The Fight for the NHS/MMT economics

[ks.234]

Because the vast majority of MMT is Keynesianism and the differences, Keynesians argue, either make little actual difference or are harmful and possibly even dangerous.

We seem to be going around in circles again. I don’t understand how you can say the ‘Keynesianism *is* MMT’ and then say that MMT is dangerous but Keynesianism is not.

I don't understand this at all. Surely the whole point of MMT is that interest rates do not affect aggregate demand and are therefore not used as part of monetary policy. Instead MMT uses money printing and tax increases to control demand, compared to NK which uses money printing, tax rises and interest rates.

Again, all the MMT says on interest rates is that they’re regressive

And Keynesians argue that the fiscal space for MMT is no greater than that already available (but mostly unused) to NK. And that if you go beyond the NK limit you are going to either have inflation or else a moribund economy with low productivity growth. Which is why they want to talk about secular stagnation, Japan, productivity, the limits of fiscal policy effectiveness, zero lower bounds, endless affordability of GOP tax cuts, etc. etc. and not MMT.

If both Keynesianism and MMT agree that there is unused fiscal space that can be used up to but not beyond the point of inflation, what’s the argument? MMT clearly says that inflation is a limit to spending, as are all the other limits you mention

But that's politics, not economics. And literally that's the politics of Krugman (government can do good, we have orders of magnitude more fiscal space than we think, green new deal, addressing income inequality, etc.) who you earlier dismissed as a right wing shill.

Of course it’s politics. That’s the point. Economic truths need to be heard outside of academia and get into politics. The fact that academic models of the economy do not find their way into politics is the problem.

It is true that Krugman is quoted out of context by those who use him to attack MMT, but Krugman says one thing one minute and something else another depending on his audience.

What is interesting though is how Krugman is used as a stick to beat MMT by both monetarists and Keynesianism alike, despite the fact that a number of MMT supporters have taken on the criticisms head on and answered them.

There seems to be an alliance between academia and current economic thinking to keep MMT out of politics, not sure why.

No doubt if MMT makes more headway we’ll start to hear more about MMT being a socialist utopia/dystopia, a far left ideology, or some such nonsense.

 

[Spraggons Den]

Yes, I think the old dichotomy of private sector equals efficient-public sector equals inefficient is a glib way of viewing modern, complex structures such as supranational corporations, PFI s etc

 

[ks.234]

Which will of course drive (further) inefficiencies if people know or think there is a bottomless pit. Applies to everything, not just the NHS. If resources are abundant, their value reduces.

No. It’s about spending to utilise resources, not spending beyond available resources. Overspending will of course have economic consequences, but the last time I looked, the NHS was not awash with an over abundance of resources.

We are a long, long way from a situation where the economy will even begin to suffer consequences due to overspending on the NHS.

 

[Ponty]

I think the BBC is a reasonably good example of this - it was a byword for profligacy back in the day, and I'm not sure that any thrift measures now applied are hitting all the right areas.

But it doesn't follow that the same can or should be said for the NHS, or any other public service. A lot of the 'inefficiencies' in the NHS are not a result of profligacy, but are a result of a lack of joined-up thinking and externalities. So 'bed-blocking' is not an NHS problem, but a problem with community social care, for example. There may be unnecessary tiers of NHS management, I don't know, but I do know that a fair amount of NHS 'management' time is taken up dealing with 'stuff' that isn't of the NHS' own making.

The lack of joined up thinking must be a huge inefficiency across public services full stop. Parochial solutions and empire building rather than a holistic approach. How these issues get fixed with incumbent mindsets I just don’t know.

 

[Heckyman]

The root of the problem is that the developed world is over-indebted, the population is ageing and growth is slowing. There are actually very few options left other than fiscal stimulus and a Govt engineered period of financial repression (rate of inflation above interest rates) to inflate away the debt.

It's scant consolation if you don't own real assets (or if you're a saver rather than a borrower), but at least you could get a nice hospital if the printed money goes on the NHS ;-)

 

[Sue Pertwee-Tyr]

The lack of joined up thinking must be a huge inefficiency across public services full stop. Parochial solutions and empire building rather than a holistic approach. How these issues get fixed with incumbent mindsets I just don’t know.

Privatisation is probably about the worst way to achieve a holistic approach, surely? Numerous competing organisations each working to maximise their own advantage, to their own corporate ends, is not the way to achieve a holistic 'best solution for the most people' outcome for anything. It might work when the market is widely differentiated, so multifarious and varied offers are useful by way of providing choice, but I don't think healthcare (or most public services, for that matter) fits that description.

 

[Ponty]

No. It’s about spending to utilise resources, not spending beyond available resources. Overspending will of course have economic consequences, but the last time I looked, the NHS was not awash with an over abundance of resources.

We are a long, long way from a situation where the economy will even begin to suffer consequences due to overspending on the NHS.

If resources (including labour) become fully utilised and there is no spare capacity, what will happen to prices?

 

[paulfromcamden]

Which will of course drive (further) inefficiencies if people know or think there is a bottomless pit. Applies to everything, not just the NHS. If resources are abundant, their value reduces.

I dunno to be honest. For one thing I don't imagine it's a situation many working in the NHS have experienced. The only place I've worked that really was awash with cash was an investment bank pre-crunch. Did it lead to gross inefficiencies? Perhaps. But not that were noticeable to me as a lowly IT grunt.

I guess I'm a little bit wary of politicians talking about inefficiency and red tape in public services as it often seems like an excuse to not properly fund the service. I think you have to accept that there will always be a degree of inefficiency and waste in any very large organisation. Though hopefully the economies of scale work in your favour - example: the NHS buys insulin for a fraction of what it costs US insurance companies.

 

[Ponty]

The root of the problem is that the developed world is over-indebted, the population is ageing and growth is slowing. There are actually very few options left other than fiscal stimulus and a Govt engineered period of financial repression (rate of inflation above interest rates) to inflate away the debt.

It's scant consolation if you don't own real assets (or if you're a saver rather than a borrower), but at least you could get a nice hospital if the printed money goes on the NHS ;-)

Agree with you, particularly now recessions are banned.

 

[ks.234]

If resources (including labour) become fully utilised and there is no spare capacity, what will happen to prices?

We are such a long, long way from that scenario that it really is another world.

If we ever do get to that El Dorado, I’m not sure even MMT has the crystal ball to predict what will happen to prices. Not sure anyone else has either to be honest.

 

[Ponty]

Privatisation is probably about the worst way to achieve a holistic approach, surely? Numerous competing organisations each working to maximise their own advantage, to their own corporate ends, is not the way to achieve a holistic 'best solution for the most people' outcome for anything. It might work when the market is widely differentiated, so multifarious and varied offers are useful by way of providing choice, but I don't think healthcare (or most public services, for that matter) fits that description.

I suppose we could go back to the days of everything being nationalised. It was a paragon of efficiency back then so I’m told.

 

[Ponty]

We are such a long, long way from that scenario that it really is another world.

If we ever do get to that El Dorado, I’m not sure even MMT has the crystal ball to predict what will happen to prices. Not sure anyone else has either to be honest.

Well, a real time example is plenty of businesses who can’t find labour. I know people in the hospitality trade who have literally had to shut the doors due to lack of staff. Guess what’s happening to staff wages, and consequently end customer pricing.

 

[Sue Pertwee-Tyr]

I suppose we could go back to the days of everything being nationalised. It was a paragon of efficiency back then so I’m told.

Why is it all or nothing with you? Why can't we have some things under public sector, like NHS, critical infrastructure and the like, and other things in the private sector where competition can be beneficial. Why, if I say 'the NHS should be in public ownership' would you respond with something akin to 'I suppose you want British Leyland back'? It's a pretty threadbare line of argument, have you nothing better?

 

[Heckyman]

Agree with you, particularly now recessions are banned.

I think they can't allow recessions anymore as there's a pretty good chance the whole house of cards comes crashing down. They daren't even let large individual companies go to the wall because no-one knows who's on the hook at the end of the line.

 

[Enfield boy]

Let's face it, what happened to privately owned Ford UK, GM UK, Rootes/Chrysler UK. All pretty much gone. There was industrial strife but I'd contend this was mostly due to incompetent management.

Why is it all or nothing with you? Why can't we have some things under public sector, like NHS, critical infrastructure and the like, and other things in the private sector where competition can be beneficial. Why, if I say 'the NHS should be in public ownership' would you respond with something akin to 'I suppose you want British Leyland back'? It's a pretty threadbare line of argument, have you nothing better?

 

[Ponty]

Why is it all or nothing with you? Why can't we have some things under public sector, like NHS, critical infrastructure and the like, and other things in the private sector where competition can be beneficial. Why, if I say 'the NHS should be in public ownership' would you respond with something akin to 'I suppose you want British Leyland back'? It's a pretty threadbare line of argument, have you nothing better?

I actually agree with you. Certain things are too important and should be taken out of short term political control. The challenge is, public sector does not generally go hand in hand with efficiency.

 

[Spraggons Den]

Parochial solutions and empire building

...are also rife in the private sector...as evidenced in the attitude of the employees from the Slough branch in BBC1 documentary 'The Office' towards their colleagues from Swindon during the merger.

 

[Sue Pertwee-Tyr]

I actually agree with you. Certain things are too important and should be taken out of short term political control. The challenge is, public sector does not generally go hand in hand with efficiency.

It depends, to some degree, what you regard as efficiency. The public sector tends, in my experience, to aspire to best practice in terms of things like employment rights, pensions, equality and diversity, and generally doing the right thing. Not least because it is required under its enabling legislation. The private sector tends to apply more inventiveness to looking like it is doing the right thing, while cutting corners or actively circumventing some of this, perceived as a drain on the bottom line. I don't consider that to be 'efficiency' in the wider sense of the term.

 

[ks.234]

Well, a real time example is plenty of businesses who can’t find labour. I know people in the hospitality trade who have literally had to shut the doors due to lack of staff. Guess what’s happening to staff wages, and consequently end customer pricing.

That sounds like a case of wages being held artificially low by years of underemployment based on the threat of unemployment. If those businesses can’t compete in an economic environment in which they can’t pay the current rate for staff, which is still on the low side, perhaps there is something wrong with their business model?

 

[ks.234]

The question is this, are we in a period of inflation, as described in economic terms as a period of ‘continuous inflation’ or are we seeing a period of structural adjustment?