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The Fight for the NHS/MMT economics

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

  1. Heckyman

    Heckyman pfm Member

    What if the gov can’t afford to have folks retiring at 65? You might have to go work in an abattoir until you’re 70 thanks to all the missing imported labour…
  2. ks.234

    ks.234 pfm Member

    Our Government can afford to buy whatever it wants GBP’s.
  3. Heckyman

    Heckyman pfm Member

    OK, so why not let everyone over, say, 50 get the state pension from the magic money tree?
  4. ks.234

    ks.234 pfm Member

    The only limit to government spending is inflation. The limit is not the availability of money, the limit is the consequences of where and how it is spent.
  5. Tony L

    Tony L Administrator

    Indeed. We should not forget that the government easily created £37bn, which over ten times the cost of a full-term NASA mars lander project, for Dido Harding’s test and trace failure. The money can be created, as it is when you take out a mortgage etc. It just needs to be invested in things that pay back long-term (i.e. not Dido Harding, Matt Hancock and the rest of those crooks).
  6. Spraggons Den

    Spraggons Den pfm Member

    Its a fair question and I don’t have a ready answer for you.

    I would say that any policy based on an age cut-off will inevitably catch some people out, disadvantage them.

    Such effects could me mitigated however by introducing the policy in phases by making the age 75 to begin with and reducing it after say five years to 70 etc until the state pension age figure is attained. This would allow folks to plan accordingly

    Not ideal I know but better than the scourge of mass, youth unemployment which has terrible social and economic consequences for those affected and the country.
    PhilofCas likes this.
  7. ks.234

    ks.234 pfm Member

    Yes, except I wouldn’t say we should invest in things that can pay back, but things we need. Like climate change.
  8. Tony L

    Tony L Administrator

    It just doesn’t work logically as it would require an absolutely unacceptable degree of authoritarianism. Most conventional employment has an age cutoff anyway, e.g. public sector roles etc, and very few in private sector business get to work far beyond the retirement age. There are exceptions, judges, HoL, certain high-skills, creatives etc. As someone who is self-employed I’ll keep on doing exactly what I want exactly as long as I want to keep doing it and any government can stick any argument to the contrary sideways up their butt! By saying that forcing retirement on many aged rock stars might be a good move.
    Chops54 likes this.
  9. Tony L

    Tony L Administrator

    Averting climate change will have the biggest payback of any investment in history. Not averting it will burn all markets to the ground. Literally. Well any that aren’t already underwater by that point. There is no amount I wouldn’t create/borrow to address this one.
    ks.234 likes this.
  10. droodzilla

    droodzilla pfm Member

    I'm no expert but I think the underlying constraint is the real capacity in the economy - inflation is just the "temperature gauge", as it were. In this respect, MMT follows Keynes' line: if we have the resources to do it, then we can afford it. There must be a bit more to it than that because, as I understand it, MMT is not just reheated Keynesianism.

    Anyway, another (shorter) video from Kelton:

    I found the last bit (from 7:30 on) illuminating, especially the analogy between money and scorekeeping in a sports game.

    It's possible to quibble over the details but the essential point of MMT is surely correct: that the national economy is not like a household budget, and that seeing it that way enables all sorts of damaging policy decisions to masquerade as "common sense".
    ks.234 likes this.
  11. Spraggons Den

    Spraggons Den pfm Member

    I think you have made my argument for me perfectly .

    I agree that it could easily be perceived as heavy handed and authoritarian but compulsory retirement was accepted as the norm for most of my adulthood and only changed about ten years or so ago.

    I also concede that for a minority of oldies working on is good for their mental and physical well-being but IMHO it comes at the cost of depriving people in their twenties of these benefits plus of course economic ones. I suppose ultimately I just see someone who is working into their 70s when they are already comfortably well off as being selfish.
    Last edited: Oct 27, 2021
    Bob McC and PhilofCas like this.
  12. ks.234

    ks.234 pfm Member

    Yes. In the same manner, the NHS is a benefit, not a cost as our right wing friends would have us believe
    srh likes this.
  13. ks.234

    ks.234 pfm Member

  14. Tony L

    Tony L Administrator

    Agreed. Even if one forgets entirely any moral imperative there is a direct benefit to business in not having to pay or subsidise crippling health insurance premiums for employees. It also facilitates so much small business that just wouldn’t be viable under an elitist private healthcare model.

    The thing that never ceases to baffle me is how the Republican far-right in America manage to sell such a corrupt private healthcare model to working people despite the fact it bankrupts so many taking everything they have worked for and saved over a lifetime just to pay for treatment of commonplace ailments. Just totally irrational.
  15. ks.234

    ks.234 pfm Member

    As already said, I have no credentials, but you don’t need credentials to see that he is making a conclusion based on a false understanding of what MMT actually is.

    The fact that there is opposition to MMT is unsurprising as the household economy myth is both very pervasive and makes intuitive sense because it chimes with our own experience.

    Half a millennium ago we believed that the earth was at the centre of the solar system. We believed it because was preached from ever pulpit in the land and because it chimed with our everyday experience; if we jump up and down the earth doesn’t move, and you can see the sun moving in the sky, see, just look!

    But the Copernican Revolution gained currency thanks to a scientific observation of the real order of things. What then followed on from that simple revolution of understanding, was not so simple. We needed a theory of gravity to explain why the earth didn’t move under our feet when we jumped up and down, a theory which only got more complicated and more counterintuitive as it was developed further and further. But even if we don’t have an Einstein like understanding of gravity, that does not threaten our understanding of the simple Copernican observation of the real order of things in the solar system.

    Just as the sun does not go around the earth; it’s the opposite, so tax is not required to create government spending; it’s the opposite.

    Government does not need an income in order to spend in the same way that a household does. When the government spends, that money is the money circulating in the economy. The Deficit is an accounting term to describe the difference between what the government spends and what it receives. In the real world outside a spreadsheet, the deficit is not a negative, it’s the money in our pockets.

    MMT is not about spending into oblivion* it’s about spending up to the limit of available resources so as not to cause inflation. The very fact of unemployment means that we have resources that are not being deployed, and more than not being deployed, are a cost.

    It is however true that right wing governments are obsessed with ‘balancing the books’. Balancing the books is necessary in our own households (and in business, and local governments etc) but where money is created, balancing the books is an accounting exercise leftover from the days when money was notionally based on real things.

    Nowadays what the government spends is the money in the private sector. What is a government deficit, is a domestic and private sector surplus


    Balancing the books, like Clinton was so proud to do, just turns a domestic and private sector surplus into a deficit and household debt. Clinton’s balanced budget was a cause of the 2008 crash.

    We don’t need to balance the books, we need to balance the economy. We need an economy that is balanced between supplying our need up to available resources, and the dangers of inflation and dysfunction. We need to balance the economy between the need to produce growth and the need to save the planet.

    *All modern examples of Hyperinflation are not the result of spending to oblivion. Oblivion was caused by the need to pay debts in a foreign currency
  16. Tony L

    Tony L Administrator

    I watched the two videos last night (I’d only recommend the longer one, the shorter one is too condensed to understand her points) and she does make a lot of sense. Obviously I’m starting a bit into it as for years I have fundamentally rejected the stupid ‘household budget’ concepts of our two dinosaur parties, their track records prove beyond doubt they are economically illiterate. The part I hadn’t fully grasped was the relationship between state and private sector deficit and exactly why it was such an advantage to private business to run a state deficit/how clearing state deficit (e.g. under Clinton) is a bad thing.

    I’m now at the point where I believe MMT analysis to be fundamentally correct, but I’d need a lot more detail to know how far it holds up as a deliberate strategy. I have a rather more jaded view to unemployment and believe there will always be a residual number that don’t really have any employable context. You can’t just look at that figure and assume the skillsets you need are available. Huge numbers of job vacancies can certainly exist simultaneously with mass unemployment. I’m also curious to see how it works in the face of mass automation/computerisation and with unnatural constructs such as ‘minimum wage’ etc. I still can’t see beyond UBI in most respects, but don’t necessarily see that being incompatible with MMT.

    I certainly hope it gains traction though as the current state of economic thinking in the UK really is just bullshit. Brown, Osborne, Sunak etc are just liars and idiots endlessly repeating obvious mistakes of the past.

    PS Anyone reading this thread assuming this is some fringe leftist cloud-cuckoo-land fantasy bullshit should really watch the (longer) video. It isn’t at all to my eyes, in fact I don’t see it as left/right at all. I have many questions, but it certainly addresses a lot of current thinking that is so obviously wrong.
    ks.234 likes this.
  17. Ponty

    Ponty pfm Member

    Appreciate your post. I have a fundamental belief that you can’t have something for nothing, there is no free lunch. You could argue that looking at yesterdays budget, the govt is well down the road of MMT. Sunak is spending plenty of money (he doesn’t have), with record borrowing and historically high taxation. This is lunacy from a conservative govt and I question whether I can continue to vote for this cavalier approach. Throw in rapidly rising inflation (which bizarrely, these MMT guys don’t seem to think exists) and inevitable interest rate rises on record govt and personal debt and if you think things are bad now, you ain’t seen nothing. Those who think the govt can continue to throw money at problems are in for one hell of a shock IMHO. It really is time to ensure you have resilience to external factors and resulting events which may unfold.

    You mention the 2008 crash. If regulators had been on top of their game, the shenanigans which took place (in the UK, not just the US) would have been stamped on and the debacle could have been avoided IMHO.
  18. Joe Hutch

    Joe Hutch Mate of the bloke

    Is it just me, or does the acronym MMT suggest Magic Money Tree?
  19. ks.234

    ks.234 pfm Member

    Thank you for your reply. You are absolutely correct in that you and I, and everyone else outside the issuing bank, cannot have something for nothing, there is indeed, no free lunch for us. But that government can and does issue money into existence is undeniable. To say that the government requires income from tax before it can spend is nonsense, it’s as if you sit down to a game of monopoly and the banker says to all the players that they have to hand over money before the game san start. It makes no sense.

    I must correct one huge misunderstanding. MMT guys do not think inflation does not exist. MMT recognise inflation very clearly. It is central to MMT thinking. MMT says that inflation is the real limit to government spending. The limit to government spending is not the availability of money, because as the issuer, government has a never ending supply. The UK government cannot run out of £’s.

    If inflation is one side of the coin, Unemployment is the other. So rather than balancing the books, which is no more that balancing numbers on a spread sheet, MMT say we should balance the economy, that we should balance unemployment with inflation. The numbers on the spreadsheet don’t matter much, what happens in the real world matters a lot more.

    Also, you mention borrowing. But government borrowing is another accounting exercise to balance the books. In order to cover ‘the deficit’, government sells bonds and securities that are bought by the private sector (and play an important part in insurance an pensions) But paying back that ‘borrowing’ again comes from the central bank issuing the money to pay the returns when they’re due. Government borrowing is not like the borrowing that you and I understand where we have to pay back from our income. The government pays back by issuing the money.

    Finally, I don’t think it helps to see MMT as a right/left thing. Many aspects of MMT would appeal to right wingers and some would appal left wingers. For example, MMT describes the means to full employment, Warren Mosler* talks of Transitional Employment and others call the Job Guarentee which could appeal to the right wing supporter of Welfare to Work. As a proponent of Sovereign Money, MMT is against giving up a sovereign currency such as our for another currency such as the Euro, something that might have a few radical Remainers up in arms?

    Whatever your political beliefs, MMT deserves serious consideration. Its difficult because it involves turning our thinking upside down, but if we’re not prepared to turn our understanding on it’s head, we’d still believe that the sun goes around the earth


    Among other thing Mosler talks about here is Job Guarentee and UBI which might be of interest to @Tony L
    Sue Pertwee-Tyr likes this.
  20. Tony L

    Tony L Administrator

    It isn’t a free lunch at all. Have a watch of the video. It may take a couple of watches as I already started a fair way in as I recognise Thatcherism, Osborne and for that matter anything Labour have to be absolute bullshit that deliberately and fundamentally misrepresents how state issued money works. We are living the lie right now, this is just a far better analysis of exactly where we are and how to control the parameters that actually matter. The MMT analysis of how money is issued is correct. The analysis of how state and private deficits balance looks to be correct too.

    As I say there is a lot more I want to understand (as stated I don’t consider full employment to be either possible or even desirable, I also don’t believe in left constructs such as an arbitrary state dictated ‘minimum wage’ etc, though that is a different thing), but I know for sure the current system is based on a fundamental lie. It just is. All evidence points to that.

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