Economics is pretty inextricable from politics though, so “converting lay people” is actually a critical function and can’t really be brushed off. In true Social Science fashion, the conditions of economic models are actually impacted by the public’s understanding and perception of them. Measures of confidence, jitters, runs on banks, inflation, etc…are impacted by whether or not people have been convinced that an economic system is sound and reliable, and whether it is being executed competently. The relative performance of any economic system may very well significantly depend of how thoroughly participants believe in it. Politicians and pundits certainly act like that’s so…
3 Likes
Yes, I don’t think it makes a really big difference to anything. Ultimately the left wingers who are pushing MMT are for raising taxes, especially on the very wealthy, and creating social programs that help everyone.
You can say the taxes will pay for the social programs or you can say that the taxes will remove money from the system to prevent the social program spending from being inflationary.
In my opinion raising taxes will help reduce income inequality and is a good thing in itself and we should do it even if we don’t implement social programs. Also, the kinds of social programs people are actually proposing are ones that make societies richer, not poorer, and we should do them regardless of whether we change taxation.
So rather than traditional economics or MMT I come down much more firmly on the side of, “This is all bullshit!” But the MMT proponents seem to be using it to advance ideas I agree with. Just if I were running things I’d be using the “is this a good idea to do” metric instead of the “does an economist say this is a good idea to do” metric.
5 Likes
I never said that. The signal is used to decide if and when to adjust taxes. MMT does require appropriate taxes to balance (not necessarily equal) spending.
The problem there being that taxes are so politicized (and currently controlled by congress), and inflation slow/difficult to calculate (not to mention politicized as well), there is the risk of things getting out of balance. Which is why we have the Federal Reserve also setting interest rates. Economics is not immune to control theory. You don’t need to work in Laplace space to know that fine tuning and fast adjustments are useful tools.
2 Likes
Very well put. I like some of the elements of MMT if nothing more than a different way to look at things. It has it’s own pluses and minus, which are fine as long as we are aware of them.
My only real problem is with people who propose an enormous spending programs then use MMT as justification like it’s some magic purse. If the program is worthwhile, then make the case. But don’t use MMT as the justification.
3 Likes
Looking at thing through multiple lenses is a great way to get wiser.
The thing is, to a large degree, when a government controls its own currency, it is a magic purse. The government/Fed literally creates the dollars. The insiders on Wall St, the big government contractors, the war profiteers, they understand this key insight, and make sure they are first in line at the spigot.
And it’s not just any currency. The U.S. government controls the main reserve currency in the world (at least for now). It’s an incredibly powerful tool. Who benefits from that power?
We can use that power to further enrich the already wealthy, or we can make this a better world for all of us.
There are certainly technical details around the balance of spending and taxes that always need to be worked out. But I object to the way these concerns are only trotted out when programs that benefit the 99% are proposed.
3 Likes
Just to clarify, you do know those are entirely different, right? Certainly intertwined, but not the same.
An that this one isn’t the one that controls the currency?
Fair point. It should be trotted out for every program, even good ones. I’m a huge proponent of pre-natal care. Even looked at purely economically, it yields an incredible return that more than pays for itself. It should be fully funded. But I wouldn’t try to argue that spending 10 times as much as fully funded is wise. Every item, from military to pre-natal, should be scrutinized for appropriate spending and necessary revenue sources. Always. I’m under no illusion it’s done well now.
MMT has nothing to do with spending and revenue priorities other than pointing out how governments are already effectively doing things.
1 Like
Exactly. MMT is not really “theory”; it is simply the fact of the matter. Oligarchs have been using this knowledge to their advantage for decades (notice how, despite protestations about spending, Republicans always fearlessly run up the debt).
Moreover, in the intervening 40 years during the rise of neoliberalism, the oligarch class has taken steps to handcuff or undermine government fiscal sovereignty (either through austerity “pacts” or free trade agreements, like the EU) ensuring that only they will benefit from any kind of government spending. Naturally Oligarchs understand the implications of MMT, such as government as competitor in the labor market – driving wages UP – and will naturally fight these tooth and nail. The challenge MMT has is not that it’s fantasy – it’s the challenge every good idea faces in the modern politic, which is defeating the oligarch class, which has spent 40 years solidifying their power and eroding democracy.
4 Likes
This topic was automatically closed after 5 days. New replies are no longer allowed.
