Funding the Future

Why's Labour destroying jobs?

Pat McFadden says the government should help people into employment instead of simply paying benefits. But how can Labour promise more jobs while supporting economic policies designed to suppress demand and increase unemployment?
In this video, I examine the contradiction at the heart of Labour’s employment policy. The Bank of England is maintaining high interest rates and pursuing quantitative tightening, restricting investment and reducing the number of jobs available. At the same time, ministers are placing greater pressure on health and disability benefit claimants to find work.
You cannot destroy jobs and demand that more people work at the same time.
I explain why the government should reconsider the Bank of England's independence, reduce interest rates, and end quantitative tightening. I also outline how reforms to ISA and pension tax relief could direct more than £100 billion a year towards productive investment in Britain.
That investment could support better transport, renewable energy, hospitals, schools, flood defences, housing and the national grid while creating worthwhile employment throughout the country.
It could also support people facing barriers to employment who need training, transport, appropriate workplace support, and help with special educational needs. Slogans and benefit sanctions cannot substitute for a credible full-employment policy.
Can Labour resolve this contradiction, or is a fundamental change of economic policy now required?

What's wrong with 'The Treasury View'?

For more than a century, one economic idea has shaped British government policy more than almost any other: The Treasury View.
It sounds technical, but it affects almost every political debate you hear. Whenever politicians claim that “there is no money”, that government spending must be cut, or that public investment has to wait until taxes rise or borrowing falls, they are usually relying on this way of thinking.
In this video, I explain where The Treasury View came from, why it emerged in the 1920s, why Keynes challenged it during the Great Depression, and why, despite that, it continues to dominate thinking inside Whitehall today.
More importantly, I explain the hidden assumption on which it depends: that government must first obtain money through taxation or borrowing before it can spend. That assumption no longer reflects how a modern currency-issuing government actually operates.
Instead, I explain how government spending is authorised, how money is created, why taxation comes later in the process, and why the real limits on government spending are not financial but the availability of people, skills, technology, energy, materials and environmental capacity.
If the Treasury misunderstands how government finance works, it is no surprise that we have politicians making terrible political choices that are presented as economic necessities.
If you’ve ever wondered why Britain is told it cannot afford better public services, infrastructure or investment, this video explains the economic doctrine behind those claims.

What will Burnham do?

Andy Burnham might arrive in Downing Street on Monday promising a fresh start, but what will his government actually do? A change of leader means little unless it produces a change in policy.
In this video, I set out the questions that should define a Burnham premiership.
For example, will he abandon restrictive fiscal rules, embrace modern monetary theory, tax wealth more fairly and pursue full employment? And will he restore democratic control over interest rates and put public wellbeing ahead of growth for growth’s sake?
The questions extend far beyond economics, though. Britain needs council housing, stronger public services, a Green New Deal, investment in the National Grid and decisive action on failing utilities. It also needs properly funded healthcare, education, local government and social security.
Burnham would also have to confront difficult choices about migration, civil liberties, electoral reform, political donations, defence, Palestine and Britain’s relationship with the United States.
A new prime minister should not be judged by presentation, personality or promises. He should be judged by the decisions he makes and the interests he chooses to serve.
So, what will he do? By his actions, we will know the man.

Making the wealthy pay tax

The UK tax system is supposed to be progressive. In reality, wealthy people can pay a smaller proportion of their income in tax than millions of people who work for a living.
That is not an accident. Wealth is taxed differently from work.
Workers pay income tax and National Insurance. They then pay VAT when they spend. Wealthy people can instead turn income into capital gains, retain profits inside private companies, use offshore structures, transfer assets between generations, and they also spend a smaller proportion of their income on items subject to VAT.
The result is a tax system that helps create and preserve wealth while imposing a disproportionate burden on ordinary households.
In this video, I explain seven ways in which the UK tax system favours wealth. I also explain why I do not think that an annual wealth tax is the best immediate answer to that problem.
Instead, I explain that we could raise well over £50 billion a year by reforming existing taxes. Capital gains could be taxed at income tax rates. Higher investment income could be subject to a charge equivalent to national insurance. Private companies could be prevented from accumulating untaxed personal wealth. Inheritance tax loopholes could be closed, while council tax could be made genuinely progressive.
This is not technically difficult. The necessary information already exists. What is missing is political will.
Fair taxation means taxing wealth like work.
Please share your opinion in the comments and take part in the poll below.

Will Burnham beat the OBR?

Can Andy Burnham really change Britain if he accepts the economic rules that the Office for Budget Responsibility (OBR) expects every government to follow?
In this video, I argue that this is the defining economic question facing the next Labour government. The issue is not Andy Burnham’s leadership style, personality or political instincts. It is whether any government can rebuild Britain while accepting a fiscal framework built on assumptions created during the George Osborne era.
The OBR says Britain faces rising debt, higher spending pressures, increasing interest costs and the need for tighter public finances. But are those conclusions inevitable, or do they depend on economic assumptions that deserve to be challenged?
I explain why I believe the real constraints on the British economy are not government borrowing, but unused people, unused skills, unused knowledge and unused productive capacity.
I also explain why the cost of government debt matters far more than the amount of debt itself, and why government has considerably more control over those costs than is usually acknowledged.
Ultimately this is a debate about who governs Britain. Do elected politicians shape economic policy, or do fiscal rules become more important than democracy itself?
If Labour wants to rebuild Britain, it must first change the country’s economic framework. But has it got the courage to do so?

Are we heading for censorship?

Parliament is on the verge of passing the National Security (State Threats) Bill, and I think far too few people understand what it could mean.
The government says this legislation is designed to protect Britain from hostile foreign states. That sounds reasonable. But when you look closely at what the bill actually says, serious questions emerge about its effect on journalism, research, blogging and public debate.
In this video, I explain why.
The bill allows organisations to be designated as state threats. Once that happens, obtaining information from them could itself become a criminal offence carrying a prison sentence of up to 14 years. Independent reviewers have already warned that the legislation is drafted so broadly that journalists may have to rely on prosecutorial discretion rather than clear legal protections.
That matters because reporting conflicts has always depended on speaking to every side. Whether the conflict is in Gaza, Ukraine, Sudan, Yemen or elsewhere, understanding events requires access to information from multiple sources, not just those governments approve of.
This is not simply a legal issue. It is an issue of political economy. Information is a public good. Democracy depends upon informed citizens. If access to information is reduced, rumour, misinformation and distrust are likely to grow.
Is this really the balance Parliament should be striking between national security and democratic accountability? If so, we should all be worried. 

Society comes before markets

What is society? It sounds like an obvious question, but modern economics rarely answers it well.
Too often economics starts with the idea of isolated individuals making rational choices in markets, as if society somehow emerges afterwards. I argue that this has the relationship completely the wrong way round.
We are not born as independent individuals. We become who we are through our relationships with other people. Families, education, communities, trust, language and shared knowledge all come before markets. Society creates the conditions in which individuals can flourish, not the other way around. In other words, society does not emerge from independent individuals. Independent individuals emerge from society.
That changes how we should think about the economy.
This is also true of markets. They are important, but they depend on trust, law, public infrastructure, education and a stable monetary system. Society creates them.
Money also only works because society collectively agrees that it does. And accounting records relationships, not just transactions. Economics has too often forgotten that fact.
If society is fundamentally a network of relationships, then its purpose is not simply to maximise GDP or consumption. Its purpose is to create the conditions in which everyone can realise their potential while respecting the limits of the natural world.
This video is the next step in my Economics of Hope series. It builds on earlier discussions about human potential, money and taxation and prepares the ground for the next question: why do governments exist, and what should they actually do?
If you enjoy these videos, please subscribe, like, comment and share to help more people discover a different way of thinking about economics.

Taking on rubbish politics

One of the strangest by-elections in modern British history is about to take place. Nigel Farage has resigned as MP for Clacton to force a by-election that he fully expects to win. But instead of facing Labour, the Conservatives, the Liberal Democrats or the Greens, he faces something very different.
His only likely serious opponent is Count Binface.
At first sight, that sounds ridiculous. My argument in this video is that the humour is exactly the point.
In this video, I explain why the mainstream political parties have refused to contest this election, why Farage remains under investigation by the Parliamentary Standards Commissioner, and why his political gamble may well backfire, even if he wins.
More importantly, I argue that Count Binface represents something much larger than a novelty candidate. Satire has become one of the few effective ways of challenging populist politics. When conventional opposition fails, ridicule can expose truths that serious politicians seem unwilling to confront.
This is therefore not really a video about a man in a dustbin. It is about the failure of Britain’s political system to provide a convincing alternative to forty years of neoliberal politics. It is about political alienation, the weakness of the mainstream parties, and why many voters are looking for a completely different politics based on care rather than grievance.
So, is Count Binface merely a joke—or is he exposing a crisis at the heart of British democracy?

Trump has crashed again

Donald Trump says the ceasefire with Iran is over. Military action has resumed, the Strait of Hormuz is once again at the centre of the conflict, and the economic consequences could be profound.
In this video, I explain why wars are never just military events. They are always economic events too. They reshape trade, disrupt supply chains, drive up commodity prices and create inflationary pressures that spread throughout the global economy.
The Strait of Hormuz carries a huge share of the world’s oil and much of its jet fuel. More sustained disruption affects not only energy markets but also trade in fertilisers, industrial chemicals, and critical manufacturing supplies. Businesses will respond by delaying investment, consumers will become more cautious, and financial markets will become increasingly volatile.
I’ve argued for months that the greatest danger from this conflict would be economic rather than military. If this escalation continues,  as seems likely, the risk of recession rises significantly, not because markets will panic overnight, but because the resulting uncertainty will steadily undermine confidence and investment.
Wars are always about economic power, control over resources and the revenues they generate. This one is no different. Trump just can't let go of a prize he cannot have, and so he's at risk of crashing the world economy again. 

Trump crossed the line

Did Donald Trump persuade FIFA to overturn a World Cup red card? More importantly, if he did, why does it matter?
This video is not really about football. It is about something much bigger.
Sport only works because everyone accepts the same rules. Referees make decisions, appeals follow established procedures, and no player should receive special treatment simply because they have powerful friends. Once that principle disappears, confidence in the game disappears with it.
The same is true of democracy.
Courts, regulators, election officials and public institutions all depend on one simple principle: that rules apply equally to everyone. The moment powerful individuals can bypass normal procedures, trust begins to collapse.
In this video, I examine the controversy surrounding Donald Trump’s intervention over a USA World Cup red card and ask what it tells us about the growing willingness of powerful politicians to expect different treatment from everyone else.
Whether you support Trump or oppose him is not the central issue. The real question is whether any individual should be able to bend institutions to their own advantage. If we lose confidence that rules apply equally, we lose far more than a football match. We begin to lose confidence in democracy itself.
I’d be very interested to know what you think, so please vote in the poll, leave a comment and join the discussion below.
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