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The Fight for the NHS/MMT economics

Discussion in 'off topic' started by ks.234, Oct 26, 2021.

  1. matthewr

    matthewr spɹɐʍʞɔɐq spɹoɔǝɹ ɹnoʎ sʎɐld

    Ok I officially give up. I tried to explain the subject and my views as best I could.
  2. Joe Hutch

    Joe Hutch Mate of the bloke

    mega lord and ks.234 like this.
  3. ks.234

    ks.234 pfm Member

    From my point of view, as someone new to MMT, I have asked for the basis of your objections to MMT, not a series of lectures on ‘we thought of it first’ Keynesianism. When it comes to your views on the failings of MMT, they seem to boil down to your views against ‘socialist utopias/dystopias’ and an antipathy to anything ‘leftist’.

    As such your objections seem rather more political than economic.
  4. matthewr

    matthewr spɹɐʍʞɔɐq spɹoɔǝɹ ɹnoʎ sʎɐld

    All of my comments here and my interest in economics over the years are from a lifetime of left wing politics.
  5. Tim Jones

    Tim Jones pfm Member

    Why can't they be the same thing? I'm sure there are lots of things Matthew and I would disagree on, but his economics always seem interesting to me, especially in terms of the breakdown of the supply-side consensus, Simon Wren, etc.

    From my POV, what's the link between all this and the privatising the NHS thing? Don't quite get that.
  6. laughingboy

    laughingboy pfm Member

    The link between all this (whether ISLM-based Keynesianism or MMT-based economics) is that they suggest that a properly-funded NHS healthcare system is achievable in economic terms. This is particularly true of healthcare because its primary cost is labour. We have plenty of labour lying underused. Spending money to train, retain and maintain that labour force is unlikely to be particularly inflationary until full employment is reached.

    But you don't need economics to show you this - International comparison will do it, too. The Kings Fund tells us:
    If other nations can afford it, so can we. The under-resourcing of the NHS is a political choice.
    Spraggons Den, PhilofCas and ks.234 like this.
  7. ks.234

    ks.234 pfm Member

    I absolutely agree that Matthew has a great deal of knowledge worth listening to, which is why, as someone very new the MMT and zero expertise, I was interested in his objections to MMT. But those objections came down to ‘MMT says x, and if x then y’, but from my reading MMT doesn’t say x, so the explanation that follows from x takes me no closer to understanding the real objection.

    Neither did the patronising tone and single word *sigh* responses.

    I’m not sure what you mean about the supply side consensus, as supply side economics seem to me to be the opposite of Keynesianism in that it is against public spending and for deregulation and lower taxes for the wealthy.

    On the NHS we have a government that has underfunded the NHS for years and by running the NHS down on the grounds that government has no money to the point that privatisation is the only acceptable option for improvement. Only recently we have had a rise in NI to pay for Care.

    MMT (and Keynesianism) points out that government spending is not dependant on tax. The Government spends money into existence. Our Government can afford to buy whatever it wants in £s. It can never run out of £s.

    The underfunding of the NHS is a political choice. It is not a consequence of a shortage of money.
    Last edited: Nov 23, 2021 at 9:47 AM
  8. ks.234

    ks.234 pfm Member

    “It is true that God allowed men to turn the earth it’s products and it’s creatures to his own use and convenience, that is, He gave an indefinite right to them.

    Yet the manner, intensity and extent of this power were left to the judgement and disposition of men, where, in other words, they would confine it within certain limits, or within none at all, and wether they wanted every man to have a right to everything, or only to a certain and fixed part of things, or to be assigned definitive portion with which he should rest content and claim no right to anything else”

    Samuel Pufendorf, 1672
  9. matthewr

    matthewr spɹɐʍʞɔɐq spɹoɔǝɹ ɹnoʎ sʎɐld

    So I re-read the thread and my contributions here and would make a few points:

    1) I think I added a good deal to the conversation and spent some considerable time explaining the issues and the economics (or at least my understanding of it) from a mainstream point of view.

    2) My <sigh> post should be read in context. Specifically I was talking about how mainstream economists avoid MMT conversations as they often end up bogged down in semantics and tend to go around in circles and become very frustrating. So they end up letting out a weary sigh and move on. My sigh was to echo this and I think that is clear in context.

    3) The following morning, in the spirit of moving on and trying again, I spent some considerable effort (effort I can ill afford FWIW) explaining my views on MMT and on Keynesian economics. To which I received a reply that seemed unnecessarily antagonistic and, frankly, more than somewhat rude. At which point I gave up.

    In none of this was it my intention to be condescending or patronising or to do anything else other than to explain my views on the subject, which again I stress are broadly in line with 98% of mainstream economists.

    It remains my view that anyone wanting to understand MMT should start from a position of understanding more about ISLM and New Keynesianism and how this relates to neoliberal and conservative economic ideology. I do think there is some scope for MMT on the political side for reframing the debate, although this was largely tried with the Sanders campaign with little success.

    Beyond that I don't think I have much to add to this debate and certainly don't want another go around the NK / MMT loop. But I did think re-reading my posts and clarifying my views was worthwhile given my name had come up again.
    ks.234 likes this.
  10. ks.234

    ks.234 pfm Member

    The sigh did come across as patronising but I was not really aware of the debates in academia between Keynesians and MMT, which do indeed seem about semantics and assumptions. Having read a bit more those battles are more obvious. But I still don’t understand the big picture behind them. As you say Keynesianism and MMT are very similar. If the two share similar principles, why get bogged down in battles over minutiae?

    Warren Mosler, a bond trader and non-academic often regarded as the father of MMT, wrote a paper in 1996 to get his ideas, ideas that were recognised in the financial word, accepted by academia. His ideas were however rejected by academia, despite the fact that Mosler had made a great deal of money from understanding how the money markets work in the real world.

    Mosler was puzzled by the rejection because he did not think MMT would be controversial to academic thought. Much of the rejection of MMT by academia was based on presumptions that you have outlined, objections such as MMT rejecting monetary policy and the role of interest rates. But MMT does not reject monetary policy, it specifically says that every tool available should be used to balance the economy. Likewise MMT doesn’t reject using interest rates as a lever. Yes, it sees interest rates as regressive as they transfer wealth from borrowers to lenders, but they don’t reject them altogether.

    The appeal of MMT to a non-academic like me, is manyfold. First of all it speaks to me in words I can understand, it doesn’t speak in academic language and mathematic equations. It makes sense in the real world that I happen to live in.

    Second, (and perhaps pertinent to the ‘battles’) MMT’s message is much more moral than academic. It points to the possibility of a economic system that can provide a great deal more for a great deal more people, instead of feeding the already rich who happen to “belong’.

    Thinkers of the past have all started from a moral perspective. Samuel Pufendorf writing in 1672 noted the moral question about the distribution of wealth being equal among men or allocated disproportionately for political means. More recently Adam Smith (who I have just started re-reading) noted that economic advances have sociological consequences that are not always of a beneficial tendency and that the social tendency of men has to be considered alongside his tendency towards greed and selfishness.

    It seems to me that philosophers of yore like Hobbs, Pufendorf and Locke, all started off by considering the state of man and the state of nature from which is derived the role of government. We seem to have lost that basis of social enquiry in favour of academic theorising based on mathematical modelling. MMT seems to get back to more of a question about what government is for, a question that in a time of massive social need due to existential threats like Pandemics and Climate Change and a government response to such threats that is still predicated on an economic lie designed to distribute wealth according political allegiance rather than economic need, is surely a question of some importance.
  11. Heckyman

    Heckyman pfm Member

    Yes! I recently watched an interview of Sir James Goldsmith(!) from 1994 who, in the face of impending liberalisation via GATT/WTO, was arguing that globalisation would destabilise societies and that the poor in rich countries would end up subsidising the rich in poor countries:

    "What is this nonsense? Everything is based, in our modern society, on improving an economic index. How do we get greater economic growth, how do we grow GNP? And the result is we are destroying the stability of our societies, because we are worshipping the wrong god....the economy, like everything else, is a tool which should be subject to the true and fundamental requirements of society." (@37 min)

    Remarkably prescient looking back from 2020's Brexitland!
    Sue Pertwee-Tyr likes this.
  12. ks.234

    ks.234 pfm Member

    “the economy, like everything else, is a tool which should be subject to the true and fundamental requirements of society."

    Yes. We absolutely need an economy built on the requirements of society.

    But we live with an economy built on the presumption that ‘there is no such thing as society’. We live in an economy built on the requirements of an elite that uses underemployment and unemployment as a buffer to keeping their own economic stock high.

    An economy subject to true and fundament requirements is desperately needed before the current ideology leads us into further unemployment and climate disaster. Neither of which ironically, will be very good for the, er, economy
    Sue Pertwee-Tyr likes this.
  13. Heckyman

    Heckyman pfm Member

    We should make that quote: "There's no such thing as the economy. There are <del>individual</del> men and women and there are families [edit: and communities]."
    Last edited: Nov 25, 2021 at 12:50 PM
    ks.234 likes this.
  14. ks.234

    ks.234 pfm Member

    Yes, though I’d take out the word individual and say there are only people and families. The whole ‘individual’ thing is very Thatcherite
    Heckyman likes this.
  15. laughingboy

    laughingboy pfm Member

    Goldsmith's book, The Trap, is available as a free pdf from his own website (here). I have no patience for his ideas for the Welfare State, but what is surprising is that for a right-winger and a capitalist, a lot of his arguments are about decentralising power and increasing democratic control.
  16. matthewr

    matthewr spɹɐʍʞɔɐq spɹoɔǝɹ ɹnoʎ sʎɐld

    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.

    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.

    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.

    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.
  17. paulfromcamden

    paulfromcamden Baffled

    I think the idea is (broadly) that the government cranks up the printing presses so the NHS is awash with cash.
  18. Ponty

    Ponty pfm Member

    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.
  19. Spraggons Den

    Spraggons Den pfm Member

    ..including your posts :)
  20. Sue Pertwee-Tyr

    Sue Pertwee-Tyr Well, I can dream, can’t I?

    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.

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