Accountant and tax specialist Richard Murphy, writing today:
Rachel Reeves did an interview with Nick Robinson of the BBC this week as part of a new series entitled Political Thinking. The audio is available here.
As Nick Robinson made clear, that the interview took place this week was not by chance. Rachel Reeves’ team suggested the date. He never successfully extracted a reason for that. My guess is they thought they’d have something good to say after Reeves’ visit to China. What is clear is that events got in the way.
Even clearer was that Reeves is as economically illiterate as ever. In a programme called Political Thinking, no hint of political philosophy was on offer from her. Economically her whole thinking could be summarised in one word: growth.
And after she acknowledged there has been no growth of any consequence in the last fourteen years, she claimed it was essential to deliver increased incomes for working people. What she did not mention was that despite that lack of growth the rich had got richer and yet, somehow, she still thinks that growth will trickle down. That can only be described as delusional.
Worse, when discussing her belief that ‘the sums must add up’ (which makes no accounting sense because they always do), she went back to her favourite story about watching her mother balance the household budget at the kitchen table, making it clear she thought she had the same obligation with the nation’s finances. Robinson, supine throughout, did not challenge her on this. He should have done. In 2022 the BBC offered this guidance:
Household analogies are dangerous territory, intensely contested, and can easily mislead.
Actually, they are just wrong. The explanation is simple. Reeves’ mother did not have her own bank. Reeves, as Chancellor, does. It is called the Bank of England. It does not use other people’s money, as her mother had to do, because she could not create her own. It instead creates all the money we use, and it is its task to do so. Otherwise the economy could not function. Without the cash injections that government deficits create, our economy would not have the credit it needs to function or grow.
Either Reeves does not understand this, in which case she is not fit for office, or she does understand it but pretends not to, which makes her even more unfit for office.
A Chancellor who has no comprehension of such basic macroeconomics and who is without a political philosophy should never have been allowed near the Treasury. She has been. No wonder we are in trouble.
I would not recommend listening to the programme. It was tedious. But if you do, I suggest having the snooker on at the same time, as I did. That meant I did not waste half an hour of my life.
I value Richard Murphy for his acerbic, informed and cogently argued punditry but he is limited by failure to understand imperialism. Another political economist I admire is Canadian Radhika Desai, who often appears alongside Michael Hudson and Richard Wolff. In one of a post last September on the European Commission, I hosted a video with Michael and Radhika guesting, and Dimitri Lascaris hosting. When Dimitri asked Radhika why Europe’s leaders are against the interests of their citizens and industries, she replied:
The entire Left in most Western countries – by ‘Left’ I mean the Social Democratic Left, the Green Parties and perhaps most of the entire political establishment – is now led by individuals who have been through the US ideological factories … the think tanks, the annual meetings etc. You know, the Leaders of Tomorrow type programs for which these people go to the USA on junkets, and become part of a network of leaders with a similar understanding of what is to be done, both domestically and internationally. People like Starmer, Macron, Von der Leyen and Annalena Baerbock … they belong to these circles. So in answer to the question – why are European governments acting so manifestly contrary to the interest of their economies, their people etc? – the only reason I can find is that at the present moment the United States is in this sweet spot where the people it has groomed have taken power in major European capitals.
The specific context was the Ukraine War, which has accelerated Europe’s decline, but the point is more general. That Rachel Reeves can peddle such discredited claptrap fifty years on from Mrs Thatcher speaks volumes on the grip of easily disproved neoliberal cant on the minds of the mediocrities now in high office.
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