Sunday, June 9, 2019

Dylan Matthews - Modern Monetary Theory, explained

A very detailed walkthrough of the big new left economic idea.

An excellent article on MMT by Dylan Mathews although doesn't think MMT will ever be fully implemented as some of its proposals are very radical. Well, we've got this far so let's see. 

Dylan Mathews says how the Republicans will deficit spend to give tax cuts to the rich and to spend on the military blowing the budget, and then the Democrats get in and always balance the budget again. This means that when the Republicans eventually get back in they can start the whole cycle over again giving money away to their class, but MMT shows that the budget doesn't have to be balanced and so the Democrats can refuse to play ball messing up the Republicans game. 

When the economy slows the job guarantee can give people a job, but as the market picks up employers can hire people from the job guarantee program who will be on a minimum wage of $15 an hour and this would counter wage rise inflation. 

This is outside the MMT remit, but could this be a start to a modern society where we are not slaves to our work, and where wouldn't lose our homes, healthcare, our children's schooling, if we gave up work for a while. We could go to university, or retrain, or just have much needed rest and recuperate? Capitalists love the discipline of the market to enslave their workers and drive them into the ground like cattle. 

I saw a brand new van today with a company logo on it with three pet services advertised on the side, one of which was dog walking. It's said to be a good thriving business around here, and I saw a woman the other day being dragged about with about 5 dogs on leashes. Are people so overloaded now that they don't have time to walk their dogs anymore?

Here's a snippet of this very informative article. 

Game theorists have known for decades that one of the best ways to generate cooperative behavior in a prisoner’s dilemma-type game is a tit-for-tat strategy: If your opponent cooperated last time, you cooperate, and if they defected last time, you defect.
Democrats have effectively been offering to cooperate and pay for all their budget proposals, or even entertain (as under Obama) and enact (as under Clinton) big bipartisan balanced budget deals — even as Republicans repeatedly defect and show no interest in paying for anything. The rational move in such a game is to start defecting yourself, and declare that you’re not going to pay for anything either.
So even if you want to generate balanced budgets in the future, Democratic deficit spending might be a way to get Republicans more on board with that going forward. And MMT just strengthens Democrats’ bargaining position in this regard, as it lets them send a credible signal that they don’t even think it’s a good idea to pay for everything.


Andrew Anderson said...

This is outside the MMT remit, but could this be a start to a modern society where we are not slaves to our work, and where wouldn't lose our homes, healthcare, our children's schooling, if we gave up work for a while. kv

Why do you conflate having a job with work? Before they were stolen by the banks, family farms, businesses and the commons allowed people to work for themselves and not for others via "jobs."

And with ethical finance, we could still have had automation and economies of scale but without cheating anyone.

Calgacus said...

Why do you conflate having a job with work?

Because not "conflating" it is crazy and ahistorical; they are near synonyms always and especially in the modern world. Family farms (except the most poverty stricken subsistence farming) and businesses (always) were "working for others" in part and often mostly. If you want to buy stuff or services with money, you had to sell stuff or services for money. That's "working for others" - or "working with others". "Jobs" were always there, long preceding modern banking. The problem is that the state often is corrupt or insane and refuses to give money to some people for their stuff, favoring others. Not being corrupt and insane this way = Job Guarantee.

Your opposition to the job guarantee and this silly complaint about job / work shows you don't understand ethical finance and Christian ethics or accounting, common sense and logic. As Jesus said, ethical finance requires a job guarantee. Jesus was right. On this, you are wrong.

The big bad banks and all their big badnesses are a big fat nothingburger compared to this titanic wrong.

André said...

Again, people cannot "implement" MMT because they already leave in a MMT world for decades. What they could "implement" are some of the policy proposals made by many MMTers, like the Job Guarantee.

Ps: is Matt Franko making posts closed for comments? Why? That was the first time I saw it here in Mike Norman economics...

S400 said...

Matt Franko has closed comments. He can only handle one way communication so it’s in line with that.

Greg said...

He doesn’t want comments because that is part of the “dialectic” method......which he has proven to be insufficient for dealing with the problems of today......which include improper uses of speech figures...... and the reification of concepts perfectly understood by those with STEM backgrounds... you know the non artist non morons.