THE FUNDAMENTAL DIFFERENCE BETWEEN AUSTRIANS AND MMT’ERS
John Carney has written a series of excellent articles pertaining to Modern Monetary Theory and why he believes there are many similarities between Austrian economics and MMT. I’ve previously described some of my issues with Austrian economics (see here and here), but I must admit that the Austrian school makes many significant contributions to the field of economics. For instance, I have previously expressed my displeasure (or uncertainty) regarding the MMT Job Guarantee due to praxeological elements. This is a component of Austrian economics that is particularly strong. When it comes to understanding the uncertainties surrounding human behavior the Austrians make many excellent contributions. Most mainstream economists don’t appreciate the fact that human behavior can’t be modeled in pretty equations that lead to best selling textbooks. Unfortunately, it’s this lack of provable mathematics that often leads to criticism of Austrian economics. But while there are certainly elements of Austrian economics that MMTers agree with there is one large hurdle….
I agree with John that there are more overlaps than most presume. But the largest hurdle is substantial. MMT is based on the state theory of money. We acknowledge that anything can be money. Gold can be money, pieces of paper can be money, credit cards can be money, a simple promise can be money. But what MMTers are very precise about is the fact that a sovereign nation with endless supply of currency in a floating exchange rate system names that which is money as defined in economic terms within that particular nation. In the USA, the US government deems “money” to be the US dollar. You might claim that gold is money (and it certainly is in some regard), but if you take a bar of gold to the IRS on April 15th they will request that you exchange that gold into US Dollars before they can extinguish your tax liability. In other words, while gold might be money to you and your neighbor, it is not money when it comes to extinguishing your liabilities to the Federal government. When it comes to transacting within the US economy, this is the crucial distinction when it comes to “money”. But there is a more complex disagreement in these schools of thought.
MMTers understand that “money” is always a social construct (whether it be gold, pieces of paper, social agreements, etc). In the same regard, money is always a debt that helps fulfill some particular social construct. And since “money”, in a modern society, is always a creature of the state (as described above) then the “money” that a government creates is merely a social construct of the society that creates that government.
As human beings we have evolved to the point where we reside in these incredibly vast and complex societies. We are, after all, the ultimate pack animals. We like to think we’re these independent creatures, but we’re actually incredibly dependent on one another for our survival and success. And as a society, we choose to maintain some semblance of order, rules, law, social structure, nationality and economic coordination through a centralized government. We can quibble over the size of that government (I tend to prefer less government than most other MMTers), but we cannot ignore the reality that governments exist for very practical purposes and will likely always exist in some form (if for no other purpose than to provide a legal system and a coordinated military). Austrians tend to veer towards the misconception that governments are these exogenous entities that infringe on our personal liberties when the truth is that we create governments for some public purpose. We do not create governments to impose hardship on ourselves. That’s not to say that governments can’t become corrupt or excessive, but it’s rather naive to claim that a moderately sized government cannot provide some level of services that benefit the society as a whole.
The most hardcore of Austrians take this myth to another level in believing we can reside in these “Crusoe Islands” where no government is necessary at all. Never mind that no such fantasy island exists in reality….The problem is, this totally misunderstands the evolutionary aspect of society, government, money and why we have the social constructs and infrastructure that we do today. Austrians want to attach “money” to a shiny rock or the detach it from the reality where humans reside in complex social structures which require complex entities to help these societies achieve goals. Both ideas are misguided as they misinterpret the intricate link between money and society.
Ironically, the greatest strength of Austrian economics is also the cause of its broadest misconceptions. Ultimately, they misinterpret human nature and the very nature of the societies in which we reside. The idea that the human being can survive and thrive entirely independent of complex social constructs is a sheer myth. Even worse, they assume that small factions of the society can regulate and behave rationally and responsibly enough to eliminate the need for government. As I often say, government becomes corrupted when the power of the many falls into the hands of the few. This applies to the small factions on Crusoe Island as well. The point being, in trying to prove this ideological argument they create myths that lead people to believe that we do not need strict social constructs to survive. In doing so, they try to separate a society from the social constructs (thereby breaking the links between society and money) that make up its very essence.
This idea of money being a creature of the state is a substantial hurdle that some Austrians like John Carney are willing to overcome. But I fear most Austrians cannot overcome their political biases that lead them to conclude that government is always bad and therefore, the state issued fiat money is always bad. And in doing so they misinterpret the nature of society, the role of government in society and the “money” that governments create.
Cullen Roche
Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.
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The incandescent shine of MMT (and post MMT):
John Cochrane demonstrates once again that he doesn’t know that Say’s Law is false in a fiat currency economy; Brad Delong demonstrates that he almost gets MMT (without realizing it), i.e. that loans create deposits and that government spending creates net private sector saving; and everybody under the sun, these guys and many more, demonstrate that nobody on earth knows how to present a clear example of what Ricardian equivalence means even in theory (as per the blogosphere war on same over the past week or so; quite something if you haven’t been following it).
http://delong.typepad.com/sdj/2012/01/department-of-huh-john-cochrane-iii.html
Experimentation Part 1. Why not just try MMT & JG? … in another country …
In the same way corporations test market in Minneapolis, why doesn’t MMT economists just convince another country to try. With the current crisis, there can’t be a better time then now; perhaps in S. America or Africa. Seriously; not being sarcastic.
Experimentation Part 2. Historically, haven’t other countries run extended periods of (peace time) deficits with increasing government programs and public sector, which simulates a JG? Why have they all backtracked?
I’m thinking Sweden and Canada.
According to Bill MItchell the JG concept has been tried and shown successful in several trials in emerging nations.
I don’t think that the full-on MMT macro approach has been tested yet, but some aspects have been tested separately, including the JG.
Mitchell, The best way to eradicate poverty is to create jobs
Mitchell, Employment guarantees in developing countries
Fulwiller, Confronting Poverty with Jobs and Job Training: A Northeast Iowa Case Study
The WPA and CCC also were deployed in the US during the Great Depression to provided jobs and incomes, and at the macro level affected sectoral balance through fiscal policy.
BTW, it’s not because the full-on MMT macro solution with JG hasn’t been pitched to emerging nations. It has. Bill reports that countries are reluctant to go out on a limb though because neoliberalism is endemic globally and well-entrenched among TPTB just about everywhere. It is going to take some softening up, like trying a limited JG in the boondocks, which is what S. Africa did, IIRC.
Thanks Tom.
Contrary to Bill’s comment on the problems with developing nations implementing MMT, and thus as a MMT laboratory, with the increasing polarization of incomes and jobs in the US (low paid local jobs; high paying international jobs), it may more closely mirror the US economy in 20-30 years.
Perhaps we could try on a small developed-world nation (Iceland, Greece (;-}), Croatia, Albania). With all the money spent on “geo-political” strategy, as well as economic intervention (via IMF), it seems like the world could afford to backstop an experiment and guarantee a “reversal” if things don’t work out perfectly. (MMT is not so radical that it would be a huge leap. It’ll still be cheaper than the blowback from Iraq etc.)
I think that ‘price stability’ is generally defined as low, steady inflation, rather than zero inflation (I sure any ‘Austrians’ will hate such a definition, but there you go). Price volatility is considered to be bad because it arbitrarily rewards or punishes different segments of society whilst sending out further erratic signals to the markets, leading to a negative feedback loop.
The MMT concept of the JG is considered to engender greater price stabilty for three basic reasons (as far as I can tell):
1. The basic guaranteed income serves to offset losses in aggregate/effective demand during a downturn (i.e. it is an ‘automatic stabiliser’ which comes into effect without the need for additional discretionary government spending).
2.The guaranteed income makes it easier to shift people out of non-JG employment when the economy overheats, without sending the economy into a tailspin.
3. The preservation of skills and habits associated with continuous employment makes the movement from JG to non-JG employment easier (less frictional), whereas an unemployed buffer stock can potentially become terminally unemployed and unemployable. Therefore, the balancing mechanism of an employed buffer stock is more flexible and fluid than an unemployed buffer stock, meaning that the market can respond more rapidly to changing situations – and thus that prices can easily stabilise without having to go through periods of high volatility.
The alternatives to a JG buffer stock (in the absence of an alternative PS/FE non-JG theory) are: a) a buffer stock of unemployed (who receive a basic income but remain ‘idle’), or b) a buffer stock that receive no income and have to fend for themselves/seek charitable support/starve.
The main problem with (a) is that the potential labour of the unemployed is wasted, whilst their skills and habits deteriorate, and that movement between unemployment and employment becomes more problematic. The main problems with (b) are that aggregate demand and prices fluctuate wildly, whilst individuals’ lives and productive capacity are potentially destroyed.
Now, it may be argued that if all the other MMT prescriptions were implemented, then the level of unemployment would shrink significally. On top of this, further supply-side reforms could be introduced to maximise employment. However in his blog Bill Mitchell argues that supply-side reforms have done little to increase employment over the years that they have been tried, and that in any case the choice will always be between an employed buffer stock or an unemployed buffer stock, regardless. The only way to create genuinely full employment, he argues, is therefore to implement a version of the JG.
Alternatively, the only other rational choice is to subsidise an inevitable degree of unemployment with a basic income. This could be linked with stringent demands so as to ensure that people do not become complacent and lazy.
I agree with your view, Cullen, that self-reliance and an independence of spirit are what make individuals, countries and economies prosper in the long run. However, the current (dominant) non-MMT macro view is that a portion of the population will always have to be unemployed, so as to hold accelerating-inflation at bay. This view holds that increased employment beyond a supposed ‘natural’ rate will not only create increased inflation, but accelerating inflation which quickly becomes difficult to control. As such the dominant policy within OECD countries is to maintain a rate of unemployment roughly at this natural rate, if possible. Bill Mitchell’s riposte to this is that a) unemployment is in and of itself hugely wasteful and damaging, b) the ‘natural’ rate of unemployment is impossible to calculate with any degree of accuracy, and c) an unemployed buffer stock created with reference to this supposed ‘natural’ rate actually leads to greater price volatility in both the short and long term than an employed buffer stock alternative would.
I’m sure there are many counter-arguments to this view, which I look forward to reading. (I may have misrepresented Bill’s views too, if so I apologise) .
Good summary, Phil. I think you hit the high points. I woud just add that the MMT economists are not concerned with moderate inflation. They claim that it has never resulted in any real problems, especially in comparison with the waste created by a policy of idling resources to contain inflation to some unobservable natural rate.
A big issue MMT economists have with neoliberals is over unobservable like natural rates and inflationary expectations. Mighty thin data on which to base economic policy that affects the lives of millions and even billions of people, condemning many to lives of poverty and keeping economies in a state of chronic underperformance wrt to potential given the resources available. This is at the heart of their criticism of the IGBC, too.
Having followed this discussion through its entirety and reviewed the 2 latest Billyblog posts that seem to lie close to its core, I feel that the areas of dispute can be resolved simply by maintaining the distinction between academic theory and real world policy.
I hear Mitchell saying that given the MMT account of a true fiat monetary system, maintaining a ‘buffer stock of employment’ through direct government action can theoretically enable full employment and price stability, which have always been defined as core objectives, and validity criteria, for a ‘macro-theory’.
I don’t hear Cullen and others objecting to that theoretical assertion. I hear them saying that implementing such a government-maintained buffer stock through a flat public jobs guarantee in the US socio-political-economic system as it currently exists would be problematic for a variety of reasons. (This is not just a matter of political ‘bias’ – by conventional standards, I would place on the far left fringe here, but I agree with this judgment.)
Tom Hickey has expressed the academic view on this. However, given that for the most part, controlled experiments are not possible in economics and related fields, the only way that theory can be tested is by implementing policies designed to produce effects tightly linked to the theory, and then evaluate over time, whether these implemented policies have a) measurably produced the intended effects, and b) resulted in (or at least coincided with) the desired results – such as an unemployment rate low enough to be considered ‘voluntary/transitional’ along with price stability. (Tom mentioned real JG implementation in developing countries; I would want to know the duration and stability of these ‘tests’ and still would not consider this ‘proof’ that the policy would be transferable to the developed and uniquely complex US situation.)
I do think that it may (soon?) be politically, socially, fiscally feasible to create an effective ‘buffer’ controlled by direct government spending large enough to do most or all of what the theory would require. (To use the ‘sink’ analogy, a syringe buffer would not need the capacity of the entire sink, but only enough to accommodate the fluctuations due to actual variations in in- and out-flow.)
However, to design such a ‘syringe’ one would also need to examine the reality of the types of jobs that occupy the ‘buffer zone’. I am frustrated because I sense assumptions about this not based on such an examination. In particular, the suggestion that there is not much demand for what I prefer to call ‘hands on’ work (I have a lifetime of acquired skills but may no longer have the physical stamina and reflexes required for some of this work) and that such jobs would necessarily be in the vicinity of ‘make work’, or that well-designed short-term training could not have a huge effect (again, look at what the US military does).
Yes, some of these jobs occupy a flexible/discretionary position (we can clean our own houses, mow our own lawns, or do without a manicured estate; and raise our own children; in response to changes in our own employability).
Others are much more inelastic (but one of the reasons they are ‘under the radar screen’ of awareness is that many have been performed for less than minimum wage by ‘illegal’ workers: building our houses and roads; cleaning our workplaces after we leave; harvesting the food on our tables. The addiction here is on a par to that to all the ‘Made in ___’ consumer goods.)
Looking at the reality here might reveal sector(s) suitable for direct government control and sizable enough to do the trick.
But all of this is in the realm of real-world praxis – not academic theory. (Sorry for running so long – I tried to be brief. And Happy New Year).
Colin, MMT economists have considered the types of job that would characterize an ELR program like the MMT JG to create a buffer stock of employed. First, consider that this is part and parcel of an MMT macro policy recommendation that relies chiefly on countercyclical fiscal policy since the government fiscal balance is used to offset fluctuations in the non-government balance, which is affected by demand leakage to saving. MMT economists point out that even with well-managed fiscal policy there would likely be a residual of unemployment at the bottom of the hiring scale as people with some skill get underemployed, but the low skill workers get laid off with no other possibility for employment. Thus the government ELR program is designed to hire off the bottom at a floor wage that establishes a price anchor. Since the workers are expected to be low-skilled, the work would be on that level and there is plenty of that which can be done locally and administered locally in communities. The basic idea is to keep people out of poverty and also give them something useful to do until the economy picks up and they get another hire on. But there is still an underclass in many countries, including the US, in which generational poverty is a problem. This kind of program could be targeted to them to give them training in some basic skills and an opportunity to get into the system. For example, organizations like Hospice could be used to train people for home health care at the floor wage. With the growing number of elderly expected as the boomers age, there will be a growing private market in home health care services over the next decade or two.
Thanks, Tom. I think programs targeted to populations and tasks such as you describe, and presented not as a monolithic blanket ‘job guarantee’ but as designed to provide short-term training and employment to those who want but cannot find a job, to perform needed work, could establish an effective buffer. (They would also not replace short-term unemployment benefits.)
A CCC-type component operating on the national/state level could provide eg: natural disaster prevention/preparation/relief (AneriCorps already inatituted a small, in my experience, effective, version of this, appealing mainly to younger people).
However, programs working with local government and social service agencies, businesses and individuals would be most effective in moving people beyond marginal employability and meeting local needs. Under careful controls, providing needed services at less than cost through and to such entities could also eliminate the ‘leakage’ to substandard/sub-living wage employment practices.
Rodger Malcolm Mitchell is also critical of the MMT-proposed Job Guarantee (a.k.a. Employer of Last Resort – ELR): (http://rodgermmitchell.wordpress.com/2012/01/01/why-modern-monetary-theorys-employer-of-last-resort-is-a-bad-idea/#comments).
His suggestions are much more in line with where Cullen seems to stand on the issue. Specifically, RMM says the following should be done immediately:
1. Eliminate FICA (Click here)
2. Medicare — parts A, B & D — for everyone
3. Send every American citizen an annual check for $5,000 or give every state $5,000 per capita (Click here)
4. Long-term nursing care for everyone
5. Free education (including post-grad) for everyone
6. Salary for attending school (Click here)
7. Eliminate corporate taxes
8. Increase the standard income tax deduction annually
9. Increase federal spending on the myriad initiatives that benefit America
“So my recommendation is to begin #1-#9 today, and if/when inflation starts to occur, institute the first inflation-fighting program the Fed always uses: Raise interest rates. If that doesn’t do enough, begin to cut deficit spending.
…
By balancing interest rates and deficit spending, we can hold inflation at any level we choose, while accruing the benefits of increased money creation.” – RMM
Any thoughts?
Interesting ideas for increasing the government fiscal balance to offset the non-government balance to set in motion a return toward output potential and full employment but not a macro solution to output, employment and prices. In MMT terms it is a partial solution in the sense that the amount of the deficit required to offset the non-government surplus has to be figured first and then ways devised to allocate those funds so as to best manage the various parts of the economy that need stimulating. It includes a one time grant similar to a negative income tax instead of a JG that works out to around $100 a week. That’s barely subsistence for those unemployed with no income. Pretty much equal to a JG offering $2.50 p/hr for a 40 hr work week, plus medical and education. Considering that the JG is both a mop up operation for hiring off the bottom and also establishes a price anchor by setting a floor price for unskilled labor that is unwanted by the private sector, I’m not sure that this fills the entire bill.
However, those are all programs that I think should be made permanent anyway, and something could be included under the purview of #9 that addresses the issues at the bottom that aren’t being dealt with at all satisfactorily in that they have become chronic and indeed poisonous.
Tom,
I think you’re too quick to eat the academic cooking here. You and other academic economists obsess over the UE and PS. But what if those are the wrong metrics by which we measure prosperity? I notice that Bill cited the Reserve Bank Board’s 3 pronged approach. The last involving “the economic welfare and prosperity of the people of Australia”. That’s a very vague definition. What if we can be more precise about that? And more importantly, what if the PS and UE targets are secondary to a larger goal of full production? What if everything the academics have been filling in their models with is flat out wrong? What then? Then the MMT obsession with the JG and PS are seen in a totally different perspective….
Good idea. Rather than setting labor price anchors, we need lifestyle anchors: everyone should live within 20 km of a beach, have shrimp on the barbie Friday-Sunday, and at least 15 hours/wk of beach/water sport time. Funny accent optional.
Looks like you really missed the point on that one….
Cullen, I am not an academic economist but an ex-trader who backed into this whole thinking trying to figure out the GFC since it was clear that no one in the mainstream media had clue. Serendipitously, I discovered MMT through a blog post of Ramanan somewhere. Initially, I passed it off as kooky, but I don’t mind kooky and he gave some references that I followed up on and eventually read Randy’s Understanding Modern Money. Then I wandered by Warren and Bill’s and got excited that finally here was not only an explanation but also a way to distributed prosperity and the material basis for ideal society.
I have a terminal degree (pun intended) in philosophy, so my interest in economics is far wider than academic economics or any particular view of economics. For me, economics is about providing the material life-support system for a society, and it is the quality of the society that counts.
As Peter F. Drucker said, doing things right is efficiency and doing the right thing is effectiveness. What is “right” for a society is a principally a philosophical question rather than chiefly an economic one. In my view, the economic approach is far too limited, on one hand, and bonkers, on the other. So I am totally open to redefining what “effectiveness” means wrt macroeconomics.
I’ve just been presenting my views on what I have understood about MMT and heard from the MMT economists. In fact, one of my personal criticisms of MMT is that it fits itself into the prevailing academic universe of discourse whereas I would be a lot bolder about using the understanding MMT provides in creating ideal society.
I think we have to begin philosophically by clarifying what “effectiveness” means wrt to society in general and specifically wrt with the fast emerging global society. This is the project of the 21st century in my view, so I am totally aboard with revisiting the whole project of economics as it fits into what Plato called “the good life” and living it with others. This has been a debate that has been abandoned of late, even though it began millennia ago in both East and West. According to the Vedic literature, “The world is my family” (Sanskrit Vasudhaiva kutumbakam, quoted in Mohandas K. Gandhi, “Young India,” March 21, 1929 ).
So let’s have at it.
Tom, it was not my intention to insult your intelligence. Let me be very clear about that. I have a huge amount of respect for your understanding here. Perhaps I should have phrased that comment better. What do you think of targeting full production as opposed to FE and PS? This can, in my opinion, be completely in-line with the goals of FE and PS while also focusing on maximizing efficiency and output. It’s also in-line with functional finance and the ideals of MMT. My concern though, is that the current thinking has led people to conclude that we just need to fix PS and FE and then we’ll all be better off. But what if these are the wrong metrics to target?
Cullen, that’s a question to put to a macroeconomist. The big three of macro, both as theory and policy instrument, are GDP, FP, and PS. These are debated in great detail over the history of economics, often hotly. This is the debate that the MMT economists have joined after reaching the state of the art in their field through their grad studies. I assume that they must have considered this already in preparing their professional publications. I suggest contacting one or more of them and inquiring about it. I would be surprised if they have not thought about this deeply and discussed it together.
Cullen, how would a government go about targeting full production, ie full capacity? The reason MMT likes the JG is that it DRASTICALLY reduces any uncertainty in the economy with regard to investment and production plans for corporations and businesses, partly because everyone will always have more money available if they always have a job available to them. In terms of prescriptive remedies MMT surely could come up with other ideas using its descriptive powers. If you have some other idea for how to ensure full capacity, put it out there.
I do. In development. I think it’s innovative, but I’ve learned my lesson about unleashing ideas on the world without them being largely developed so it will have to wait a lot longer I am afraid….
Those NINE things sound great, and I would vociferously lobby for all of them in lieu of a JG…. but if you think the JG is politically untenable try getting all NINE of those things passed.
Thing is those nine things must be done together to be effective. If you simply do the tax cut parts and dont do the healthcare and education parts your pretty much where we are today. The cost of living /surviving must decrease for the average American.
We are nowhere near seeing any of them made into law. Can you imagine? Eliminate FICA? Then how will we fund Social Security? Medicare for all? Yea right. We couldn’t even get a public option. Send everyone a $5,000 check? HA! And so on…
#1 priority has to be getting the “core” of MMT into mainstream discussion… the descriptive part. All of the prescriptive proposals have no chance until the descriptive part, at the very least, enters mainstream discussion.
“All of the prescriptive proposals have no chance until the descriptive part, at the very least, enters mainstream discussion.”
That’s an interesting way of putting it.
I’d say something similar, although not exactly the same:
To the degree that MMT confuses its policy prescriptions with its monetary system descriptions, it runs the risk of diluting the power of those descriptions as an original force.
(Notice I said “to the degree”)
If the separation is clear, then the way in which MMT policy is using MMT description becomes clear.
Moreover, the debate over policies that are possible based on MMT description becomes clear.
Some of those policies may be the ones proposed by MMT. Some may not.
The problem with the MMT descriptive-policy nexus right now, as I see it, is that it tends to obscure the full variety of options that might flow from the descriptive MMT contribution to economic thinking.
MMT has already chosen its preferred options, pretty much. So any others are non-MMT by definition.
If MMT considers it mandatory that the JG be a non-optional part of MMT, then I think post-MMT may be in the cards. This development might use the descriptive strength of MMT, but it also might transform that description into a successor model. After all, MMT doesn’t have a monopoly on accounting, which is the basis for the MMT descriptive component.
“All of the prescriptive proposals have no chance until the descriptive part, at the very least, enters mainstream discussion.”
JKH, all that I meant to say, in a nutshell, is that so long as the majority of people in the United States think we’re going broke and can’t afford this or that, the prescriptive policy proposals will constantly hit the brick wall of “we can’t afford it” …and that’s being generous in supposing the proposals even penetrate to the point of consideration. Many of the proposals coming from MMT and its relatives must sound like outright lunacy to someone who is thoroughly brainwashed with neoclassical economics.
Hopefully everyone that has a firm understanding of the descriptive aspects of our monetary system are staying on Krugman, Carney, etc . It seems they are the most likely megaphones at this point. Mike Norman gets occasional face time on Fox News, too. But good luck with that crowd.
OK.
Makes good sense in that context.
Are governments successful in setting a price anchor for labour?
Based on many friends experience in private education and the cleaning business ..
- high paid public school teachers and professors do not set a benchmark for private education (which has much lower salary and benefits)
- public unionization in lower paid sectors (cleaning, clerks etc.) significantly increases those salaries/benefits, while not “dragging up” the salaries in the private sector
Of course, one could say that the public sector hasn’t targeted all (e.g. cleaner) jobs, i.e. it has only targeted a rationed quantity, but this seems to be a circular argument … how can you be a price anchor without essentially being willing to take all the quantity?
Let’s continue. So the government decides to take all quantity and employ all private sector cleaners at the same rate, and force the private companies to pay. Costs go up. Now, supplied constrained google employees, say their relative costs have increased and they want a raise …
Maybe I’m missing something …
One thing I haven’t heard or read from the founders of MMT is how/why they think full employment wouldn’t put constant upward pressure on wages. If persistant unemployment puts downward pressure on wages, why wouldn’t persistant full employment put upward pressure on them? (or is this just some of my neoclassical economics that I have yet to abandon?). I imagine some of them have discussed this in academic articles but I haven’t come accross it.
Have you checked out Mitchell and Muysken, Full Employment Abandoned (Elgar 2008)? It’s the definitive MMT work on FE & PS with JG.
Tom, thanks. I will read it.
Must be MMT rutting season …. there’s a lot of snorting, rolling in the dust, displays and marking of territory going on here! Great entertainment ….!
The ‘old bulls’ of MMt haven’t had a significant challenge to their theory since its inception; there’s been quite a few young guns circling for some time now. But what we need are facts.
There will be a lot of very sharp minds watching Cullen, as you lay down your contribution – to prove “PS and UE targets are secondary to a larger goal of full production?”
For me the context is as TomH mentioned: “economics is about providing the material life-support system for a society, and it is the quality of the society that counts.”
Also think the descriptive and prescriptive aspects of MMT should be separated only for purposes of analysis: much like discussing the peripheral and central nervous systems that function in one body.
I think this is a problem. We are not fighting over something like females in heat. We are simply discussing ideas. Anyone who thinks MMT has all the answers to the world’s problems is wrong. And unfortunately, the idea of the JG being central to MMT implies that the answer to economic prosperity is as easy as JG + more govt spending. I wish the world were so black and white.
All I am doing here is expressing my opinion with regards to the potential that the JG is not the optimal approach. I see from Warren’s comments that he’s much more in-line with me than Randy’s story implied. I am not sure why some of the MMTers are trying to establish battlegrounds here. We are not fighting over ideas. We are establishing them so the world can become a better place. This isn’t personal. It’s about society. We shouldn’t forget that. The interjection of egos (“he clearly didn’t read any of MY work”) here is really poisonous to the goals of MMT.
Sorry Cullen – not meaning to be disrespectful: just my ‘sense of humour’ at work there. If you do enjoy success with your ideas, I think it is fair to say that you will meet with personal sacrifice and even more responsibility; defending the integrity of your contribution. The original theorist have courageously carried MMT for a long time and people appreciate their efforts. In that I too, wish you well!
If Eugene V. Debs suddenly came back to life today, he would think that the Socialists must have won a few national elections because so much of their turn of the 20th century reform platform had been enacted. Social Security, Medicare, Medicaid, UE, subsidized housing, thousands of state programs etc. The JG is a bridge too far today, but another decade or two of economic rot and bankster thuggery financed by the Fed might produce a more receptive public. That way lies stagnation and decline, but unless we rein in the banks and the Fed, that is what we are going to get.
A big difference between Austrians and MMT’ers is that MMT’ers see all capital as being equal. Austrians look at history and see that all capital is not equal. Both Austrian and MMT’ers can agree that there are issuers of capital, such as individuals, equity funds, banks and governments. Then there are users of capital such as entrepreneurs, businesses and corporations. Inevitably the users of capital need to pay back the issuers of capital in the form of principal or taxes plus some profit in the form of intrest or more tax receipts. However, in a well functioning economic system that provides for full employment and a rising standard of living, there needs to be both efficient issuers of capital and efficient users of capital. In other words, for the issuer of capital to be repaid, requires that the issuer of capital make prudent choices as to whom capital is issued to. It also requires that the user of capital make efficient use of capital so that it can be repaid. The problem with the government being the primary issuer of capital is that governments are not very efficient operations and are certainly not very efficient at allocating capital. Governments tend to allocate capital based on political expediency and so you get a lot of capital flowing into ventures that amount to little more than digging holes and filling them back in; and bridges to nowhere. These ventures then have little economic value, do not result in increased economic activity; and thus the capital is not paid back in the form of taxe receipts. The result is a political economic system characterized by high debt, inflation and chronic unemployment.
Cullen, if this is your considered position, why not work up a paper on it setting it forth and defending it preemptively from objections you expect to be raised. Otherwise, it remains just a suggestion.
The reason that science was developed in the first place and then went viral even though it is difficult to do in most field and requires a solid background not only in the field itself but also math is because what people considered evident turned out not only not to be evident but also wrong under rigorous scrutiny. For anything to be taken seriously in a field like macro, one has to go through the steps of setting it forth, establishing it as empirically as possible, and defending it in terms of the prevailing universe of discourse and accepted practice.
Warren is not an academic economist, but he presented his ideas in a solidly written paper, “Soft Currency Economics,” which launched MMT, showing that it is doable.
Ah, but that is not a compromise – it’s rather exactly what MMT suggests, isn’t it?
Look at 7DIF. Warren writes that most western economies are grossly over-taxed. Unemployment is the evidence.
So, increase deficits, cut some taxes, whatever. We demand – aggregate demand!
This way, it should be possible to reduce unemployment to a few millions.
But at some point, the economy won’t be able to expand more. We’ve reached what mainstream calls NAIRU. Inflationary pressure builds up.
Now, a fundamental MMT insight is that we can indeed achieve full employment with price stability. But to use general demand stimulus to trickle down all the way up to full employment won’t work. Inflation.
However, these last few millions can be hired at the wage-floor, constituting a bufferstock of employed. MMT holds that this is not inflationary.
Ok, blah blah. In any case, I don’t think any MMTer would suggest JG is the *only* policy option.
To be honest Tom, this is something I’ve only recently begun to think about. Your suggestion is an excellent one. I’d love insights if you have them….
Several suggestions come to mind. First, be very familiar with the position set forth by the MMT economists. Secondly, be familiar with the comments on relevant MMT blogs. I am collecting and posting some of these over at Mike’s as you may have seen today. Thirdly, MMT distinguishes between the general and specific cases. It would be useful to frame this issues in terms of the general case and also as it applies to US economic policy, where there is great resistance to the notion of JG for political reasons, perhaps rendering it impractical as a policy option. Then another MMT-compliant policy option would be necessary for practical reasons. I would also work with at least of the MMT economists on this, in particular the US ones, if you decide to work on putting together a US policy option that is not a full-on JG, which would be very difficult to pass in the current political environment.
Yes, I need to be much more precise before writing comments here. I have not formulated and condensed my thoughts well enough to be writing about them as of yet….Thanks Tom.
In fact, Mitchell argues that “NAIBER” should be even less than NAIRU.
Where is it suggested that the JG workers should be 10ths of millions? Has Mitchell said that?
mmtwiki.org/wiki/Full_Employment_along_with_Price_Stability
- attempt to summarize the theory – why is JG not inflationary etc?
The JG would offer a govt job to ANYONE willing to work….That might not amount to 13MM jobs, but it would certainly add millions. Do we really think that doubling, tripling or quadrupling the size of the federal work force will have no negative impacts? The problem is not the JG per se, but its implementation, size, scope, duration, etc. I am not sure that we’re all thinking about this correctly….
Mass unemployment results in huge permanent losses every day in foregone output and income. Add to that the depreciation of human capital, increasing family breakdowns, child abuse, crime, medical costs, skill loss, psychological harm, ill health, reduced life expectancy, loss of motivation, racial and gender inequality and loss of social values and responsibility. The personal, family and community losses are enormous and persist across generations.
What are these consequences of the JG program that you fear so much, causing you to prefer mass unemployment? There must be something concrete that you can spell out?
Iluvatar, I don’t disagree with your view of that of many others in the thread and elsewhere on this, but I emphasize that a central issue for professional macroeconomists is employment v. price stability. MMT is a macro theory with a voluminous literature already, considering the inputs its builds on. These economists are speaking in terms of a universe of discourse that defines terminology, major issues, and so forth. MMT enters that debate in a very specific way, addressing one of the chief theoretical problems in macro that has enormous policy implications, too, that of employment in relation to price stability. It shows that the mainstream ideas about this are in error in thinking that full employment contributes to price stability. MMT, including the boffer stock of employed, shows how full actual employment (less friction) contributes to price stability. That is what is really going on in their eyes.
Of course, anyone can make any use of bits and pieces of the contributions of MMT economists, but they regard the resolution of the above conundrum affecting mainstream economics as one of their greatest contributions. Attempts to say that the JG is an add-on to an otherwise stand-alone economic theory totally misses the point of MMT and misrepresents the work of the MMT economists and their astounding achievement, which is yet to be recognized.
So sure, have-at using ideas gleaned from MMT (with attribution, of course). But in doing so, we have to careful not to misrepresent what the MMT economists have done in constructing a tightly knit macro theory and claims to complete the quest for the holy grail of macro, actual full employment along with price stability. Professional economists will immediately recognize this claim and its significance. Others may not.
I fear a stagnating society that fails to increase the broad standards of living over many generations. The power of capitalism is in its ability to innovate. Not in its power to employ. We can create a society of robots working the same mundane jobs day in and day out. And that might be fine for some societies. But we should expect more than that. We should expect to live substantially better lives than those before us. When did we come to expect that govt can and should provide so much for us? You want to know why America is in such a rut? Because no one wants to get their hands dirty anymore. They want to make money the easy way so they can go home and watch the Kardashians all night. This is not how great societies are built. We are losing our sense of independence. And that might be fine for some, but it’s not fine for me. I expect more.
We’re hell bent on trying to focus on the 10% of people who are out of work. Did economists ever consider that that’s the wrong target? What about the 90% who are working? Shouldn’t we really be implementing policy that focuses in maximizing their output? Isn’t that really the best way to achieve prosperity? It’s not dissimilar to a football coach who spends his time obsessing with how bad his bench players are. Economists are obsessed with figuring out ways to better the bench players. But maybe the best way to better the bench players is to better the starters. Only then can we motivate the bench players to improve. Now, I don’t question that currently, there are a huge number of jobs the govt could provide to help bring the economy out of the doldrums and improve overall living stds. But are there permanent jobs in this regard? I don’t think so. And I think this sort of program will simply mutate into a sort of spread the wealth plan where a small portion of the population receives a better living std at the expense of us all.
I find it incredible how so many people have no objection to what appears like common sense. If the unemployed were a net positive ROI on society then they’d be earning an income. But they’re not. They’re a negative ROI on society. If prosperity were as easy as the govt hiring a few million people then America wouldn’t be the greatest economic miracle in the history of man. The problem in America is not that we don’t have enough govt or spending per se. The problem is that the quality of our output is on the decline. I have proposed programs like the innovation initiative and substantial financial reforms that would help stop our best minds from filing into Wall St firms. There are ways we can use govt to better the players on the field. This is where the real power of MMT should focus. I could really care less that our bench players suck. It’s my men on the field who are losing games day in and day out. And they need our help….
Very interesting! Deserves a post of its own? A shame to let it disappear in the tsunami of comments here.
> I fear a stagnating society that fails to increase the broad standards of living. The power of capitalism is in its ability to innovate. Not in its power to employ.
No, that’s right. Private sector on their own are unlikely to fix full employment (at least according to post-Keynesians, to which MMT’ers sometimes seem closely related). So, if you want full employment, there has to be a mixed economy. Government sector and private sector.
But why would the power to innovate reduce if there is a Job Guarantee? Does mass employment stimulate innovation? I think it rather just creates misery. With proper skill improvement programs, a JG system could stimulate more innovation and creativity, not less.
I think capitalism can actually work better, become more vibrant and thriving, in a soil where people are never out of work, and can always improve skills, find new things to learn and earn a decent income.
> We can create a society of robots working the same mundane jobs day in and day out. And that might be fine for some societies.
Sounds like a nightmare. Has absolutely nothing to do with JG though, in my opinion.
> But we should expect more than that. We should expect to live substantially better lives than those before us.
Sure. With a JG in place, that could go for 100% of the population.
> We’re hell bent on trying to focus on the 10% of people who are out of work. But what about the 90% who are working? Shouldn’t we really be implementing policy that focuses in maximizing their output? Isn’t that really the best way to achieve prosperity?
Or how about both? They are not mutually exclusive. To implement a JG is not even certain to constitute a net cost, if you take into account the social costs of mass unemployment.
> It’s not dissimilar to a football coach who spends his time obsessing with how bad his bench players are. Economists are obsessed with figuring out ways to better the bench players. But maybe the best way to better the bench players is to better the starters. Only then can we motivate the bench players to improve.
Neoclassical argumentation. The unemployed are unemployed due to lack of motivation? They could just make a better effort and jobs would show up? MMT rejects this, emphasizing that unemployment is about deficient aggregate demand. And in any case, I would definitely keep these bench players in training to maintain their form. That would achieve better liquidity — sometimes a bench player would become a proper first team player. Also, would be a waste to just leave them sitting in isolation, seeing them lose hope, start using alcohol and drugs and ultimately completely give up and go home and beat the crap out of their children. (Well, you started with the metaphor
)
> Now, I don’t question that currently, there are a huge number of jobs the govt could provide to help bring the economy out of the doldrums and improve overall living stds. But are there permanent jobs in this regard? I don’t think so.
Ok, mass unemployment is better then. I’ve seen plenty of suggestions though. Not a big worry of mine.
> And I think this sort of program will simply mutate into a sort of spread the wealth plan where a small portion of the population receives a better living std at the expense of us all.
Ok, so the rest of us are better of if the bench players are unemployed., But so far, none of the arguments I’ve seen for that are convincing. I just don’t see how the benefits of mass unemployment (if there are any) outweigh all those costs that result from it — even if we ignore the human tragedy for those actually unemployed.
> I find it incredible how so many people have no objection to what appears like common sense. If the unemployed were a net positive ROI on society then they’d be earning an income. But they’re not. They’re a negative ROI on society.
Right, this is pretty much the neo-classical argumentation. I’d reject this flat out. The private sector on its own is unlikely to be able to fix full employment — even skilled and productive workers can easily end up unemployed. It’s about deficient aggregate demand.
Neoclassicals blame the intervening government for unemployment. MMT’ers says the government has to step in and offset the demand drag that results from net saving desires among private agents. Or else, unemployment results. This has nothing to do with people being unproductive — it’s about deficient aggregate demand.
> If prosperity were as easy as the govt hiring a few million people then America wouldn’t be the greatest economic miracle in the history of man.
Granted, there is a glorious history, though one could tribute much of that to government spending during the post-war period? The great miracle right now though is that America is fast becoming a nation pretty much in ruins.
> The problem in America is not that we don’t have enough govt or spending per se. The problem is that the quality of our output is on the decline. I have proposed programs like the innovation initiative and substantial financial reforms that would help stop our best minds from filing into Wall St firms.
Agreed!
> There are ways we can use govt to better the players on the field. This is where the real power of MMT should focus.
Agreed, this sounds like it could be taken straight out of 7DIF.
Basically, I still find your argumentation a bit weak. I think mass unemployment societies will stagnate rather than full employment ones. Detroit.. New Orleans. — places not exactly thriving from the streams of motivated skill-improving job-seekers standing at the doors of the closed down employment offices.
> The point being (which I think you’re missing) is not that the JG is necessarily horrible, but that MMT proves that the monopoly supplier of currency has an unlimited ability to help the pvt sector.
Ok.
> The question is how best to do so? Do we pay people to sit on couches as we do now? Do we pay people to rake leaves on I-95? Or can we implement policy that stimulates innovation, reduces financialization and really gets to the endgame of increasing our living standards via increased innovation, efficiency, etc?
Ok. Sounds like 7DIF.
> I keep repeating that I am not anti-JG.
Ok, it just really sounds as if you are. But point taken. (Probably have managed to miss many of the comments here..)
> I just don’t think it’s the best way to implement MMT policies.
But you’re making it sound a bit as if a JG would be mutually exclusive with the innovation/efficiency improvements (etc) suggested above?
IMO, one should not think of JG as “either JG *or* innovation/efficiency improvements”. Why wouldn’t you be able to have both?
Rather, I think you should think of JG as: “either JG OR not JG”.
Or: “either a buffer stock of employed OR a buffer stock of unemployed”.
Or: “either full employment OR mass unemployment”.
(There may of course be other alternatives as well, as suggested by peterc recently, such as basic income guarantee schemes.)
> And there’s nothing neoclassical in there. It’s all in MMT paradigm.
Not the way I see it — see the specific instances pointed out in previous comment.
> I just don’t buy BM’s argument that you need the price level theory to be attached to a JG. It could just as easily be attached to NFAs.
Seems most of the heavy weight MMT’ers emphasize the bufferstock thinking though — not just Mitchell. Either you have a bufferstock of employed or of unemployed. The price setter sets a nominal price to which the value of the currency is anchored, and lets the quantity float. Ok, I don’t fully understand this myself (how does this apply to the bufferstock of unemployed?) — just saying that this is not just Mitchell but pretty much all of them?
> So the JG is not essential to MMT at all. It might be essential in Bill Mitchell’s theory of socialized employment.
The bufferstock thinking is essential though (how a bufferstock is used as a nominal price anchor) — or so I believe the heavy-weighters would argue. No? See Keltons comment above, or Fullwiler or Mosler.
Honestly, I think JG is pretty central there too. It’s about the bufferstock of employed (JG) versus unemployed (current system) versus unemployed/gold (previous system). I think it’s “core MMT theory” to say that a “bufferstock of employed has better inflation fighting effects than one of unemployed” or something like that. Would you agree with such a statement?
> But it’s not at all essential to the state theory of money or understanding modern money….
Granted, MMT has a lot to offer in addition the bufferstock ideas.
> Better?
Yes, thanks.
We’re missing the point by getting bogged down in wonk talk. Economists have a rigid explanation for macro. Bill justifies his position by claiming to have a broad macro approach based on his focus on UE and price stability. Did it ever occur to anyone that these targets were wrong? Could it be that the failing profession of economics has been obsessed with some of the wrong targets? Maybe productivity is the real focus? If we create an ultra productive economy doesn’t UE and price stability pretty much take care of itself? So why not focus on productivity and efficiency of output rather than UE rates and price stability?
The obsession with price stability and UE is leading to two misleading conclusions. One being that the govt should eliminate the UE problem by hiring everyone. And the second being that the govt should create price stability via the buffer stock of employed. But what if these targets are the wrong target? What if solving these two problems doesn’t actually increase our overall living standards in the way that other policy measures could? That’s where I am coming from. And the conclusions I reach are dramatically different than conclusions that involve filling in UE rates and price levels so as to make economist’s equations lead to more satisfying outputs in their models. I know the govt can hire everyone and set prices. I’m just pointing out that that might be the wrong way to increase the living stds of the society mentioned….
I need to lay out these arguments in far more detail though….
> Maybe productivity is the real focus? If we create an ultra productive economy doesn’t UE and price stability pretty much take care of itself?
Not according to the Keynesian inheritance baked into MMT. If you want full employment, you can’t rely on the private sector alone. It is likely to fail.
Not sure about an ultra-productive economy. Perhaps in a few hundred years, you will be proven right. Or a few decennia? Or millenia?
Would be a shame to keep in letting the unemployed rot in the mean time though.
> So why not focus on productivity rather than UE rates and price stability? The obsession with price stability and UE is leading to two misleading conclusions.
Why not focus on both? Why leave people in unemployment, given the enormous human costs? A bit harsh to call it “obsession”. It’s not like it’s only a game or something. Today’s policies leads to humongous amounts of unnecessary human misery. The situation could be considerably improved with MMT policies in place. Unemployment is a killer.
> But what if these targets are the wrong target? That’s where I am coming from.
Right. MMT as it currently stands focuses mostly on full employment and price stability though? But there is probably room for more than that. Sounds like the “Roche fork” of MMT will be different?
> I need to lay out these arguments in far more detail though….
Will be interesting!
I’m all for your suggestions!
(And I think it’ll work better in a full-employment economy with appropriate possibilities for skill improvement etc, than in a mass-unemployment economy where 10% of the population are not able to take part. So — I’m still pro-JG, against mass unemployment and the resulting unnecessary human misery and costs. Haven’t seen convincing arguments otherwise. Not that you’re anti-JG — you seem to have ended up somewhat indifferent to the idea. To me, though, even that is almost incomprehensible.)
Looking forward to your future thoughts!
Hugo/Cullen
Real great exchange here. Really enjoyed following it. Very illuminating.
I see in Cullens comments and reservations something which I frequently see but which I need to do more to try to understand and that is a sense that this JG (or any type of govt income guarantee program) will just end up making more people completely dependent, lazy and worthless. In addtion, it seems to be posited that these people will be living the good life off of our sweat!
Now, Ive never longed to be in a minimum wage job nor have I longed to be on the basic minimum of welfare (I know we technically do not have welfare anymore). I cannot for the life of me understand why anyone thinks those people have it good, or better than you who have 20$/hr jobs? If you want that meager lifestyle….. YOU TOO CAN HAVE IT!!!! Go for it!
Yes, there are people whom are capable of doing more and to see them languishing in min wage govt jobs or just sitting home collecting a govt transfer is a shame. I too wish to see every human reach their maximum capacity but I certainly do not think these people are living the high life at my expense. I have no desire to switch places with them. Some people make it sound as if these people are in enviable positions when in fact we should be pitying them.
I also think that our American system (not as its practiced TODAY so much) has been the best at providing opportunity for advancement, preserving broad choices and retaining some dignity when things go bad. But this hasnt come about because private sector owners wished it to be that way. Our system evolved with a mix of entrepeneurship and heavy handed govt intervention that forced businesses to provide defined work weeks with extra pay for extra work, paid time off, sick leave considerations, retirement benefits. Does anyone here think that all those aforementioned things would have occured without a govt body playing a large role decades ago?
My point is the reason so many of us got it so good (although it is eroding of late) is due to our govt sector too. Not just our private sector. Our govt is bad but its the best there is.
There will likely always be people more or less dependent on the govt sector (us) for whatever semblence of wlefare they have. We can afford it and we dont need to envy them. They are not getting away with anything they are just getting by!
I hope that everyone can get by. If they can get by for long enough maybe we can get more out of them. The potential is there
Seems to me we use buffer stocks everywhere but labor supply. We have a national oil reserve so we can keep our consumption of energy smoothes in the face of out side shocks or whatever. All of us keep a buffer stock of potential income in the form of savings so our consumption doesnt have to fall off a cliff if we suffer income changes at work.
In addition with every valuable commodity like housing, gold, or stocks if we find that 10-15% of the exisitng market is now unsellable, that constitutes a panic. Markets crash and central bankers pull out all stops to restorestability to those affected markets. How is it we can sit so blithely by while 10-15% of our labor market is basically un sellable/unbuyable.? In one instance we are talking about inanimate objects in the other we are talking about humans.
Cullen
Thanks for the reply.
I think I would posit that the potential size of a JG program, if instituted now, is due to the fact that our labor market (thanks to our financial system and political morass) is so terribly wrecked at the moment. I think it might be possible to argue that if we had been doing what MMTists had been advocating all along we would never need the size JG that might be necessary today. The state of our labor market is terrible, and its not because we dont have any skilled workers.
Where do you think our unemployment rate would be if tomorrow we had a moment of sanity in our govt and told all states to rehire every fired worker from the last three years ( the feds would assure the states had the money) and removed payroll taxes. The potential JG pool would be a lot smaller in that case.
It looks daunting now because our labor market is just decimated. This should never have been allowed to occur. There was no “real” reason for this recession. It was all a figment of our imagination thanks to our mismangement of our monetary system
Iluvatar, Bill Mitchell began working on the macro employment problem as a grad student and very quickly hit on the buffer stock approach base on the way that the Australian government dealt with wool. Since then he has published extensive research on the buffer stock of employed and advised government about it. It has been adopted in several emerging countries, successfully Bill reports. This is not a pie in the sky idea. It’s been around for several decades and there have been actually tests reported in the MMT literature. Of course, there are also similar programs in the US, such as the WPA and the CCC during the Great Depression. The claim of the MMT economists is that it’s either create a buffer stock of employment or accept employment elevated above what is necessary with a BSE with the resulting inefficiency of resources use, amounting to huge amount of wastefulness that cannot be recaptured. As I said above, if anyone has another alternative, write it up and put it out there as a macro proposal. But without a professional presentation it will not be considered. MMT has made a professional presentation and still the mainstream refuses to consider it seriously, even though there is empirical evidence that it actually works.
It’s not about avoiding govt policy to achieve full employment. Rather, it’s about focusing on efficiency of productivity to achieve that end. I am all for public sector involvement. But let’s focus on maximizing pvt sector output via govt spending programs, tax cuts, regulation, and new creative programs that promote efficiency, innovation and reduce financialization.
I clearly have a lot of work to do here before my thoughts are formal and final….
I don’t necessarily disagree. But we have to be precise here. The reason why America is what it is, why we have created such incredible wealth in just 235 years, is because we are incredibly productive and innovative. Our capitalist economy and democratic form of govt unleashed a wrecking ball on the old way of doing things. And yes, it is a combination of great govt and great pvt sector. But let’s not confuse the balance of the two. Govt exists to help the pvt sector achieve prosperity. We did not create govt so it could become the engine of prosperity. MMTists (like that better btw) know that govt can do much more than it currently does. But that doesn’t necessarily always mean it should.
I would focus my govt programs on ways to ignite the IBMs, Apples, Microsofts, Caterpillars, etc. Let’s promote innovation and reduce financialization. America isn’t great because our govt employs a lot of people. America is great because our innovators and producers helped create a remarkably fast std of living trajectory. Govt can help, but that doesn’t mean they’re the engine of prosperity….
I’m preparing much more formal thoughts on all of this….