Bill Mitchell – My podcast with Alan Kohler

Modern Monetary Theory (MMT) has been gaining more attention in Australia in recent weeks. I have been shifting my face-to-face speaking commitments slowly to on-line presentations. I will be announcing more systematic MMTed classes beginning via the Internet soon. And I will do some Live Youtube presentations as well. Last week, the well-known financial market journalist Alan Kohler used his weekly column in The Australian newspaper to discuss MMT – It’s Modern Monetary Theory time as the state steps in (March 23, 2020 – subscription required). Apart from his private corporate work in the financial markets (he writes a regular briefing and does an inflight business report for Qantas), Alan presents the finance report on the national broadcaster ABC nightly news program. He is also a regular columnist in the business pages. So he has high profile. I discussed my concerns with Alan’s representation of MMT in this blog post – It’s Modern Monetary Theory time! No, it always has been! (March 23, 2020). We made contact soon after that – I E-mailed him to tell him I had written a response to his column and he rang me and we arranged to talk further. On Wednesday last week (March 25, 2020), we spoke as part of Alan’s regular podcast – published at Eureka Report (which is a subscription business service). The 48-odd minute is also published here with some additional commentary.  

Alan Kohler is an MMT critic. Here is the essence of his objection.

In his article, Alan wrote that we do not want the RBA purchasing Treasury debt directly.
Why?:

we don’t want to do that ­because we don’t trust politicians. They need to be handcuffed by the idea that all spending must be funded by taxes or debt. Otherwise where would we be? In the land of the Magic Pudding, that’s where.But that is a fabrication ­designed to prevent politicians using unlimited cash to buy votes and entrench themselves in power.The interesting question now is whether that fabrication will survive the virus or become one of its casualties.

Bill demolishes this objection, which is one of the standard ones, along with "hyperinflation," "bond vigilantes," Weimar, "Zimbabwe" and "Venezuela."

Elites prefer austerity because they view it as deflationary and deflation favors savers. Conversely, they view social welfare spending and public investment as inflationary unless it benefits them primarily. While Bill primarily attacks this as ideological bias, it is also reflective of self-interest and class-interest by the wealthy and power. There is a reason behind the veil of ideology, neoliberalism, and economic liberalism in general. The combination of self-interest and class-interest.

As a result there is a contradiction between political liberalism expressed as government of the people, for the people and by the people, the economic correlate of which is some form of socialism, and economic liberalism, which is based on capitalism and "the sanctity of private property" as determined by courts whose judges are selected from and by the elite class.

Bill hints at this but does not explore it in this post.

Bill Mitchell – billy blog

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