MMT – Job Guarantee and Employer of Last Resort – We’re back, You Moneterist!!
I bought the MMT book by L Randell Wray, and have read it. Some of it I understood, but not all. However, our current NeoLiberal leaders from the Uniparty mostly all believe the same Economic Theory, Monetarism (Except the Gold Bugs, who harken back to the days when we drug our knuckles on the ground.)
Being a disbelieving person I set about recreating what I perceive as the major figure in the Book, Figure 1.3 on page 29, The Accounting Identity in Chart form. This figure in the book is somewhat difficult to read, as it has small bars, and is rendered in various shades of gray, not color (nor is it black and white). It is difficult to reproduce as Prof Wray does not appear to provide sources for the data, so I had to use Mr Google.
The chart is more or less is the same as figure 1.3 in Prof Wray’s MMT Book. It shows the green deficit in private sector balance that began the trend under Bush I, and continued under Clinton, as the defect faeries played their games. In addition, after Clinton pushed NAFTA, and blessed China’s entry in to the WTO, the blue trade deficit was increasing as the Mercantile Policies of China were allowed to asset strip the private sector in the US. Nice work by Clinton on the “general welfare” of the US.
Under Bush II there was a continuation of the private sector decline in balance for a huge loss in private sector wealth. As Wray states, this continual deficit for the private sector results in a debt collapse, because the private sector has limits on the wealth extracted, and the whole private sector collapses under a total “strategic default”.
Now I’m going to branch off from this start to review some history, and suggest a diagnosis.
Up until 1973 the world was kind-of-sort of run under Keynesian Economics (at least the part I lived in), with goals of Full employment and gradually increasing wealth. All this appears to have ended after the oil shock in 1973, and the subsequent stagflation, which was blamed on wage pull by Union membership. (As an aside the results of oil shock were clearly cost push, as with all the coming resource shocks as we reach peak oil, gas, water, iron, lithium, etc. Peak lies and bullshit appear to be well into the future, and not a near term threat).
Keynesian economics became discredited, because the emerging field of economics, Monetarism, blamed wage pull for the stagflation of the late ’70s, and the political climate changed such that Unions were seen as the cause of the problems, not a continued reaction to protect Union members from bad management, poor governance and energy cost push.
Then came the ’80s, and the political climate enabled the powers that be to (Reagan & Thatcher) crush the Unions, depriving the parties of the left of money, consequently the parties of the left went and sought money where it could be found, the City in London, and Corporations in the US. Thus Blair in the Uk and the DLC in the US were visited upon us from on high.
With only monetarism as the economic model (The NeoLoberal Economic Model), two party democracies, the US and the UK, evolved where the parties became, as Ralph Nader put so well, two heads of the same corporate party. What else could they be? They have but a single economic model and one set of funding. The remainder is all theater, an illusion of choice, because there is no choice in the Monetarist/Single source of funds system. In addition as is typical in conservative movements, lateral and creative thinking is eradicated, those children become the black sheep of the family (Remember, in conservative families children are to be seen and not heard).
Ok Diagnosis Complete, on to Treatment and Prescription
In MMT, which to me appears pragmatically founded in what money does becuase of its accounting foundation, we have the beginning of a new economic theory which can drive the political climate. MMT, in Wray’s book, includes a full employment program, Job Guarantee and Employer of Last Resort (JG/ELR), and discusses the implications of inflation, which Wray generally believes to be manageable.
1. With potential resource shortages, is inflation manageable?
2. Does the New left need a source of funding independent from the current donor class?
3. Should the state be funding elections? (a good push back against the NeoLiberal Agenda, privatize everything), because the current system is obviously to all, corrupt.
4. Why pay unemployment, when one can pay employment, which can produce goods and services for our use?
The chart above is built in excel. All the data is from US Government sources (named in the spreadsheet). Anyone who wants a copy only need ask. The only price I ask is to correct mistakes in the spreadsheet, and publish them.