I found this book very inspiring, though slightly difficult to understand without in-depth knowledge of economics. However, I do urge everyone to read it, as it challenges the government’s policy of austerity, which is really having the most terrible effects on all our services, from child care to the health service, to prisons and policing, to farming and agriculture. Everywhere, devastation occurring, enough to make one cry with despair.
Richard Murphy says that all this is quite unnecessary and counterproductive. As he explains, all money is created by banks making loans, out of thin air, so the government can create money through the Bank of England by quantitative easing. The government can spend without collecting taxes, and does so, meaning that taxing is not necessary for spending. The government does not need and should not run a balanced budget. The goal of a balanced budget makes no sense because the government is not a business. Overspending is essential to get the economy going. Cutting spending is counter-productive. Government can spend in excess of the tax collected and have no impact on inflation, but have a beneficial effect in keeping the economy going, meaning the policy of balancing the budget is either recklessly irresponsible or a completely false promise that cannot be delivered.
George Osborne was wrong to begin the cuts in 2010. The policies of the ‘grey’ parties (my phrase) are wrong; only the Greens, SDP and Plaid Cymru are right.
According to Murphy, taxes must do six things:
- Reclaim the money the government has spent into the economy for reuse
- Ratify the value of money
- Reorganise the economy
- Redistribute income and wealth
- Reprice goods and services
- Raise representation.
Also, they should be built on the foundations of peace, equality, simplicity and truth.
Richard Murphy promotes a citizen’s income, including for children, and has worked it out with economist Howard Reed. It would replace most benefits and national insurance and involve changes in income tax, meaning that the whole tax and benefits system would be hugely simplified.
The last chapter is the budget speech the new chancellor would make, outlining all the reforms needed.