This is two and a half minutes of cogent, coherent argument from Stella Creasy, demonstrating how Conservatism has literally fought against the interests of us all: Let us hope that people now realise how Conservatives have disemboweled the country, much as they used to do to the empire… As has been said before, policies aren’t... Read more

I posted this video on YouTube this morning.

As I said of it on YouTube:

Monopolies exist when one or a very few companies or organizations control a market and can exploit consumers as a result. The modern economy is riddled with monopolies, many of which are very powerful. Until governments are willing to stand up to them we are all at risk of being ripped off.

The transcript says:

Monopolies are always bad news when it comes to economics.

What do I mean by a monopoly? A monopoly exists whenever one or a few companies - when technically we call it oligopoly, but it amounts to much the same thing -  one or a few companies control a marketplace so that effectively they can control the prices that you and I, as consumers, will pay, and they can make sure that other people cannot enter the market to provide effective competition to them. That's what a monopoly is.

Now, there are some natural monopolies. Water supply is one. Education is another if everyone is to benefit from it. Railway companies are a natural monopoly because you can't run lots of parallel sets of tracks between places to create genuine competition. But we also see monopolies in many other parts of the economy as well.

Let's be blunt, Amazon is a monopoly because frankly they totally dominate the online delivery market.

Some of our retailers look remarkably close to monopolies, or at least to oligopolies. There aren't very many supermarkets and yes, they might say they price compete with each other, but that doesn't mean to say they can't put a ceiling below prices at which they guarantee that we'll all still pay sufficient so that none of them can fail.

In other words, they still have the opportunity to abuse us, even if there appears to be some veneer of competition laid over it.

Our banks are in much the same position. Most of them offer remarkably similar prices. products and services. The downside of this is that we can be exploited. They have all the power.

They are large.

They have economic clout.

We, as individuals, can't go elsewhere.

We can be exploited.

This means that any government has to have a policy to manage monopolies.

Now, those that are so natural, like water and rail, and education and health care for everyone, need to be run by the state. There is no way around that. Those are so strong as monopolies and the need is so essential that the state must nationalise them.

In other sectors, there must be strong regulation of the companies involved to guarantee they don't exploit this. This needs a genuine Competition Commissioner who can control prices, control profits, and if necessary, demand that there be a real opportunity for other companies. to allow competition to enter the marketplace if they are dominant in certain places. Rarely does this happen at present in the UK; normally only on takeovers.

We need to have more aggressive control by governments of monopolists to make sure that we aren't exploited, because at present it's almost certain that we are.

The Guardian is making a splash this morning on his story:

Senior Whitehall officials fear Thames Water’s financial collapse could trigger a rise in government borrowing costs not seen since the chaos of the Liz Truss mini-budget, the Guardian can reveal.

Such is their concern about the impact on wider borrowing costs for the UK, even beyond utilities and infrastructure, that they believe Thames should be renationalised before the general election.

I am struggling to come up with an appropriate word to describe this observation from the UK government's Debt Management Office, and the only one that I can think of is drivel.

There are several reasons for saying so.

First, if any Thames Water debt is taken on by the government, there will be assets to back the value. Otherwise, there would be no reason for taking on the debt.

Second, that debt is £14.7 billion at present, meaning that the payment made will be somewhat less as everyone expects that a haircut will be applied to its value. When total government debt is, even if stated correctly net of QE, more than £1,600 billion, to suggest that an additional £10 billion or so, because of the acquisition of the assets of Thames Water might totally destabilise markets is really quite ridiculous

Third, if there is any risk of such instability, then the simple answer is that the Bank of England should hold back on its quantitative tightening programme, which is expected to involve the sale of at least £100 billion of debt into financial markets this year for absolutely no net gain whatsoever to the government, or to society, or to public finances, except that this sale will keep the overall level of interest rate payable on government debt higher than it otherwise might need to be solely for the purpose of supporting the Bank of England's extortionate interest rate policies.

Finally, this debt could, of course, be covered by additional QE without markets blinking.

I am wholly supportive of the nationalisation of Thames Water, and the other English water companies. This type of hysteria does, however, suggest that the Treasury and the Debt Management Office are continuing to act in anything but the best interests of the UK as a whole by spreading total misinformation.

The Guardian has an editorial this morning that I recommend reading in full, but which I will discuss here nonetheless.

Of most note in their introduction is the observation that:

Jeremy Rudd of the US Federal Reserve writes scornfully in his latest book, A Practical Guide to Macroeconomics, that economists’ role today is to justify “what elite interests want to do anyway: deregulate, pay fewer taxes, keep wages as low as possible”.

There is, I think, considerable truth in that assertion.

What, however, they go on to say is that:

One school of thought attempting to rewrite the textbooks is called modern monetary theory, whose face is Stephanie Kelton, a former economic adviser to Bernie Sanders. She argues that there is no financial constraint on government spending; money can be created and invested so long as there is capacity in the economy to absorb the cash. If not, inflation will follow. This shouldn’t be controversial. John Maynard Keynes said as much in his 1940 book, How to Pay for the War. The theory is not just about deficits: a strong exporting nation should pursue fiscal surpluses – an insight attributed to Prof Kelton’s tutor and ex-Treasury adviser Wynne Godley.

That is spot-on, including the suggestion that inflation is one of the core concerns of MMT, which those macroeconomists who serve elite interests, always seek to deny.

As they also note:

Her current argument that rising US interest rates might be inflationary finds her agreeing with her sharpest critic, Larry Summers. Such challenges should be welcome in Britain. The US debates have produced an industrial policy powered by government deficits – and the world’s fastest growing advanced economy.

That argument that the raising of interest rates has, itself, caused inflation is something that will be familiar to readers of this blog because I have rehearsed it here on several occasions.

As the Guardian then notes, all current mainstream political and economic opinion does appear to be aligned against such thinking at present. But as they also noted, one voice has suggested that this should automatically mean that the outliers should be listed to, when saying:

The history of British policymaking in the last hundred years has taught us that on all the other occasions when major economic misjudgements were made, broad-based political, media, financial and popular opinion was in favour of the decision at the time, and the dissenting voices of economists were silenced or ignored.

Ed Balls said that in 2010. But he's mainstream now, serving the interests of the elite with an agenda that will tick all their boxes.