Monday, January 31, 2011
Caution: MMT can be hazardous to your love life!
On Saturday night I went out on a date. I was going to have dinner with a girl whom I had just recently started dating. We agreed to meet at one of my favorite restaurants--a nice Italian place with cozy atmosphere in the Flatiron District of Manhattan. Everything was superb. We were seated at an intimate little semi-circular booth near the back, which had a nice view of all the goings on. I knew the owner of the joint so we were treated like celebrities. The evening started off wonderfully, the wine flowed and so did the conversation.
Most people know that there are two things you never talk about early on in a relationship: politics and religion. I know this and I'm always careful to steer clear of these subjects unless I am certain that the person I’m with shares my views. On the other hand economics is not that sensitive a subject, at least I thought.
You guessed it, before long the conversation started to gravitate into economics. I'm not quite sure why; maybe she started asking me more about my profession or maybe I started making my usual observations about the economy generally and how upsetting it was to see so many people out of work and struggling.
For the record my date was self-employed in a field obliquely associated with the entertainment industry. She spoke about how tough her business had become, but added that she still felt that if she worked very, very, hard she could eke out a modest living, but it was no cakewalk by any means. I said that I thought it was a shame that so much sweat was required to make just a bare subsistence and that it didn't have to be that way.
She looked puzzled and asked me to elaborate. That's when it all began. Like a fool, I started with the MMT stuff and from that moment on the whole evening started to go downhill. I "explained" to her how there could be plenty of productive work and income for everyone if the government simply made the investments that our country needed on a scale that we needed them. Stuff like infrastructure, health care, basic R&D, transportation, alternative energy, etc.
Then she asked me how we would “pay” for those things? I responded with my best MMT explanation, that the government merely “pushes a button” and bank accounts are credited and Voila! It’s all paid for just like that. Moreover, I said that there was no limit to how much it could spend and that it needed to spend to distribute enough money into the economy to get it moving again. She looked at me like I was nuts. She said, "You mean just print money?” “Sorry," she said, "But that's just going to create inflation and destroy the value of our currency.”
At this point I could see the debate coming, but I didn't panic because I had been here before. (Though never with a tall, gorgeous, blonde who I really wanted to sleep with!) I responded by saying that as long as the spending resulted in the greater production of goods and services—which it would--then there needn't be any inflation. "You are creating more wealth by definition," I said. "That’s not inflationary."
I could see the smile evaporate from her face and her eyes start to glaze over. She went on and on about the money printing and going into debt and the burden on future generations. She was obviously not buying anything that I was selling. In fact, rather than convince her I could see her moving farther away from my views. She was becoming irritated. To make matters worse, the more I tried to explain it, the more my explanation seemed to become desperate.
Suddenly the conversation went dead. Both of us sat there in silence, staring out into the restaurant when just minutes before we were gazing longingly into each others' eyes. I'm sure she was thinking the same thing that I was thinking: that all she wanted was to be someplace else.
After another seemingly endless moment of silence she turns to me and hits me with this: "If you're so sure about this why isn't there anyone else in economics or in policy or in the media who says anything like this?" To which I responded with this beauty of a refrain: "A lot of people didn't believe Christopher Columbus either when he said the world was not flat!"
The look on her face went to sheer pity. A few more awkward comments were exchanged, but at that moment we both knew the evening had come to an end. I ordered a double grappa. She left. In a strange way I felt relieved, like a fighter who had just taken pounding, but the fight was at least over.
In the end I realized that the next time I am on a first date, I will never discuss religion, politics and MMT!