Originally published at: https://boingboing.net/2019/11/28/neoclassical-cruelty.html
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I find this particular line hilarious (the “even the government” part). I can’t think of any evidence to suggest the government is worse at investing than the private sector. The return on public spending can outstrip private investment phenomenally. There is just no way for the private sector to realize a gain with a value anything like the value of an education population or a healthy population or roads and bridges.
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given that governments are the sole source of currency?
Wait, what? Plenty of private currencies have existed. I mean, government issued ones have some nice properties, but they’ve never been the only game in town.
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Here is an actual economist’s take on mmt. You might have herd of him, he had a couple small jobs working for Obama and Clinton.
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Modern monetary theory, sometimes shortened to MMT, is the supply-side economics of our time. A valid idea — that traditional fiscal-policy taboos need to be rethought in an era of low real interest rates — has been stretched by fringe economists into ludicrous claims that massive spending on job guarantees can be financed by central banks without any burden on the economy. At a moment of economic and political frustration, some in the more extreme wing of the out-of-power political party are seizing on the possibility of a free lunch to offer politically attractive ways out of economic difficulty."
Really sad to see Cory start to rembrace the antivaxx economics side of our party.
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You might find that “actual economist” isn’t a widely respected credential around here. And even among those it is respected by, the people advancing MMT are also actual economists. Notice the story about Randall Wray? Try googling the name. You’ll notice they are a professor of economics (i.e. “actual economist”). You even don’t have to google it, it’s right in the story.
I take the criticism seriously: you can’t play games with words and numbers to change reality. That applies to all branches of economics, not just MMT. For example, about 40% of US groceries are thrown away every year (and garbage collection isn’t free). We are spending money to not give away free lunches. The US spends more public dollars per capita on healthcare than Canada and then doubles that with private spending. Again, a lot of money is being spent to not give things away to people.
That’s not some easy problem that someone can solve with a magic wand, but we had better start thinking about how we are going to solve it instead of sitting on our heels and pretending that it would cost too much. There are people who want to work, there is work that needs to be done, there is more than enough food, shelter and clothing for the people who want to work. We have to stop intentionally turning abundance into scarcity.
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Art Laffer was a real economist too. Only problem was his “model” that was used to justify a bunch of bad decisions lacked rigor. But there were plenty of people ready to back it up with a nice graph or maybe a cherry picked historic example. Sound familiar?
You are the one who tried to use the credential of “actual economist” to prove a point. I only brought up that Wray is an actual economist to point out that it runs both ways. Laffer is a further example of why we shouldn’t necessarily listen to “actual economists”, Lawrence Summers included.
Yes, it sounds like the entire field of economics, including the economics practiced by Obama’s and Clinton’s administration who Summers worked for.
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Don’t let’s pretend that economics is a science like the science behind vaccination.
The interesting thing about MMT is it’s the first attempt I’ve seen (specifically, that I’ve seen in my ignorance), that actually addresses a puzzle I’ve always had which is that we can afford stuff. As in, there isn’t some debt to the universe we owe when we borrow money to do work… We still have that work done. The notion of monetary debt makes sense to me when it’s an individual, because they’re sensitive to societal pressures, but when it is society, then the pressures don’t really make sense.
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I don’t need to be an “actual economist” to know what to think about the fact that, when it comes war, bank bailouts and billionaire-serving tax cuts, the congress-critters have no trouble simply passing the necessary appropriations (aka creating dollars) – but when it comes to health care, education, social security, infrastructure, then it’s time to bring up pay-for’s and made-up deficits.
Exactly which mainstream “actual economists” predicted the 2008-2009 crash?
All you really need to prove MMT is to have eyes. Or, perhaps, eyes that are not blinded by billionaire dollars.
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This is exactly what I always think. Someone still have to do the work. No one is looking for a free lunch, we’re looking for a lunch that required work to produce. There a debt to the universe of a kind, but it’s just the law of conservation of energy.
I get baffled that anything at all in the economy makes sense. Like if I eat a potato, someone had to grow that potato and then they shipped it to the grocery store and I bought it and a countless number of people had a small part in it. And somehow all of that work can be accomplished for less than the food energy of one potato. Otherwise a downward spiral to collapse would have happened long before I was born. It’s staggering to me that its possible for us to feed and house and cloth ourselves. But obviously it is possible, and it’s possible for all of us to have iPads on top of that.
Money is supposed to be a proxy for all of that. Economics is just another case where we got obsessed with our metrics and stopped thinking about what we really wanted to measure.
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I think a lot of what they’re trying to do with MMT is to think less about money as a thing unto itself, and think more about productivity and resources. Who is getting lion’s share of the post-1980 gains in productivity? (Clearly, not workers.)
One of the big things I’ve gotten from MMT is the realization that the U.S. government injects huge sums of money into the economy all the time. The 2009 bank bailouts were just an extreme example. Where and how it’s done comes down to political choices. Do we want to fund banks and bombs, or doctors and schools?
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On top of that, we have enough resources to support billionaires, even $100B+ in the hands of specific people.
Scarcity is a propaganda game that corporate elites use to make us think we can’t have nice things. It’s bullshit. We have huge resources and potential. If we stop directing most of generated wealth up to the top of the economic pyramid, there’s so much we could do. America could be a great place to live.
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An economy is like an ecosystem. You can have a bare volcanic island and various plants and animals colonize it and build on each others’ inputs and outputs until you have billions of tons of organic material. It does not come from nothing. Inputs like sunlight, atmospheric gases and water are required. The economy was fueled animal power and manpower. Then coal. Now oil. Money was tied to gold. Now it is the petrodollar, dollar backed by oil. The oil is stored power laid down millions of years ago. That is your deficit that we owe the universe. All closed systems run down and tend to chaos without energy input. The economy is the same. We spend energy, not really money. We can use it more or less efficiently based on knowledge. A good theory of economics would help us direct our efforts more efficiently.
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A very good point I left out. There are other resources we might be running down too (or at least we rationally know there is a limit to them). If people framed “we can’t afford” arguments in terms of things we actually don’t have enough of they would make sense. But we talk about GDP as if copper was as renewable as cute kitten videos. As if money is fungible and therefore in the aggregate, everything is fungible.
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That’s true econ is a social science and it struggles with experimentation. Im being hyperbolic but I should have said we need to hold new theories to a high standard. In econ today that means showing your math. Mmt supporters cant do that. It’s all about converting the lay people. You wont see any articles listing the teir-one publications that could someday win a Noble prize.
I’m not sure what specificly you are saying is interesting about mmt. As the Summers article I linked mentions fiscal policy does need to change to meet the current situation. Mainstream economists are certainly doing research in that area.
Maybe you are talking about continuous debt finacing? As in always running a deficit. I think that’s also a pretty common topic of study. Kind of just sounds like you are talking about how growth can allow a society to maintain deficit spending. Thats not an idea mmt gave us.
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Given the dumpster fire of an economy and world the neo-liberal consensus has wrought, it’s amazing to me that anyone takes their propaganda courtiers (mainstream economists) seriously.
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MMT is not much different than current economic theory. Something people who like MMT seem to forget is the taxation part. This requires strict discipline from Congress. Current funding uses government debt rates as an economic signal. MMT uses inflation. It still says you need to tax to balance spending, but not borrow before you spend.
Another thing people tend to ignore is that, yes, there is no effect on inflation if the spending is on something no one else is buying. MMT doesn’t differ with other economic theory on this point. So assuming the government isn’t just buying surplus cheese and such all the time, and is doing things like hiring people that can’t find other work, it works just fine.
But if unemployment is low (not zero, but low) then hiring someone does have a ripple effect. To use the potato analogy, the government hiring someone in a small town in Idaho could shift labor, over time, from farming potatoes to working for the government. That’s true under any economic theory (MMT or not).
MMT does not preach abundance. It’s just a different funding method, not a panacea.
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By all means, let’s continue doing more of the same and hope for different results. /s
I’m not sure what your point is. This article clearly states that this is heterodox, aka fringe, economics.
Debating things like which “economic signal” should be used to control spending is the type of sophistry used by the corporate establishment to muddle up the basic facts – such as:
When the government spends money, who is on the receiving end? Does it end up in the pockets of billionaires, or working people?
When the government taxes money back in, is the burden falling disproportionally on the 99.9%, or the 0.1%. How is it affecting the wealth gap?
Even if MMT does nothing more than clarify that federal taxes do not fund federal programs, it’s doing a great service.
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