The Ability Of Richard Murphy To Connect The Dots


The Senior Lecturer has spent some years telling us that the country doesn’t invest enough in real assets. Therefore pensions savings need to be close to nationalised, at least directed into the building of those real assets for the next generation. For it is that which underpins every pension – when the time comes to start drawing on those savings there must be a productive investment behind them in order to fund said pension.

Note that neither he nor I are talking here about the specific form of the investment, not at this level of the discussion. But the cash saved must have gone and done something useful in order for there to be the surplus to pay the pension.

At which point we get this (lightly edited to extract just this one point):

Nic says:
November 24 2019 at 9:48 am

Both Canada and the US have largely funded public sector pensions and France has a partially funded system. Including UK public sector pension liabilities would push debt to GDP close to 200%

Richard Murphy says:
November 24 2019 at 1:02 pm

And thank heaven we have not got a funded pension scheme – think how overvalued pension assets would be in that case

That is, private pensions must be used to build real assets. Public sector ones must not. Which is interesting in itself, but it’s the failure to join the dots which fascinates.

If public sector pensions were fully funded then, yes, in that first iteration, pensions assets would be more valuable. So what is it that happens when things become more valuable? People go and make more of them. The value has risen – further perhaps – above the cost of creation. There is a profit then in going and making those things that have gone up.

If pension assets, those buildings, companies, investments, which make the future richer go up in value then people will invest more in buildings, companies, investments which make the future richer. That is, the very thing which the Senior Lecturer is telling us should not happen – funded pensions – is the very thing which achieves his aim, greater investment.

As with so many autodidacts there’s this inability to see that the economic leg bone really is connected to the economic hip bone. Something that wouldn’t really matter expect he would plan our entire economic life for us and until recently was employed in teaching economics to undergraduates.

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<picture of Richard Murphy>

LOL. Out loud.