This pilot project and the radio/video shows it will produce and place on the web is for everyone tired of hearing economic commentary from those who got everything wrong. For decades, the doctrine of “Fiscal Responsibility” interpreted as long-term deficit reduction and Government austerity has had a secure place in American politics. This doctrine is the economic equivalent of the medieval notion that patients must be bled to cure them of disease. And this truth is reflected in the economic history of the United States at least since 1976, when we first began to practice ideology-based austerity in its modern form by planning for deficit reduction and balanced budgets in order to decrease the debt-to-GDP ratio.
Yes, there were short periods of expansive GDP growth during the Reagan and Clinton Administrations, but when one compares job creation and growth rates across the decades, one can see from Table One, that new job creation and GDP growth during the 70s, 80s, 90s, and the first 10 years of this century don’t compare to the 40s, 50s, and 60s of the 20th century. By comparison we’ve been experiencing a stagnant economy in varying degrees for more than 40 years now.
Table One: Percent Changes in Some
Key Indicators Across the Decades*
*The first four columns in the table were taken from Neil Irwin’s 2010 article emphasizing that the first decade of the 21st Century was a lost decade for the US economy and its workers. I added the last four columns, myself. All the numbers in the Table are percent changes, or ratios of percent changes during each decade beginning in 1940. I took the percent population change column from the US Census Bureau via Wikipedia, and then calculated the ratios in the last three columns.
The notion that austerity is necessary after running budget deficits caused by economic downturns is false and damaging to economies all over the world. We have opposed targeted deficit reduction and austerity in the blogosphere and in an e-book since 2010. Yet despite our efforts and the efforts of many others who using the Modern Money Theory (MMT) approach to economics, as well as other post-Keynesians, the mythology of austerity still survives as a political doctrine echoed by various figures in Congress and occasionally by the President of the United States and some of his cabinet officers, waiting in the wings until the next debt ceiling or budgetary crisis provides an opportunity for austerity partisans to push their nostrums of spending cuts and “Grand Bargains” once again.
Why does austerity ideology still survive? Because the developing oligarchy uses its false notion of fiscal responsibility to justify its refusal to support solutions to our problems that require deficit spending. “Fiscal Responsibility” is used as a moral cudgel to get some things done and to block other things. Thus far, it has been used to get the wrong things done in the wrong way by politicians and pundits of every stripe working at the behest of the developing oligarchy.
So, the importance of our project is that it is aimed at overturning their myth of fiscal responsibility and replacing it with Real Fiscal Responsibility. If we can do that, with your help, then an important tool used to create and maintain the oligarchy will be gone, replaced by one that we can use to drive fiscal policies designed to fulfill the public purpose as seen by the people.
We value Real Fiscal Responsibility highly, and we want it very badly; but it doesn’t lie in targeted deficit reduction, or in spending cuts for their own sake, or in balanced budgets, or in paying off debt, in the abstract. We know that this kind of conception of fiscal responsibility is actually the height of fiscal irresponsibility, because it has been responsible for most of the increasing economic misery and growing idleness and economic inequality that many of the people of the United States have endured for decades.
Instead, Real Fiscal Responsibility lies in targeting real impacts, real benefits, and real results, and fulfilling the needs of real people. We want to replace the false and damaging austerian accountant’s green eyeshade paradigm of so-called “Fiscal Responsibility,” evaluated against the arbitrary standards and scare tactics of debt-to-GDP ratios and public debt levels, with the human scale paradigm of Real Fiscal Responsibility, evaluated against the standard of fulfilling public purpose.
We seek funding for a pilot project for a new radio/video series that will present, and advocate for this paradigm change. The project will create six shows that we will then use to get the series picked up by an existing cable network.
Only by exposing the fallacies of austerity systematically, week by week, can we end its reign of error and needless privation. Only by describing the implications of fiat currency systems in detail can we communicate the opportunities existing for people who will use the expanded policy space they provide.
Getting this done is enormously important, because working people are suffering and the middle class is being destroyed needlessly by austerity policies, and by some with malice aforethought. Our paradigm of Real Fiscal Responsibility makes clear that Governments with fiat currency systems like those found in the US, UK, Canada, Australia, Japan, and many other nations issuing their own currency cannot run out of money. They have no solvency risk. Their level of debt and debt-to-GDP ratios don’t matter from a financial risk point of view.Here’s Professor Stephanie Kelton being interviewed by Richard Eskow on this point and the general orientation of MMT.
Once people understand the expanded policy space implications of fiat currency systems they will know that any budget cuts or tax increases or rejections of new legislation on solvency or financial scarcity grounds alone are unjustified. And they will know that all the troubles caused by refusals to pass full employment, Medicare for All, new energy foundations, educational reform, infrastructure reinvention, extensions of the social safety net, and other highly desirable fiscal policies create gratuitous and cruel individual and societal hardships for most of us. All proposals to cut entitlements and the social safety net on grounds of cost or so-called future liabilities are equally unjustified, and certain to cause entirely unnecessary suffering.
These spending cuts on purely deficit reduction grounds harm America. They sell it short. They damage future generations. They prevent us from seriously considering new and innovative policy proposals which address a number of our problems simultaneously such as this one, and in so doing hurt our ability to adapt to change and challenge. They must be eliminated as a factor in politics once and for all if we are to progress as a nation.
Our proposed Radio/Video program is about presenting the paradigm of Real Fiscal Responsibility to the general public. It will explain all facets of the new paradigm through interviews and discussions with the main thinkers in Modern Money Theory and other post-Keynesian approaches who have developed aspects of the new approach.
The show will feature discussions of policy alternatives that may be effective in solving the problems listed earlier. It will feature advocates for alternative policies and discuss their proposals. We will talk to economists and policy makers who share our perspective and also to some who don’t.
We will also provide a forum for discussing all the implications of Real Fiscal Responsibility for both fiscal policy and for politics more broadly. The show will be supplemented by a web site providing blogs, commentary, and discussion forums about the various policy issues covered in the shows.
Our goal for this pilot project is to raise $30,000 to create the six programs. Please help us to meet this goal at our indiegogo site. If we can do it, and then get the program picked up, our voice may be the decisive one in defeating the austerians and their policies, and in opening the way to create the America of economic opportunity and social justice we all long for.
Great job, although I do fear that you end up gathering many enemies for MMT by showcasing so many liberal ideas that conservatives cannot stomach. For that matter tax cuts would be neutral policy tool that both conservatives and liberals could embrace. Slogan could be that we are grossly overtaxed for the size of the government we have.
Talking about real fiscal responsibility, we could also talk about real debt. What is the government indebted to do for its citizens? There is this overwhelming view, almost universal, that good economic management is the responsibility of the government. It therefore follows that government is obligated to issue financial wealth in just right amount to ensure full employment and price stability. The real debt that government has is not the amount of interest-bearing liabilities outstanding, but the amount that it is obligated to issue to ensure good economic management. That’s what government owes to its citizens. And while the precise amount cannot be known, it is clear that, in the time of mass unemployment sum is much more than presently outstanding.
Thanks, PZ. In reply:
First, I’m not concerned about conservative opposition to MMT, because I don’t think MMT is a purely descriptive approach to economics. In fact, I don’t think any of those do or can exist. MMT itself has a progressive bias which comes from its commitment to fulfilling public purpose as the legitimate goal of economics. I’ve outlined that view elsewhere and so will not repeat it here. In short, I don’t care in the least whether conservatives can stomach MMT or its ideas. I only care about whether the general public accepts MMT views as soon as possible so that all the unnecessary suffering of people can be ended.
Second, tax cuts are not a neutral policy tool. FICA Tax cuts are relatively progressive. tax cuts on the wealthy are not. Progressives might be persuaded to support the first, and conservatives the second; but they will not support the same tax cuts. Also, the deficits caused by tax cuts don’t have the same impact as those due to increased deficit spending. In general, deficit spending on safety net measures, infrastructure, education, job guarantees, new energy projects and so on, have much higher fiscal multipliers than most tax cuts. The highest multiplier tax cut I’ve seen so far in popular discussion is the full payroll tax cut, with a multiplier of 1.33 or so. But unemployment insurance extensions are up there in the 1.60 to 1,70 range, as is food stamp, and infrastructure spending. MMT favors payroll tax cuts because of their immediate effect, but in the long run, deficit spending is more effective in getting to full recovery.
Next, I wish it were the overwhelming view that good economic management is the responsibility of the government, but I think voters have been giving the government a pass on this one for a very long time. Sure economic issues play into campaigns, but they are not the only issues involved, and the public has largely tolerated much less than full employment since Richard Nixon’s Administration. They have also largely tolerated the development on increasing economic inequality over the past 40 years while re-electing both Republicans and Democrats who have abetted and/or allowed this situation, dangerous to democracy, to develop.
Anyway I doubt that most Americans believe that “government is obligated to issue financial wealth in just right amount to ensure full employment and price stability.”I wish most people did believe that and voted on the basis of that belief.
Finally, I don’t agree that “good economic management” is the standard for the obligation of the Government to the people. I believe that standard is trying its best to fulfill “public purpose.” How I define that is specified in the indiegogo offering linked to above. But that’s just my current theory of public purpose. The collective public has its own view of that which can be measured using the proper methods (not simple public opinion surveys, I hasten to add).
In any case, pending such measurements, anyone who wants to fulfill public purpose has to develop their own specification of what that means and proceed accordingly, but always, the standard involved will be far broader than “good economic management.”
contact rt for an economics facts window on one of their programs all USA news is controlled by Gov. !
It is obvious that “your Truth” is not the message Washington insiders want Americans to hear !
Go to the media that can penetrate that , RT !
RT is one of the networks we will approach. But not the only one. They already have the BoomBust show which is produced by Ed Harrison, a very bright but conservative MMTer who represents the MMT point of view when he gets into related to MMT. The program also features Peter Schiff, the notorious goldie much more frequently than it features any MMTer other than Ed.
The federal gov’t can sell bonds at any effective interest rate it desires. That means the level of transfer payments to bondholders is entirely a public policy question. There is no special status to deficit spending (gov’t money creation) when it comes to inflation. Private-money creation (bank lending) is dollar-for-dollar equivalent to gov’t-money creation (deficits). The rate of bank lending depends on the supply of borrowers who are defined to be creditworthy (this definition depends only partly on the interest rate) and capital regulations. The definition of creditworthiness and the capital regulations are also subject to the rulings of the Federal Reserve and ultimately of Congress.
Yes, is this intended to suggest that a Real Fiscal Responsibility Today show isn’t necessary or desirable? If so, then please make the connection for us, since it’s not clear from your comment.
Don’t we already have this in “All In with Chris Hayes”? Chris is an MMTer. He said so on Twitter. Matthew Klein tweeted something MMTish and Chris replied with something like, “Welcome to the MMT club!”
Does Chris have every show focused on Real Fiscal Responsibility. I don’t think so. Does he have even a single show focused on it? How long has it been since he’s had Stephanie Kelton on his show or any other MMTer. C’mon Tyler, Chris Hayes’s show hardly deals with MMT at all much less in the context of Real Fiscal Responsibility. This new show is needed in the worst way to hit back at the incessant Peterson Foundation/CBO/Jack Lew propaganda in favor of austerity. As for Barack Obama, he’s just waiting for another chance to crow about the deficits has shrunk so much during his Administration, while he assures us that much more still needs to be done about unemployment!
What are the key “hot button” issues which create enormous angst in most non-rich Americans? I think if you restated the issues for program as ones which explained “Why Federal Income Taxes Don’t Pay for Anything”, “Middle Class Americans Are Subsidizing the 1%”, America Never Borrows From China or Anyone Else”, “America Owes All of its Debt in its Own Currency”
These are counter intuitive for the average American. Nonetheless, the objective is to create conversation not just listeners/viewers.
I had a two hour conversation with my nephew, PhD econ, GWU, who never had a course which described “How” the government created, spent, taxed and sold/bought dollars/securities. He was heavy on Say’s Law, debt/GDP ratio’s, unfunded liabilities, etc. He graduated in 2010. I gave him Alt’s eBook and Warren’s free PDF. He’s now an MMTer. He asked me, “You went there too, don’t you feel duped?” I said, “Yes.”
Robert, I like the comment, but I’m not sure I understand what you mean by “. . . restated the issues for program . . .” Please explain.
Those are some excellent suggestions for show titles; the same concepts that first hooked me on MMT. To yours, I would like to add: “What would you pay for Warren Mosler’s business card?” “Why the IRS just throws your cash tax payments in the trash. . ” and, “How come all those predictions of hyper-inflation never came true ?”
Great idea, Robert. I think it would also help if both the shows and the titles were brought down to the reading and comprehension level of the average Fox News viewer. Intellectuals can already find MMT on our own. It’s the rest of the people who would benefit most from hearing about it.
I expect this would take some time, and some good marketing and public relations work. But eventually, over time, ways could be found to get this information out to the general public, in ways that will grab their attention, and in language that they will understand.
Looking for hot button issues to use in titles and shows sounds like a great idea. Just like in high school, you have to get people’s attention first, before you can educate them. It is challenging though– as most high school teachers can attest.
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A great idea! Many ordinary people have felt at an intuitive level, that there has been something wrong with the type of political- economic reasoning they have been subjected to daily for decades with the support of the mainstream sources. Some (self included) have found MMT because they just knew an alternative was out there somewhere, and went searching for whatever it was called; however for most, the dominance of the mainstream ideology in media has just left them with extreme cognitive dissonance when they hear the ongoing misinterpretation of events, while the apparent lack of credible opposing academic voices has just been very disheartening. Most will immediately recognize the truth in MMT if it’s message can just reach them.
Joe,
I forgot to delete “for program” when I rewrote the thought. My bad.
I would add reforming the IRS to the list, that should resonate. They seem to pursue low hanging fruit with excessive penalties, fines, deadlines and interest. The takings are not economical.
I think the IRS can be fixed by a president who wants to fix it. However, the first thing to do is to enforce the law as written, then we can see how really bad things are, and then Congress can see what, if anything should be done.
“In short, I don’t care in the least whether conservatives can stomach MMT or its ideas. I only care about whether the general public accepts MMT views as soon as possible so that all the unnecessary suffering of people can be ended.”
Joe – great idea – glad to see this kind of effort. can you post some background on the team in terms of their prior success in producing this kind of work? I think that will give donors confidence.
WRT the comment to PZ above, if your goal is to convert Democrats/liberals to MMT, I guess this works. If you desire to have a broader reach with the message, I think PZ raises a valid point.
My view is that Austrians and Conservatives also need a bridge to cross to an MMT worldview and that there is more of a fertile field there than you may be giving credit to. They need to see themselves in the picture first, and making them convert to liberals first won’t help. “MMT for Austrians” or “MMT for Conservatives” would be helpful.
While I agree that MMT leads to certain progressive goals, the “how” can still be debated from a left and right perspective. From my reading of your writings, I see your views as further left than, say, Warren Mosler. E.g. one can implement universal health from an MMT perspective a variety of ways: the left may prefer a single payer system, whereas the right may prefer a multi-payer but single funder (Gov pays, consumers spend) approach that involves market dynamics.
It’s your program, so it comes down to what you’re trying to achieve. Maybe you have to focus on one audience and someone else will have to tackle the other side. Give it some thought.
We all appreciate the initiative – all the best!
Thanks. On prior experience, the members of this team were three of the 6 organizers of the 2010 Fiscal Sustainability Teach-In Counter-Conference at The George Washington University In Washington, DC. That conference provided a same-day reply to the original 2010 Peter G. Peterson Foundation Fiscal Summit Conference. Proceedings of the Conference are available here. We organized that Conference in 6 weeks with very little money raised from soliciting donations. The Conference is discussed in detail in this series at Correntewire.com.
In addition, Lambert Strether, our web developer, is well-known for his work in developing Correntewire.com, a great progressive blog, and also for his work at Yves Smith’s Naked Capitalism site. Also, I’ve been among the most active bloggers and writers in bringing the idea of funding deficit spending through using High Value Platinum Coin Seigniorage, rather than debt instruments, into the public sphere. Finally, The person who originated this effort, Alice Marshall, has had a long career in PR in the Washington, DC area.
On PZ’s point, I want to emphasize that the primary purpose of our effort is to foster Real Fiscal Responsibility and to use the MMT approach to do it. I think Real Fiscal Responsibility, is an unavoidably-value laden concept, and that MMT economists, over a long period have spelled out what their value concerns are, as I make clear here, and here.
If you look at the offering you’ll see that fiscally responsible policy is aimed at valued outcomes and that there’s a list of valued outcomes that MMTers would target, including full employment and price stability, and a host of other outcomes as well. Most of these outcomes are progressive concerns, not conservative ones. Of course conservatives can use some of the insights of MMT along with their own policy concerns, but the result would not be fiscal responsibility from the MMT point of view it would be fiscal responsibility from the austrian point of view. I’m sure we’ll have occasion to discuss such an interpretation on the show, but our main purpose isn’t to inform people about such a non-MMT approach. I’m happy to let others do that.
But our purpose is to spread the MMT approach among all those interested in it insofar as it relates to Real Fiscal Responsibility. In that sense, our show is a political show and it is a consciously progressive political talk show. The kind of show that has precious little exposure on television and in the Press these days. We want to change that.
On my views and Warren’s, I think that Warren and I are interested in achieving many of the same outcomes. I also like many of his policy proposals and would have no trouble supporting them. Warren was the first to synthesize the MMT approach, and he along with Randy Wray and Bill Mitchell is still one of MMT’s big three. I disagree with Warren on some matters such as the JG wage level right off the bat. I also like the idea of a JG and a BIG combination. But on most other things, I doubt there’s much disagreement between Warren and I, and I see him as very progressive in his many proposals to achieve most of the value concerns of MMT. Also, among all the MMTers, Warren work has probably been the most influential in developing my own views.
I don’t know exactly why Warren is seen as more conservative than other MMTers. It may be his very low key style and artful conciliatory statements during debates. But I think those who think he is more conservative than the rest of us haven’t read the various policy proposals on his web site. Taken together, they would achieve a very far-reaching Second New Deal for all of us.
Today I watching c span and there was a forum on debt and national security sponsor by the common wealth club of California and Saxby Chambliss senator from Georgia who is vice chairman of the senate intelligence committee was their guest speaker. Senator Chambliss said that the greatest threat to our national security is our 17 trillion dollar debt. Senator Chambliss was pushing austerity sequestration during forum to solve the problem. Since I have been following MMT it is my opinion that deficit hawk politicians like Chambliss are creating our greatest threat to our national security with austerity and sequestration. Are there other people who agree with me? He also said that other US senators agree with him including senator Warren who might run for president. We need to have deficit owl politicians running our government to get things done for the people. I also like the wisdom I learned on this web site and I am sharing this information I learn here with my fellow citizens. So keep on fighting the good fight with truth peace and wisdom instead of the fear lies and ignorance that we get from the deficit hawks.
Thanks. I agree that the deficit hawks are a threat to our national security in the sense that they are a threat to our future as a democracy. Deficit hawkism in its modern neoliberal form dates from at least the beginning of Jimmy Carter’s Administration. In those nearly 40 years it done much to destroy social, economic, and political equality in the United States.
On Warren, I’m not sure she agrees with Chambliss on this, and I think it’s much more likely that Hillary Clinton does. Warren almost never talks about the deficit. She seems unconcerned with it. Which is a funny posture for someone who’s supposed to agree with Chambliss. Indeed, Bernie Sanders is much more verbal in expressing his belief that the US has a debt problem.