This is an interesting article on rethinking conservatism. From the MMT perspective, it is evident that much of the conservative agenda is based on a misunderstanding of monetary economics, in that conservatives have ideological policy goals which presuppose that taxes or borrowing are necessary to fund government expenditure.
Here's an exercise for MMT-aware conservatives. What would modernizing conservativism look like in light of a correct understanding of monetary economics?
Read the piece at Breakthrough Journal
Modernizing Conservatism
by Stephen F. Hayward
(h/t Kevin Fathi via email)
24 comments:
Conservatives understand much of modern economics. The right yearns for a gold standard that they can use to control the social engineering being perpetrated in our country.
Unfettered government expenditures makes it possible for the government to buy consent and reward "special interests" that disagree with the political rights ideals, mores and religious beliefs.
It has nothing to do with being correct on the economics but on the politics.
@ bosscauser
Right. Ideology is basically normative, i.e, value-laden or moralistic. When the economics is understood, then this becomes clear. Until, moralizing is disguised in economic terms.
" Stagnant income growth and mobility and a shrinking middle class are considered unhealthy by most conservative understandings of social health, cohesion, and well-being."
That's news to me. Modern conservatism has consistently favored the rich at the expense of the middle class and socio-economic mobility. Has the author not noticed that?
I agree with the comments thus far. Modern conservatism is incompatible with MMT, therefore they will never "get it." Even if they get it, the ideology will look much the same.
That said, I think a conservative willing to go there would say that, fine, the Governments only role then is expenditure and everything should be privatized. JG's thru temp agencies, school vouchers, even more private defense contractors, etc. I have some inclination to this viewpoint, although I'm not all in.
Shrink govt, that means replacing federal regulation wherever possible with pigouvian taxation-- on pollution, congestion, robotrading, imports- and reform the tax code (allowing for the shuttering of entire cabinet departments along the way) by replacing virtually all spending programs and tax expenditures with a negative income tax system (though some kind of national health insurance and universal daycare system/voucher is more or less inevitable). Like Cap Weinberger said, the goal should be, a "family would no longer both pay taxes and receive benefits at the same time, but instead would have either a tax liability or eligibility for a transfer".
http://findarticles.com/p/articles/mi_hb3356/is_4_53/ai_n28809872/pg_6/
Oh yeah, and bring back the draft, that would do more to keep us out of unnecessary wars than anything else.
Two sides of the same coin: crony capitalism and bought officials. A corporatocracy or plutocracy plays both parts like two hand puppets moved by the same person.
where's ESM when you need him!?!?
beowulf....I'm sorry man...hell no on bringing back the draft. Instead why not put a cap on personal and corporate expenditures instead? I have no clue on how to enforce that, and it might be a terrible idea but something along the lines of limiting the economics of the private sector whenever war is on.
As far s I can tell, conservatives cannot fully embrace MMT without acquiescing to devilish social programs, so it will never happen unless they redefine it. Perhaps Warren himself and his various proposals is really the best prototype for the modern conservative. Essentially low taxes, decent and workable social programs, and properly regulated markets so that the government can stay out as much as possible. yeah?
Shrink govt != bring back the draft
I am beginning to think that I am the only MMT Conservative. I am a Social Conservative that believes in MMT. I used to be one of those balanced budget guys until I studied MMT after hearing Mike Norman on the radio. If you know of any other Republicans that believe in MMT please let me know. I am starting to feel like and outsider in my own party.
Theron,
I'm registered GOP, have never voted Democrat in my life.
My Primary voting record in last Presidential primaries (as back as I go) Buchanan, Buchanan, Keyes, Romney. I'm down for Romney as of now.
The whole concept of a "fiscal" conservative is a Bush I and II era GOP heresy (not saying the Bushes drove that, it is more a product of the southern, former Democrat, zealots that have invaded the party over the last 20 years, all emotion no brain).
This is the way I sometimes describe it: I'm a Lincolnesque Greenback spending, Teddy Roosevelt Cartel Crushing, Eisenhower Infrastructure Building, Nixon Gold Standard Repudiating, Reagan Tax Cutting..... Republican.
MMT fits me like a glove already with no real changes required. But I am sort of outside of the orthodoxy of GOP politics in this present era.
Resp,
Good response Matt. Although I think believing MMT puts you outside any orthodoxy because... well mainstream economics dominates both establishments.
@Trento, realize that it is a natural political phenomenon for the outside party to drift further to the extreme when they are out of power. Hence the reason that the cranks like Paul have gotten so much credibility in the party over the last couple of years. The Austrian leanings that have arisen in the last couple of years would be expelled if/when Republicans get a majority or the oval office.
As for how Conservatism can adapt, I think it is moving more towards the Bob McDonnell "results oriented" styled conservatism that focuses on making government more efficient and adapting bureaucratic structures to become more responsive to changes driven by technology and globalization. The establishment knows that the Ohio model of pissing off the middle class is no long strategy for gaining reelection.
It also will begin to see entitlement reform not so much as a solvency issue, but a realization that the health care reimbursement model has to change to promote health and prevention rather than simply treatment. Traditional Medicare FFS is a reflection the increasing burden health care costs place on many Americans. By bringing about reforms that don't simply destroy the programs outright, we'd be able to invest more in things like education, infrastructure, telecommunications, basic R&D (you know all the stuff that gets cut first whenever there is deficit reduction).
"As far s I can tell, conservatives cannot fully embrace MMT without acquiescing to devilish social programs, so it will never happen unless they redefine it."
No, MMT just says you don't have to worry about affording these programs, just keep an eye on inflation. MMT does not say you have to have any of the programs. Mosler puts it well - for whatever size govt people agree on, adjust taxes accordingly. Different ideologies have different ideas on what the size should be.
"Different ideologies have different ideas on what the size should be."
Although conservatives harp on the size of government, what they often mean is limiting what government should be doing as its purview.
This is where the actual disagreement is rather than over the absolute size. The right wants virtually unlimited military and security forces, for instance, while the left is for very limited.
The size thing is just a red herring to frame the debate in favor of conservative ideology. The public shouldn't fall for it.
"No, MMT just says you don't have to worry about affording these programs, just keep an eye on inflation. MMT does not say you have to have any of the programs. Mosler puts it well - for whatever size govt people agree on, adjust taxes accordingly. Different ideologies have different ideas on what the size should be."
except when we all realize that SS and Medicare can be afforded and full employment reached with near 100% accuracy (or at least significant improvements from today's rate), who can say no to that and not die political defeat the like brutus and cassius have never seen?
that's the problem with MMT. If you admit affordability what man can remain ethical and human and not support these measures? It's a real problem for conservatives b/c the main thrust of the argument is always affordability and "size of government" and of course the "debt monster"...think of our children and grand-children you selfish man you!!! etc., etc.
I totally disagree Mario. You don't think Medicare is reflective of the larger trend that there are problems with efficiency and goals in our health care system and that something has to change in regards to reimbursement? Or how rising premiums are crushing wages and standard of living for many Americans?
With SS, do you support the fact FICA taxes disproportionately burden the middle class? And is it so bad to allow people to invest more of their own savings if that is their desire?
Or the fact that spending so much more on health care and pensions takes time and energy away from spending on education, infrastructure, telecommunications, basic r&d, etc.?
So no, blind support for the status quo and lack of creative reforms doesn't make you more ethical.
What MMT does is put the debate along ideological and normative lines rather than affordability.
As Peter F. Drucker ponts out in The Effective Executive, efficient is about doing the right thing and efficiency is about doing things right. Effectiveness is logically prior to efficiency, i.e., ends are prior to means. Choosing ends involves valuation. Values are the norms that constitute the foundations of an ideology.
Political economy is inherently normative as well as positive.
Dan it sounds like you operating out of paradigm.
"You don't think Medicare is reflective of the larger trend that there are problems with efficiency and goals in our health care system and that something has to change in regards to reimbursement?"
no I think the demand for it is indicative that MORE is needed.
At an ethical level decent basic medical care cannot be denied to the public. Period.
MMT allows FICA to be reduced if not eliminated so I think you're point there is out of paradigm.
the act of spending on health care or pensions doesn't effect real resources, so it does not take away from our ability in infrastructure and those other areas mentioned. MMT shows that spending is just a changing numbers on a spreadsheet. Not too much loss of energy or resources in that process I'd say.
"Shrink govt != bring back the draft"
One of life's paradoxes I know.
Steve Miller surprised his audience Sunday (7/11) at the Greek Theater in Los Angeles by calling for a reinstatement of the military draft. The suggestion was met with stunned silence.
Before performing his 1968 anti-Vietnam War tune "Living in the U.S.A.," Miller pointed out what he said were the similarities between the Vietnam era and now -- specifically, unpopular wars. The difference then, he said, was that people were vocal about the war; today, people are too caught up in computers and Twitter, and avoiding the reality of soldiers losing their lives.
http://www.soundspike.com/story/258/steve-miller-says-its-time-to-bring-back-the-draft/
I'm not out of the paradigm. But you are operating outside of reality.
Yes, if people keep waiting until they get sick, more people will demand treatment. But how is that good for society? Isn't it better to keep people healthy to begin with and system that promotes it?
With traditional Medicare FFS and othe FFS, we pay doctors based on the number of services they provide. Not how well they cooridinate, or outcomes, or performance indicators. Yet you like the reimbursement structure which says pay $1000 for drugs that will keep you alive for 2 more days? You like a payment structure that incentivizes hospitals to push people to get more and more services and tratment (that isn't even all that efficient and produces thousandsof medical errors and millions of HAIs)?
So yes, we may afford it. But it isn't all that compassionate. If you think throwing more money into health care automatically means better healthcare (and not simply more room for people to make a buck or for more people to make more drugs), you don't know how the system works. Americans paying more per capita and stil comes behind other developed countries isn't just a talking point, but a real issue. And again, you don't even address the issue of how rising premiums crush middle Americans.
My point with SS is that affordability doesn't mean it is perfect. There are ways we could improve the system and funding (you just mentioned you are against FICA).
As for your last point, you really show you don't understand how any the political process through which Congress spends works. Yes, spending itself is keystrokes. But the process of writing legislation, the time Congress devotes to issues, the procedures that need to be followed, the hearings that need to be held, the agencies that have to coordinate, etc... that takes time and energy. Time spent on issues and persuading constituencies isn't infinite like keystrokes. The act of spending takes place through a keystroke, but the political process does not. Of course the debt ceiling and health care debate detracted from the ability of Congress to address other issues (and thus, take on additional spending).
MMT is about accepting operational realities. If you are not willing to do so, then you my friend are the one operating out of the paradigm.
@Tom, I agree that is where the debate needs to be.
check out Warren's health care proposals for more info on that stuff. Fee schedules work well. Check out how workers comp treatment works. It's a good model on how a public option could work and of course there are bad apples in the mix (always will be), but overall the system works well and people get the care they need. I used to work for a doctor that had 80% of his practice in W/C. I handled collections.
yes preventative medicine is great!!! when people can afford it and have access to it.
The energy and resources it will take (which frankly is still not that much at all when you think about it) regarding the congressional process for writing up health care legislation imho is WELL WORTH IT.
Either way Mario, original point stands: being against health care status quo doesn't make you unethical. People should disagree about what they think works best.
PS I have read it. On a large scale, I still feel you need something other than fee schedule to promote coordination. See Mayo Clinic, Kaiser, integrated health systems, etc.
Stumbling upon this post rather late but I'll give my 2 cents. I am a conservative Republican who understands and embraces MMT. I know that most fiscal conservative thought comes from a few views: 1) govt. spending must be "paid for" and therefore the govt is taking our money either via taxes or borrowing. 2) The debt is "unsustainable", though you never actually get a definition of that. 3) Saving finances investment, so in order to get more investment we need to eliminate taxes on saving as much as possible and would prefer to tax consumption. Liberals interpret policies such as capital gains tax cuts as an evil conservative plot to help the rich, but really conservatives beleive they are enacting the best policies to boost growth.
From my perspective, MMT-educated conservatives would stop worrying about the deficit so much, and have further justification for tax cuts (a good thing). Social spending wouldn't be such a big deal, but we do really need to reform the healthcare system as it represents a massive waste of real resources.
well put Erik, and I agree completely with you on all accounts.
It seems now that the "new" conservative rebuttal to government spending is that it "skews the marketplace." So then we get into rabbit hole discussions on inflation, price fluctuations, the Fed, etc., etc. It really is a rather tiresome conversation imho. LOL
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