£35bn on debt interest? But what about the £375bn held by the Bank of England?

One thing has puzzled me since the introduction of “Quantitative Easing” (QE) in 2009. Between then and 2012 the Bank of England ‘bought’ £375bn of government bonds from their previous private sector owners.

This is a pretty sizeable chunk of the total Government debt of about £1.5bn – roughly a quarter. And it costs us nothing. Continue reading

SR2015: Spending: Is 36% of GDP still his target? [Update: the answer is yes]

[Rather than single blog I am posting a series of shorter posts on the Spending Review today on specific issues]

“Mr Speaker, I want to announce to the House that we are on target to meet our long-term economic plan of reducing the size of the British state to just 36%, putting firmly at the lower end of public spending in advanced economies. This will replace the long-term trend of public spending in the UK to be at around 43% of GDP, even under Conservative governments. By 2020 we will have fundamentally reduced the size of British Government.”

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Jeremy Corbyn, George Osborne and co: ‘Pragmatism’ and the Art of Indirect Strategy?

Most politicians like to claim to be “pragmatic” these days. The latest is Jeremy Corbyn, who now claims his economic program is “just pragmatic”.

George Osborne likewise claims he is only being pragmatic about the public finances, getting the deficit and debt under control, whilst actually his clear, but unstated, aim is to permanently reduce the size of government.

New Labour always claimed to be being merely “pragmatic” when it claimed that people didn’t care who provided public services, but for some reason kept coming down on the side of outsourcing to private providers. Or that liberalizing labor markets was just a pragmatic reaction to globalization. In reality Brown and Blair, but especially the latter, were more liberal democrats than social democrats – favoring market or market-like solutions whenever possible.

Now Jeremy Corbyn seems to be attempting to soften his image by claiming to be merely “pragmatic” in his economic policies – whilst in practice favoring old-fashioned statist public ownership and planning as the preferred solution. Which prompted me into thinking about this universal appeal to ‘pragmatism’ and where it comes from? Continue reading

Playing Fantasy Fiscal Policy: Jeremy Corbyn’s Tax “Policy”

Reading Jeremy Corbyn’s “The Economy in 2020” you could be forgiven for thinking the UK has no real public finance problem.

Using figures drawn from a report from Richard Murphy, a tax campaigner, Corbyn alleges that we have about £120bn in uncollected taxes in the UK – which is the equivalent of roughly 20% of the UK tax collection. If these figures are correct, and all this tax could be collected, Britain wouldn’t really have a fiscal problem. The annual deficit is only about two-thirds of £120bn. So if these figures were credible it ‘solves’ the problem ‘at a stroke’ (to repeat a historic phrase). Continue reading

Varieties of the Democratic State Market?

This is a ‘think piece’ about varieties of what I  call the ‘Democratic State Market’, for reasons I’ll explain below.

I would really welcome discussion on this, as it’s all somewhat speculative at this stage.

end of historyWhen Francis Fukuyama published his now famous (or infamous, depending on your point of view) initial essay on “The End of History” in 1989 it provoked a furious discussion that continues to this day (the later book version is here). The discussion has been often generated more heat than light, with some of his critics reading things into what he said that just weren’t there. That is perhaps understandable, as he posed fairly fundamental questions about where human society and history is going.

Fukuyama’s mistake (if it was such) was to label the end State of history as the ‘Liberal Democratic’ state. This has been widely taken to mean some version of USA style ‘liberal democracy’ with a relatively small public sector, as opposed to the conservative or social democratic states of Europe with rather larger and more interventionist states. A great deal of energy has been expended proving that there are actually ‘diverse’ (or even divergent) forms of capitalism and welfare states. Continue reading

The Invisible Hand’s Shadow (conference) (originally published in 2004)

Public Finance 04-06-2004

From time to time, evidence of invisible people and invisible jobs appear on the government’s radar screen: when the Census didn’t make sense, when cockle-pickers died in Morecambe Bay. But no concerted effort has been made to find out the true extent of the shadow economy.

In the 1993 film, A Perfect World (Eastwood 1993), Clint Eastwood plays a Texas Ranger pursuing an escaped convict (played by Kevin Costner) in the 1960s. But for me the real star of this film was a shiny, new, gadget-laden Airstream trailer brought into the chase by the FBI. It had wondrous things such as radio phones and faxes and was clearly going to enable the Feds to catch the fugitive. But then all sorts of things go wrong and it finally crashes because it’s not really suitable for ‘real world’ use.


[NB – not an image from the film, just an Airstream]

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