MMT IS A SOCIAL AGENDA
The subtitle of Stephanie Kelton’s book, The Deficit Myth, is “Modern Monetary Theory and the Birth of the People’s Economy”. The material in her book supports and encourages that theme and what it implies.
It isn’t that Ms. Kelton and others have not explained carefully how MMT can presumably work, both financially and economically; they have. The financial details have been enumerated and dissected adequately. However, the justification for implementation of MMT appears to be based on expectations of grander social programs, and how to pay for them.
A question comes to mind: “Is MMT still desirable if the selective application of additional government spending doesn’t parallel the intentions of its proponents? For example…
If the government (or any sovereign government) is freed from spending restraints, and chooses to spend more on defense than on global warming, does that nullify the positive benefits of MMT?
Additionally, if the US government chooses to spend money for any other reason rather than allocate funds for a federal job guarantee program, Social Security benefits, healthcare, climate control, a Green New Deal, etc.; does this change the nature of MMT, or lessen its preferred use?
There are others, whom we might generally call “conservative” in their political thinking who have embraced Modern MonetaryTheory. But it may be that this is done out of frustration, rather than conviction.
We have been told for decades that our nations finances are in horrible disarray, and that the burgeoning growth of the national debt will lead to financial and economic disaster.
Yet, each time that we are on the verge of a financial crisis, the Federal Reserve and the government seem to conjure up enough dollars to save us from being completely swallowed up.
Over time, the results of magic money are reasonably effective, if inefficient. It isn’t a question “about the government’s financial ability to pay” says Ms. Kelton. “Uncle Sam can always pay!”
Ms. Kelton points out that budgets and deficits are items of shared concern among almost all members of Congress, regardless of political persuasion. She also recognizes that “Congress has the power of the purse” and “if it really wants to accomplish something, the money can always be made available.”
If that is the case, and if “spending or not spending is a political decision” then the question is whether MMT is fundamentally applicable, workable and justifiable on an apolitical basis.
How we think about spending, taxing and deficits may well be outdated and unnecessarily restrictive. Does MMT offer a better alternative? Or is it a Trojan horse for social programs of choice?
(also see MMT – Variation On A Theme and MMT And Gold)
Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED!