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The Fight for the NHS/MMT economics

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

  1. paulfromcamden

    paulfromcamden Baffled

    Genuine question from me for MMT heads. The Investopedia article states "monetarily sovereign countries like the U.S., U.K., Japan, and Canada, which spend, tax, and borrow in a fiat currency that they fully control."

    Where does this leave the rest of the planet? Does MMT advocate rich Western monetarily 'sovereign' nations spending as they wish but developing nations continuing to rely on taxation?
  2. Joe Hutch

    Joe Hutch Mate of the bloke

    I’m guessing that many voters would be thinking a) if something seems to good to be true, it probably is and/or b) there’s no such thing as a free lunch.

    (Of course the idea that the Tories are the party of fiscal probity and prudence is laughable).
    Heckyman likes this.
  3. Sue Pertwee-Tyr

    Sue Pertwee-Tyr Pending

    I think the bit you posted in bold is where the confusion might arise. I don't think 'governments do not rely on...' is the same as 'governments don't need to...'.

    Again, caveated as I did above, my take is that governments do still 'need' to collect taxes in order for the cycle to continue, but the taxation comes after the spending, not the other way round. Governments create money, which generates wealth, which is taxed. Without the taxing bit, somebody's going to run out of road, eventually, but you can't tax until you've generated the wealth, and you can't generate the wealth unless you create the money.
    ks.234, Heckyman and paulfromcamden like this.
  4. Heckyman

    Heckyman pfm Member

    ... AFAIU, MMT doesn't actually say we don't have to pay for increased spending, it just gives that impression e.g. Kelton (TED talk) when she says stuff like "we are living below our means..." hence all the confusion.
  5. tuga

    tuga Legal Alien

    Interesting question. I wonder how it relates to a country's ability to print money without affecting the economy.
  6. ks.234

    ks.234 pfm Member

    Kelton’s book The Deficit Myth is worth a read
  7. Tony L

    Tony L Administrator

    It is the unemployed aspect that rings alarm bells with me as I can’t see any scenario where legitimate full employment can exist given the ongoing technological revolution. Nor can I see a scenario where we would want it to. To my mind the future needs to be based on UBI and the notion of job-sharing, artisan crafts, creativity, leisure etc as mass labour is (thankfully) heading towards obsolescence. Obviously this requires a whole conceptual land-shift/structural rebuild, and politics in the UK is still rooted in the 18th/early-20th century depending on party. Care work/health will certainly always need humans, but they are all but done in other areas that can be described as ‘labour’. Another 10-15 years and we won’t even need drivers etc, let alone warehouse staff, cleaners and all the other roles at that level.
  8. Sue Pertwee-Tyr

    Sue Pertwee-Tyr Pending

    I think it depends, Tony, what you define as 'legitimate full employment'. To my mind the notion of the 40 hour week is as outdated as any other right of centre notions like 'the undeserving poor', 'hard working families', 'workshy benefit scroungers' and so-on. They all belong in the Victorian era. Why can't we have everybody doing something positive (for themselves, and society) for a few hours a week, rather than fewer people doing the same stuff for more hours? And why can't that be 'full employment'? It is, after all, merely a shift in the work/life balance.
    Darmok and ks.234 like this.
  9. Tony L

    Tony L Administrator

    I did mention job-sharing as a potential solution. The problem is it means exponentially more training for any given role. I remember back when I was an IT manager back in the ‘90s I was always being offered gap-year IT degree students for free for a few months. It just wasn’t viable from a ‘labour’ perspective as it took so many weeks before they were actually useful at all. Up until that point I’d have spent a tiny fraction of the time just doing whatever it was myself rather than having to deal with someone likely of no future value to the company following me around constantly asking questions. The reality is they just sucked time despite having good IT theory as no way would they know the layout and complexities of the server room, the layout of the building, what users were there, what their requirements or knowledge was etc. In most cases they had zero experience of any of the hardware or software in use! Actually training someone, even someone that bright, takes a lot of time!
  10. ks.234

    ks.234 pfm Member

    Unfortunately all parties subscribe to the household budget model of the economy. Some I fear for the fig leaf it gives to cutting back on public services, but some because to go against the household model would attract hostility, ridicule and incredulity.

    However, there are some misconceptions here. MMT is not necessarily a left wing thing, it also allows for lower tax and using the unemployed as a resource by employing them, both of which appeal right wingers.
    Sue Pertwee-Tyr likes this.
  11. Sue Pertwee-Tyr

    Sue Pertwee-Tyr Pending

    But training is just another employment option in that model. You present it as a problem, but not many minutes ago you were saying there wasn't enough work to go around. You could be employed for your expertise, or as a trainer to bring other people's expertise up a notch or two. Both useful functions. And not either/or, more like you get to do the one you prefer/are best at.
    ks.234 likes this.
  12. ks.234

    ks.234 pfm Member

    I’m not up to speed on MMT a and full employment but here is one podcast on full employment and another on inflation here
  13. Spraggons Den

    Spraggons Den pfm Member

    I am liking the stuff on MMT although I am having to try hard to get past the notion that it is just a development of Keynes.

    On full employment, I have long been an advocate for compulsory retirement at the state pension age to give the youngsters a chance which, sad to say, hasn't always gone down well on PF.
  14. PhilofCas

    PhilofCas pfm Member

    It does with me, the retirement age shouldn’t have gone up , and yes, at 65 you’ve done enough, get on with your retirement and let someone else have the benefit of a job.
    Covkxw likes this.
  15. ks.234

    ks.234 pfm Member

  16. Tony L

    Tony L Administrator

    True, but it comes at a cost. That being products and services will inevitably be dearer if a vastly higher training requirement is placed on employers/creators, or it will show as an increase in costs/taxation if the same is applied to the public sector. It just translates as less efficiency.

    All roads come back to UBI to my eyes.

    Huge numbers of roles effectively have a cull long before retirement age already. It is also very hard to get reemployed over about 50-55 unless you are either very highly skilled in certain areas or have good existing friends/contacts. It has always been the case. My first IT role was as a trainer teaching the long-term unemployed adults how to program in COBOL (a course I’d just been through myself). Even in the massive IT skills shortage of the early-90s and with a lot of help behind them few got jobs (I was one of the lucky ones and ended up a well-paid contractor in That London within a year or two).
  17. Heckyman

    Heckyman pfm Member

    During last year's general election, Theresa May argued there was "No magic money tree" to pay for the things some voters wanted. Although she was chided for being unsympathetic to various worthy spending claims, a more fundamental criticism could have been levelled at the Prime Minister: There is indeed a Magic Money Tree!! Since the financial crisis, no less than £435billion of new money has been created through the policy of "quantitative easing", equivalent to a fifth of Britain's annual GDP. In this programme, financial journalist Michael Robinson finds out what happened to this staggering sum of money, and evaluates its effect on the lives of us all.

    TLDR; the money could have been much better spent, not a million miles away from what the proponents of MMT are saying: direct the money to the real world rather than the financial one.
    Spraggons Den and ks.234 like this.
  18. ks.234

    ks.234 pfm Member

    I’ve been looking into MMT and the private sector, specifically by looking at Stephanie Kelton and The Deficit Myth.

    As already stated, if the government creates £100b to go into the economy, and if £40b come back as Tax, then the £60b that is left is The Deficit. It is called a Deficit because it is on the Government’s negative accounting sheet. The Deficit is portrayed as a bad thing. Government’s talk about bringing down The Deficit.

    But the Government Deficit is the money in the economy, it is essentially the Private Sector Surplus.

    If you look at the economy from Kelton’s MMT lens, then what is a negative for Government is a positive for the private sector. A Government Surplus will mean a Private Sector deficit.

    The difference is that the government does not have to pay back its deficit, but the private sector does.


    There is Stephanie Kelton YouTube link above that covers this in more detail
    Sue Pertwee-Tyr likes this.
  19. flatpopely

    flatpopely Prog Rock/Moderator

    What if someone can’t afford to retire at 65?
  20. Joe Hutch

    Joe Hutch Mate of the bloke

    Then surely the answer is to provide a state pension that would be enough to live on, rather than one which just about enables a person to keep body and soul together (but possibly not enough to keep their house warm in winter).

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