As long as they have sovereign currencies, yes.
It does not work for any of the EU nations (excepting the UK) who do not have currency sovereignty. Which rules most of the West’s democracies out of the equation of being able to employ MMT (which I argue, was the point of the EU to begin with). This is the biggest problem to MMT’s viability; the concept itself is bulletproof.
For me, the biggest challenge with MMT is the same challenge we have with everything, which is that we don’t have a good democracy that implements the will of the people. MMT proponents assume the challenge is one of changing perspectives among the majority, but the real challenge is that the majority has little control over their politics even when they do agree on good policies. A broad majority of Americans voters voted for an African-American president, an action plan on Climate, a jobs program and universal healthcare 10 years ago. An instransigent minority was able to block all of those things.
So IMO, it doesn’t matter if you “convince” most Americans of things they already know is conventional wisdom (like that the government can spend to create jobs) by calling it MMT or whatever. Americans on both sides support those things. But our democracy doesn’t reflect the will of voters.
Money = speech means those with more money have more speech than us. Politicians give us lip service, but serve the moneyed interests. Regarding politicians: “Ignore what they say and watch where their feed go.”
Money only has value because we all agree that it does. An artist proved it.
Yep. Any great economic idea is a pipe dream until Citizens United is fixed. Even well-intended politicians will struggle to compete without raising money from big donors.
That would be more accurate than what the neolibs actually use.
Homo Economicus, someone who always makes the most rational decision unless that rational decision is socialist in some way. It’s broken even before it is compared to actual living people.
MMT is either voodoo or just a rhetorical device. Let me bold the important bits
- The government can create money to buy any good or service that the private sector isn’t using without driving inflation (that is, if there’s someone unemployed and the government gives them a job, that won’t drive up wages because the private sector had already passed on using their labor, so the supply/demand ratio of labor to private jobs remains constant), offering full employment to everyone who wants to work; and
- The government can create money to buy goods and services that the private sector is currently using without creating inflation, provided it can convince people not to spend that money – for example, by creating “war bonds” that sequester the vast sums that get pumped into the economy during wartime, to prevent the workers who receive those sums from bidding against the materials that are being used in munitions factories.
The “that the private sector isn’t using”, and “convince people not to spend that money” parts are easily accommodated in standard Keynesian economics by “when the economy is in a recession”. During the recession, it’s clear that the private sector isn’t using the full capacity, and the monetary side of things is illiquid.
Outside of a recession though, the MMTer’s use of those terms serve merely to confuse and suggest applications when they don’t exist. Look for example at Cory’s explanations. They do not apply.
In the first case, a person that is currently unemployed in a non-recession situation could become employed at some point. The private sector has not ‘passed’ on employing them forever, so the government giving them a bullshit job just so they have one actually does affect the economy and drives up inflation because it’s removed them from the pool of potential workers. (It would be far better to just provide services that ensure people live comfortably without a job, so they can be in the position to pick up a job when a suitable one appears.) In the second case, the work of the ‘convincing’ is done by the war, or more generally the special situation of the time.
I have done quite a lot of holidaying in eastern european countries. I can tell you from experience that the theory that the government can just employ all unemployed people without affecting the rest of the economy is wishful thinking. They tried that system in the soviet states and it really didn’t work.
Now I do think the U.S. could stand to move a bit more to the (eastern) european situation, as they are currently in the opposite extreme, and that doesn’t really work either, as demonstrated.
My point was more along the lines that Boingboing might not be the ideal place to learn economic theory.
For example:
But from Wikipedia article about MMT:
" A 2019 survey of leading economists by the University of Chicago Booth’s Initiative on Global Markets showed a unanimous rejection of assertions attributed to modern monetary theory in the survey: “Countries that borrow in their own currency should not worry about government deficits because they can always create money to finance their debt. […] Countries that borrow in their own currency can finance as much real government spending as they want by creating money”.[63][64] Directly responding to the survey, MMT economist William K. Black said “MMT scholars do not make or support either claim.”[65] Multiple MMT academics regard the attribution of these claims as a smear.[66]"
(bold emphasis is mine)
In other words, MMT economists consider what etpol01 said to be a smear of MMT. What he said may be true, but leaves out caveats and consequences that are core to MMT.
I am not an economist, and I also like the idea of the universal basic income, but I take issue with the assumption that it would be “a bullshit job.” There is plenty of work that needs to get done, that isn’t getting done because we don’t invest in it. National parks are reducing services, infrastructure is wilting, public transportation is non-existent in large swaths of the country, childcare, addiction recovery services, environmental clean up, all are needed. They’d take training (more potential jobs!), but those are meaningful, needed jobs.
One, take anything related to economics from the University of Chicago, put a pin in it, fold it up, freeze it, put it in the trash, take out the trash, put it in a dumpster, burn it, put the burnt dumpster on a boat, take the boat out to the deep ocean, sink the boat.
Then burn the ocean. It’s the only way to be sure.
But those caveats are in the article summary. Why would @etpol01 need to repeat them?
Neither of these things “disprove” MMT. MMT is standard Keynesian economics taken to its extremes within a social democratic framework. The idea of the government as employer is recessionary times is basic New Deal fiscal policy.
However, even in non-recessionary times you have structural unemployment or under-employment due to a variety of factors. A govt that paid workers to do meaningful work (that we decided on by voting) is a more radical and threatening idea to capitalism than a universal basic income. Because a lot of people today would choose to work to repair a bridge or street in their community for a decent minimum wage than work for WalMart and Uber.
Imagine that – boosting employment that benefits the community instead of the short-term profits of a billionare. Crazy talk!
For the same reason you would need to mention the caveats that go with any free offer. The army offers a free education. No need to tell some 18 year old the caveats since it’s mentioned elsewhere.
The caveats make a tremendous difference.
As for University of Chicago, that was the gist of my last post: etpol01 was using the same selectivity.
Free advice: If someone’s trying to sign you up for the army in a comment thread, don’t join based on a single comment.
Nah. Here are the relevant caveats from @doctorow’s OP:
Note that they are central to the point of the whole topic.
Then here’s @etpol01’s direct response to the OP:
There’s no obfuscation between the two. The only way to be confused about the limiting conditions of @etpol01’s assertion is to have skipped the OP completely and taken the post entirely out of context.
That’s my point. Corey said one thing, with caveats, which everyone is happy to ignore. He also neglected the main caveat, which is bonds are only part of the equation (and a minor one). Taxation, which historically is not well managed, is required to maintain economic health.
MMT does not differ from mainstream economics except for saying “a government that issues its own money” results in “does not need to compete with the private sector for scarce savings by issuing bonds.”
Yet that is getting warped into all sorts of weird policy proposals.
So I still maintain BoingBoing is not a good place for learning economic theory.
I disagree a bit with your description (a very common description) of MMT. There are two aspects to MMT; the explanation of the post-gold/free floating currency system we pretty much have, which I also consider bullet proof, and the policy objectives of most of the MMT proponents. Most MMT proponents are pro-spending on climate mitigation, jobs programs, infrastructure, and healthcare. The policy objectives are based on political leanings (most I agree with), but that aspect isn’t rock solid, just implications of what the current system can be used for.
The really important information that MMT scholarship explains, for me, is just how post 1971-73 global money creation works and also how those who understand this (the financial cartel and the Department of Defense proponents “Reagan proved deficits don’t matter”) have used this knowledge to feather their nests while keeping the rest of us firmly in place.
Thanks for the reply. The info about having your own currency is an important point that I hadn’t been aware of.
Money is a means to get wealth