Wednesday 7 September 2022

Nor A Borrower Be?

Just because something has not been on the liberal-Left broadcast media or in the liberal-Right print media, that does not mean that it has not been happening. There has been a cost of living crisis for at least 12 years, but suddenly it is news now that it affects the people whose lives are considered newsworthy.

One of the reasons why Boris Johnson was nowhere near the worst Prime Minister ever was that in Britain, Covid-19 killed nowhere near as many people as David Cameron's austerity programme, which was supported by the Liberal Democrats, supported by the Labour Party until 2015, and supported by most Labour MPs and the whole of the party's staff to the bitter end. The admission that austerity had been the political choice that some of us had always said that it was puts the Government well to the left of Keir Starmer.

For about 10 years, we are all going to beggar ourselves by trying to pay back the loans to the energy companies. Then those companies will get bored of collecting them, make the necessary donations, and have the State write off the remainder. When far less "borrowing" than this was proposed by Jeremy Corbyn and John McDonnell, then there was talk of a run on the pound. But when an Old Etonian Chancellor of the Exchequer is going to do it, then "the City and the markets have reacted favourably". To this much corporate welfare, I bet they have.

Renationalise these commercially unviable companies on which we all depend for the means of life. Would that affect, say, the price of wholesale gas? That would not be the direct reason to do it. The development of an all-of-the-above energy policy would be something that only the State could do. Immediately, though, renationalisation would make these profiteering price increases impossible.

In any case, what "borrowing"? That is an accounting trick. The Bank of England and the Treasury are both the State, so there is no debt. In the event of a "default", then would bailiffs be sent round? What items would they seize? A sovereign state with its own free floating, fiat currency cannot be in debt, and it certainly cannot be in debt to itself. Therefore, there is no reason effectively to issue every household with an energy mortgage to be paid off over 10 or 20 years.

Rather, a sovereign state with its own free floating, fiat currency has as much of that currency as it chose to issue to itself, with readily available fiscal and monetary means of controlling any inflationary effect. Everyone serious knows this, which is why no grownup is interested in the saloon bar foghornery of those who think that they are doing the world a favour by giving the rest of us the benefit of their O-level Economics from 50 or 60 years ago.

If that. Sometimes, we are treated to quotations from Margaret Thatcher, of all people, whose three General Election victories no more made her an expert on economic policy than Tony Blair's made him an expert on foreign policy. She thought that the State had no money of its own. Having never paid for anything herself, she had obviously never seen a banknote. Her ignorance has done as much damage as Blair's. Yes, as much as that. Many people have an oddly rosy impression of the economic records of Conservative Governments. Six of the seven recessions since the War have at least started under the Conservatives, and five have been entirely under them.

But those who will vote for someone because she literally dressed up as Thatcher have had their day for the time being. The audience is no longer Conservative Party members, but the Conservative MPs who have mostly never wanted Liz Truss as Prime Minister. Many of them have to hold seats that their party won for the first time, and by tiny margins, in 2019. Most of those seats are in colder parts of the country.

Still, our currency is able to purchase only such resources as are available. The war in Ukraine has been going on for eight years, and it could last that long again. It is going to be a convenient excuse for a long time yet. If we let those who would use it do so. We must not. And Truss is obsessed with Ukraine. Obsessed. Not only is it going to be her go-to excuse for everything, but that may not be a cynical move. She shows signs of truly believing it. Be afraid. Be very, very, very afraid.