Does the government create wealth?

People are often told that only the private sector creates wealth and that government simply wastes taxpayers’ money.

That claim is everywhere in modern political debate. It underpins austerity. It justifies privatisation. And it shapes how people think about the economy.

But it is wrong.

In this video, I explain what wealth really is and how it is actually created. Wealth is not just private profit. It includes infrastructure, education, health, security, and social stability.

Historically, public enterprise built much of modern Britain. Local government created the systems that allowed private enterprise to function: sewers, electricity networks, public transport, housing, and water systems.

I also explain the money myth that underpins many of these arguments. In a modern monetary economy, government spending creates money first, and taxation later helps manage inflation. Public spending can therefore increase national wealth rather than destroy it.

The real issue is not public versus private. The real issue is whether economic activity meets social need and maintains the capital on which our society depends.

If we want a better economy, we need to rebuild public enterprise and reject the myth that only private companies create wealth.