Utopia for Realists
May 9, 2017 10:21 PM Subscribe
The Rock-Star Appeal of Modern Monetary Theory - "Their foundational point [is] that fiat currency is a social construct, and that there are therefore no fiscal limits on how much a sovereign currency-issuing nation can spend... once we change the way we think about money, we can provide for everyone: We don't have to 'find' the money to 'pay' for universal health care by 'cutting' the budget elsewhere. In fact, our government already works that way: Spending must precede taxation, or there would be no dollars in the economy to tax. It's the political will to spend on certain things, not the money to afford it, that's lacking."
Conventional wisdom holds that the government taxes individuals and companies in order to fund its own spending. But the government—which is ultimately the source of all dollars, taxed or untaxed—pays or spends first and taxes later. When it funds programs, it literally spends money into existence, injecting cash into the economy. Taxes exist in order to control inflation by reducing the money supply, and to ensure that dollars, as the only currency accepted for tax payments, remain in demand.Free Lunch for Everyone - "Bregman's basic ideas are pretty simple. He thinks (and many scientists agree with him) that if you give people a basic income with no strings attached, they will make better decisions, work more, cost the state less in the areas of things like health care and incarceration, and be happier and feel less humiliated, scared, and insecure... He also argues pretty forcefully that working longer hours makes us less productive and also more unhappy... More relaxing, less working and consuming – that's where we should be looking. So he proposes a 15-hour work week... what's so interesting about modern America is our hostility to the mere idea of trying to create an easier and happier life."
It follows that currency-issuing governments could (and, depending on how you lean politically, should) spend as much as they need to in order to guarantee full employment and other social goods. MMT’s adherents like to point out that the federal government never “runs out” of money to fund the military, but routinely invokes budget constraints to justify defunding social programs. Money, in other words, isn’t a scarce commodity like silver or gold...
The decisions about how to issue, lend, and spend money come down to politics, values, and convention, whether the goal is reducing inequality or boosting entrepreneurship. Inflation, MMT’s proponents contend, can be controlled through taxation, and only becomes a problem at full employment—and we’re a long way off from that, particularly if we include people who have given up looking for jobs or aren’t working as much as they’d like to among the officially “unemployed.” The point is that, once you shake off notions of artificial scarcity, MMT’s possibilities are endless. The state can guarantee a job to anyone who wants one, lowering unemployment and competing with the private sector for workers, raising standards and wages across the board.
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