"Spend and tax" not "tax and spend"

 I got a response from my MP which got me kind of mad. You'll see why as I reproduce it here. Apologies for the strange changes in typestyle -which seems to be due to the way blogger treats the paste-in.

I'm sorry, Catherine, but I really do urge you -again- to review or become acquainted with some monetary theory which at the very least lays a huge question mark against the specious claim being made by the government and which you repeat in your response: 

"if we are to fix the foundations of our economy and address the £22 billion hole..."

Before repeating this highly questionable metaphor, please at least look into Modern Monetary Theory or at minimum review Keynes' basic proposals about government spending which helped create the growing prosperity beginning in the 50s through to the mid 70s and to begin to narrow the wealth gap in British society (and beyond). Keynes needs supplementing in the light of coming of the gold standard and away from the Bretton Woods agreement but the success of his approach in setting off waves of progressive outcomes is not to be ignored.

Please allow me to whet your appetite by presenting a quote to open up the slight shift in thinking to help Labour to actually fulfill some of the stated missions. To wit:

"... governments create money by their spending, and they do so before taxing, is a matter of fact. ... ever since governments began to work as fiat currencies - and that transition happened across the world basically between the 1930s when countries like the UK abandoned the gold standard to 1971 when the USA finally abandoned it - over that period of adjustment, everybody moved from being a gold standard currency to being a fiat currency, and during that period of transition gradually everyone moved to this point where the central bank simply always created money whenever the government issued an instruction for it to do so.... wrong understandings as it turns out of the way in which money behaves at present, which are based upon old gold standard thinking, and the gold standard hasn't existed for over 50 years. 

https://www.taxresearch.org.uk/Blog/2024/10/18/mmt-is-not-a-policy-option-its-a-description-of-the-economy/

Of course there is more to be said, but the main point is to understand that "tax and spend" is not the way it works. It is and has always been "spend and tax". The role of tax is not to raise finance but to moderate flows of the money that governments make available for the common good -to prevent it accumulating unfairly, usuriously and in quantities able to sway governments. Controlling flow can also help when genuine inflation threatens. But raising finance? -that's not something a government with a sovereign currency need worry about. Pretending that it does in the face of post-war macro-economic history is, in effect, a decision to continue to enrich the already wealthy at the expense of the least powerful and most marginalised people in our society: -the real strivers if truth be known.

When Reeves' project fails, please be ready with this idea which is already lying around.

ɷˡˡ̷

Andii Bowsher

52 Fern Avenue

Jesmond

NE2 2QX

"Was the earth made to preserve a few covetous, proud men to live at ease; or was it made to preserve all her children?” 

- Gerrard Winstanley, 1649, founder of ‘The True Levellers’

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On Tue, 29 Oct 2024 at 17:29, Catherine McKinnell MP <catherine.mckinnell.mp@parliament.uk> wrote:

Dear Andii,
 
Thank you for writing to me about the event on the Budget for National Renewal. I understand the strength of feeling regarding public finances. Unfortunately, due to ministerial commitments, I was unable to make the event on 8 October. Nevertheless, I am committed to an economy that serves everyday Britons across the country.
 
As you will know, the upcoming Budget is set to be released on 30 October. Therefore, at this moment in time, I am unable to comment on specific aspects of public finances. However, please be assured that the new Labour Government is working tirelessly so that our public finances serve everyone in Britain, not just the wealthiest in our society.
 
As I am sure you are aware, the country faces several difficult decisions on spending, welfare, and tax, if we are to fix the foundations of our economy and address the £22 billion hole left in the public finances by the previous Conservative Government. It is in this context that the Chancellor will be making any decisions on public finances at the Budget.
 
Nonetheless, the Government is committed to ensuring the tax system raises revenue in such a way that supports economic growth and prosperity for communities across the UK. The Labour Government was elected on a manifesto that pledged to rebuild Britain and serve the working people, and we will ensure that public finances are set up in a way to achieve those goals.
 
Thank you once again for contacting me about this issue.
 
Kind regards,

Catherine

Catherine McKinnell MP
Member of Parliament for Newcastle upon Tyne North



Tel: 0191 229 0352 (Constituency) 
www.catherinemckinnellmp.co.uk