Saturday, June 1, 2019

Randy Wray - MMP Blog 38: MMT for Austrians

I got this from Magpie's blog, which is by Randy Wray and is very good. It's old, from 2012, so you are probably all familiar with it, but I still thought it was worth posting.

Randy says how the free market equilibrium theory, the invisible hand, is a myth. Economists did manage to work out a formula for it after 80 years of trying, but it is based on everything being perfect, like being perfectly informed, eg, advertisements are completely honest, and there is no market manipulation. Some hope there.

What I found interesting is that if MMT is used to buy military equipment it would be inflationary, says Wray.

Can we “afford” full employment? Yes. Can we “afford” Social Security? Yes. Can we “afford” to put wine in all the drinking fountains? Yes.

The problem IS NOT, CANNOT BE about affordability. It is about resources.

Unemployment is easy: by definition, someone who is unemployed is available to hire. So government can put them to work. (See the next blog series for a plan.)

Social Security is a little more difficult: can we move enough resources to the aged (plus their dependents, and people with disabilities) so that they can enjoy a comfortable, American-style, life? On all reasonable projections of demographics and US ability to produce, the answer is yes. The projectionscould turn out to be wrong. But if they do, affordability still will not be the problem—it will be a resource problem.

New Economic Resources

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