fact packus growth per person was higher in the golden age-0.06-0.04-0.02 0 0.02 0.04 0.06 0.08...

Fact Pack

Contents

• Three Big Chunks of Time• The Golden Age vs the Era of Market Capitalism – Key Measures

• The Current Era – Where Are We Heading?

• The Myths that make us Believe that ‘There is No Alternative’• The ‘Dangers of Government action’

• The ‘Lack of Evidence’ that an Alternative would Work

• The ‘Unaffordability’ of any Alternative

• 5 Steps to Heaven

Three Big Chunks of Time

The Age of ????The Age of

Market CapitalismThe Golden Age

of Capitalism

1945 1980 2015 2050

35 years 35 years 35 years

We begin by looking back over the Golden Age and the Age of Market Capitalism

The Myth

The post-war period, in both the US and the UK, was a minor economic

disaster, culminating in the ‘dreadful’ 1970s. The two countries

were fortunately rescued by the Thatcher and Reagan reforms, which ushered-in the Age of Market Capitalism and led to

renewed growth and prosperity.

The Facts

The Golden Age of Capitalism was well-named: it had higher

economic growth in total and per person. The typical person enjoyed

a fair share of that growth. And they had a better chance of finding

a job.

0% 1% 2% 3% 4% 5% 6% 7% 8%

Real GDP growth - US

Real GDP growth - UK

Per capita GDP growth - US

Per capita GDP growth - UK

Median household income growth - US

Median household income growth - UK

Long-term unemployment - US

Long-term unemployment - UK

Inflation - US

Inflation - UK

Golden Age Market Capitalism

Source: BEA, ONS, Federal Reserve Bank of St Louis, Census Bureau, Bureau of Labour Statistics

The Golden Age saw better performance on almost every measure than the Age of Market Capitalism

US Economic Growth was higher in the Golden Age

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

1940 1950 1960 1970 1980 1990 2000 2010 2020

Lon

g-te

rm t

ren

ds

in r

eal e

con

om

ic

gro

wth

Real GDP growth Golden Age Market Capitalism

The Myth

Economic growth was lacklustre during the post-war period –

especially during the 'dreadful' 1970s.

The Facts

Growth was far higher during the Golden Age then it has been during the age of Market Capitalism – and

growth during the 1970s was farhigher than it has been over the

last decade.

Source: BEA

UK Economic Growth was higher in the Golden Age

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

1940 1950 1960 1970 1980 1990 2000 2010 2020

Gro

wth

rat

e o

f re

al G

DP

Real GDP growth Golden Age Market Capitalism

Source: ONS

The Myth

Economic growth was lacklustre during the post-war period –

especially during the 'dreadful' 1970s.

The Facts

Growth was higher during the Golden Age then it has been during the age of Market Capitalism – and

growth during the 1970s was double what we have seen over the

last decade.

US Growth per person was Higher in the Golden Age

-0.06

-0.04

-0.02

0

0.02

0.04

0.06

0.08

1950 1960 1970 1980 1990 2000 2010

An

nu

al G

row

th R

ate

in U

S p

er c

apit

a G

DP

Growth Golden Age Market Capitalism

The Myth

The market-based reforms produced growth from which

everyone could benefit.

The Facts

The reforms produced less growth per head. Some people were bound

to suffer.

Source: Federal Reserve Bank of St Louis

UK Growth per person was Higher in the Golden Age

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

1940 1950 1960 1970 1980 1990 2000 2010 2020

UK

Rea

l GD

P p

er c

apit

a gr

ow

th r

ate

Growth rate Golden Age Market Capitalism

Source: ONS

The Myth

The market-based reforms produced growth from which

everyone could benefit.

The Facts

The reforms produced less growth per head. Some people were bound

to suffer.

US Growth in income per household was Higher in the Golden Age

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

1940 1950 1960 1970 1980 1990 2000 2010 2020

Rea

l Med

ian

inco

me

grp

wth

(6

0th

cen

tile

)

Real income growth Golden Age Market Capitalism

The Myth

Reagan’s reforms created ‘morning in America’ – and all Americans

loved it.

The Facts

Household income growth almost stagnated for most Americans. And wages did stagnate (see next slide)

Source: US Census Bureau

US wages stagnated during the Era of Market Capitalism

-

50

100

150

200

250

1975 1980 1985 1990 1995 2000 2005 2010 2015

Rea

l GD

P v

s R

eal W

ages

(I

nd

exed

: 19

79

= 1

00

)

GDP

Wages

The Myth

“It’s the economy, stupid” – if the economy grows, everyone benefits.

The Facts

It is possible to have significant (150%) growth in an economy

without the average wage earner seeing any benefit.

Source:

Rising inequality and lower productivity growth wiped out the gains for the median wage-earner

147%

116%

53%

1%7% 8%

0%

20%

40%

60%

80%

100%

120%

140%

160%

Growth inreal GDP

Decliningwage share

of GDP

Total wagegrowth

Growth innumber of

workers

Averagewage

growth

Wageinequality

Medianwage

growth

Earners perhousehold

Medianhousehold

incomegrowth

The Myth

“The potential for improving the lives of poor people by finding different ways of distributing current production is nothing compared to the apparently

limitless potential of increasing production.”

Robert Lucas

The Facts

Production has increased by almost 150% since 1980, but poor – and

indeed normal – people have seen next to no benefit.

Source: BEA, BLS, Census Bureau, St Louis Federal Reserve

Rising Inequality

Lower productivity

growth

US Unemployment was significantly lower in the Golden Age

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

1940 1950 1960 1970 1980 1990 2000 2010 2020

US

un

emp

loym

ent

Average unemployment Golden Age Market Capitalism

The Myth

The post-war period saw America become a paradise for ‘welfare

queens’ until Reagan put America back to work.

The Facts

The average rate of unemployment post the Reagan reforms is double

the rate of the Golden Age.

Source: BLS

Market Capitalism has been a dreadful period for unemployment

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

UK

un

emp

loym

ent

rate

(cl

aim

ant

cou

nt)

UK unemployment rate Market Capitalism Golden Age

'Labour isn't working'

'LabourStill isn't working'

The Myth

The Facts

In 1979, based on what was then known, Margaret Thatcher had a

point.In 2010, having seen the impact of the market reforms, the campaign

was far from the truth.

Source: ONS

US Inflation was worse in the Golden Age

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

1940 1950 1960 1970 1980 1990 2000 2010

An

nu

al p

erce

nta

ge in

flat

ion

in U

S (C

on

sum

er

Pri

ce In

flat

ion

)

CPI Golden Age Market Capitalism

Source: US Inflation Calculator

The Facts

In this instance, the conventional story is broadly true – inflation was

higher during the Golden Age (especially after the two oil price

shocks of the 1970s).

Nevertheless, even after adjusting for this inflation, the economy

overall, and most people, did far better in the Golden Age.

UK Inflation was worse in the Golden Age

Source: ONS

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

1945 1955 1965 1975 1985 1995 2005 2015

An

nu

al P

rice

In

flat

ion

(R

etai

l Pri

ce I

nd

ex)

RPI over 12 months Golden Age Market Capitalism

The Facts

In this instance, the conventional story is broadly true – inflation was

higher during the Golden Age (especially after the two oil price

shocks of the 1970s).

Nevertheless, even after adjusting for this inflation, the economy

overall, and most people, did far better in the Golden Age.

There is one perspective from which the 1970s were truly dreadful

0%

5%

10%

15%

20%

25%

30%

1900 1920 1940 1960 1980 2000 2020

Top

0.1

% s

har

e o

f to

tal w

ealt

h

The Myth

The 1970s were, economically, a dreadful decade. Growth was almost non-existent and unemployment and

inflation were out of control.

The Facts

As we have seen, the level of growth in the 1970s was far higher then it has

been in the last decade.

An indicator which was truly dreadful (for them) was that the wealth share of the top 0.1% was falling rapidly –

though of course it was never close to 0.1%

Source: Saez & Zucman

Wants and desires

Needs for a normal life

Absolute needs

What is supplied

Desire for super luxury

How the economy met people’s needs – 1980 position

Needs for an easy life

Almost everyone had their most basic needs met, but there was real hardship in

places and at the other end of the spectrum there was

relatively little super-luxury available.Source: 99%

Wants and desires


Absolute needs

What is supplied


How the economy meets people’s needs – 2015 position


We have made little or no progress in meeting peoples’ basic needs, but there is far more super-luxury available.

Source: 99%

Three Big Chunks of Time

The Age of ????The Age of

Market CapitalismThe Golden Age

of Capitalism

1945 1980 2015 2050

35 years 35 years 35 years

Now let’s see where we may be heading (on current trends)

Since 2000, almost half of American families have seen falling income

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

Bottom20%

20-40% 40-60% 60-80% 80-100% Top 5%

Gro

wth

rat

e o

f re

al h

ou

seh

old

inco

me

1980-2016 1980-2000 2000-2015

The Myth

Since 1980, everyone has become better off – thanks to the market

reforms.

The Facts

As we saw, the only reason families are better off is the increase in

household size – wages have been flat. And since 2000, even this has not been true: most middle-class families have become worse-off.

Source: Census Bureau

Under Market Capitalism, it has been the middle class which has suffered most

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

0-20% 20-40% 40-60% 60-80% 80-90% 90-95% 95-99% 99-100%

Gro

wth

rat

e o

f re

al h

ou

seh

old

in

com

e, b

y se

gmen

t o

f th

e p

op

ula

tio

n

CAGR 1980-2011 Average for whole population

The Myth

America is a middle class society with relatively few working class and upper

class.

The Facts

Although 70% of Americans still self-identify as middle class, only 50% now qualify on income grounds. The middle class is being hollowed-out as priority is

given to the richest and the poorest.

Source: CBO

Note: Figures include, for poorer families, Social insurance benefits (Social Security, Medicare, unemployment insurance, and workers’ compensation) and means-tested transfers, both cash and in-kind, such as Medicaid and Children’s Health Insurance Program (CHIP) benefits, Supplemental Nutrition Assistance Program (SNAP, formerly food stamps) benefits, and Temporary Assistance for Needy Families (TANF) cash assistance.

10,000

100,000

1,000,000

10,000,000

1970 1980 1990 2000 2010 2020 2030 2040 2050 2060CB

O r

eal h

ou

seh

old

inco

me

extr

apo

lati

on

($

)

0-20% 20-40% 40-60% 60-80%

80-90% 90-95% 95-99% 99-100%

The Myth

Economic growth sustained by further tax cuts will enrich all

Americans.

The Facts

If the hollowing-out continues, by 2050 there will be almost no middle class remaining. Mass

impoverishment will have claimed most of them.

Source: Extrapolation of CBO data assuming priority given to top and bottom segments

If these trends continue, by 2050 almost half of Americans will be living in or near poverty

If the trends continue, poverty rates in the US in 2050 will be a bit like South Africa today

US 2015 US 2050 South Africa 2015

Percentage getting by on household income of $27,000 or less

20% ~45%

Percentage in poverty (2015 standards)

12% ~25% 26%

Percentage in deep poverty

6% ~11%

Percentage in absolute poverty (2015 global standards), living on less than $4 per day

1.5% ~3%

Source: Census Bureau, Deaton, OECD

Since 2010, the UK has seen lower economic growth and declining pay

Note: CAGR = Compound Annual Growth RateSource: ONS

-

20

40

60

80

100

120

1995 2000 2005 2010 2015 2020

Ind

exed

rea

l dat

a (2

01

0=1

00)

Median income Real GDP per capita

The Myth

Austerity was a hard but necessary decision for the health of the

economy.

The Facts

The period since 2010 has shown lower overall economic growth than

1997-2010 (the period which included the Global Financial Crisis).

Even worse than the overall economic performance has been the impact on

those who work for a living. Even though the economy as a whole is

richer, employees are poorer.

CAGR up to 2010

CAGR since 2010

Median gross weekly pay

1.3% -0.6%

Real GDP per capita

1.6% 0.7%

Continuation of current trends would mean that by 2050 the UK's median wage would have fallen almost half way to today's poverty income!

Source: ONS

The Myth

Whatever we do, we must not risk undoing all the hard work of austerity.

The Facts

Most economists believe that the austerity programme was a serious

mistake. Unless we admit the mistake and take urgent steps to build a

society which both grows the pie much faster and shares it fairly, we are

heading towards a grim future.

Possible 2050 median wage on different trends

2050 wage on today’s trends

34,286

29,902

19,730

23,920

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

Pre-2010 trends Post-2010growth and fixed

inequality

Post-2010growth andinequality

Today's medianwage

Me

dia

n w

age

s in

20

50

(20

18

£)

2050 Projection Today's poverty rate

The eight scenarios for society in 2050

Will the Pie Grow?

Pie Grows Pie Does Not Grow

Will we have a peaceful

transition to our future

state?

Will the Median

Slice Grow?

Median

Slice Grows

Scenario 1:

Revolution

Scenario 2:

Eat the RichViolent transition

Scenario 3:

Solidarity and

Abundance

Scenario 4:

Philanthropy ++

Peaceful transition

Median

Slice Does

Not Grow

Scenario 5:

Accepting

Impoverishment

Scenario 6:

Sharing Decline

Scenario 7:

Neo-feudalism

Scenario 8:

CollapseViolent transition

This is where current policies are taking us

Source: 99%

Wants and desires


Absolute needs

What is supplied


How 2050 might look: Solidarity and Abundance


In the scenario Solidarity And Abundance, we do a great job of giving everybody a decent

life, but there is relatively little super-luxury available.

Source: 99%

Wants and desires


Absolute needs

What is supplied


How 2050 might look: Accepting Impoverishment


In the scenario Accepting Impoverishment, we do a great job of providing super-luxury, but many fewer people enjoy

an easy life.Source: 99%

Contents

• Three Big Chunks of TimeThe Golden Age was a time of growth and prosperity in which the bulk of the population shared; during Market Capitalism, growth was lower and many people did not share in it. If we continue for another 35 years, by 2050 large parts of the population will be living in or near poverty





Far more than we would like, we are going post-fact

Absolute truth Approximate truth SpinDeliberate

misrepresentationUnfounded falsehood

Definition True without reservation and demonstrable by experiment or logical reasoning

Broadly true and not misleading – but there will be exceptions

Does not contain outright falsehoods, but facts are presented in such a way as to be misleading

Comment may be based on real-world events but reporting is not factual and is deliberately misleading

No real-world basis – simply an attempt to manipulate opinion without regard to truth

Example “The world is not flat”.

“There are no integers a,b for which a2/b2 = 2”.

"Immigration is good for the economy as a whole, but for unskilled and semi-skilled workers there is a small negative impact"

“Migration has apositive impact in three areas – the labour market, the public purse and economic growth.”

“Every week we send the EU £350 million which could be used to fund our NHS instead”.

“Pope Francis Shocks World, Endorses Donald Trump for President”

Research in hard sciences and mathematics

Research in social sciences and economics

Mainstream media

Political discussion

Social media

Post-factFact

Source: 99%

Contents






Government spending did not cause the Global Financial Crisis

UK 2007

Spain 2007

Greece 2007

Japan 2007

Latvia 2007

Ireland 2007

US 2007

Germany 2007

France 2007

Italy 2007

UK 2012

Spain 2012

Greece 2012

Japan 2012

Latvia 2012

Ireland 2012

US 2012

Germany 2012

France 2012

Italy 2012

-12%

-11%

-10%

-9%

-8%

-7%

-6%

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

3%

0% 50% 100% 150% 200%

Gen

eral

go

vern

men

t n

et le

nd

ing

/ (b

orr

ow

ing)

General government net debt

Maastricht Criteria

Excess Spending

Excess Debt

Excess Debt & Spending

The Myth

“Indeed, it is expansionary policies and weak fiscal positions that created the current

problems of high debt and low competitiveness in the crisis countries in the first place.”

Ludger Schuknecht

The Facts

The countries hardest hit by the crisis were (with the exception of Greece) prudent in their

pre-crisis management of government finances – it is the crisis which caused their

debt and spending to rise

Source: IMF

It is not ‘normal’ for governments to run a surplus

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

1950 1960 1970 1980 1990 2000 2010 2020

% o

f n

om

inal

GD

P

Year

UK Public Sector Net Borrowing (excluding Banks) The Myth

A normal, prudent government would run its finances so as to

remain in surplus.

The Facts

Of the 234 quarters shown, the government borrowed in 200 of

them (85% of the time). Of Margaret Thatcher’s 46 quarters in power, the government borrowed

in 39 (85% of the time).

Government borrowing is not an anomaly, it is the norm.

Source: ONS

Governments should not run like households

-20%

-15%

-10%

-5%

0%

5%

10%

15%

01/01/1960 31/12/1969 01/01/1980 31/12/1989 01/01/2000 31/12/2009

Sect

ora

l Bal

ance

s as

% o

f G

DP

Private Sector surplus / (deficit) Government Sector surplus / (deficit)

Foreign Sector surplus (= Trade deficit)

The Myth

Every housewife, and every small business owner knows that you cannot keep

spending more than you earn.

The Facts

The three balances (Private Sector, Public Sector and Foreign Sector) always sum to

precisely zero.If there is a Trade Deficit (Foreign Sector surplus) as there is in the US and UK, and

also a Public Sector surplus, then there must be a Private Sector deficit.

A permanent Government surplus would force the private sector into permanent

deficit.

Source: Federal Reserve Bank of St Louis

Higher Government debt does not necessarily lead to higher borrowing costs

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

1900 1920 1940 1960 1980 2000 2020

Inte

rest

-to

tal p

erce

nt

of

GD

P

The Myth

Austerity was justified on the basis that without it, Britain would lose

its cherished AAA rating and borrowing costs would rise.

The Facts

The UK did lose its AAA rating in 2013 , despite austerity, but borrowing costs fell anyway

because of quantitative easing by the Bank of England.

Source: Chantril, BBC, Bank of England

In 2013, the UK lost its AAA rating

Lower taxes do not increase social mobility

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Earn

ings

mo

bili

ty

(1-i

nte

rgen

erat

ion

al e

arn

ings

ela

stic

ity)

The Myth

The freer the market, and the lower the tax rates, the freer the people.

The Facts

Many of the countries with the highest levels of social mobility have relatively high tax rates.

For the inhabitants of these countries, their freedom to better

themselves is higher.

Source: OECD

It is not true that cutting public spending frees the private sector to grow faster

UK

Spain

Greece

JapanAustria

LatviaIreland

US Germany

France

Italy

-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

-10% -5% 0% 5% 10% 15% 20%

Gro

wth

Austerity

Growth vs Austerity (2008-2013)

The Myth

“As regards the economy, the idea that austerity measures could

trigger stagnation is incorrect… in the current circumstances,

confidence-inspiring policies will foster and not hamper economic

recovery, because confidence is the key factor today.”

Jean-Claude Trichet

The Facts

There is no question that Austerity did trigger stagnation.

Source: IMF

Contents






There are (far) more than 50 shades of capitalism – and they show some interesting evidence…

Role of the state in society

Role of the private sector in

society

Communism

Denmark UK USA

Market Fundamentalism

100%/0% 50%/50% 0%/100%

Balanced economy

Sierra Leone

France Germany

North Korea

Source: 99%

Generally speaking, the happiest countries have an active state sector

UK

US

Madagascar

YemenChina

Norway

Canada

Sierra Leone

France

Germany

Denmark

Switzerland

Iceland

Angola

Sweden

Netherlands

Finland

New ZealandAustralia

0%

10%

20%

30%

40%

50%

60%

0 50 100 150 200

Gen

eral

go

vern

men

t re

ven

ue

(P

erce

nt

of

GD

P)

World Happiness Ranking

The Myth

Government is the problem, not the solution.

The Facts

The best countries to live in, as judged by their populations, all

have an active state sector. (That this is necessary but not sufficient

is shown by Angola).

Source: World Happiness Report, 2015

Top 10 countries

Happier Less happy

Having a higher GDP per capita helps, but the richest are not always the best countries to live in

UK

US

Norway

Canada

France

Germany

DenmarkSwitzerland

Iceland

Sweden

Netherlands

FinlandNew Zealand

Australia

-

20,000

40,000

60,000

80,000

100,000

120,000

0 5 10 15 20 25 30

Gro

ss d

om

esti

c p

rod

uct

per

cap

ita,

(U

.S. d

olla

rs)


The Myth

It’s the economy, stupid.

The Facts

It’s not just the size of the pie, but how it gets sliced.


Top 10 countries

Happier Less happy

Raising median income is necessary but not sufficient for happiness

Switzerland

Iceland

Denmark

Norway

Canada

Finland

NetherlandsSweden

New Zealand

Australia

United States

United Kingdom

France

Germany

ChinaSierra Leone

YemenMadagascar

-

5,000

10,000

15,000

20,000

25,000

30,000

35,000

0 20 40 60 80 100 120 140 160

Med

ian

Inco

me


The Myth

All that matters is what you get paid.

The Facts

If you are paid a little more, but then have to pay for healthcare out

of your income, it can be very stressful – indeed ruinous.


Top 10 countries

Happier Less happy

Tackling poverty is one of the clearest factors leading to a happy society

Switzerland

Denmark

Netherlands

Sweden

United StatesUnited Kingdom

France

Germany

Sierra Leone

Yemen

Madagascar

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

0 20 40 60 80 100 120 140 160

% L

ivin

g in

po

vert

y


The Myth

Rich countries don’t really have poverty.

The Facts

Even some of the richest countries have surprisingly high poverty

rates, and this has clearly led to lower satisfaction levels in their

populations.


Happier Less happy

Increasing social mobility (decreasing immobility) leads to a happier society

Denmark

Norway

CanadaFinland

Sweden

United StatesUnited Kingdom

France

Germany

0

0.1

0.2

0.3

0.4

0.5

0.6

0 20 40 60 80 100 120 140 160

Soci

al Im

mo

bili

ty


The Myth

Freeing up the market is the only way to free individuals to better

themselves.

The Facts

Freer markets lead to dynastic concentrations of wealth, lower social mobility and unhappier

populations.


Top 10 countries

Happier Less happy

Contents






The US and the UK do not need to spend less because times are tough

-

50

100

150

200

250

1980 1990 2000 2010 2020

Rea

l GD

P p

er

cap

ita

(in

dex

ed, 1

98

0 =

10

0)

UK

USA

The Myth

“There isn’t a magic money tree that we can shake that suddenly provides for everything that people want.”

Theresa May (in answer to a nurse asking why she hadn’t had a pay

rise for 8 years – a real-terms pay cut)

The Facts

Both the US and the UK are richer today on a per person basis and adjusting for inflation than they have ever

been. Anything they could ever afford, (including paying nurses) they can afford today.

Government has three ways it can pay nurses: 1) it can borrow; 2) it can tax; 3) it can create money out of

nothing.

Source: World Bank; PositiveMoney.org

0%

50%

100%

150%

200%

250%

300%

1700 1750 1800 1850 1900 1950 2000 2050

Deb

t:G

DP

rat

io

Debt:GDP ratio Average debt:GDP

UK Government Debt is not at record levels

Source: Bank of England

This tiny part of the picture is what we are shown, and

out of context, it looks scary

The Myth

“To every mother, father,grandparent, uncle, aunt – I would ask

this question. When youlook at the children you love, do you

want to land them with alegacy of huge debts?”

David Cameron

The Facts

The UK’s Government debt is not ‘huge’; it is not ‘rather high’; it is not

even ‘average’ – it is below the average of the last 300 years.

But that debt was the justification for austerity.

High debt levels did not prevent the Golden Age

0%

50%

100%

150%

200%

250%

1948 2015

Pu

blic

Net

Deb

t (a

s a

per

cen

t o

f G

DP

)

-132%

The Myth

High levels of Government debt spell economic disaster. Paying off

the debt requires higher taxes, which cripple economic growth, and nobody ends up benefitting.

The Facts

High levels of debt preceded both the Industrial Revolution and the Golden Age of Capitalism – two of the most successful periods in our

economic history

Source: Bank of England

Higher taxes do not stifle growth

1916 - 1920

1921 - 19251926 - 1930

1931 - 1935

1936 - 1940

1941 - 1945

1946 - 1950

1951 - 1955

1956 - 1960

1961 - 1965

1966 - 1970

1971 - 1975

1976 - 19801981 - 1985

1986 - 1990

1991 - 1995

1996 - 2000

2001 - 2005

2006 - 2008

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

0% 20% 40% 60% 80% 100%

GD

P p

er c

apit

a gr

ow

th r

ate

(5-y

ear

aver

age)

Top marginal tax rate (5-year average)

The Myth

“…penalizing investors, successfulentrepreneurs and job creators with

higher taxes, to reward the less productive … to make everyone more equal, is a sure-

fire way to get less productivity, fewer jobs, lower wages and reduced economic

growth.” Peter Ferrara

The Facts

Over a long time frame, there is no evidence of such a ‘sure-fire’ link. Higher

taxes correlate with higher growth –possibly because the wealthy ‘invest’

their income, often in pre-existing assets, while the poor spend and fuel demand.Source: Maddison, IRS, Dynan, Skinner & Zeldes

And it is not even true that money cannot come from nothing – the vast bulk of all money does exactly that

The Myth

Money doesn’t just come from nowhere.

The Facts

Money is created (almost) out of nothing in a variety of ways:

1. a central bank has coins minted and bank notes printed;

2. a central bank creates money electronically;

3. commercial banks create money electronically by making loans – and this is how the vast bulk of all money is created

The Bank of England’s QE programme has created over £400 billion of new money – out of nothing. And almost £1trillion of guarantees were made to support Banks. More than 11 years’ budget for the NHS.

Source: US Federal Reserve; Bank of England; NAO

Contents


• The Myths that make us Believe that ‘There is No Alternative’We have allowed ourselves to be persuaded, despite all the evidence, that government is the problem, not the solution – and this prevents us from taking the obvious steps…


5 Steps to ending mass impoverishment

Step 1: A Democratic Reset – constitutional reform

Step 2: Base Policy-making on Fact, not Myth

Step 3: Formulate Policy for Abundance and Solidarity – grow the pie and share it fairly

Step 4: Invest Wisely in the Future

Step 5: Ensure Clean, Competitive Markets

Source: 99%

It must be the constitutional duty of a

government to look after the whole population – it must not be captured by a

small minority

You have seen some of the myths that prevent us from tackling the problem – we need to base policy on the

facts

Step 1: A Democratic Reset is the vital first step to change

1. An elected government should have an explicit duty to

govern for the benefit of its entire population

2. There should be a written constitution in countries which do

not have one, or constitutional amendment in those countries

which already have one, to enshrine Point 1 above

3. The constitution should safeguard separation of powers to

prevent the risk that capture of one part of the elite facilitates

capture of the remainder

4. Media ownership should not be concentrated

5. The constitution should also protect against an elected

government seeking to circumvent democratic safeguards

Source: 99%

Point 1 seems so obvious that it should go without saying. Unfortunately, as the figures show, it also goes without doing.

We need to enshrine it in our constitution.

Step 2: We need a serious effort to move political discussion and policy formulation to the level of approximate truth

Absolute truth Approximate truth SpinDeliberate

misrepresentationUnfounded falsehood

Definition True without reservation and demonstrable by experiment or logical reasoning

Broadly true and not misleading – but there will be exceptions

Does not contain outright falsehoods, but facts are presented in such a way as to be misleading

Comment may be based on real-world events but reporting is not factual and is deliberately misleading

No real-world basis – simply an attempt to manipulate opinion without regard to truth

Example “The world is not flat”.

“There are no integers a,b for which a2/b2 = 2”.

"Immigration is good for the economy as a whole, but for unskilled and semi-skilled workers there is a small negative impact"

“Migration has apositive impact in three areas – the labour market, the public purse and economic growth.”

“Every week we send the EU £350 million which could be used to fund our NHS instead”.

“Pope Francis Shocks World, Endorses Donald Trump for President”“No deal, no problem”

Post-factFact

Source: 99%

From HereTo Here

Step 3: We must formulate policy on the basis of Abundance and Solidarity –no more Vulture Policies

Ensuring Solidarity

Sharing the pie unfairly Sharing the pie fairly

Creating Abundance

Growing the pie

Type I: Captured Growth PoliciesBalance with types II & IV

Widespread automationLarge scale immigration

Free trade with low-cost countriesUnfunded tax cuts

Type II: Shared Growth PoliciesFocus policy here

Investment in:• R&D• Infrastructure• Education• Healthcare

Direct job-creationSupporting Private Sector investment

Not growing the pie

Type III: Vulture policiesAvoid

Funding tax cuts by reducing benefits and public services

Regressive tax changes

Type IV*: Balancing PoliciesUse to balance Type I policies

Raising the minimum wagePaying benefits to those in need

Progressive tax changes

Source: 99%

Step 4: We must Invest Wisely in the Future

0

100

200

300

400

500

600

700

800

900

2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16

Exp

end

itu

re o

n F

loo

d D

efen

ces

(£ m

illio

n)

The Myth

It was responsible government to reduce the spending on flood defences

as part of the austerity programme.

The Facts

There were serious floods in 2015. The cost of the damage to the UK ran into many billions of pounds. Spending on

flood defences would have been a sound investment for the UK economy, while ‘saving’ taxpayers a few hundred million pounds has cost them over £5

billion.

Source: DEFRA

Step 5: We must Clean-up Capitalism

Source: 99% Appendix IX

The Myth

What’s good for business is good for the economy, and

what’s good for the economy is good for the people.

The Facts

Until we create clean, competitive markets this will

not be true.

While businesses can externalise their costs, bad

businesses can benefit from hidden subsidies, which allow

them to drive out good businesses.

Profit and Loss Account

Reported values in profit and loss

account (£ million)

Benefit of subsidies

(externalised costs)

Value in unsubsidised profit and loss account

(£ million)

Revenue 1,500 0 1,500

COGS (1,145) 23 (1,168)

Variable staff cost at minumum wage

(118) 39 (157)

Gross profit 237 61 176

Graduate payroll below threshold

(20) 5 (25)

Other payroll (100) 0 (100)

Government grant income

1 1 0

Other operating costs (49) 0 (49)

Operating costs (168) 6 (174)

Operating profit 69 67 2

The subsidies make this business very profitable

The business is not carbon-neutral – we bear the cost

It does not pay a living wage –

the rest of society picks up

the tab

It wants graduate skills, but does not

pay them enough to cover their

loans

Contents


• The Myths that make us Believe that ‘There is No Alternative’We have allowed ourselves to be persuaded, despite all the evidence, that government is the problem, not the solution – and this prevents us from taking the obvious steps…

• 5 Steps to Heaven…and these steps are relatively easy to take, once we realise that we can act

fact packus growth per person was higher in the golden age-0.06-0.04-0.02 0 0.02 0.04 0.06 0.08...

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