Jack Lesgrin’s week: Turns out there is a Magic Money Tree

by Jack Lesgrin

Back during Theresa May’s ill-fated 2017 general election campaign, she told a nurse who had complained about low wages that “there isn’t a magic money tree that we can shake that suddenly provides for everything that people want.” Standard fare of political and economic discourse, you might think.

Yet listening to BBC economics correspondent Andy Verity’s Today Programme news item last Tuesday helped those of us who have been trying to locate the ephemeral Magic Money Tree. Regarding recent government financial figures, he noted that while “borrowing £300 billion may sound a frightening number”, this is a much smaller amount than the figures for both world wars, and smaller than the Office for Budget Responsibility predicted last November. But the killer line was the last one of the report: “…and almost all the money borrowed is owed to the Bank of England, which created the money to purchase that debt from nothing.”

It seems the government borrowed money from itself (in the quasi-independent form of the Bank of England) to spend during a crisis, and now owes itself this sum. It begs the question why must the government owe itself money and therefore, presumably, go through the painful process of either cutting expenditure or raising taxes to repay itself this money?

First the 2008 financial crisis, and now the Covid crisis, are showing that a government’s ability to spend money is not just a function of their ability to borrow at low interest rates and put this on the national credit card, aka the national debt. It is a function of its ability to create money from thin air. If you don’t believe me, read the Bank of England’s explainer on Quantitative Easing (£895 billion as at November 2020) which states that “Quantitative easing involves us creating digital money…The aim of QE is simple: by creating this ‘new’ money, we aim to boost spending and investment in the economy.”

While the Quantitative Easing and emergency lending response to the global financial crisis prevented the economy from imploding, many commentators believe that it also helped stoke popular suspicion of elites who were bailed out and who were not punished, while ordinary people suffered from lost jobs and the ensuing austerity that the Coalition government claimed was necessary due to poor behaviour and regulation. It’s not too much of a stretch to suggest that these trends made Brexit more likely here, and populism more popular everywhere.

Despite the PM’s proclivity for grand projects and apparent distaste for austerity as a response to Covid, he and his team must worry that the population, having seen the largesse rightly bestowed on them through the furlough scheme and other emergency spending, might be reflecting that the standard “there’s no money” arguments aren’t all they seem. Let’s not forget that the World Wars of the 20th century led the people to demand that state power be tilted towards initiatives that helped the common man or woman. The government will no doubt try to discreetly fell the Magic Money Tree before it self-seeds and becomes a minor copse, let alone a forest. It will be interesting to see whether Labour and indeed voters, allow them to do so, given that ingenuity, creativity and radicalism are required in conceiving both the policies and the funding mechanisms to “level up” or “build back better”.

Time to apologise for mere regret on genocide

Last week, President Macron sought forgiveness for France “standing by the side of a genocidal regime” in Rwanda and that by doing this it “endorsed an overwhelming responsibility” for what happened. He went further than any previous French government but was criticised by some for not having formally apologised for France’s inaction in the face of genocide. In the same week, the German government formally acknowledged as genocide the killing by German colonisers in Namibia, at the turn of the last century, of tens of thousands of Herero and Nama people. The German government agreed financial aid and is expected to send President Frank-Walter Steinmeier to apologise officially.

These admissions made me think of how a couple of weekends ago, the British media was awash with gushing coverage of the Her Majesty Queen Elizabeth’s visit to her namesake aircraft carrier ahead of its maiden deployment to the Indo-Pacific, described by Defence Secretary Ben Wallace as “flying the flag for Global Britain – projecting our influence, signalling our power, engaging with our friends and reaffirming our commitment to addressing the security challenges of today and tomorrow”.

We are rightly regarded as one of, if not the most powerful military power in Europe. Yet the recent record of military interventions indicates that it is highly unlikely that the British government, let alone British people, would actively support military intervention to prevent genocide or protect civilian populations. The Iraq intervention dislodged a vicious dictator who had verifiably used chemical weapons against his people, and committed genocide against the Kurds, yet most people cite Iraq as a reason why the UK (and wider West) should avoid interventions in future. The UK Labour Party under Ed Miliband was instrumental in preventing Prime Minister Cameron from ordering air strikes when a more recent dictator in Syria had used chemical weapons against civilians, resulting in President Obama deciding not to enforce his own red lines. We are clearly good at building aircraft carriers, but not as good at building a consensus around the need, on rare and limited occasions, to use such weapons in defence of human rights. It’s not good enough to regret inaction, or apologise for the wrong kind of action. The right kind of action, sadly, is still needed in our world.

Comms trouble-finder

Finally, last week begun with a minor hiccup in government comms around whether it had bothered to inform local officials in Indian variant hotspots of a minor change to advice about travelling into these areas. Transport Secretary Grant Shapps admitted on Radio 4’s Today programme that the “communications could have been clearer.”  It would be a good use of taxpayers’ money for someone to be hired whose job description is as follows: “Read through any national or local government Covid communications material looking for areas that are unclear or could cause confusion”. Of course you’d need to employ a few more people to resolve the problems that are discovered, but perhaps they could ask Dominic Cummings to put a call out on Twitter for people who could fulfil that role!


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19 Responses to “Jack Lesgrin’s week: Turns out there is a Magic Money Tree”

  1. A.J. says:

    It was an unfortunate phrase to begin with, coming from a woman who is about on an intellectual par with Angela Rayner. Politicians have always found money when they want to, especially for useless vanity projects. Perhaps, however, the commentator would have preferred the present government to have simply advised the electorate to go fuck themselves when Covid came upon the scene.

  2. Tafia says:

    There is no magic money tree. The government does not have any money at all – all it has is tax revenues (taken from the people )and what it can borrow (paid back by the people in higher taxes).

    The £300bn that the government used on Covid will be paid back via higher inflation, higher interest rates, reduced government spending and higher taxes & duties.

    How fast the government decides it needs paying back will dictate how hard it will hit us all and over how long a period. My guess is they will play a ‘holding’ game until after the next election and then the serious repayments will begin.

  3. Tafia says:

    And might I also add, you are econoimically illiterate.

    I have 5 cats. The stupidest one – the one with a squint, knows more about economics and money than you seem to do. One can only assume you are either pretending to be this stupid in order to famr responses, or you are an Alma Mater of the College of John McDonnell GE(fail).

  4. Blair says:

    After Starmer’s pathetic performance on Piers Morgan last night, I doubt you will hear much from Labour for some time to come. And Piers actually gave him an easy ride.

    He came across as a John Major but without the backbone or the character. And as for his football comment about knocking Boris over, all you were left wondering was that before or after he ripped a tissue.

    It was cringing to watch and whoever out of his advisors thought it was a good idea obviuously has no idea about their job.

    It’s no wonder the viewing figures had halved less than 30 minutes into the programme.

    Toe-curlingly embarrasing.

  5. Tafia says:

    And now the moment you have all been waiting for, the round-up of May’s opinion polls.

    There were 20 national opinion polls conducted during May, by all the major pollsters.

    The average for the month was:-

    Con: 43.3%
    Lab: 33.0%
    LDem: 8.1%
    Grn: 5.9%
    Oth: 9.7%

    Durimg the month, the Tories ranged from a low of 40% to a high of 46%. Labour ranged from a low of 29% to a high of 38%. Not once in any poll did Labour polll higher than the Tories..

    For the fifth consecutive month this year (ie all of them) the Tories have increased their lead from a low in January of 39.6%. Labour on the other hand have fallen every single month this year from a high back in Jan of 38.3%.

    Labour’s vote is seemingly fragmenting in 3 directions. Older Remainers are drifting to the LDems, younger urban Remainers are drifting to the Greens (both the LDems and Greens have risen every month this year). Whereas Labour Leavers and Labour traditionalists in the North are drifting to the Tories.. Labour is suffering a major identity and positioning crisis and needs to accept now that it can either have the middleclass, mainly metropolitan mainly Rejoin graduate voters, or it can have the traditional blue collar mainly Leave working class – but it cannot have both. By trying to appeal to both it is appealing to neither and alienating both. It is going to have to decide where it stands and whether it is a party of the workers or a party of the young middleclass. It does not have a right to exist and the soner it grows uo and realises this the sooner it can start to re-build.

    ——————————————–

    Batley & Spen by-Election
    No public polling has been released yet but private polls have been carried out by bookmakers and the parties and are grim reading for Labour. The bookmakers have the Tories odds-on favourites to win the seat now whereas Labour are drifting out of the betting. There is already anecdotal evidence from press interviews – including the Guardian and Independent, that voters there, including Labour voters, regard the selection of Labour’s candidate Kim Ledbetter as a stitch-up and nothing more than a cynical attempt to manipulate them because she is the late Jo Cox’s sister.

    So far, candidates from Con, Lab, LDem, Green, Yorkshire First, Workers Party and Britain First have thrown their hats into the ring.

    Lab: Kim Leadbeater –
    Con: Ryan Stephenson
    LDem: Jo Conchie
    Green: Ross Peltier –
    Yorkshire: Corey Robinson
    Workers Party: George Galloway
    Britain First: Jayda Fransen

  6. John P Reid says:

    Can someone book in The Labour Party
    For The Co-op funeral service

    At this rate priti patel ot Kemi Badenoch will br the next prime minister

    Labour activists say I’m being offended. On the door step when They tell the working class they’re scum and the man opening the door to his house
    feels labour are snobs
    There’s this members who won’t knock on the door. After Telling them them they’re scum via Facebook
    yet it’s arm chair critics who are putting the activists in the firing line , when they self Publish And then those who don’t canvass but call the poor racist mark out they’re the Victim

    Tho left love Rewriting history , take Harold Wilson As a cultural Marxist
    Or re Style Clem Attlee as a Liberal marxist.
    if is nonsense if the Attlee govt was around today excluding nationalisation
    Would be called neo fascist

  7. John P Reid says:

    Tafia

    Where as the Tories currently are 10.5% ahead in the polls compared to the 11.5% lead they got in the Dec 2019 election. It’s worth noting labour have lost 2.5% to greens gained 3.5% from the libdems while Tories have lost half a percent to the Reform party
    But it’s where those voted have changed The increase in Libdem votes to labour are in areas where labour already has safe seats do it looks like the Tories could get even more seats in 2023/4 even though their percentage maybe down a bit

  8. John P Reid says:

    basically labour need 1.725m tory voters of 2019 to vote labour in 2023 too win
    Including the fact looks like labour have already got back a million people who voted Libdem in 2019
    Same as Blair won by A getting a million
    Libdems
    b getting a million tory votes
    c The Tories got 3.8m more votes than labour in 2019
    And 2.5m more votes than labour in 1992
    D the Tories lost a million votes to the referendum party held a million to Thd libdems in 92
    And 2million abstained
    ( ok I accept labour getting 4 million more votes than the Tories in 97 , where labour to win a majority of 10 need to get 3.5million more votes than the Tories in 2023 )

  9. Tafia says:

    Batley & Spen latest:-

    Anne Marie Waters of anti-islamic party For Britain, is also standing. Waters quit UKIP after failing in her attempt to be elected as leader of UKIP in 2017 She is Irish (Dublin) and an openly gay female.

    Nominations to stand close on Monday 07 June.

  10. Tafia says:

    I wouldn’t worry about the reaction of the other G7 members on international aid as a percentage of GDP.

    UK 0.7%
    USA 0.16%
    Germany 0.6%
    France 0.44%
    Italy 0.24%
    Japan 0.29%
    Canada 0.27%

  11. Anne says:

    Is the shine coming off Mr Sunak perhaps – with his disastrous ‘eat out to help out’ which helped to spread the virus causing further deaths and contributing to the second lock down. Now there is no new money for post covid recovery in this Parliament. A fraction of the money required for education to allow children to catch up. Yet he managed to give furlough money to his wife’s company. No Robin Hood mentality there then – more like keeping the rich in the manner they have become accustomed.

  12. Tafia says:

    Batley & Spen

    Bit of a big story at street level is this. People are utterly gob-smacked that the council just accepted what they were saying with no proof whatsoever.

    https://www.examinerlive.co.uk/news/west-yorkshire-news/huddersfield-sisters-said-dad-beating-20746498

  13. Tafia says:

    Batley & Spen.

    And with literally less than two days to go before nominations close, the Lib Dems have removed their original candidate – Jo Conchie (health reasons apparently), and replaced her with a local councillor from nearby Wakefield and leader of the local Lib Dems – Tom Gordon.

    —————————————————-

    Latest betting:-

    Tory – 2/5 (fav)
    Lab – 7/4 (2nd fav)
    100-1 bar

    —————————————————-

    There are some public opinion polls done now for the constituency and others being conducted this weekend, but will not be released until some time after the nominations close on monday

  14. Tafia says:

    Batley & Spen latest

    Paul Halloren of the Heavy Woolen District Independents (a UKIP front) has announced he will not be standing. He won 6,400 pro-Brexit votes at the last General Election and but for his presence the Tories would have taken the seat then. Laurence Fox of the Reclaim Party is also not standing. He was expected to attract former Brexit Party voters (potentially another 1,600 votes).

    This is a major kick in the gonads for Labour and makes the seat a virtual shoe-in for the Tories unless they screw it themselves. Labour are defending a 3,500 majority which on paper at least has just evaporated.

    In a joint statement by Fox and Halloran they said:-

    “Paul and I have decided that we will not stand in the by election.

    It has been made clear to both of us that many people in Batley and Spen are fed up with the Labour Party.

    The Labour Party have lost their way. We cannot in good conscience stand and risk splitting the vote and condemning Batley and Spen to any more years of Labour control.

    The Labour Party is one of the most divisive and intolerant political parties in the UK.”

  15. John P Reid says:

    A week into June and it looks like there’s no change in the average vote for both Thr tories and labour
    With a small swing between the greens and libdems as they swap 3% there and back as The protest vote
    And if the Tories do lose votes it’s to the reform party
    Looks like no change for the next year at this rate and I’ll wage it’s been like this for ( months now

  16. Tafia says:

    Denis MacShane on the left’s candidate for leader of Unite…

    “Howard Beckett, a multi-millionaire solicitor who went into Unite after selling his legal firm to big trade union solicitors, Thomson’s. He owns properties in London and on Merseyside. He may be the richest union official in Europe.”

  17. John P Reid says:

    A lot of people who backed Keir starmer when he had the 2nd referendum for Remain have since quit the party those are the ones who are saying Labour’s not doing well in the party now not realising they were the ones who wanted the 2nd referendum for remain were the ones who caused labour to have its worse ever defeat in Thd first place

  18. Tafia says:

    Anne- his disastrous ‘eat out to help out’ which helped to spread the virus causing further deaths and contributing to the second lock down.

    Scientifically de-bunked drivel of the highest order. Of the miniscule number of outlets that did not apply the rules rigourously and were even prosecuted for it, virtually no cases were traced back to them.

    Do you make this stuff up or do you get it off facebook or Polly ‘the moron’ Toynbee.

  19. Tafia says:

    Batley & Spen

    Final confirmed list of candidates:-

    Paul Bickerdike – Christian Peoples Alliance
    Mike Davies – Alliance For Green Socialism
    Jayda Fransen – Independent (one of the leaders of ‘Britain First’)
    George Galloway – Workers Party
    Tom Gordon – Liberal Democrats
    Thérèse Hirst – English Democrats
    Howling Laud Hope – The Official Monster Raving Loony Party
    Susan Laird – Heritage Party
    Kim Leadbeater – Labour Party
    Oliver Purser – Social Democratic Party
    Corey Robinson – Yorkshire Party
    Andrew Smith – Rejoin EU
    Ryan Stephenson – Conservative Party
    Jack Thomson – UK Independence Party
    Jonathan Tilt – Freedom Alliance
    Anne Marie Waters – The For Britain Movement (former UKIP leadeship candidate)

    Latest Betting:-
    Tory: 1/3
    Lab: 14/5
    200/1 bar

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