You see, Joseph was not saving for himself. Joseph worked for Pharoah. And Pharoah and his court were the Government of Egypt. So Joseph was a Government minister. Rather a senior one, actually: he was the Ancient Egyptian equivalent of the Prime Minister. He "ran the land of Egypt" on Pharoah's behalf.
So when Pharoah's dream prophesied that famine was coming, Joseph created grain mountains to feed the population. Has anyone ever considered how he managed to do this, given that he was a Government official? Well, there are two possible ways. Either all the grain belonged to Pharoah and was distributed to the population by a beneficent government, or it was produced by private sector farmers who were taxed in kind (in the Bible they call this a "tithe"). So in order to build up the grain mountains either Joseph restricted distribution to the private sector, or the private sector was heavily taxed. Either way, the private sector - the population - ended up with less grain during the good times than they would have done if the Government were not saving. Now, they might of course have eaten all the grain and become grossly fat, then starved in the famine.....and indeed that was probably the assumption made by Joseph. After all, everyone knows that people are feckless and the nanny state knows best. So the population were prevented from eating the grain. But they were also, of course, prevented from saving it - as some would have done.
In fact Joseph saved up so much grain that he was able to export some. So he not only taxed the population so heavily they couldn't save, he then sold the receipts to foreigners - including his family. Isn't that corruption? Really Joseph was not a good role model for Government ministers. And no way can his story be taken as promoting the virtue of individual saving. On the contrary, it promotes the virtue of GOVERNMENT saving in order to feed a population that, it is assumed, does not save.
The story of Joseph is a great example of Keynesian economics. John Maynard Keynes advised that Governments should run surpluses in the good times to build up reserves against future scarcity. Joseph and Pharoah did exactly that - and to their credit the population survived (as did the rest of the world including Joseph's family, apparently). What we will never know, of course, is whether it was necessary. Had Joseph not taxed the population so heavily that they couldn't save for the coming famine, would they have saved? Was all that building up of grain mountains really necessary? My guess would be that some would have saved far more than they needed, and others wouldn't have saved nearly enough - and then there would have been food fights. Joseph's action was about keeping the peace as much as providing food.
Of course, the problem for governments that don't have resident prophets is knowing when you are in the good times and when - or if - they are going to end. The Brown government didn't save during the good times because it did not expect the good times ever to end. Although it wasn't that there weren't prophetic dreams or people to interpret them, it was more that Pharoah wasn't listening to them. Whereas Pharoah did what Joseph said, Gordon didn't do what John said. Consequently the UK government did not have much in the way of savings at the time of the 2007/8 crash. Admittedly there was no famine, but there was a serious recession which caused production and tax revenues to slump. So the UK government borrowed heavily to prop up the collapsing economy. That, not "profligate spending" prior to the collapse, is where most of the debt increase under the Brown government came from. It was pure Keynesian stimulus spending in a recession, but financed with debt instead of reserves because of the lack of Government saving in the preceding boom. And it worked. The economy was recovering - until it was derailed at the end of 2010. That's when everybody got scared about the scale of the borrowing needed to prop up the economy, and decided that borrowing to stimulate the economy was a bad thing and what was really needed was spending cuts and tax rises to "get the debt under control". Withdrawal of the Keynesian stimulus and its replacement with austerity at a time when the economy was still weak might have had something to do with the fact that the recovery fizzled out. Simon certainly thinks so.
Now, three years later, we seem to have the beginning of a recovery. And suddenly here is Gideon announcing his conversion to Keynesiansim. Having failed to listen to what John said for the last three years, he's become a fervent believer, apparently. I don't know if he went anywhere near Damascus, but he's seen the light. "I want the UK to be running a surplus in the next Parliament", he cries with evangelical fervour.
Except that actually he STILL isn't listening to John, or (for that matter) to Joseph. John and Joseph both say that governments should build up reserves IN THE GOOD TIMES. It is now the back end of 2013 and the good times have not yet returned: the ONS's review for October 2013 contains some promising statistics, but it really is far too early to be claiming that the economy will be performing well enough for a fiscal surplus to be either achievable or sensible in the next Parliament, which is less than 2 years away. The economy is still a long, long way from full capacity. Furthermore, the OBR's figures show that the Government will probably still be net borrowing in 2017-18:
And the Government has missed every deficit reduction target since it came into office anyway. Running a surplus in the next Parliament frankly looks like a pipe dream. It is very worrying, especially for savers, that Gideon apparently thinks this is achievable.
Reducing a deficit is economically the same as saving, and in the absence of a trade surplus Government can only save at the expense of private sector saving (for a mathematical explanation of that statement, see the Footnote). So if Gideon actually puts into practice his harebrained scheme to force a fiscal surplus in the near future, people will find it even more difficult to save than they do at the moment: their incomes will fall, their debts will rise and they will have even less discretionary income to set aside as savings. Moreover, those who do manage to save can look forward to even worse returns than they have at the moment, because the Bank of England will be forced to loosen monetary policy even more to stop the economy going back into recession. For Gideon to achieve his goal of a fiscal surplus, financial repression must become the new normal.
Neither Joseph, John nor Gideon appear to support Dave's idea that personal saving should be "rewarded". Joseph's story promotes Government saving, but only in the good times and only when you have reason to think there is a famine coming. John's recommendations are consistent with Joseph's. Neither of them is promoting personal saving: indeed, if John's recommendations are followed, people must rely more on the Government to save on their behalf, since Government running surpluses will limit their own ability to save. And Gideon apparently intends to follow their advice, though he doesn't seem to understand it. After all, he presumably agrees with Dave. He really should read John properly. Or Joseph. And do the maths.
Genesis 41 - NIV
George Osborne: We'll run a budget surplus - BBC
Cameron rules out "mansion tax" - BBC
Fiscal space: what does the IMF mean? - NIESR
Austerity and living standards - mainly macro
Economic review, October 2013 - ONS
Economic & fiscal outlook, March 2013 - OBR
What derailed the UK recovery? - Coppola Comment
One swallow - Coppola Comment
George Osborne's misconceptions about countercyclical fiscal policy - Azizonomics
For those readers who like maths (and for Gideon), here's an algebraic explanation of the Joseph story.
The relationship of private sector and public sector savings is given in the sectoral balances equation:
S - I = (G - T) + (X - M)
where S = saving, I = investment (in this case the amount of grain planted for future crops), G = government spending, T = tax revenues, X = exports and M = imports. Let's express our story of Joseph in terms of this equation. By the way, we are of course using grain as the monetary unit.
We know that while Joseph was building up Government reserves, he wasn't exporting grain. We can assume therefore that X - M is zero. Therefore we have the following:
S - I = G -T
We also know that Joseph was saving grain in the Government's barns. So (G - T) must have been negative - the amount of tax revenue (in grain) exceeded the amount of grain eaten by the Government and its beneficiaries. Therefore (S - I) must also have been negative. The Government's grain mountain was only possible because the private sector DIS-saved.
During the famine itself, of course, G - T turned positive as tax revenue collapsed (no-one was producing any grain) and Government spending increased (Joseph dished out grain to the population). And Joseph also exported grain to other famine-hit regions. So should we assume that X - M is also positive? Was Joseph engineering an export-led recovery?
No, he wasn't and we shouldn't. What Joseph was doing was selling Government assets. It's not correct to regard X - M as positive: Joseph's aid to his family was part of G, not X, and when they paid for it (in something inedible such as silver), the receipts went into the Government's coffers, so were part of T. We still haven't got any private sector external trade. So X - M is still zero even though Joseph is exporting. In fact economically the net effect of Joseph's aid to his family is zero, except that it may have deprived the Egyptian population of grain they needed to eat (part of G was diverted to Joseph's family).
So the result of reducing the surplus (G - T) might be expected to allow (S - I) to increase. Except that it was a famine, of course. Which means that national income was falling. Here's the national accounting equation :
Y = C + I + G + X - M
where C = amount consumed, other variables as before. Note that S, which is private sector saving, is missing. However, Y in this equation includes taxes (the income of the public sector). If we want just private sector income Ypriv, we need to subtract T from both sides:
Ypriv = Y - T = C + I + G - T + X - M
However, we know that (G - T) + (X - M) = (S - I), so Ypriv = C + I + (S - I)
So if private sector income Ypriv is falling, then although (G - T) is increasing and (X - M) is zero, (S - I) actually doesn't increase as a proportion of Ypriv. If C and I remain constant (the population gets enough to eat and all seed corn is planted instead of being eaten), then if Ypriv falls, (S - I) must also fall. People really don't save when there is famine.