Buried deep inside the most recent major Pew Research poll that showed we were winning the political shutdown messaging fight, there was a sinister reminder just how lost the cause of progressive economic policies has become. The result is no surprise to this observer or anybody that understands Modern Monetary Theory and therefore the operational reality of our modern monetary system. Here is the relevant part:
When it comes to the key issue of dealing with the economy, slightly more say the Republican Party (44%) than the Democratic Party (37%) could do the better job. Independents favor the GOP on the economy by a 46%-30% margin....
The Pew poll finds that the majority of voters are very concerned with the "rising" deficit and "crushing" debt.
This is wholly due to the Republican messaging machine constantly railing against the evil of deficits. And because Democrats have continued to agree with Republicans publicly that the Federal Govt's budget is the same as a household budget, why shouldn't the public at large believe deficits are bad and dangerous? If you think deficits are bad, and one party makes cutting the deficit its primary publicly stated goal (especially during Democratic times of Govt control), and the other party agrees that deficits are bad but that sometimes they are good, then its perfectly rational for the public to view Republicans as more responsible on the subject.It's the framing and messaging and no matter that it's a Big Lie. The GOP is winning on this, and by and large even progressives agree with the framing if the whole message. They just want to tweak the message a bit to save what they can of the New Deal.
MMT to the rescue. Can the cavalry get there in time to prevent the massacre?
This is why MMT is the only hope for progressive economics long term. Once people understand the nature of our monetary system, they begin to realize that not only are deficits good, they are absolutely necessary to the growth and stability of the nation. There are only two ways to grow the supply of money that is necessary to keep up with productivity and population growth, one is with private debt; where banks create deposits (money) in exchange for a promissory debt note or the Govt deficit (no corresponding private liability).The mistake lies in thinking that public debt involves a private liability as future taxes to "pay it off." MMT explains how this is a mistake that arises from confusing government finance with household and firm finance, i.e., conflating the currency issuer with currency users.
Daily Kos — Money and Public Purpose
MMT Blog: Proof The Dems Have Lost The Economic Message War And MMT Is The Only Viable Solution
Auburn Parks
"The mistake lies in thinking that public debt involves a private liability as future taxes to "pay it off." MMT explains how this is a mistake that arises from confusing government finance with household and firm finance, i.e., conflating the currency issuer with currency users."
ReplyDeleteTom, you failed to run this by Nick Rowe and Scott Sumner before posting it. What were you thinking?
What world is this person living in Tom?
ReplyDeletehttp://thehill.com/blogs/on-the-money/budget/329861-poll-voters-warm-to-entitlement-changes-as-part-of-broad-debt-plan
"The poll of 800 likely voters found that there was strong initial resistance to the idea of changing entitlement programs on their own, but that voters could come around the idea if the changes were made in a certain context."
Earth to Auburn: Our current Democrat President says "we are out of money" ALL THE TIME....
Unless Auburn thinks President Obama is a Republican?!?!?!
THE HIGHEST RANKING DEMOCRAT ELECTED OFFICIAL in the country thinks and says "we're out of money" ALL THE TIME and somehow this is a big Republican generated problem??!?!!?
Keep dreaming!
How can this person assert that "Democrats have lost the war" when the highest ranking Democrat elected official in the land is taking a position OPPOSITE what this person asserts the Democrats are fighting for?!?!!??!
ReplyDeleteHere is President Obama LAST WEEK:
"In a White House statement Thursday, President Obama made clear that he would push for new cuts in social programs, leading to major attacks on the core programs for retirees dating from the New Deal and the Great Society—Social Security and Medicare. “The key now is a budget that cuts out the things that we don’t need,” he said, adding, “The challenges we have right now are not short-term deficits; it’s the long-term obligations around things like Medicare and Social Security.”
Obama boasted of having already carried out massive cuts in social spending, saying, “This shouldn’t be as difficult as it’s been in past years because we already spend less than we did a few years ago. Our deficits are half of what they were a few years ago.”
http://www.globalresearch.ca/economic-repression-obama-democrats-offer-deeper-social-cuts-in-new-budget-talks/5354834
?????????
Umm Matt, you obviously didn't read the post. You are saying the exact same things that I said. Namely, that Dems have no moral or intellectual authority to help the economy by expanding net spending since they have accepted the Republican paradigm that "deficits are bad" as a policy view. If progressive economic policy is to ever be implemented, it must be done through a MMT paradigm. I'm not sure what your laying into me for. Clearly, we believe the exact same thing.
ReplyDeleteAuburn,
ReplyDeleteHow can you assert this:
"This is wholly due to the Republican messaging machine constantly railing against the evil of deficits. "
?????
President Obama believes the Republicans? This is why he says "we're out of money?"
C'mon...
There is no 'message war' other than each party is warring to see who can impose the most austerity....
Now I see where the confusion is. If you didn't read the whole post and are only getting what Tom added here, then you are missing the context of that statement. It went like this:
ReplyDelete"Regardless of the historical fact that every Democratic President since JFK has presided over a shrinking annual average deficit during their time in office, and every Republican President (except for Nixon) has presided over annual average increases in the deficit, the American public still thinks of Republicans as deficit cutters and Democrats as tax and spenders.
This is wholly due to the Republican messaging machine constantly railing against the evil of deficits."
That sentence is in reference to the fact that Americans believe Cons are better on the deficit, and since Americans believe the deficit is bad for the economy and country, this plays a large role in why Americans view Republicans as at least equals in their ability to manage the economy.
And no, I would never ever say Obama is a progressive. You have to keep in mind what site this entry was posted at, Daily Kos. Which is part of the progressive wing of the Dem party. I've chosen to focus my personal time and energy trying to get progressives to understand and use MMT. And since republicans are hopeless, IMHO, when it comes to accepting out of paradigm thinking, by default we are left working with Dems. Its a lesser of two evils type of thing
Certainly GOP messaging since President Reagan has been that government is the problem and not the solution, which is a statement of the long standing GOP small government platform that appeals to those who oppose a strong central government (Jeffersonians rather than Hamiltonians) and business in general, which doesn't like either taxation or regulation.
ReplyDeleteHowever, since Dick Morris convinced Bill Clinton to "triangulate" to co-opt the GOP message, the Democratic Party has been moving in that direction, too. VP Al Gore was given the mission to shrink government and improve efficiency, and the Clinton surpluses became fodder for the Democratic messaging to the effect that Democrats are really more serious about fiscal discipline than the GOP has been, which the numbers show taking the surplus in the Clinton years into account and the declining deficits under Obama.
As a result the framing has become which party is more serious about fiscal discipline and responsibility and which is more actively concerned with fiscal sustainability.
However, I think that there is little doubt that this was initially a GOP message than the Democrats adopted subsequently because it had been successful.
The problem is that it seem intuitively correct for the naive common sense point of view in terms of the analogy of government finance being essentially the same as household and firm finance. It also plays into the universal preference for low taxes along with the mistaken perception that government must fund itself with revenue just like other currency users, and government revenue is chiefly taxes.
Whatever, we are now stuck in that framing and until it is overcome, the US is going to be in austerity mode excepting spending that is fear-driven, fear being a more powerful motivator than greed, and, of course, that means military spending and spending on domestic security.
This means that the US is more dependent on private borrowing or exports for economic expansion and innovation that increases productivity, both of which are needed for a rising standard of living.
But private debt is the real problem in fiscal sustainability. Without sufficient government contribution, inequality increases, standard of living lags, and the economy lurches cyclically with the credit expansion and contraction since private debt is limited by the ability to service it from incomes.
Until the framing shifts, there is no way out of the present morass other than to expand military spending and ramp up domestic security to expand the government contribution. Which is just fine with the GOP, and it's where they want to be. Democrats?