Last week I went attended the 2nd annual conference on “Modern Monetary Theory” — a movement known colloquially as MMT. It was very interesting, and much of it was new for me. MMT is essentially trying to change the way the public thinks about government spending and inflation.
Super interesting stuff, Rachel. Thanks for the write up -- I didn't know the conference was happening -- and for the useful links.
I have mixed feelings about MMT and would be interested to know what other readers here think about it. I don't disagree with any of the arguments they make about the character of money. But, as Kelton insists, deficits still matter, even for adherents of the theory. Even if the only matter in the future and less so than orthodox economics predicts, they will matter eventually. Meanwhile, for Democrats, the task is to design ambitious social insurance programs that will endure for generations, like Social Security. So, I do worry that folks on the left are putting way more intellectual energy into MMT and not enough into thinking about generating revenue through tax reform. There are lots of exciting ideas both in this country and in Europe about how to raise taxes without negatively affecting economic growth, but no one seems as interested in the those questions as in the monetary questions.
As I see it, there are three questions, which should be dealt with separately. 1. Is the optimal level of debt for the U.S. government higher than the current level? 2. Should we put more automatic stabilizers into the fiscal system, and if so, should those take the form of a job guarantee or something else? 3. How do we finance new social-insurance programs on a continuing basis? I think MMT can answer 1 and 2, but not 3.
Super interesting stuff, Rachel. Thanks for the write up -- I didn't know the conference was happening -- and for the useful links.
I have mixed feelings about MMT and would be interested to know what other readers here think about it. I don't disagree with any of the arguments they make about the character of money. But, as Kelton insists, deficits still matter, even for adherents of the theory. Even if the only matter in the future and less so than orthodox economics predicts, they will matter eventually. Meanwhile, for Democrats, the task is to design ambitious social insurance programs that will endure for generations, like Social Security. So, I do worry that folks on the left are putting way more intellectual energy into MMT and not enough into thinking about generating revenue through tax reform. There are lots of exciting ideas both in this country and in Europe about how to raise taxes without negatively affecting economic growth, but no one seems as interested in the those questions as in the monetary questions.
As I see it, there are three questions, which should be dealt with separately. 1. Is the optimal level of debt for the U.S. government higher than the current level? 2. Should we put more automatic stabilizers into the fiscal system, and if so, should those take the form of a job guarantee or something else? 3. How do we finance new social-insurance programs on a continuing basis? I think MMT can answer 1 and 2, but not 3.