In an exclusive interview with Every Investor, Professor Steve Keen from Kingston University has warned that politicians who promote austerity economics are naïve.
Austerity policies a new study suggests has caused 120,000 deaths. The paper found that there were 45,000 more deaths in the first four years of Tory-led efficiencies than would have been expected if funding had stayed at pre-election levels. On this trajectory that could rise to nearly 200,000 excess deaths by the end of 2020, even with the extra funding that has been earmarked for public sector services this year. The paper identified that mortality rates in the UK had declined steadily from 2001 to 2010, but this reversed sharply with the death rate growing again after austerity came in. From this reversal the authors identified that 45,368 extra deaths occurred between 2010 and 2014, than would have been expected, although it stops short of calling them "avoidable". Based on those trends it predicted the next five years - from 2015 to 2020 - would account for 152,141 deaths - 100 a day - findings which one of the authors likened to “economic murder”. The study, published in BMJ Open today, estimated that to return death rates to their pre-2010 levels spending would need to increase by £25.3bn. Per capita public health spending between 2001 and 2010 increased by 3.8 per cent a year, but in the first four years of the Coalition, increases were just 0.41 per cent, researchers from University College London found. In social care the annual budget increase collapsed from 2.20 per cent annually, to a decrease of 1.57 per cent. The researchers found this coincided with death rates which had decreased by around 0.77 per cent a year to 2010, beginning to increase again by 0.87 per cent a year. And the majority of those were people reliant on social care, the paper says: “This is most likely because social care experienced greater relative spending constraints than healthcare." It also notes that a drop in nurse numbers may have accounted for 10 per cent of deaths, concluding: "We have found that spending constraints since 2010, especially public expenditure on social care, may have produced a substantial mortality gap in England.” The papers’ senior author and a researcher at UCL, Dr Ben Maruthappu, said this trend is seen elsewhere. “When you look at Portugal and other countries that have gone through austerity measures, they have found that health care provision gets worse and health care outcomes get worse,” he told The Independent. One of his co-author’s, Professor Lawrence King of the Applied Health Research Unit at Cambridge University, said "It is now very clear that austerity does not promote growth or reduce deficits - it is bad economics, but good class politics," he said. "This study shows it is also a public health disaster. It is not an exaggeration to call it economic murder.”
Austerity really is a very broad concept- all it means is reducing government debts and deficits using increased taxation and/or decreased spending. I feel it's unfair and doesn't grant a clear picture if all you do is show the results of less government spending. Paying debt is a necessary part of governance- if you cannot indicate you are going to pay the money back, no borrowers will be willing to lend to you in the future. This is similar to Europe and sovereign debt crises. Packaging everything negative about spending cuts and tax hikes into one term- Austerity, and choosing to attack it relentlessly can give off a misrepresentation of how broad the term really is, and how it is necessary to execute other government functions such as securing foreign debt packages. There have been successful implementations of austerity such as during the Clinton years in the US and in Iceland. It is such a broad and necessary concept to government borrowing that this treatment of it is incomplete.
@@ArthurWuYeah211 Not that many deaths, not that those people mattered, not fair to the people handing out the pain, what, cut the wealthy? Also does not apply to sovereign currency economy.
@@garysouza95 Fiscal discipline certainly does apply to a monetary sovereign. Not maintaining fiscal discipline means two things: one, you create inflation and devalue the currency due to more money going into the economy rather than out of it (though this also depends where you spend this money), and two, it's hard to backtrack from a long period of fiscal deficit as you have to continually roll over your debt, and in periods where interest rates are high (usually to fight inflation) your debt payments increase even more and inflation becomes an even worse problem. Monetary sovereigns default not because they can't create more money, but because creating vastly more money to balance an extremely irresponsible deficit would result in hyperinflation. Frankly, if you think of public finance in a way where saving one life or even a few hundred is worth $25.3 billion, you will not get very far. You could also argue that the instability hyperinflation produces would cost thousands of lives as well, due to shorter lifespan from lower quality of life.
While he is largely right I think he is overlooking an important truth which is that not all spending is optional. You have mandatory spending on rent, food, fuel and other things. You also have wealth inequality so taking 10.000$ from a bank account with 50k on it is totally different than taking it from an account with 5B on it. Taxes are mainly a tool of wealth redistribution where you take money from the rich and give it to the poor. Wealth redistribution like this is actually necessary to make capitalism viable long term. Rent and profit channel wealth upwards so overtime the overall wealth of the lower class goes down and down. That's why the government needs to tax the rich enough and provide for the poor enough to off-set that tendency for upwards wealth redistribution. Think of it as recycling wealth in that the government takes the money the rich make from the poor and gives it back to the poor so that the rich can take it once more. Though rather this is best done directly through a UBI or indirectly through public services can be debated. I consider it better for it to be done via public services as some sectors of society don't work well under capitalism for various reasons. I'm not a communist but I think we should be honest with ourselves and admit that capitalism isn't the right system for EVERYTHING. Things like public transit, healthcare, environmental investment, education, prisons and so on are better done publicly
I do think he is making the same mistake many other economists make and that is to treat everyone as middle class. While actually you have lower class being the majority and upper class having the majority of the wealth. So the people having the wealth of the economy and the people spending and producing the wealth are not the same ones.
it may be kindergarten thinking about how the economy should be run but it's exactly how the people in charge want it to be run......there's NO possible way you can have a wide gap between the 1% and rest without out it running that way.
At a certain point, if you’re going to have millions in the top 1% of a single country, their spending alone can encourage inflation. Especially when they’re doing shit like scalping to get even richer.
Public debt can be paid down over time by increasing the taxation of rents of land and land-like assets (e.g., the broadcast spectrum, take-off and land slots at airports, and the value of any license issued by government that limits competition. This last category would include such licenses as those to sell alcoholic beverages, medallions to operate taxi services, etc.
Apart from an increase in the death rate, austerity is also responsible for a general decrease in life expectancy, increased adult and childhood poverty, the latter producing decrements in educational attainment, health and occupational attainment.
Lucas And they failed. Keyensians caused it. The crash happened, due to the Fed, unemployment in 1929 peaked at 9%. By Q1 1930 it was at 6%, Hoover got desperate and raised taxes, tariffs and then pumped a lot of money into the economy. Then came the Great Depression and Roosevelt would prolong it. The stock exchange would not go pre crash levels till 1954. Thats why Keynesians always fail.
wtf Keynesians didn't exist until after the great depression and Roosevelt didn't prolong it that's just plain revisionism. All real factors of the economy improved under him. The only slump he had was when the listened to austerity-lovers and went back to surplus.
He is 100% right. Hoover was not the Laissez Faire President people claim. The raising of the top rate of tax from 25% to 63% in 1932 is a testament to this. Hoover was an interventionist and the deficit in 1932 was at the time the 3rd largest Deficit in US history at the time. I know facts hurt. Right?
Not if it means you can spend the other half on things you like and enjoy life, and housing, education, healthcare etc is all taken care of by the govt. That's a sweet deal.
IJTop200 He meant to say surplus there. And also, for anyone else who wants a more in-depth look into Prof. Keen's analysis, he uploads almost all of his public lectures to RU-vid on the ProfSteveKeen channel
If the only alternatives to keep the money supply growing to match the economic turnover are for either the citizens or the government to go into debt, it has to be the government because they can expand the money supply to pay for the most reasonably priced borrowing. But it doesn't make sense for the government to be paying to borrow money at all, when they can just make it for free. There simply have to be effective curbs on the money printing to make it match, without exceeding, the needs of the economy. Putting the banks in charge of regulating the money supply creates a perverse incentive to enrich insiders in the short term, at the expense of economic stability in the long term.
really good interview....it's demeaning and trivializing when the national economy is infantalized for propaganda purposes......the economy of state bears no resemblance too a given "household economy"!!! The ability of a nation to wield it's currency as a function of debt creates the ability for the governing body to meet it's responsibilities. National debt is an important aspect of civil society.
Yes I was shocked when he said government can't just print money. It can. Government can control the issuance of currency by eliminating the Reserve Bank or Federal Reserve and not paying a corporate entity to give us fake money
Yes, usually. But just like how loan money gets paid back (and, in a sense, deleted) money "printed" by the government is gradually paid back to the government via tax (also deleted in a sense)
The ECB printed 1.5 trillion Euro. By mow maybe more. Any inflation? How much money did the FED pour into the economy and there has been no inflation. We live in strange times.
Beautifully clear explanation of the austerity cesspuddle. Steve - great jacket, which would benefit from a little breaking down (a fun exercise) to avoid the startling shop fresh look
The government produces a singular product, currency. To create demand for currency, it mandates taxes and government fees in that currency. This is the linchpin for the economy function. There is more to this but suffice it to say, the average household and businesses cannot create currency.
Given the results of capitalism on the environnent, isn't economic stagnation desirable? Stopping austerity will continue the unfeasible delusion of endless growth with finite rescources. The main problem is that austerity isn't being shared equally. We're probably all screwed anyway, but unless fossil fuel burning stops we're definately well and truly mashed.
the problem is the national debt if growth stops the repaymants stop resulting in currency collapse, the irony is scrapping for the last recources and planning for change end in the same place just with less blood on the floor
How are we screwed? So the ocean levels rise and the temperatures increase causing wild weather patterns. Humans are survivors. We will adapt. Won't be the first climate change this planet has seen.
He does fall into the same trap as many other people which is to think of the population as all middle class. In reality the people who own the wealth and the people who make the economy go round by production and consumption are not the same ones.
Ik I’m late but - isn’t the congressional budget just a part of the money creation? What about credit created by private banks and the money eventually made for that?
Read : Debt and Investment in the Keen Model: a Reappraisal of Modeling Minsky. His model is wrong, profits go negative this is never heard of and it is necessary to his crisis.
Eh, if we circulated it better it’d be fine. You’re quite correct though, the fact people can hoard physical money generation to generation can eventually cause issues.
Italian total debt is running at...wait for it...666.2% of GDP. Government debt stands at a whopping 2.766 trillion euros and rising. Given the current global stagnation and possible downturn, Italy can cause an existential crisis for the Euro and the European Central Bank.
We have severe global problem with inflation caused by printing and spending billions by the governments. 2023 will be the year of record inflation and probably out of control. The great reset is coming
Maintain de capital structure and allocate ressource to create sustenable growth, also called inovation, after that the economy can grow rapidly because it use ressources more efficiently and it grow more rapidly than the debt
@@felixbonneau1834 Who's more efficient at allocating resources and innovation; private entrepreneurs and capitalists or political bureaucrats? Both philosophically and historically speaking.
@@dankghoul1438 well, basic research is the foundation for innovation. Even the super rich pharmaceutic industry has a large public funding on drug approvals in the USA, for example. www.ncbi.nlm.nih.gov/pmc/articles/PMC5878010/
Govt spending did not cause the crisis. Bailing the banks caused the crisis. If you cut govt spending. You are cutting GDP. No GDP equals no way to generate growth and THEN reduce the debt/deficit.
What this professor doesn't doesn't even mention is how debt is creating inflation. Which in turns harms people by taking away their savings and people working a salary that doesn't keep up with inflation.
+Chris Bernardes Debt used towards productive investment doesn't cause inflation. Debt used for consumption or to finance asset price bubbles does cause inflation.
Why does he think that only way to achieve surplus is to raise taxes on people ? There are tons of ways to achieve surplus, like more efficient spending, investing with deficit to achieve surplus in future, etc.
did anyone catch that part 5:33min about the economy contracting because of over taxation and people trying to payoff debt??? this should be a big ass clue about the state of affairs in many countries. growing to fast is just as dangerous as not growing fast enough.
Drza Austin i don’t understand why government spending is “good” better not tax the people and let them spend in the economy for what they really need.
This "expert" is the naive one. Those in the UK are experience austerity now, because of the consequence of governments actions, lock-downs and "stimulus" spending. The growth of government necessarily leads to increasing austerity, or, more accurately, poverty.
The people in the comments thinking that they know more sitting behind their keyboard than a professor of fucking economics. I think he knows what he's on about more than you mate
The people in the comments section don't realize they are still applying the fallacy of composition. For those who are reading: that is the fallacy of assuming that which must be good for a member of the group must be good for the group as a whole. In this case, what's being debated is decreasing expenditures in order to bring your balance sheet into/closer to positive. While this does make sense for the individual person, company, or government; it doesn't make sense if everyone is doing it at the same time, hence fallacy of composition. Granted, it is a subtle point, because the fallacy of composition is a subtle logical misstep, but it totally makes sense that you can't have the government reduce spending while everyone else is too. Let's take it to the logical extreme: what happens if everyone literally stopped spending? Economic collapse. What happens when everyone decreases spending at the same time? Economic contraction. So, in other words, the point that is being made is you have to have the government spend if the private sector is undergoing a crisis, unless of course you want the entire economy to contract, sometimes *a lot*.
Yep, especially when you see the amount of research and data acquisition he did to reach his conclusions, while they are still just working on dubious 200 year old theories and "rational thinking". Also they see the economy as something to impose their "moral" lessons on other people and an inherently perfect system that was corrupted by some bogeyman.
So no one is allowed to have an opinion apart from the elite? Do you think people can't read other books and journals and come to a conclusion for themselves?
I disagree , the government can waste less money and just like in the US by focusing on reducing cost of basic services can drive down deficits , its about reducing waste and reducing costs.
Professor Steve Keen explains austerity effects as simple as can be to the dot, then simply explains how the government need to avoid the household view of the state run economy. My respect professor...
Much as I agree with his thoughts about, 'Austerity', I don't agree at all with his model of the reasons behind taxation. In a fiat currency taxation serves various purposes, but raising revenue isn't one!
Someone on this thread is economically literate AWESOME yes Taxation creates demand for the currency which the state creates....so with that being said the government cannot run out of the money it creates!!
Keynesian economics is naive. Greece,Portugal and Spain became democracies in the 70's and borrowed lots of money and spent their way to wealth. In the late 90's banks came knocking for their money and they have been struggling to pay their debts since. Open markets and cutting of regulations and taxes solve the problem.
@kingmatt2563 Keynesian Economics isn't running up huge deficits in perpetuity as some like to claim. The idea is to spend more during a recession to keep the economy running and to reduce the effects of the recession. But during an economic boom, the Govt spends less and repays the debt incurred. Greece, Portugal, and Spain were essentially running massive deficits for decades, and it caught up with them. A better example is New Zealand. In 2008, the public debt-to-GDP ratio was about 6%, and instead of embarking on a harsh regime of austerity like the UK has, the Govt mostly maintained expenditure. Over the last 10 years, through the GFC, plus an Earthquake that almost flattened half the city of Christchurch, debt now stands at about 26% of GDP, and we've entered into surplus again, and can start paying that debt back down. Plus cutting regulation is what the US did in the 90s and 2000s, particularly of the banking sector, which then lacked the oversight it should have had. They ran the economy hot with lending irresponsibly, creating a bubble which popped in 2008 when Lehman's collapsed.
The only difference between a public debt and a household debt is that a household is not allowed to change the rules of the debt! Winners: Government - Losers: The citizens.
Being financially "Naive" is the belief that in any financial system there can be a deficit in one part and no surplus in the other. That being thee deficit in the government sector must equal the surplus in the private sector. That surplus is what the government receives in goods and services by Selling newly created money (deficit created money) and geting goods and services in return. That situation cannot persist indefinitely and if pushed to the limit it will destroy the ability of people to save and invest. It will reduce the value of each unit of currency (as it has over the past 100 years or more of recorded facts). There is no balance in a financial sense if one sector of the economy continually fails to be balanced since the other sector has to make up for the other's failure to balance. That is because the sum of all money in the economy (private plus government) must add up mathematically. The deficit of one causes the instability of surplus of the other. Keen does not understand this at all and pushes a line as MMT economists also do that government must issue new money for the economy to expand. This is of course a complete fallacy since firstly government does not issue more currency to the private sector at all. They sell currency to the private sector in exchange for goods and services. Secondly it assumes there is a one to one relationship between the price of goods and services and that of money and we all know that prices of goods change, exchange rates change and interest rates (the price of money on loans) also changes. What he says just does not add up and can be shown to be poorly reasoned and illogical on a very straight forward spreadsheet.
LOL, this guy says that taking money out of peoples bank accounts is bad, but supports policies which cause that same money in their bank account to lose value, which in the end is the same thing.
He should explain what Economy is: exploitation of labor. So, austerity economics is not naive, but more brutal exploitation. "Austerity" means Scarcity. Scarcity is trauma. Trauma paralyzes the mind. A slave with a paralyzed mind is what the master needs. "Austerity programs" is reinforcing the guilt into the mind of the slave: -oh, it's my fault for being poor, because I'm evil. It's the same Master Morality (read Nietzsche's Master - Slave morality), as the Feudal discourse, where the exploited was kept in a perpetual state of guilt through religion.
criztu LOL, The world is not infinite. There are limited Resources, Time, Material, etc. The economy through the price system attempts send signals where to spend the time and resources on.
nanagyamfua there isn't enough for everyone if we all shared. That's why communism and socialism fail every time its tried. There must be incentives for work to be done. We live in a finite existence there is no need to understand the concept of infinity.
+Chris Bernardes the world, the universe, is infinite. just listen to what Albert Einstein teaches us - he talks about matter and energy, and how converting one into the other result in infinite energy or infinite matter. Relative to our human scale, the energy of the Sun is infinite. The Sun provides us with so much energy, that you would need another Sun to store it. You simply don't understand how much energy is available to us.
So, it's absolutely essential that we live in a world where there's a small elite of billionaires and millionaires that own the large percentage of the world's economy. The overwhelming majority must have far less, and there needs to be absolute poverty where people are dying. Otherwise, no-one would have an incentive to work ? The absolute richest couldn't pay more tax to help out the poor ? Is this what you're saying ?
Venezuela is the perfect example of a extreme spendrift state which simply went broker and will take decades to recover a semblance of what used to be...
If you think about it though, the whole world lives on buying and selling debt. It's a huge clusterfuck but you eventually realise that by being stationary, you fall behind. The way to rise is to borrow. And invest in order to be able to lend money to others and collect
Basically he's banging on like the aging alcoholic in the pub corner about "austerity economics" something that hasn't existed since the great depression.
3:00 they take the money out of people's bank accounts anyway. Running a deficit means they tax through inflation rather than upfront. Inflation is a tax on the poor and it drives wealth inequality. 5:00 the alternative is to have the poor get poorer and the poor increase in number through inflation. 6:00 private debt has run high on the economic policies which you're advocating. Why should we think more of the same is a solution.
These fools always try to reason their theory in a closed system (domestic only). The us economy participated in a global system, the country needs to be competitive.....i.e. running surpluses. Also the government takes money from me every year (in taxes) this guys arguments are naive. I think kindergartners could explain economics better than these fools.....
+Brad S he never said that we can run deficits without consequences. But at the end of the day debt only becomes a problem if you can't repay it. Our economy is very weak at the moment and the government trying to balance the books by cutting spending is not helping matters. In order to run a surplus you need to increase your income, best way to do that is invest in growth and the tax receipts will follow. As long as you pay back the debt you need not worry.
ejcmoorhouse Yes, he basically did say that we can run deficits without consequences, and that's niave. Also, debt becomes a problem long before you can't repay it, for a number of reasons. And . . . I could go on, but if you haven't paid attention to economic history, you aren't going to listen to me. Have a nice day.
Brad S No he did not say that we can run deficits without consequences, nor do I believe he believes that. In this video he clearly made the point that personal debt as in mine and yours is far too high and should be the main focus. National debt is something every country has and most manage it. We managed with much higher levels in the past.
ejcmoorhouse National debt is something every country has and is being strangled by, and I don't know who "we" is in your post, but I'm not familiar with any modern nation that has had more national debt in the past that didn't run into huge economic problems because of it. And no, he didn't say it. He heavily implied it, dismissing concerns over continual deficits as niave and unfounded. That is the true niave opinion.
Brad S Britain post world war 2 had huge levels of national debt but managed it. Maintaining a deficit is not a good idea, but actively cutting back spending when the economy is still weak is restricting the flow of money in the economy. Hence the slow growth.
Simpleton thinking by Steve Keen with his idea that a government surplus reduces savings in the private sector. Why ? Because Keen does not know the difference between savings and sectoral balance changes. Savings and balance changes between one sector and another are two entirely separate things. Savings in the private sector Only come people spending less than they a earn. If savings resulted from government deficits then the level of private debt would have decreased over the past ten years of net budget deficits and not increased as it has. The reality is deficits in the government budget are a tax burden that the private sector is forced to pay since the deficits are funded by government borrowing and eventually the bonds they sell to fund deficits mature and have to be paid out by the taxpayer.
