Tcherneva, Sawicky and Kaboub on MMT and policy

Pavlina Tcherneva:

There is nothing more crippling to a bold policy agenda than the myth that the government can run out of money. This myth is behind every But how will you pay for it? objection to proposals such as a Green New Deal and Medicare for All. New House Majority Leader Nancy Pelosi (D-Calif.) has even proposed instituting self-defeating PAYGO (pay as you go) rules, which would require all new government spending to be matched with increased revenue, wrongly prioritizing the balancing of the budget over the well-being of the public.

Dispelling this myth is at the heart of an economic approach that is rapidly gaining a global following, known as modern monetary theory (MMT). MMT stresses that, in the modern world, where government-backed currencies are no longer backed by gold or other commodities, federal governments can’t run out of financial resources. Unlike states and municipalities (which have hard constraints on spending), for the federal government, all funding shortages are artificially created. Understanding this changes everything—from the economic possibilities before us to what the public can demand from our government.

In These Times

PAYGO Is Based on a Fallacy
Pavlina R. Tcherneva | program director and associate professor of economics at Bard College and research associate at the Levy Economics Institute

Max Sawicky:

Pavlina asserts that an ideology of fiscal rectitude, embodied in the How will we pay for it? mantra, places impossible barriers before progressive public spending initiatives. For a number of reasons, however, this isn’t quite right.… 

There are a bunch of ways to justify additional public spending without recourse to MMT....

In These Times
The Best Way To Argue Against PAYGO
Max B. Sawicky | independent economist and writer based in Virginia, formerly at the Economic Policy Institute in Washington, D.C.

 Fadhel Kaboub:

The rising popularity of modern monetary theory (MMT) has inevitably brought misconceptions. Critics across the political spectrum often claim that MMTers want sovereign governments to “just print money” with no concern for the national debt or, as Max B. Sawicky suggests, inflation. Some, especially on the Right, point to Venezuela and Zimbabwe as classic cases of hyperinflation.

But MMT points to a different primary cause of inflation in developing countries: not domestic spending, but foreign debt and a resulting lack of “monetary sovereignty.”...

In These Times

Why Government Spending Can’t Turn the U.S. Into Venezuela—When poor countries fall prey to inflation, it’s not because they’re “too socialist.”
Fadhel Kaboub | associate professor of economics at Denison University, and president of the Global Institute for Sustainable Prosperity

John Carney — The Problem with the ‘Job Guarantee’ Is Not That It’s Too Expensive. It’s That the Left Hates Us

John Carney makes interesting points pro and con. Most of the cons are about politicization of the program since the JG as it is being presented and supported is clearly a Democratic program and "leftist" idea. He points out that this needn't be so. A value-neutral JG program can also be designed to appeal cross the political spectrum. JG supporters should listen to this.

A JG is really a populist program that favors people, and firms will oppose it. For, as Carney points out, employers depend on disciplining labor power to control the wage bill.

Breitbart News
Carney: The Problem with the ‘Job Guarantee’ Is Not That It’s Too Expensive. It’s That the Left Hates Us
John Carney

See also

It's complicated....

More pertinent questions.

None of this means we should reject a job guarantee out of hand.

Daily Beast — Opinion
Dems’ Job Guarantee Isn’t Nearly as Easy as It Sounds

Dean Baker | Co-director of the Center for Economic and Policy Research in Washington, D.C

Dylan Matthews — What America would look like if it guaranteed everyone a job

Imagine if a well-paying job, with benefits and a high enough salary to pay for rent, transportation, and food, were a human right.

Imagine the US federal government established a policy whereby anyone who didn’t have a job and wanted one could go into a local office for a government agency — call it the Works Progress Administration — and walk out with a regular government position paying a livable wage ($15 an hour, perhaps) and offering health, dental, and vision insurance, and retirement benefits, and child care for their kids.

Different people would do different things: teaching or working for after-school programs or providing child care or building roads and mass transit or driving buses and so on. But everyone would be guaranteed a job, including during recessions. Involuntary unemployment would be a thing of the past. No one who works would be in poverty.

That’s a truly radical policy idea. But it has deep roots in the Democratic Party’s past, from the New Deal’s emergency employment programs to the Humphrey-Hawkins Act, a 1970s proposal that, as originally written, would have given unemployed Americans the right to sue the government.

Today, there are even some actual proposals on the table. In May, the Center for American Progress issued a report calling for a "large-scale, permanent program of public employment and infrastructure investment."…

Only a brief mention of MMT by way of Pavlina Tcherneva.

Still another outline from economist Pavlina Tcherneva, a professor at Bard College and its Levy Economics Institute, would also provide a guarantee, and allocate enrollees across nonprofit organizations rather than having the federal government provide jobs directly.

Then the kicker:

While Tcherneva doesn’t go into this, such a plan would almost certainly amount to a massive subsidy to religious organizations, given how dominated the US nonprofit sector is by local religious groups and charities.

This is a sure-fire way to get the right on board.

Summary: Only a brief mention of Pavlina and no mention of the extensive MMT contribution to the job guarantee literature, but kudos to Dylan for putting the idea on the table.

VOX
What America would look like if it guaranteed everyone a job
Dylan Matthews

Michael Stephens — “Stimulus” Isn’t the Best Reason to Support (or Oppose) Infrastructure Spending

Pavlina Tcherneva on Bloomberg with Joe Weisenthal.

Multiplier Effect
“Stimulus” Isn’t the Best Reason to Support (or Oppose) Infrastructure Spending

Michael Stephens

Ned Resnikoff — Bernie Sanders, mulling presidential run, adopts novel stance on deficit

MMT-friendly. Focus on the real and not the financial.

Report of what Bernie Sanders said on Thursday in Iowa City. I was unable to attend, but here is a report.

Al Jazeera America
Bernie Sanders, mulling presidential run, adopts novel stance on deficit

Ned Resnikoff

Michael Stephens — Looking Beyond the Tax System To Fight Inequality

In the context of last Tuesday’s State of the Union, Pavlina Tcherneva was interviewed by Wall Street Journal Live‘s Sara Murray on the issue of the effectiveness of policies to combat widening income inequality.

MMT at the WSJ.

Multiplier Effect
Looking Beyond the Tax System To Fight Inequality
Michael Stephens

Michael Stephens — Exclusive Growth

More on Pavlina.

Multiplier Effect
Exclusive Growth
Michael Stephens

Pavlina Tcherneva — Grasping at straws and more trickery from Forbes’ Scott Winship

Scott Winship may be picked the wrong fight.

New Economic Perspectives
Grasping at straws and more trickery from Forbes’ Scott Winship
Pavlina Tcherneva

Pavlina Tcherneva — A response to Forbes’ Scott Winship

After the chart went viral online and was featured in the New York Times, Slate, Vox, NPR, CNN, and multiple other outlets, Forbes’s Scott Winship posted, as far as I can tell, the only challenge to the graph. 

Winship goes through a series of adjustments using data from Piketty-Saez and the CBO to produce, in his words, a “very different” picture.

New Economic Perspectives

Growth and Inequality in the U.S.: when “shared prosperity” means shared by the very few
Pavlina Tcherneva

Edward Lambert — Pavlina Tcherneva rightly says it is better to support labor income in a recovery rather than the financial sector

The title of this post describes the main message of Pavlina Tcherneva’s research. This video is a “must see”.

Angry Bear
Pavlina Tcherneva rightly says it is better to support labor income in a recovery rather than the financial sector
Edward Lambert

Michael Stephens — Mission-Oriented Finance (Video)

The following clips are from the Mission-Oriented Finance for Innovation conference held in London, organized by Mariana Mazzucato as part of a research project with L. Randall Wray on “Financing Innovation.” 

L. Randall Wray, “Financing the Capital Development of the Economy: A Keynes-Schumpeter-Minsky Synthesis”

Pavlina Tcherneva, “Full Employment, Value Creation and the Public Purpose”

Multiplier Effect
Mission-Oriented Finance (Video)
Michael Stephens

Pavlina at Truthout

Pavlina's post contra Matt Yglesias on the MMT JG is reposted at Truthout.

Sixteen Reasons Matt Yglesias Is Wrong About the Job Guarantee vs. Basic Income by Pavlina R. Tcherneva, Ph.D., New Economic Perspectives | Op-Ed

Theory of Free National Currencies - MMT Round Table in Bulgaria [video]

Ryan Markov has posted a couple of excellent videos from the MMT Round Table that was held in Sofia, Bulgaria on 9 November 2013. The presenters were Warren Mosler, Pavlina Tcherneva and Ryan. The latter two spoke in Bulgarian. Warren spoke in English. The first video is of the main presentation. The part in English takes up the first 53 minutes or so. The second video is of answers to questions. The part in English comprises the first 25 minutes. The Round Table focused on fundamental aspects of sovereign currencies, the benefits of going off a currency board and the steps to take in doing so.

Heteconomist
Theory of Free National Currencies - MMT Round Table in Bulgaria
Posted by Peter Cooper

MMT Conference in Bulgaria organized by the Union of Economists in Bulgaria (UPB) , World Economy, Sofia and Bulgarian blog Bulgaria and MMT.

BULGARIA AND MODERN MONETARY THEORY (MMT)
MMT visit Sofia


[Google translate follows with slight editing]


Friends

I am pleased to officially announce the holding of scientific economic roundtable on "modern monetary theory: relevance and applicability in modern economic science", organized jointly by the Union of Economists in Bulgaria (UPB) , World Economy, Sofia and Bulgarian blog "Bulgaria and MMT. " Facebook event page is located here :

The round table will be held at the following preliminary program:

1. Welcome all the participants in the forum by Prof. Stati Stattev rector of World Economy and Professor Elka Todorova, Chairman of the SIB.

2. Introductory discussion 10:00 to 12:00 hours, moderator Professor K. Petkov.

3. Introductory presentations Warren Mosler, Prof. Pavlina Tcherneva, Raycho Markov working in the U.S., travel to Sofia for the special event.

4. Discussants: Prof. Dr. Mileti Mladenov World Economy, Gergana Yordanova expert BNB and PhD. etc. Lyubomir Hristov - to be confirmed.

5. Coffee break from 12:00 to 12:20 hours.

6. For discussion, moderator of the World Economy.

7. Closing ceremony and a press statement.

We invite all who are interested to hear discussions to mark its presence on Facebook page. Due to some technical reasons, we still have no information about the capacity of the hall in the University, but I think it will become clear shortly after October 20.

Useful materials on modern monetary theory, will be posted on the event page . Thus discussants at the roundtable, and viewers will be able to get acquainted with them could have prepared questions and topics for discussion during the event.

Michael Stephens — Reorienting Fiscal Policy and Understanding Currency Sovereignty

From Mariana Mazzucato’s “Rethinking the State” video series:

Pavlina Tcherneva discusses the implications of the Great Financial Crisis of 2007 for employment outcomes and fiscal policy. She argues that the current view of Keynesian fiscal policies is based on a misreading of Keynes. Simply boosting demand — through what should be understood as trickle-down fiscal policy — is not sufficient to promote inclusive growth. Keynes originally called for a more targeted approach, including “on the spot employment,” as the means to achieve full employment and equitable and sustainable growth.
[See also her recent working paper on this theme.]

L. Randall Wray argues that rethinking the State requires rethinking the relationship between the State and its currency. His analysis starts with the observation that money is based on State power (“currency sovereignty”): it is an “IOU” from the State — a liability — implying that fiscal constraints are in fact artificially created. In this sense, the State cannot run out of money, as it creates and enforces its own IOUs. Governments could — and should — afford to invest more in innovation and technology development to promote the capital development of the economy.

Multiplier Effect
Reorienting Fiscal Policy and Understanding Currency Sovereignty
Michael Stephens

P. R. Tcherneva and P. T. Harvey — Guaranteed Income Or Employment: Economic Rights

This seminar focuses on the social, political and economic justifications for securing a legal right to meaningful work and basic material wellbeing, as well as historical examples of direct public employment programs from various nations including the United States, Argentina and India. Questions to be addressed include:

Should individuals have a legal right to work and/or basic material wellbeing?

Can we afford a job or income guarantee?

What would a job or income guarantee look like?

What can we learn from direct employment programs from the past and abroad?

The Modern Money Network
8. GUARANTEED INCOME OR EMPLOYMENT: 
ECONOMIC RIGHTS
Pavlina R. Tcherneva, Assistant Professor of Economics at Bard College and a Research Scholar at the Levy Economics Institute; Philip T. Harvey, Professor of Law and Economics at Rutgers School of Law-Camden and Gertrude Schaffner Goldberg (moderator), Professor of Social Policy, Adelphi University of Social Work

Pavlina R. Tcherneva on MMT

This post is primarily addressed to the MMT community and whoever considers himself/herself a follower of Modern Monetary Theory.  It deals with the question of what is in the purview of MMT.

Read it at New Economic Perspectives

What’s MMT About Anyway and is the Job Guarantee Crucial to the Project?
by Pavlina R. Tcherneva

Pavlina concludes, "And when we illuminate policy choices, we MMTers inevitably make a choice between one policy prescription over another."

I am not sure this is totally correct with the JG, which is part and parcel of MMT as a macro theory as I understand what the the developers (Moser, Wray, and Mitchell) have said. I would put it this way instead.

All policy options are optional politically, but economics may indicate the relative degree of optimality. It is always possible to choose a less optimal option for political reasons, but one should be clear that there is a tradeoff economically that bears an extra cost.

The JG is optional as a policy option, but then the one choosing it has departed from the MMT claim that full employment along with price stability is achievable through application of MMT. Without an alterative to the buffer stock of employed, one is choosing a buffer stock of unemployed and all the inefficiency, hence waste, that comes along. This should be clearly accepted unless the MMT claim that the JG along with the rest of MMT is capable of resulting in full employment with price stability can be disproved, or a substitute for the JG can be found.

Where MMT economists speak for themselves as citizens in policy choices is in how fiscal policy is to be applied. For example, some MMT economists, e.g, Warren Mosler, generally favor increasing the deficit by lowering taxes, whereas others, notably Bill Mitchell, favor increasing government expenditures. Those are policy choices generally independent of MMT as a macro theory specifying the size of the government balance needed relative to the non-government balance iaw the sectoral balance approach.

How functional finance is applied may be optional in many cases, since efficiency and effectives are not affected by the choice, so that no economic decision criteria are available. However, it an economic argument can be made the policy choice is not completely optional unless one is willing to settle for a less than optimal economic choice for political reasons.