06:15 GMT28 October 2020
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    Another Take on Brexit

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    Brexit has turned into a major episode consuming the mental space of hundreds of millions of people in the UK and Europe. In this program, Steve Keen argues that Brexit might be good for the UK in terms of implementing economic reforms.

    Professor Steve Keen, the author of Debunking Economics, is now crowdfunded on Patreon.

    One of the issues that come up when discussing Brexit, is whether leaving the EU will be a good thing or a bad thing in terms of encouraging the progressive reform of the British economy. Steve says that Brexit might be positive for the British economy in this respect: "The UK has been using the Euro to not invest in many infrastructure projects which should have been investing in. People say: ‘well we can't leave the EU because if we do, we won't get funding any more'. Education should be funded by the British government. It has been underfunding its own research, underfunding infrastructure, things they could get away with to some extent by blaming the EU, but also leaving the burden on them for innovative programs. It's about time the British woke up; Brexit is a slap in the face for Britain, and also for the EU."

     To the question: "Will the British government have to raise taxes, is that the issue?" Steve answers: "This is one of the areas where there is an attempt by non-orthodox economists to help people understand the reality of how governments think about money. After the Second World War, a lot of American economists realized that they had financed the war effectively by money creation. They issued bonds to finance it, and these bonds were issued by its central bank, and that is what gave it the ability to dramatically industrialize from the depths of the Great Depression when 20% of the population was unemployed in 1937. There was a huge mobilization of the entire country. Everybody had a job and inflation was kept under control, rationing played a role here as well. What they saw was that the government did not actually have the money to spend, it created it by spending, and then taxed it to take it out of circulation to prevent inflation or the trade deficit being run up….The UK government is not financially restrained, it is restrained by the resources in its economy, and it is restrained by its capability to create new resources by investment, but it's not restrained by money because in that sense it has an infinite capability to create money. The government has its own bank; it is called The Bank of England… Despite what May might have said, the government does have a magic money tree; it's called the central bank, which can be mobilized. It is easy to create money but harder to know how to deploy it, and that is where the difficult decisions come in."

    We are presented with a binary choice — In/Out, but that makes the presumption that our relationship with the material world is a binary affair and that we take either one of these options to be real. The question is: Can economics be described in binary terms? "Steve says: "Not really, but the EU has set it up this way. Article 50 is only there to say you can leave, but not telling you exactly how. It is a bit like an Irish divorce. You can get a divorce, but you have to get it authorized by Pope Pius III first. See how they treated Greece. They pummeled Greece into submission, and quite literally shut their banks down at one stage…"

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    economic reforms, economy, Brexit, Steve Keen, EU, United Kingdom
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