I posted this thread on Twitter this morning:

There’s a approach out of the financial mess the UK is in. It solely requires two issues. The primary is information. The second is an admission of previous errors. That is it, in a nutshell. A thread…..

Everybody however authorities ministers admit that we’re in a multitude, and so they’re simply mendacity. It’s, in that case, a common fact price acknowledging that we’re in want of an answer to our issues.

It is usually true, as Einstein as soon as famous, that doing the identical failed factor over and over and hoping for a unique consequence subsequent time, as our legislators appear to be doing, is the closest factor to a working definition of madness as we’re more likely to get.

In that case, let’s presume that any seemingly reply to our financial woes goes to require us to do one thing completely different to what we have been going thus far.

This can be a shock to Conservative politicians. They suppose that the imposition of austerity with the only goal of shrinking the scale of the state is their sole motive for being in workplace. They consider that may assist the non-public sector flourish. It clearly has not.

The difficulty we now have is that so profitable have the Tories been at selling this failed perception that the Labour Occasion now believes it. They too now suppose it their job to shrink the state as a result of they consider that the non-public sector is just too small to help the general public companies we’d like.

The selection on the subsequent election will, in that case, be a bit extra or rather less austerity, however it will likely be a alternative of austerity, come what might. And there’s no doubt that austerity has obtained us into the mess we’re in.

Schooling, well being care, social care, the justice system, defence, housing, and lots of extra public companies are failing. In consequence, they fail us. What’s extra, they fail the non-public sector economic system.

The belief by Labour and the Tories is that we will solely have the state sector that we’d like as a result of we now have a non-public sector economic system. The idea is that the taxes paid by the non-public sector preserve the state sector going.

The suggestion that the state is just too huge and so is unaffordable flows from this perception. However suppose that perception is flawed? Suppose that as a substitute of us having a state sector as a result of we now have a non-public sector the reality is that the connection is the opposite approach round.

Suppose, in different phrases, that the one motive that we will have a flourishing non-public sector is as a result of we now have a state sector. That may make full sense.

For instance, the non-public sector wants contract legislation to work. The state offers that.

It additionally requires that there be a foreign money – which is what all of the cash utilized in non-public sector exchanges is. Solely the state can provide that, because the failure of any cryptocurrency to fulfil this operate proves.

And the non-public sector additionally wants regulation. Sincere merchants want that to make sure that dishonest merchants don’t undermine and even destroy markets by supplying pretend, stolen, unsafe and unfairly copied merchandise. The state offers that.

In that case, the essential functioning of a market system is wholly depending on the state. The one motive you could danger going out for a espresso is as a result of the state makes it protected so that you can purchase that espresso, assured it shouldn’t hurt you. And that is a extremely easy product.

However the state does much more than that.

The state offers the essential coaching each employer wants their workers to have.

The state additionally ensured that these staff would flip as much as work match and nicely, though that is not fairly so sure now, which is why there are fewer folks within the workforce at current.

The state additionally let folks take the large danger of working for only one employer who may fail at any time. The social security internet we used to offer existed to make that doable. It is not so good anymore.

And the state took the essential pension obligation off employers.

As well as, by offering social care, childcare, training companies and rather more, the state ensured folks might go to work while their family members have been stored protected and nicely.

In that case, I might counsel that the state is prime to creating the non-public sector work. Actually, with out the state, a lot of the non-public sector couldn’t work.

So we have to be taught plenty of issues. One is that we’re not depending on the non-public sector if we’re to have state companies. These companies add worth in their very own proper, and the non-public sector couldn’t exist with out them.

Neither is the non-public sector drained by the necessity to pay taxes in alternate for which they get no profit. There is no such thing as a one who might make revenue within the UK with out the existence of the state, so paying taxes is a obligatory quid professional quo for that chance the state provides.

And since the state pays for itself by the Financial institution of England creating the cash to cowl its prices day-after-day, day in and time out, not solely is the state not a burden on the non-public sector however is as a substitute a bonus it can’t do with out.

And tax just isn’t even a cost for the state. As an alternative, taxes are the mandatory value of controlling inflation which might in any other case come up as a result of most of what the state provides is delivered freed from cost, paid for by cash creation.

Perceive all that, and now it’s obvious that the non-public sector is fairly closely depending on the state, and never vice versa, opposite to what nearly each politician says.

Or is it? May it truly be that the reply is one thing else altogether? May that reply be that the state wants the non-public sector – as a result of there are very clearly some issues that the state can’t do – while the non-public sector wants the state for precisely the reverse motive?

In different phrases, may or not it’s that to have a very functioning fashionable economic system we must always not idolise one a part of the economic system and condemn the opposite? The query just isn’t, in different phrases, which is extra necessary – the state or non-public sector – however is it that each are elementary?

Hearken to virtually any debate on politics or economics and that suggestion will normally be absent. However, I counsel, it’s the common fact that we’re lacking. By adopting dogmatic positions, most of which are actually anti-state and pro-private sector, we’re killing the economic system.

If we simply understood that the non-public sector wants a state sector large enough to ship stability, safety, well being, training, a social security internet and extra, then we’d make an enormous step ahead as a result of proper now it’s obviously apparent that their absence is crippling the nation.

What’s extra, if we realised that sufficient tax must be paid to compensate for the provision of each one of these companies freed from cost, we would make one other huge advance.

If we additionally understood that this must pay this tax arises not as a result of these paying the tax essentially use these companies, however as a result of the foundations of their wealth are dependent upon them, then we would additionally make an extra advance.

However, after all, some myths would right here to be slain alongside the best way. One could be the parable of the self-made particular person, as a result of they don’t exist.

One other could be the concept anybody can choose out of the state by ‘going non-public’ as a result of the fact is the non-public sector is wholly depending on the state.

And we’d even have to grasp that the state actually does pay for itself by creating and spending into use all the cash that we use day in and time out, as a result of that could be a truth.

This might then additionally require that we perceive that it’s tax and never rates of interest that actually can and do management inflation – which might most undoubtedly upset the Financial institution of England.

In different phrases, lots of the tales we inform ourselves would wish to alter. However provided that the tales that we at the moment inform in regards to the economic system – like taxes are too excessive, we now have to shrink the state, and rates of interest should go ever larger – are undoubtedly flawed, would not that be factor?

However, as I’ve already famous, which may require the admission that we have been flawed to consider that the previous tales we instructed in regards to the economic system wrote proper after they clearly weren’t.

So, we now have a call to make. Do we modify the financial narrative – and create a brand new rationalization as to the way it works alongside the strains I’ve simply urged?

Or will we proceed with what Einstein referred to as the madness of retaining on doing the identical issues over and over and discovering that we fail but once more?

I counsel we begin once more. I feel we’d like a brand new and higher tune to sing. (Watch Educating Rita if you wish to know the place I get that line from.) And it is time we began now.

It is not laborious. It merely requires that we are saying:

– The state is nice
– So is the non-public sector
– They badly want one another
– We’d like each
– And if one fails, so does the opposite

Austerity has introduced our state to its knees. That’s the reason our nation not works. Until we put it again on its ft once more nothing can work now. However by doing that we would additionally give the non-public sector an enormous enhance.

There is a gigantic win:win available within the UK. However it might probably solely begin after we abandon austerity and rebuild our state, as a result of our prosperity is predicated on it.