I posted this link because, as an noneconomist, I find modern monetary theory intriguing but I don't know how well it would work in practice. If it is indeed viable, why have the issues of deficits and government debt—which the theory seems to claim don't matter—been allowed to dominate the political conversation?
The essay "Political Aspects of of Full Employment" [1] outlines the vested interests of industry leaders in playing up the danger of deficits and increased public investment. As a noneconomist, I too would be interested in hearing some reasons why the idea was abandoned until MMT brought it into the mainstream once again.
1) dislike of government interference in the problem of employment as such
2) dislike of the direction of government spending (public investment and subsidizing consumption)
3) dislike of the social and political changes resulting from the maintenance of full employment.
>"This, broadly speaking, is how our monetary system works. It is true that the dollars in your pocket are, in a physical sense, just pieces of paper. It’s the state’s ability to make and enforce its tax laws that sustains a demand for them, which in turn makes those dollars valuable. It’s also how the British Empire and others before it were able to effectively rule: conquer, erase the legitimacy of a given people’s original currency, impose British currency on the colonized, then watch how the entire local economy begins to revolve around British currency, interests and power. Taxes exist for many reasons, but they exist mainly to give value to a state’s otherwise worthless tokens.
Coming to terms with this was jarring — a Copernican moment. By the time I developed this subject into my first published, peer-reviewed academic paper, I realized that my prior understanding of government finance had been wrong."
"Mr. Mosler had essentially imposed a tax that could be paid only with his own monogrammed paper. And he was prepared to enforce it. Now the cards were worth something. Before long, the kids were scurrying around, tidying up their bedrooms, the kitchen and the yard — working to maintain the lifestyle they wanted."
Looks like a step towards a dictatorship.
It's also funny that the author starts by laughing at how people think of the economy as if it was a household, and then puts this exact example.
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[ 3.9 ms ] story [ 25.3 ms ] threadDo deficits dominate political conversations? And what does that have to do with mattering?
These ideas have been allowed to dominate political conversation because they are politically effective.
Note that the Republicans, who are politically the anti deficit party, only seem to care when arguing to end programs they don't like.
1) dislike of government interference in the problem of employment as such
2) dislike of the direction of government spending (public investment and subsidizing consumption)
3) dislike of the social and political changes resulting from the maintenance of full employment.
[1] https://mronline.org/2010/05/22/political-aspects-of-full-em...
Coming to terms with this was jarring — a Copernican moment. By the time I developed this subject into my first published, peer-reviewed academic paper, I realized that my prior understanding of government finance had been wrong."
Looks like a step towards a dictatorship.
It's also funny that the author starts by laughing at how people think of the economy as if it was a household, and then puts this exact example.