Tag Archives: william mitchell

Grexit: Exchanges on the IT Problem Continue

I’ve already been over Louis Proyect’s critical analysis of the chapter on the IT software problem in my new e-book. But in the comments on Proyect’s post a significant dialogue occurred between two commenters at NC: Ben Johannson and Clive. Here I analyze and comment on that exchange. Continue reading

On the IT Problem of Grexit: A Reply

I’d like to start by thanking Louis Proyect for commenting on at least part of my new e-book Austerity, Greece’s Debt Crisis and the Theft of Democracy namely the chapter entitled “The Information Technology Problem.” His opening paragraph begins by including an aside calling Professor William Mitchell’s ideas about these problems “unrealistic.”

Professor Mitchell’s ideas on the amount of work involved in Grexit, may or may not be unrealistic, but I think it was unnecessary to say that at the beginning of the post, without also stating why Louis Proyect thinks so, or at least providing a link to one or more of his earlier posts at Naked Capitalism where he explains his reasons for thinking that. Continue reading

The Political Path to Full Employment

By Dan Kervick

Paul Krugman argues in a recent New York Times column  that right-wing critics of Ben Bernanke and his colleagues are trying to bully the Fed into a misguided obsession with inflation, and that “the truth is that we’d be better off if the Fed paid less attention to inflation and more attention to unemployment. Indeed, a bit more inflation would be a good thing, not a bad thing.”

Krugman is absolutely right to lament conservative pundits’ and politicians’ obsessions with inflation when tens of millions of Americans are languishing in unemployment, with all of the personal, social and economic misery and waste that unemployment entails.  But his argument, which assumes that the Fed can boost employment by engineering higher inflation, is problematic.  He defends the inflationist approach this way:

“For one thing, large parts of the private sector continue to be crippled by the overhang of debt accumulated during the bubble years; this debt burden is arguably the main thing holding private spending back and perpetuating the slump. Modest inflation would, however, reduce that overhang — by eroding the real value of that debt — and help promote the private-sector recovery we need. Meanwhile, other parts of the private sector (like much of corporate America) are sitting on large hoards of cash; the prospect of moderate inflation would make letting the cash just sit there less attractive, acting as a spur to investment — again, helping to promote overall recovery.”

I believe this is the wrong approach.  The Fed’s ability to boost employment is very limited, well-intentioned citations of the Fed’s full employment “mandate” notwithstanding.  Rather than looking to central bankers and the banking system to accomplish a task for which they are not really cut out, we should turn our attention back toward fiscal policy as the primary tool for bringing the country up to full employment and keeping it there.   And rather than seeking engineered inflation as the mechanism for boosting spending and employment, we should implement the MMT job guarantee proposal to achieve full employment and price stability at the same time.

Continue reading