay interest on the national debt.
UK Gvt needs to fund the Demand side and make big proper meaningful infrastructure investments and reduce taxes so as to fund massive GROWTH, which will in turn generate increased tax revues to pay down debt. Interest rates should go up to circa 3% to make a real cost of capital and to support the currency given all the printing.
“Government needs to be ready to own (and manage) more of the economy than it has done for decades.” No kidding Sherlock! There is a reason the government do not own and manage more of the economy – they are absolutely useless at it!!
Civil Servants do not know how to manage factories, Civil Servants do not know how to run railways and Civil Servants don’t know how to buy next years fashions.
The government should supply selective support to help business back to normal but they must not take major shareholdings and control. The private sector must get it’s own house in order and those business that can’t survive must go to the wall. People talk about the “new normal” after lock down, well government can’t try and stop that for the sake of socialist dogma. Business will go under, people will become unemployed, then new business will emerge and new employment will be created. We cannot stop evolution, lets not spend billions trying!
Civil servants know very little about anything. Except perhaps why Persephone must return to Hades for half of each year.
The private sector certainly don’t know how to run railways, so we’re in a right pickle on that one!
National Rail is a public body and they make running a RoC impossible!
This is Project Fear Version 3. The author does not know how exactly the economy will go in another 6 or 8 weeks time as more & more scientific advice starts showing the opposite of Ferguson’s blunder.
Is the deal with unherd that you can’t say the article is rubbish?
On the economic part of Peter’s piece, I think it really is time for him and everybody who comments on his arguments to mug up a bit more on modern monetary theory: Wray, Modern Money Theory; Mitchell and Fazi, Reclaiming the State, or Stephanie Kelton’s forthcoming (June) The Deficit Myth. It’s not credible to call for no more austerity without explaining what was wrong with the justifications for austerity given by previous Tory (and Labour) governments. It makes it even less credible if you repeat some of those same errors yourself, as if they were self-evident (danger of Sterling collapse, hyperinflation, need to pay off ‘national debt’ etc.). It is true that all these standard objections are in the basic, and even some of the not-so-basic, economics textbooks; but Wray, Mitchell and Kelton have shown comprehensively how we have been miseducated by these textbooks. The unthinking majority of economists are stuck in a time warp and have failed to adjust to how macroeconomies are actually managed in countries like the US and UK today.
On the political leadership, the A-Team we need are people who understand all this and are prepared to lead a paradigm shift. I am not at all persuaded that the pre-Boris Tory old guard are likely candidates in this regard.
Thanks for nothing David. Fat lot of good telling everyone to understand something then fail to offer even an outline, in quite a lengthy post, of what you’re on about.
Perhaps something as simple as “shake the magic money tree” might have, at least, given us a clue.
Great comment, lots of people commenting here seem to be basing their views on seriously outdated economic theory that has proved harmful to people and planet. We need to do things differently and remind ourselves what and who the economy is for.
As Roger Bootle has pointed out, modern monetary policy isn’t modern, it isn’t really monetary and it isn’t a theory.
https://www.telegraph.co.uk…
“Peter Franklin is Associate Editor of UnHerd. He was previously a policy advisor and speechwriter on environmental and social issues.”
In other words a mouthpiece for leftie orthodoxy. I knew what the article would say before I read it. I read it anyway in the hope I was wrong but wasn’t.
Of course, the A-team would, for their part, have to toe the government line on Brexit. They’d also have to put aside any ideological hang-ups about government intervention
…and there is the problem. Latterly, ideology trumps reason and rationality, need and necessity, truth and reality.
Peter, you have clearly been drinking the LibDem Blairite masquerading as ‘Conservatives’ Kool-Aid…. !
May, Cameron, Gauke, Clarke…. have you lost the plot! NO WAY! May as well make Olly Robins PM…. and give the EU the whole of the UK…
One Problem with Bojo’s Cabinet, is too many ‘Remainers’. Voting ‘Remain’ was about a ‘Mind Set’ and a LACK of ‘UK plc & Self’ Confidence to thrive as an Independent Sovereign Nation, NOT just about ‘Brexit’.
Another Problem with Bojo Cabinet is that he did not include more experienced and strong and business minded proper “Conservatives” like John Redwood and Steve Baker.
Fine for Penny Maudant, BUT what the Cabinet needs immediately is Steve Baker, John Redwood and more MPs of same calibre and skill set.
This a very long winded article that could be replaced with “we should have stuck with the original plan” which also happened to be the stated policy of all 4 UK country governments, the NHS and it’s scientific advisors for 9 years. The NHS pandemic infuenza plan, written in 2011 says ‘we will not be able to contain a new virus’. What it should have said was ‘we will not be able to contain a new virus without totally f*****g up the country and people’s lives for years and years to come’. That plan expected babies, children and mothers to die in equal measure, nothing like the incredibly kind Coronavirus that blows through healthy under 45s like a Tsunami of warm air.
Had I seen this four weeks ago, or even three weeks ago, I would be thinking time to go for it. Too late now. Far, far too late. It’s going to be a hungry winter.
And you were doing so well, Peter. Bring back Theresa May? I usually try to respond to articles with something considered and polite but, in this instance, I can only say, are you mad?!!!
First, Penny Mordaunt is not on the backbenches, she is Paymaster General. Greg Clark was a complete nonentity at BEIS. Saj is bright but totally lacking in charisma – we’re much better off with Rishi. Cameron is quite an attractive personality but does he have any particular skills? I’m not sure chillaxing is in great demand at the moment. And Gauke spent several years at the Treasury seemingly enjoying putting Britain’s small businesses out of business by championing IR35. He was totally captured by HMRC and is the last person we need anywhere near our economy right now … or indeed, ever.
Bring back the Maybot, the Broone and Bliar????????? I think not. Although I would agree that the front bench needs beefing up with the likes of Maudant.
it took you a long time to try to make your point can you honestly say that are you objective with no political bias
I think we must do better than bringing back Cameron, May, Gauke and Clarke.
Another thought….:
Given how successful and efficient the Army were at building the Nightingale Hospitals…., and that Healthcare is clearly now part of National Defense for Bio-Warfare…
Maybe the NHS should report into and be run by the Army….
and ex Forces people should run and staff the a new Border Force.
ex Forces people should also fill the Civil Service ranks
I have a new financial idea that will help fix this
Email [email protected]
If you are interested
David Cameron (bad) and Theresa May (worse) were awful Prime Ministers. David Gauke was a dreadful minister. None of this lot should be let anywhere near the corridors of power ever again. You may as well go on to suggest that they ask in John Major, Tony Blair, Gordon Brown, Ed Miliband and Jeremy Corbyn. Some others, like John Redwood and Peter Lilley would be well worth asking back.
Your point on vulture capitalists buying up distressed assets is well made. We should not allow either China or Germany (who bought a lot of Greek assets during their crisis) do this.
Is this a teaser for running a ‘Fantasy Cabinet’ competition? Or perhaps it is a camouflaged version of ‘hate Brexit, hate Boris’?
Otherwise bringing back politicians who resigned or were sacked would undermine the authority of the present incumbents, especially the PM. The last thing we need during a crisis.