Monthly Archives: May 2012

New York Times Reporters need to Read Krugman’s Columns

By William K. Black

To know the Washington Consensus as a regular citizen is to hate the Consensus.  The Washington Consensus, as the name implies, was an “inside the beltway” series of neo-liberal policies embraced by the IMF, the World Bank, and the U.S. government.  It called for a minimal State and an all-powerful private sector.  The private sector and de facto private central banks would discipline the State by insisting on balanced budgets – perpetual austerity.  Democracy was unreliable, indeed dangerous, so the central banks had to be “independent” of the democratic process (and wholly dependent on the largest banks).  Only the private sector had the proper incentives that could be relied upon to create vibrant growth and a self-correcting economy.  The Consensus was developed in the context of the policies that should be imposed on Latin America and Latin Americans were the guinea pigs of Consensus.  (This metaphor was particularly troubling for Latin Americans who knew that their ancestors raised guinea pigs as a reliable source of meat.)

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A Closer Look at Three Sectors’ Financial Balances

By Erin Haswell

Erin’s video is first among several developed by students in Eric Tymgoine’s modern money course.

Developing Nations

By Dan Kervick

Matt Yglesias has described three popular contemporary political approaches to the challenge of maintaining our national commitment to “providing health care services to the elderly, the disabled, and the poor and also to bolstering the general incomes of elderly people.”  One is Congressman Paul Ryan’s approach of reducing the level of the future commitment in order to bring it in line with “historic norms about the level of taxation.”  The second is the liberal approach of preserving our existing level of commitment into the future, even if that means raising taxes in the aggregate.  The third is “the hazy Obama/Simpson-Bowlesish center that wants to raise taxes and cut programs.”

Perhaps this short list characterizes the main political answers reasonably well, if the main political question is how to tame the budget, and shrink or control the deficit.  But I would like to point out that all three answers have something in common:  Not a single one of these approaches, as usually presented, contains any call for the national government to engage seriously in what one might call “investing in our future”.  All three of them reflect the defeatist mindsets of different camps of worn out oldsters, each promoting a different way of giving up, making do, or just hanging on.  They are all pathologies of the dismal “No, we can’t!” era in which we now live.

The promoters of these three variations on the theme of austere, hard news pessimism no doubt fancy themselves realists and responsible grownups.  But they are nothing of the sort.  They are burned-out casualties of neoliberalism, afflicted with dead imaginations or ideological blinders, who have forgotten what it means to grow a country and build a society.  We need to move beyond their miserable and dismal trilemma.  If the die-hard adherents of these schools of thought want to mope around the shuffleboard courts at the End of History Home for Final Surrender, let them.  But it’s time for the rest of us to reject all three approaches and reignite our history.

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RESPONSES TO BLOG 48: MMT AND THE JOB GUARANTEE

By L. Randall Wray

Ok we had a huge number of responses. I can see we will need a Blog 49 on this topic and that there are way too many comments for me to deal with tonight. I will just hit seven themes—commentators should be able to see which of these themes their comments fall under. And I will be brief. I will deal in more detail next week with a few of these.

1. Attention Deficit Disorder: A couple of comments here, and from what I can tell a huge number of comments on other “Modern Money” blogs that are not called MMT, suffer from ADD. Some people cannot read past a single sentence. I think there are now drugs that help. Try them.

So apparently a lot of bloggers (especially those who accept MMT, but without the taxes or the JG—go figure!) latched onto a sentence, plus one word. I said: “So, can we have MMT without a JG? Certainly!” Now that followed a long discussion, including an analogy to a theory of disease and a policy to fight the disease (more in a minute), and followed by the statement by me: “I believe it is a policy mistake to operate a modern money system without a JG—but that is what almost all countries do. MMT allows us to analyze them, and to offer policy recommendations. But if we leave out the JG in our recommendations, we are seriously remiss in our advice.”

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