Bill Mitchell — Planning public works – history has a lot to say if we listen properly

A few weeks ago, in my three part series answering questions about Modern Monetary Theory (MMT), I addressed the issue often raised about the fiscal policy emphasis in MMT, that it is difficult to time government spending injections to match the cyclical need. These criticisms go back a long way and were used by the likes of Milton Friedman to build up his case against discretionary fiscal activism in favour of monetary rules. Of course, that was an ideological preference, given the Monetarists wanted ‘small’ government and technocrats implementing economic policy. The basic precepts of Monetarism have not stood the test of time and the GFC and its aftermath have showed, beyond doubt, that monetary policy is an ineffective means of stimulating aggregate spending and that fiscal policy is the best way to counter non-government spending collapses. In those blogs, I outlined several ways in which fiscal policy could overcome ‘timing’ issues and deliver prompt stimulus when needed and be able to contract the stimulus in a timely manner once non-government confidence and spending had recovered. The points I raised are not new and have been discussed and made operational many times in the past. A tweet from my MMT colleague Stephanie Kelton last week reminded us of this again when the US National Resources Planning Board (NPP) was mentioned with a link to the The Internet Archive is a “non-profit library of millions of free books, movies, software, music, websites, and more” and is a fabulous resource for researchers. Reading the Report from the NPP is like music to the ears! History has a lot to say if we listen properly

It's ironic that China is doing this kind of national planning that the US used to do, while present US policy is to funnel money to the top.

Bill Mitchell – billy blog

Planning public works – history has a lot to say if we listen properly

Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

The Absolute Disdain For The Middle Class Is Infuriating

(Commentary posted by Roger Erickson)

Take the reporters from Bloomberg, PLEASE!!!

Japan Unveils Record 2014 Budget Draft as Debt Burden Mounts

First they tease you with some sanity.

"Prime Minister Shinzo Abe boosts spending on social security, defense and public works ... "

Sounds great! At least it's some momentum. Once some national fiat builds, it can be reshaped, tuned and redirected as needed. That's always a LOT easier than starting from nothing, and hoping to head in the right direction.

Yet then the bizarre, non-logic kicks in again. Based on twisted semantics. Right in the opening sentence. It's like they're embarrassed to leave a logical sentence untarnished by propaganda!

"... while trying to contain growth in the world's biggest debt burden."

?? Where did that come from? What the heck is going on?

After all this time; who's pushing this "fiat burden" myth THAT HARD? 

It's very much like watching an OCD patient, and trying hard not to stare & embarrass them. Except this nonsensical compulsion is masquerading as OUR national policy!

Is is just an embarrassing compulsion? Or is that obsession occurring by fiat too? 

Either way, this is no way to run national policy. Just stop the stupid behavior, and usher the character actors off stage, graciously, BUT FIRMLY, and ASAP. This is our country we're talking about. Not some psych ward or parlour game. These obsessions are killing citizens and destroying the USA.

Every year, it's more difficult to take these supposed policy obsessions seriously. At various public events, I keep hearing or meeting more & more older government workers (current or ex) in DC who knew all along that it was BS. Enough always knew that taxes are irrelevant to fiat, and that our simple goal with fiat currency is to avoid excessive inflation or deflation, while right-sizing the national fiat currency supply of a population growing in both numbers and economic tempo and complexity. This is not rocket science.

Meanwhile, an obsession with "balancing fiat" continues, and the absolute disdain for the Middle Class which that obsession requires is infuriating to the point of tears. Citizens do not treat citizens this way. It's inhuman, not mention mindlessly stupid. No one seems to know where the obsession originates. That can be discussed separately. The worst social illness is the vast numbers who willingly sell out and go along with the insanity ... for pay, for prestige, for guaranteed income, for perks, for a job, or ... worst of all, just for association with a class of faux-elegant toadies and outright Control Frauds.

WE ARE SENDING THE WRONG PEOPLE TO POLICY OFFICES!

And that, semi-Innocent Fraud runs throughout our electorate. If citizens in any country love their children, they have to stop the collective stupid and start coordinating some Group Intelligence.

As Bloomberg started with, the returns are AWESOME, even insanely great, and easy. Just stop there. Lets just get some awesome going, then keep tuning it to adaptive, not destructive use.

Cities forced to sell ads for chicken wings on public works!

The ongoing looting of public income and assets continues unabated. To survive, municipalities have been lowered to basically prostituting themselves: forced to reach for any means of producing income, whether that be through the sale of assets, heightened and expanded fines or other penalties and now even advertising on public works. That's right, cities are resorting to ad placement on such things as firetrucks, fire hydrants, manhole covers and whatever else they can find, in an effort to generate desperately needed revenue. Do you suddenly find yourself in the mood for spicy chicken wings? Well maybe that's because you just saw it advertised on a sewer grate.

In other words, instead of investing in the stuff that we really need like roads, bridges, tunnels, all kinds of infrastructure, 21st century public transportation, schools, research facilities--the things that comprise the real capital to support growth, prosperity and a high standard of living for the next generation or two--we force our economy deeper and deeper into this junk-consumption/rent-extracting mode, that will leave us short of the real assets we need to be a first world nation. But, hey, life will be wonderful for landfill operators!

And why do we do this lunacy? Because of an idiotic belief that we've "run out of money." NO more fiat. Can't push that button on the keyboard.

As the public sector is forced violently to shrink, what does the vaunted private sector create in its absence? Remember, we've been told that the problem was that government was too big, that the private sector was getting crowded out and if it were just left alone to work its magic, then there'd be jobs and a vibrant, efficient economy with prosperity for all. So this is the private sector answer: prisons, reality TV shows, plastic throway crap that pollutes the environment and turning everything into a billboard.

To be sure, the wealthy and big business are loving it. They can scoop up all the valuable public assets, which have been paid for 50 times over by you and me in the form of taxes, and then they can extract rents for their use. Mind you, we used to have these things for free or at minimal cost, but that's not how the efficient private sector works; it has to make profit.

Our kids, who no longer have first-rate educations because of school closures, teacher layoffs and budget cuts, can look forward to a future of menial work (that is, if they're lucky), perhaps waving palm frons over the rich as they relax leisurely while their bank accounts grow from the income earned on the assets that WE BUILT AND PAID FOR!

What a lovely system. All hail the private sector! All hail austerity!