As the inflation episode starts to abate, central bank governors have been keen to advance…
Reflections on the 2nd International MMT Conference – Part 1
I have very little free time today. I am now in Dublin and am travelling to Galway soon for tonight’s event (see below). Last evening I met with some Irish politicians at the Irish Parliament and had some interesting conversations. I will reflect on the interactions I have had so far in Ireland in a later blog post. But today (and next time I post) I plan to reflect briefly on my thoughts about the Second International Modern Monetary Theory which was held last weekend in New York City. Around 400 participants were in attendance, which by any mark represents tremendous progress. The feeling of the gathering was one of optimism, enthusiasm and, one might say without to much license, boundless energy. So a big stride given where we have come from. Having said that, I had mixed reactions to the different sessions and the informal conversations I had over the three-day period, which might serve as a cautionary warning not to get to far ahead of ourselves. This blog post is Part 1 of my collection of some of those thoughts. They reflect, to some extent, the closing comments I made on the last panel last Sunday.
Here are some reflections ordered in the way I discussed them in my contribution to the closing panel last Sunday at the MMT Conference in New York City.
I hope that these comments are taking in the right spirit.
It was a tremendous effort by the organisers to put together such a diverse panel structure. I think the balance was a little skewed away from the educational content backed by research efforts with evidence-backing and towards a variety of opinions some of were not at all within, what I call, the MMT paradigm.
This is not about disagreement.
Rather, it is about starting from a grounding in what MMT actually is and using that perspective to structure the activism. There were several offerings from people who I concluded had only the slightest awareness of what MMT actually constituted and this resulted, at times, in less than effective debate.
Too often I heard speakers say that ‘we have to work this out’ or ‘we haven’t considered this yet’, when, the reality is that the body of work we have constructed over the last 25 years (about, at least) has considered all those angles.
So while there was an engaging enthusiasm and optimism among the participants which I think bodes well for the future we need to maintain a realistic view that there is a massive amount of work yet to be done.
While it is undeniable that MMT is now increasingly penetrating the public debate these ‘idea challenges’ are typically a slow burn – it takes a long time to mount an effective challenge to the dominant thought processes in any academic discipline.
MMT is not a slogan
I sensed that there is a tendency among some new to Modern Monetary Theory (MMT) to use the term MMT as a slogan rather than relating to it as a coherent and meticulously developed body of academic work in economic theory and practice.
Many people I spoke to and listened seemed to limit their conception of MMT as saying that the capacity of the government to fund programs is unlimited and so there is massive scope for all sorts of progressive policies to be introduced.
The corollary to this was a tendency I observed (heard) that MMT is sort of a grab-bag of ideas that we can pick and choose from to suit our own preferences. In this vein, all the various employment guarantee schemes that have popped up in the last several months is symptomatic of that tendency. See more on this below.
To some extent that it true but merely constructing MMT as some sort of licence for government to do whatever it wants is a simplification that invites criticism.
And not appreciating the full MMT story – what the body of work involves – means that a pick-and-choose approach can often lead to policy proposals being unworkable and open to severe criticism from mainstream economists.
For example, now that we have mostly gone beyond the knee-jerk response from mainstream economists that the government will run out of money – the usual first response that was common in the early days of MMT – to an instant claim that running continuous fiscal deficits will, ultimately, be inflationary, it is important that we understand the price stability mechanisms within the MMT body of work.
It is project that the debate has shifted from solvency to inflationary bias. In part, this is progress because it focuses the debate on the issue rather than the smokescreen.
Inflation is a risk for all spending – government or non-government. And while it is a lesser evil than mass unemployment, it is still desirable, and the core MMT team certainly emphasise this, that our policy structures do not trigger accelerating inflation.
This means that activists have to be keenly aware of how the MMT approach attenuates the inflationary risk of government spending and not propose policies that undermine those mechanisms. I am referring to the employment buffer stock mechanisms that are intrinsic to MMT.
Merely considering these mechansims to be job creation schemes and then believing that we can have better versions of these job creation schemes (see below), many of which, violate the essential inflation-stabilising aspects of the price anchor, is to undermine the credibility of MMT as the alternative macroeconomic orthodoxy.
I write more about that below.
In other words, operating within the parameters of what we now refer to as MMT – meaning that one accepts the body of work we have developed – does not allow one to advocate a free-for-all.
The core MMT team has spent nearly 25 years together (in various ways) creating this body of work.
The fact is that an understanding of it leads to an appreciation that governments can only operate in a tightly disciplined fiscal environment if they desire to be responsible and serve the interests of the many.
While there are no financial constraints on a currency-issuing government there are certainly very tight real resource constraints. The scope for government intervention is limited by those real constraints.
Fiscal deficits really matter. And the challenge for all activists is to know how they matter – that is, in what sense do MMT economists say that and to distinguish that concern from the way the mainstream economists construct the ‘deficits matter’ narrative.
I wrote about this in this blog post – The full employment fiscal deficit condition (April 13, 2011).
Anyway, it is not a free-for-all at all.
In the real world, there are likely (definitely) to be hard political choices that have to be made on an on-going basis in terms of the allocation of goverment funds between competing ends for those productive resources.
In that context, it is crucial that the activist arm of our program takes as its point of departure the rich literature that we have developed on what MMT is and the implications of its foundational propositions.
This will condition the sort of options that are then proposed.
We cannot have everything we want.
For example, with an MMT mindset, a politician can easily introduce an unconditional job offer at a fixed wage. That proposal would create work but at the same not put pressure on the price level.
But it does not, then, necessarily follow that the same government can create public sector employment opportunities, by competing with the non-government sector at market prices for productive resources, without encountering inflationary and other negative consequences.
We thus have to be mindful of context.
Not having any financial constraints is one thing – and thank whoever that we are finally conditioning the debate to move beyond the fallacy that currency-issuing governments can run out of money.
But knowing when to use that fiscal capacity is another thing all together and we must not think that everything is possible.
It is not. Choices still have to be made among priorities.
There is only one Job Guarantee
In my comments at the closing panel I made the point that just like the Disney studio had created the 101 Dalmations in 1996, it seems like there are now 101 or more job guarantee proposals circulating, many of which claim to be derived from MMT.
Note the use of the lower case j and g in the previous paragraph.
Here are some caveats:
First the original MMT team does not claim to have invented the concept of the ‘right to work’. This goes back to at least the C13th and there has been a constant struggle between those who want to improve the lot of the working person and those who desire unemployment buffer stocks to keep the working person down since.
So the development of the Job Guarantee (note capitals) is not an attempt to usurp the concept of the ‘right to work’. In fact, and I don’t want this point to be misunderstood, the development of the Job Guarantee concept within MMT has nothing necessarily to do with philosophical or moral views on the ‘right to work’.
What you say? How can that be? So now Bill Mitchell is saying he doesn’t believe in the ‘right to work’.
As I said, I don’t want the point to be misunderstood.
I personally have a deep and abiding commitment to the concept of the ‘right to work’ for all. There is no question about that.
But my work on developing the Job Guarantee concept within MMT can be seen as being separate from that value commitment.
The Job Guarantee within MMT is a technical construct designed to replace the mainstream Phillips curve (the trade-off between unemployment and inflation). I will return to his in Part 2.
The Job Guarantee is a superior buffer stock mechanism to mass unemployment to maintain price stability.
And this means, that even if one didn’t hold the philosophical or moral commitment to the ‘right to work’ they would still advocate a Job Guarantee (MMT style) in contradistinction to the NAIRU-approach which uses unemployment as the buffer stock price anchor.
They would have to agree that in efficiency terms – which relates to resource wastage etc – the employment buffer stock approach is superior to the current dominant alternative.
This point illustrates perfectly the common misunderstanding that MMT is a regime we can move to if we only try.
As I have noted often MMT is not a regime that we ‘apply’ or ‘switch to’ or ‘introduce’.
This point still seems to escape the attention of many critics (and second-generation MMTers, for that matter).
Rather, MMT is a lens which allows us to see the true (intrinsic) workings of the fiat monetary system.
It helps us better understand the choices available to a currency-issuing government.
It is not a regime but an accurate perspective on reality.
It lifts the veil imposed by neo-liberal ideology and forces the real questions and choices out in the open.
In that sense, MMT is neither right-wing nor left-wing – liberal or non-liberal – or whatever other description of value-systems that you care to deploy.
I mean by that, that while MMT provides a clear lens for viewing the system, to advance specific policy platforms, one has impose a value system (an ideology) onto that understanding.
It is meaningless to talk about MMT’s prescriptions – anyone who talks in that way reveals that they haven’t fully understood the distinction between a lens and a value application.
The point is that MMT is what is already in place. It is not a matter of moving to MMT.
By eschewing the discretionary use of fiscal policy and imposing fiscal rules one is not exercising ‘non-MMT’ policy options.
The MMT lens allows us to tease out and more accurately predict the consequences of such a policy choice.
But there are no ‘non-MMT’ policy options. That is not very well understood.
So the Job Guarantee in MMT is a technical construct – it goes to the heart of our specification of a price anchor.
I will continue this discussion in Part 2 – maybe tomorrow, available time depending.
My current UK/European speaking schedule – update
Wednesday, October 3 – Galway – Reclaiming the State Workshop – Harbour Hotel, New Dock St, Galway.
This is a public event
The event will be chaired by Professor Terence McDonough.
Organiser: Desmond Greaves Annual School.
Contact: Kevin McCorry – firstname.lastname@example.org
Thursday, October 4 – Dublin – Reclaiming the State Workshop – at Wynn’s Hotel, 35-39 Abbey Street Lower, North City, Dublin 1, D01 C9F8.
This is a public event
The event will be chaired by Dr Karen Devine from Dublin City University.
Organiser: Desmond Greaves Annual School.
Contact: Kevin McCorry – email@example.com
Friday, October 5 – London – Launch of the The Gower Initiative for Modern Money Studies portal.
Event Time: 12:30 to 19:15
Location: The Diskus Lecture Theatre, Unite the Union, 128 Theobalds Road, WC1X 8TN London.
Registration for the Launch is from 12.30 for a 13.00 start.
1. An introduction to Modern Monetary Theory (MMT)
2. The Job Guarantee.
Registration for the workshops is from 1600 onwards for a 1630 start.
There are a limited number of places. The launch is free, seminars have a nominal charge of £7.50. Booking is separate for the two sessions. Refreshments will be available.
At the Launch, I will be joined by Randeep Ramesh, Chief Leader Writer for The Guardian, who will he talking about the role of our media in shaping our economic narrative.
Sunday, October 7 – Lisbon – Details to follow. I will be talking about the Job Guarantee and UBI.
Saturday, October 13 – Wurzburg, Germany. Makroskop event.
I am on a panel at 13:15 with Heiner Flassbeck and Martin Höpner – topic Exchange rate regimes
Location: Tagungszentrum Festung Marienberg, Oberer Burgweg 40, 97082 Wurzburg
The workshop runs from 9:00 to 18:00 with several speakers discussing aspects of currencies.
Contact: firstname.lastname@example.org for details.
That is enough for today!
(c) Copyright 2018 William Mitchell. All Rights Reserved.
This Post Has 27 Comments
Activism is fantastic because we need passionate advocates. But academic rigour should probably be the focus of any official annual conference. The official videos that come out need to rival the orthodox think tanks in professionalism and exude ‘credibility’ for want of a better world.. I have come to think of mmt not as a progressive set of policies but as more simply accurate macroeconomics….
Dear Bill, you have mentioned that you have consulted with several different governments over the years. I assume they were looking for advice as to policy options to solve certain economic problems. Did you tell those governments that you cannot prescribe any policy changes because the paradigm you work from only describes things?
I don’t understand your insistence that MMT does not offer prescriptions as to how to deal with economic problems. Prescriptions that are significantly different from the advice we would get from a New Keynesian economist often times. Advice that differs from what many policy makers understand to be possible and advisable policy for their governments. It isn’t only on the issue of the Job Guarantee, which exists in MMT form exactly no where on the planet at this time, but in many areas like fixed versus floating exchange rates, the role of monetary policy, ‘financing’ government spending, borrowing in foreign currencies, what bond sales accomplish, and many more.
It seems to me that until policy makers and the public understand MMT better, and actually agree with it, MMT will be prescriptive as well as descriptive. I don’t see how it is meaningless to talk this way, or see how that means I don’t understand MMT.
Can the 4th World conference be in Europe please.
I’m pretty sure nobody would complain if the 3rd world conference was in Australia/ Asia.
With the 4th one being in Europe.
” […] And while it is a lesser evil than mass unemployment, it is still desirable, […]”
I suppose the intended word is ‘undesirable’?
“[…] desirable, and the core MMT team certainly emphasise this, that our policy structures do not trigger accelerating inflation.”
I realize now that I misread it. Sorry about that
“The point is that MMT is what is already in place. It is not a matter of moving to MMT.”
This is so true it is the framing, language and propaganda that is different. It is the framing, language and propaganda we need to attack and keep explaining how the monetary system actually operates.
However, you have to go further than that and use the lens gained via MMT to change things. The financial sector and the central banks are a great example of that. I’m sorry if I keep coming back to Free Movement of capital because it is so important in the Brexit context.
Via a MMT lens Warren produced “what to do with the banks” so yes that is a prescription of what needs to be done. Many MMT’rs have produced a prescription of what needs to be done with a central bank.
Bill himself through a MMT lens has started to explain a prescription about sovereign debt and a prescription of what you should do if you float a new currency or go back to an old one and the best way to do it. I would like to see those prescriptions completed.
So yes MMT is here and now and explains how the monetary system operates but once you know that it doesn’t mean it is the best way to do things. Mastricht for example and the changes made to the BOE because of it made things worse not better and tried to hide how the monetary system actually operates from view.
My own view is how the central banks and commercial banks are set up is the most important part of MMT for me. The sandbox that everyone has to play in. Along with the Job Guarentee which is a price anchor and no longer ” pump priming”
You could say ” We are all MMT’rs now” but that isn’t really true because we would set up the central banks and the commercial banks differently even through MMT describes the monetary system as it is.
So even if a Prime Minister or a world leader announces at some point ” we are all MMT’rs now ” that is not the end of the journey it is only the beginning. As I believe the biggest threat to our monetary system are elections. If neoliberals win elections they can easily destroy the sand box we have created using the lens of MMT.
They will remove capital controls, they will borrow in foreign currencies, they’ll change what commercial banks can do and change central banks operations. Remove all the work we have done and move everybody back to square one. Promote single currencies instead of sovereign ones.
This Is also why I think countries who can gain their independence are at an advantage. They can embedd our sand box into the constitution and in its laws so no matter who wins elections will find it very difficult to change it. If done right will find it impossible to change it.
Using the lens of MMT we have to create a sand box that countries want to use and the results produced from our sandbox means it can never be hijacked by vested interests.
I know I keep harping on and on and on about this but I feel it is very important or it will have been all for nothing. We need to use the lens of MMT to get that sandbox right at the first attempt.
Jerry Brown, (I don’t understand your insistence that MMT does not offer prescriptions as to how to deal with economic problems.)
MMT might only be descriptive but it is how it is specifically adopted to address reality that distinguishes economic policy.
For much of the period since the industrial revolution various forms of economic theory have been adopted but Capitalism has predominated, primarily because it has thus far matched resource allocation with associated risk – and those who have not been equally rewarded have largely accepted some degree of ideological inadequacy.
Humanity has generally benefited from the welcome rise in living standards over the last 200 hundred year period, acknowledging the role of competitiveness in bringing this about.
As individuals, humanity has also gained the material and social benefits of belonging to successful economic organisations, whether they be private or public; in the public domain this has largely arisen without the profit incentive, because there are more ingredients to success than mere financial gain.
You can best see the germination of this success in the form of leadership – it incorporates historic precedence, modern wherewithal and vision. It recognizes challenge but doesn’t actually need economic theory to succeed.
I think parentheses would have worked better than commas; my inner grammar-nazi was initially aroused by that sentence as well, but subsided on further reading!
I think Bill could really do with a sub-editor. This blog is such a vital resource, and I sometimes worry that occasional and unfortunate typos could all too easily lead to misinterpretation, misrepresentation, or erosion of the its credibility, by opponents of MMT.
And it looks like I could do with a sub-editor too!
Looking forward to Friday’s event in London.
I remember the time when you wondered why you were doing this, as Randy did around a similar time, and a number of your commenters, including me, urged you not to give up, that the environment might well change and that it needed to and that your input was an important factor in this. You continued, whether because of us or not, and I hope that you think that this was the correct decision. I think it was, but then I have a vested interest.
While I do not always agree with some of the ways that you formulate MMT issues, this is a relatively trivial matter. Its fundamentals seem to me to be right.
As for the inclusion of presentations that are not consistent with MMT, this to me seems justified only if the organizers took the view that there is as yet no consensus on either what the central narrative is or should be or where the field was going. This is not unlike having a conference on relativity and including papers that contradict the relativistic hypothesis. Why would an organizer do that? Becasue relativity had not yet been *conclusively* corroborated? If that was the view of the organizers, then the conference should not have been designated as one being about MMT. However, you will know more about what is going on in this respect than I.
Mr Shigemitsu, it would be nice to meet up with you personally, if you do not mind. I have liked your comments.
As for your typo, this is because you and Bill don’t copy and paste from Word with spell checking activated. Having said that, I have to admit that I don’t either. I have made some awful howlers in typos. Argh!
Derek, I don’t understand half of what you have written here. I do remember something of your position on central banks and I am not convinced that your proposals are viable.
Bill’s point is so patently obvious to me, so logically coherent and consistent, that it boggles my mind that people have difficulties with it and/or fail to concede it.
A proper theory of electricity and magnetism does not, in and of itself, tell you anything as to how and for what purposes electricity and magnetism *ought* to be used.
A white-supremacist, settler-colonialist government of a monetarily sovereign nation (hint, hint) has precisely the same capacities as one that is diametrically opposed to it, in value (ultimate goal) terms. A policy that effectively uses involuntary unemployment (or emigration, or premature death) as the prime “anti-accelerating inflation” instrument is consistent with monetary sovereignty. Voluntarily imposed constraints on one’s ‘degrees of freedom’, notwithstanding one’s structural monetary sovereignty, are possible and not logically incompatible with monetary sovereignty.
In fact, the whole idea that the government, and, in somewhat Pollyannish fashion, the demos of a monetarily sovereign country has CHOICES as to how to deploy (or not deploy) that monetary sovereignty is one of the crucial insights of MMT.
To try to put into a nutshell what Dr. Mitchell is saying here, he’s indicating that MMT, like the accurate knowledge of particle physics, allows us to do things like split the atom, but has nothing to do with what we choose to do with this knowledge; i.e., produce nuclear energy or produce nuclear weapons. MMT’s improved understanding of macroeconomics reveals the viable scope of governmental agency, what it can do within the bookends of bankruptcy and runaway inflation. But the policies and programs that a government chooses to undertake within this viable scope of action come from meta-economic value judgments, which are matters of human will, not human knowledge.
Newton, a government running a sovereign fiat currency system can’t really go bankrupt although it can find its scope of spending limited in various ways. Hyperinflation is very rare and mostly a consequence of a failed state. But you are right that the system can move on this kind of continuum to various positions, depending on ideological preferences. A la your particle physics analogy, we could treat your continuum as an open interval where the two endpoints are not reachable by a functioning system. Close, maybe, but no cigar.
I`ve been doing an e-mail news letter for about seven years; I`ve never once mentioned MMT. My arguments are all grounded firmly in MMT, however, I`ve never wanted to “hang out a label” as an easy target. Fight me on the theory.
My, “currency issuing government”, has only a few days ago, defaulted on all debt, foreign and domestic(didn`t mind the foreign). I went after the policy (domestic) via the news letter and a radio show. People are now calling the radio show and “blasting” the policy. I was told(I did not hear it myself) that my arguments made it last week, to the floor of parliament. My point is , it is easier to defend the tenets of MMT than the “label”, MMT……….Can`t say I`m right, it`s just my way.
I attended the MMT conference in New York and was also surprised by the extent to which MMT, especially the Job Guarantee, was bandied about as a slogan to obtain childcare, fix the environment, and so forth.
In this respect it is important to understand the US context and the frustration of social activists. There has been no significant increase in the pubic provision of services in that country for at least 40 years and increasing numbers of people are desperate: publicly funded health care is woefully inadequate, there is no officially mandated vacation leave, parental leave, childcare, etc., etc. The minimum wage, if there is one, is generally very low: 5 states: no minimum wage; $5.15 in 2 states; $7.25 in 14 states; $7.50 to $11.50 in 29 states; $13.25 in D.C. From the point of view of an advocate for improvements in these areas MMT (the functional finance part) answers the question “how will you pay for it?“ The Job Guarantee provides a way to ensure the unemployed and the dispossessed have income, social inclusion, self worth, etc., by actually providing worthwhile services.
Unfortunately it is not so easy. MMT insights do not eliminate the need for real resources to be properly allocated. In the US real resources are squandered on a vast scale. The country is being looted by the healthcare sector (18% of GDP), the military and surveillance apparatus (7% of GDP) and finance (don’t know). Redirecting those resources to more worthwhile areas does not require MMT. For example much hand wringing has recently gone on regarding how to pay for Medicare for All. But the answer is simple: it won’t cost anything, indeed there would be huge savings in money and real resources. Reducing US healthcare spending from its current astronomical level to the same level as the highest cost country in the OECD, would drop the spending from 18% of GDP to 11%. Resources amounting to a remarkable 7% of GDP would be freed up and could be deployed elsewhere.
One of the odder things in the US, something for people in other countries to keep in mind, is how new government spending is allocated between social classes. Currently the size of the US fiscal deficit is high enough that in many other countries federal spending at such a level would result in real full employment and an inflationary boom. But in the US most of the fiscal stimulus is directed to the highest income earners who save much of it or bid up asset prices. As a result the macroeconomic effects of fiscal stimulus are muted. Dean Baker (Counterpunch, October 1, 2018) estimates the pro-wealthy slant of spending requires a fiscal deficit of 3 percentage points more of GDP than would have been needed 40 years ago to have the same effect. MMT insights are not necessary to direct spending to more deserving people although the insight might allow for a higher fiscal deficit since so much is being sequestered in saving and asset bubbles. Nonetheless this is not really an MMT related observation.
I understand the hope many have that MMT and the Job Guarantee will help solve the problems in the US. But using MMT as a slogan won’t help very much. Money is already being spent at levels that would be adequate elsewhere and additions to spending may just mean the wealthy grab that as well unless people fight to stop that.
Finally an area to follow up might be how to incorporate an Employer of Last Resort (ELR) program that fluctuates according to the vagaries of the labour market into permanent programs such as childcare, eldercare, etc. This would build a constituency for both the ELR and the public programs. This is a matter of program design and I don’t know if it is possible given the central price stabilizing role the Job Guarantee plays in MMT. Perhaps it is. Referring to a 1973 paper by Minski, L.R. Wray (Levy Working Paper No. 515, p.14) notes that Minski “recognized that the program would probably need a permanent cadre to provide critical services-as the public becomes accustomed to receiving public services from the ELR program, these cannot be suddenly shut off“.
PhilipO- That is great that your arguments were heard! Sounds like you made an impact!
I write with reference to Mr Shigemitsu’s comment “I think Bill could really do with a sub-editor. This blog is such a vital resource, and I sometimes worry that occasional and unfortunate typos could all too easily lead to misinterpretation, misrepresentation, or erosion of the (sic) its credibility, by opponents of MMT.”
I couldn’t agree more, and I hereby volunteer for the honorary role of sub-editor of Billyblog.
Just a couple of weeks shy of my 78th birthday, I am a New Zealander living in Auckland. I am still occasionally engaged in forensic engineering, as well as powerboat design, and have had a lifelong interest in macroeconomics, as an independent learner. Way back in 1973, without enrolling in any classes, I sat and passed the two three-hour papers in economics – one in micro and one in macro – for the professional accounting qualification that was then required for what was then the Association of Chartered Accountants (ACA). I share Prof. Mitchell’s passion for educating people about macroeconomics, and wholeheartedly applaud his efforts.
For almost 25 years I have followed the development of MMT with great interest. IMHO, it would be much more credible to Prof. Mitchell for me to be endorsed for the role of honorary sub-editor by my peers on this blog. I have already copied and pasted this particular blog-post into a Word document, turned on ‘track changes’, and sub-edited it. I have done the same for several of Prof. Mitchell’s previous blog-posts. I should be pleased if those interested sent me an email requesting copies, with a view to assessing my suitability for the role and recommending me to Prof. Mitchell. I am vitally interested in keeping my brain as active as possible for as long as I can – and I can still run and jump! My email address is pjm.forensic.eng_@_gmail.com (remove the two underscores).
Yes Keith Newman, the minimum wage laws in the US are very weak. The Federal minimum wage is $7.25 per hour, although some ‘tipped jobs’ like waiters and bartenders are at a lower rate as long as the total hourly compensation including tips adds up to $7.25. Pathetic to say the least. No minimum benefits or paid vacation or holidays either. Some states have raised the minimum on their own, but many have not.
I also went to the conference, but could only stay for Friday. I enjoyed it, and like you say, there were a number of different ideas about what a job guarantee program could be stretched into. I did not mind this all that much. One of MMT’s criticisms of ‘mainstream’ economists has been that they do not listen to people from other fields such as sociology or psychology or law. Well if you are going to make that criticism- then maybe you need to actually listen to some of those people yourself. So I was fine with it.
The other thing is that a federal jobs guarantee would happen to be a VERY large and significant policy change for a country like the US. There is really no reasonable chance that if the US manages to implement something similar to a job guarantee that it is going to exactly follow Bill Mitchell’s MMT guidelines. Just possibly we could get someone like Bernie Sanders to propose something reasonably close- but by the time Congress got through with passing it, it really won’t look much like the Jobs Guarantee in all likelihood. And for even whatever is left of it to get passed, it is going to require the support of many activists such as the ones at the conference who were speaking in favor of it. Even if they didn’t quite understand all the MMT arguments that might be used to ‘prescribe’ the policy.
It was not positive, However! It was a “sledge” made in parliament…..I`ll take it and respond. I`ve had it out with this, “now minister” already(not a bad person actually, and plays sax. In my book that should “let him off” but, naaaa..LOL )
Hi Bill, be prepared for ‘lots of questions’ in London regarding your stance on Brexit. See the comments in this post here, where your name came up:
If you have time could you comment on this writer:
“I have put more time into researching MMT than any other single topic. Proponents have never satisfied me when trying to answer my questions.
Legislation would have to be changed because the government cannot go into overdraft with the RBA except in very short term emergency situations. That means they must issue bonds to make the books balance. If the RBA held those bonds, then MMT might work but the RBA are precluded from buying them direct. There also must be some sort of limit as to how much debt the RBA could carry on their books?
No-one has convinced me of how the accounting for MMT would work. They don’t seem to think it is important. No-one can explain why every sovereign currency doesn’t just spend whatever they want to to utilise the unused productive capacity in the economy. No-one has spoken about the environmental impact of this unlimited spending or the possible impact on exchange rates. I find the argument that one of the main purposes of taxation is to create demand for a currency unconvincing. I find the argument that bond issuance is to control overnight interest rates incorrect – it is the trading of such that might make a difference but this could be achieved by the RBA offering interest on overnight deposits. Whilst our credit rating means little for the government, would it create problems if commercial banks had to seek funds from overseas? Until they can get to the nuts and bolts, it remains an esoteric conversation for me.”
I attended the MMT conference last weekend. Many thanks to Bill Mitchell for this clarifying post, and to the commenters as well — particularly Newton Finn and Keith Newman. I have often thought that we should talk about MMR — for Modern Money Reality — but I realize, that ship has sailed.
It is contradictory to say MMT is already here you cannot move to it
but a buffer stock job guarantee is a part of MMT.
No lens can see a JG that does not exist.
Dear Kevin Harding (at 2018/10/09 at 7:26 am)
You have a very narrow understanding of what a ‘lens’ is. In the blog post – Understanding what the T in MMT involves – https://billmitchell.org/blog/?p=40383 (September 20, 2018) – I discussed in some detail what a ‘lens’ comprises.
It is much more than simply describing what one sees.
In many social science applications, there are deep abstractions that have to be theorised and approximated to build an explanatory link to the real world.
Modern Monetary Theory (MMT) contains history, culture, accounting, description and theory. Part of understanding how a monetary system works requires one to dig beneath the superficial relations in order to identify intrinsic relationships and concepts.
An explanation of inflation requires such abstract thinking. The Job Guarantee is intrinsic to the MMT discussion of inflation and our response to the mainstream theory, where the Phillips curve and its derivatives is a central part.
An inflation generating process does exist but we cannot see it. We only see approximate manifestations of it.
So to explain that process which generates the data we observe one has to conceptualise in the abstract.
The MMT ‘lens’ encompasses that reasoning, which includes the concept and operation of a buffer stock employment mechanism (the Job Guarantee).
Further, even the concept of inflation is an abstraction. Macroeconomics, itself, is an abstraction. There is no such thing as the ‘price level’, for example.
So, sorry to say, it is a very crude interpretation to just think of a ‘lens’ as a viewing portal of what one sees. Even our eyes often cannot see what is.
“I met with some Irish politicians at the Irish Parliament and had some interesting conversations. I will reflect on the interactions I have had so far in Ireland in a later blog post.”
Just a reminder…