Bringing science into economics must necessarily entail measurements in the scientific units. Ikonoclast

...Bringing science into economics must necessarily entail measurements in the scientific units above (plus the utilization of taxonomic schemes for biota). Thus if we assess by scientific studies and measurements that we are causing the 6th mass extinction and forcing dangerous climate change by releasing CO2 from our fossil fuels, then we have assessed that we should stop using fossil fuels. How we stop is the next matter for consideration and then we must examine energy transitions, energy saving and consumption curtailment, all in scientific and technological feasibility terms. Only real resource considerations are meaningful. Money considerations are completely meaningless. This is if we are being entirely logical and scientific.

MMT begins with availability of real resources. 

I have been arguing that the challenge presented by climate change is not so much economic issue as a matter of science and engineering. First the design problem has to be delineated based on scientific research involving measurement that conform to best practice in science. Then, a design solution, or alternatives with tradeoffs, must be proposed in engineering terms. Some of those tradeoffs may involve nominal cost, but in design problems that are regarded as existential challenges, like war, nominal cost is mostly irrelevant to purpose. 

Real-World Economics Review Blog
Bringing science into economics must necessarily entail measurements in the scientific units.
Ikonoclast

John T. Harvey — But Can The Government Afford It?

We’ve been hearing that a lot lately, being asked about things like the proposed US-Mexico border wall, the possibility of universal health care, and even regarding existing programs like Social Security. It’s a relevant question, to be sure, but 99 times out of 100 (or maybe 999 out of 1000), the context in which it is placed is completely wrong.
I say this because the question is almost always asked regarding whether or not we have enough money. If there is one place where the economics discipline has most substantially let down the general public, it’s in explaining how the financial sector works.

Long story short: money is not a scarce resource. Labor is, oil is, clean water is. Money is not.

Money can be and is created with a keystroke, just as easily as I am typing these words. This is true in both the public and private sectors....

Forbes — Pragmatic Economics

But Can The Government Afford It?
John T. Harvey | Professor of Economics, Texas Christian University

Bill Mitchell — Massive Eurozone infrastructure deficit requires urgent redress

The latest – EIB Investment Report 2017/2018 – published last week by the European Investment Bank tells anyone who cares to take those Europhile Rose Coloured Glasses off for just a second how deep the failure of the European policy making structures are and how long the negative impacts of those failures will resonate. This is the true ‘burden for our (their) grand kids’ sort of stuff. In claiming they had to run tight fiscal policy biased towards surpluses to avoid forcing the future generations to carry an unfair burden, these European policy makers and leaders have done exactly the opposite, as predicted – they have created an appalling future for their youth and their children to follow. The whole European monetary experiment is a failure and is beyond reform. It needs to be scrapped, national sovereignty restored and people within their own countries left, through democratic institutions to determine how the public sector operates in their best interests. The Troika technocrats should be led out to pasture. And, to the Europhile Left: take of your rose coloured glasses.

The actual issue is the availability of real resources in the present and for the future, access to which determines a society's standard of living.

The investment ratio is the proportion of Gross Domestic Product accounted for by Gross Capital Formation and indicates how much of the current production each nation is allocating to expanding productive infrastructure.

Potential GDP and hence longer-term growth is driven by capital formation. A nation that is not investing in its future productive capacity will see declining productivity growth, falling standards of living and leave its grandchildren materially deprived....

Bill Mitchell – billy blog
Massive Eurozone infrastructure deficit requires urgent redress
Bill Mitchell | Professor in Economics, University of Newcastle, New South Wales, and Director of the Centre of Full Employment and Equity (CofFEE)

Peter Cooper — If it’s Doable, it’s Affordable

Modern Monetary Theory (MMT) continues to make inroads into the mainstream discourse with the appearance of an article by Youssef El-Gingihy in The Independent Online. The article features MMT in connection with the new book by Bill Mitchell and Thomas Fazi, Reclaiming the State. At its recent rate of dissemination, MMT may transition from heterodox to mainstream ahead of expectations.

Although the finer points of MMT can get quite involved, the most basic takeaway is very simple. For societies with currency-issuing governments:
If something can be done, it is “affordable”.

If we have access to the raw materials, the labor power, the skills, the equipment and the facilities needed to produce something, then we can afford to produce it. The cost of doing so is not financial. The cost is a real cost: the exertion of human effort and know-how, the wear and tear on facilities and equipment, and the depletion of natural resources.

On one level, it is bizarre that this basic takeaway of MMT is not already mainstream. If the idea is heterodox, it is only because we are currently living in a very topsy-turvy world, in which up is presented to us as down, black as white, with everything reversed. In reality, it should be much harder to believe the opposite: that what we are capable of is impossible.

heteconomist

If it’s Doable, it’s Affordable

Peter Cooper

Bill Mitchell — Ultimately, real resource availability constrains prosperity

There are many misconceptions about what a government who understands the capacity it has as the currency-issuer can do. As Modern Monetary Theory (MMT) becomes more visible in the public arena, it is evident that people still do not fully grasp the constraints facing such a government. At the more popularist end of the MMT blogosphere you will read statements such that if only the government understood that it can run fiscal deficits with impunity then all would be well in the world. In this blog I want to set a few of those misconceptions straight. The discussion follows is a continuation of my recent examination of external constraints on governments who seek to maintain full employment. It specifically focuses on less-developed countries and the options are currency issuing government might face in such a nation, where essentials like food and energy have to be imported. While there are some general statements that can be made with respect to MMT that apply to any nation where the government issues its own currency, floats its exchange rate, and does not incur foreign currency-denominated debt, we also have to acknowledge special cases that need special policy attention. In the latter case, the specific problems facing a nation cannot be easily overcome with the increasing fiscal deficits. That is not to say that these governments should fall prey to the IMF austerity line. In all likelihood they will still have to run fiscal deficits but that will not be enough to sustain the population. We are about to consider the bottom line here – the real resource constraint. I have written about this before but the message still seems to get lost.…

Bill is on a roll.

Bill Mitchell – billy blog
Ultimately, real resource availability constrains prosperity
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

J.D. Alt — A Fallacy of Composition

The central point of MMT with respect to economic policy.

It is nonsensical to imagine that the number of Dollars available is what determines what people can accomplish. Instead it is what people can accomplish that determines how many Dollars exist. This is the essential dynamic of Modern Money systems. Modern Money is the unique socialinvention that enables nations of people—so long as the real resources and citizen’s labor are available̶—to collectively build national goods and services. It has nothing whatsoever to do with the amount of capital the individuals of the society possess at any given point in time (in spite of what Thomas Pikkety tells us.) It has everything to do with what people collectively decide needs to be done, and what real resources are actually available to do it with.

How can this possibly be? How, operationally, can the potential accomplishments of people determine how many Dollars are available to pay them to actually implement those accomplishments? In a nutshell, the answer has four parts: 

1. The people decide to form a nation and become its citizens, agreeing to abide by the rules they, the citizens, collectively impose on themselves as a nation.
2. The nation (the collective form of the citizens) establishes a Central Bank and a Treasury—and then simultaneously does two things: (a) it issues a national currency (money created by fiat, or “fiat money”) and (b) it imposes a tax on the citizens which can ONLY be paid with the national currency.
3. Having agreed to abide by the rules (which now include paying taxes) the citizens become willing to provide the nation (the collective form of the citizens themselves) with goods and services in exchange for the fiat money they need in order to pay their taxes. Subsequently, the citizens use that same fiat money as the means of measuring the value of goods and services produced and exchanged privately amongst themselves as well—(i.e. the fiat money becomes the unit of exchange in the nation’s private economy.)
4. The nation’s Central Bank and Treasury now have the task of continuing to issue the national currency—and collecting it back in taxes—in quantities as needed to match the actual potential and need the citizens have for producing goods and services. If the citizens have an actual need and potential for production for which there is not enough currency, the Central Bank and Treasury will simply issue and spend the required currency into existence by purchasing the goods and services, or otherwise causing them to be purchased. If the citizens have too much currency relative to what they are actually capable of producing (rising prices) the Treasury will increase the currency it collects back in taxes, re-establishing the balance.

 Shout it from the rooftops.

New Economic Perspectives
A Fallacy of Composition
J.D. Alt

Clean Technica — Amount Of Raw Materials Needed To Sustain Economies Of Developed World Is Significantly Underestimated, Research Finds

Amount Of Raw Materials Needed To Sustain Economies Of Developed World Is Significantly Underestimated, Research Finds (via Clean Technica)

The true raw material footprint of the world’s leading economies has been revealed thanks to new research — and the findings don’t bode well, the amount of raw materials necessary to sustain the economies of the developed world is considerably…

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