Thursday, January 3, 2019

Gordon MacIntyre-Kemp — Hot new economic theory is just one piece of the puzzle


Many of the points made have been dealt with in the MMT literature, but the author seems to be only superficially informed about it. Almost no one has taken the time to educate themselves on MMT in a serious way before offering shoot from the hip criticism.

On the other hand, these are valid considerations and if people are not informed about the MMT solutions, more education is required. That includes educating MMT evangelists so that don't just spread slogans or perpetuate myths. The MMT economists have done the heavy lifting and now it is time for both MMT proponents and those critiquing MMT to educate themselves about its breadth and depth.

The National (Scotland)
Hot new economic theory is just one piece of the puzzle
Gordon MacIntyre-Kemp, Columnist

1 comment:

Konrad said...

This is a lame attempt to justify the neoliberal status quo by using false claims to attack MMT.

CLAIM: If monetarily sovereign governments could create money out of thin air, they would do so, and thus destroy the planet.

RESPONSE: We are already destroying the planet. Moreover no MMT proponent denies the potential of inflation if the government were to create more money that the availability of labor and resources could handle. Meanwhile in the real world, politicians spend all they like on war, for example. Idiots like you only ask, “How will you pay for it?” when it comes to programs that help average people.

CLAIM: If monetarily sovereign governments could create money out of thin air, then right-wing populist leaders might not bother taxing business at all.

RESPONSE: Big corporations already pay less than zero taxes. Besides, most MMT proponents think that money would be worthless without taxation. I don’t agree with that, but I concede that taxes can be useful if applied properly. For example, taxation can be used to discourage smoking, or discourage corporate malfeasance. Taxes can help keep inflation in check. Taxes are the ultimate form of federal control. No MMT proponent suggests doing away with taxes altogether.

CLAIM: MMT means no limit on military spending, and effectively guarantees a new global arms race.

RESPONSE: We already have no limit on military spending, plus an arms race. Your arguments are essentially, “If MMT was true, then this would happen,” followed by a list things that are already happening.

CLAIM: If a nation were to utilize MMT to replace taxation, the value of its currency would sink like a stone. Brexit has demonstrated how dependent the UK is on imports of food, medicines and industrial components. The value of the pound sets the cost of those imports.

RESPONSE: MMT proponents do not call for any “replacement” of taxation. Regarding the UK’s dependency on imports, we already know that. The UK has one of the biggest trade deficits in the world, and if UK pounds were not so widely negotiable, the UK would instantly be worse than Greece. None of this has anything to do with taxation in the UK.

CLAIM: If MMT was true, we would have hyper-inflation.

RESPONSE: You forgot to mention “Zimbabwe” and “Weimar Germany.” When there are shortages of basic staples (e.g. food) the prices of those staples rise. If shortages become severe, the government may choose to create more currency to keep pace with the rise in prices. If this process gets out of control, we have hyper-inflation. What shortages of basic staples (e.g. food) do you see in the UK?

Also, you bemoan the creation of money by government, while you ignore the real problem, which is the creation of PRIVATE DEBT by banks. Of course, lying to your readers is your whole point. Right?

CLAIM: MMT removes all discipline in the economy – from individuals, corporations and politicians, which would impact negatively on inflation, the environment and the supply of labor. An economic bubble would inflate – and this would be the bubble not just to end all bubbles but to end all civilization when it crashed.

RESPONSE: That’s the hyperinflation bogeyman again. See above.