Damn, she's good. She gets it. Assertions where they make sense, qualifications where they make sense. And the kicker is we don't have two years. We might already be irrevocably lost but there's still a best course of action and Stephanie gets that. We should have been doing what she recommends in the Clinton and Obama years and they blew it. Clinton more because of personal failings and Obama, I think, because he was left such a mess and then he got shellacked. I never figured out what happened with Obama. All he had to do was provide a narrative.
Clinton/Obama blew it because they were owned by corporate masters. They both had daddy issues, just like Bush/Trump, and sought the love/approval of those closest to them, i.e., their monied interest donors. Obama had a (false) narrative: Hope and (No) Change.
Watch the interview linked below. We are, as a citizenry, red and blue, ruled by magical thinking. Elections will not save us. We are at the point Aristotle referenced when the oligarchs take control, in which the only choice left is binary: tyranny or revolution?
I disagree that Clinton and Obama were equivalent to Trump/Bush. Where the latter were aligned with monied interests, the former existed under the thumb of it. Clinton came in with a Democratic Party that was reeling after 20+ years of Republicans decimating Dems in pres elections, and Obama came in after 8 years of Republican war and tax cuts. Along with a population primed to vote against their best interest. I think Clinton, Obama, and Biden did what they could under the pressure of Republicans who’ve been deteriorating democracy since Nixon, and leftists screaming that Dem are not doing enough, all while trying to hold on to the progress of the New Deal/CRM and order of law.
Obama and the whiplash that followed, reps blockading legislation, the rise of the tea party, and reps capitulating to Trump was a pivotal point that showed Republicans hands and I sympathize with centrists and leftists alike on what they thought the solution was, but we too often equivocate the two parties when we shouldn’t. Things have went how they went so it’s easy to point fingers, but republicans goals were to always force Dems hands into subverting rule of law like forcing Obama into using EOs, so they could justify using it when they got into office, so even in a timeline where leftists went full send and expanded the Supreme Court and pushed through student loan forgiveness, I could see republicans using that as a “false flag” of sorts to justify impeach/get us to the same point we’re at now anyway.
This may come off as making excuses, but I feel it’s more important than ever to be united against the real enemy and not nitpicking each other over who has the perfect solution.
The real enemy are the corporatists (Dems/Old GOP) and the oligarchs (Trump/Soros/Musk/Gates/Thiel, etc).
I’m united against both, because both, despite their differences, side with monied interests (capital) over people (labor). Every time, since Carter/Reagan embraced the neoliberal economic fantasy back in the 70s. And that fact is more important than all others combined.
The solution is democratic socialism, in which workers have actual power in the means of production. Not control, but an actual role in how things are run and profits shared. Anything short of that, we’ll continue to circle the drain.
Yes, thanks, I know Hedges' opinions and align with him almost always. I disagree with him somewhat on how we got there. I'm both easier on Democrats but also more enraged with them because of how unnecessarily they failed. I don't think they walked to the right but got pulled or pushed. They capitulated too easily but they didn't understand what was happening and they should have. How did Clinton get there?
The South has been holding the country hostage since its inception. Johnson, a southerner. Carter, a southerner. Clinton, a southerner. Obama was the first Yankee president since Kennedy, any Republican being an honorary southerner since the advent of the Southern Strategy. This to me has defined everything. We were no more a cohesive, stable country than Yugoslavia, just rich enough to keep it glued together for a while.
As soon as desegregation got started it was a question of one country on what terms. The Yankees didn't even know we were fighting a war. Now it's been decided -- on the terms of the Confederacy. I could go on but, anyway, thanks for commenting. This is also instructive, though it doesn't go back far enough into the origins of the thing ...
Loved those old Moyers interviews. It’s not so much the Confederacy won, but capital did. Slavery, and racism, in America, were always economy-based at the core.
Due respect, but to say the Dems were pushed/pulled into their transgressions over the past half-century is akin to the battered wife using her husband’s childhood trauma as a reason to drop the assault/battery charge. Better to just stick with what was, as is the case with Biden/Harris/Blinken and the Gaza genocide, and decry the lack of both intelligence and moral compass.
I can only hope the old saying “those who don’t listen, must feel” is a strong enough lesson for us to turn this thing around, but I can see this going more like the titanic, and instead of people jumping off, half the country will go down smiling, knowing they “owned the libs”
I agree, there were possible off ramps Dems could have taken, but what are your thoughts on the 40-50 year indoctrination of half the country by the right by the Newt Ginchriches of the world? The affordable care act, while flawed saved lives and materially helped millions. The Chips and Inflation act created jobs and put money in people’s pockets. Yet half the country is not in tune with reality. Arabs voted for Trump Towers in Gaza, Latinos voted for deportation, and Blacks(men tbf) voted for someone who’s openly racist and uses “DEI” in place of the N word. Yes, this didn’t start in 2016, or even 2008, and social media misinformation is more powerful than past comms republicans had at their disposal, but Fox News and christofascist talk radio have been radicalizing half the country and holding us hostage for a long time. It’s so malicious it should have been considered an act of war because the reality of today is the only logical outcome we can assume they were aiming for.
I agree, Dems should have punched first like when you see the bully approaching you on the playground, but to use your battered spouse analogy, the conservatives in this country are the battered spouse that fights the cops when they answer the domestic violence call every 4 years. Pragmatically, you should do your job, in reality, the police just go home.
We’ve all been indoctrinated since George Washington laid waste to that cherry tree.
Your defense of Dems in bringing up the ACA is exactly the problem, for it highlights the constant deflection/rationalization used by Blue MAGA to ignore the class war in lieu of crumbs; it fattened the pockets of the health care corporate behemoths and exacerbated wealth inequality, despite helping millions, and kept everyone save for those on Medicare in a horrific, dysfunctional, oppressive, anxiety-inducing system.
There is no politics but class politics. There is nothing pragmatic about incremental solutions to catastrophic problems. I don’t care about what Republicans do; I have zero expectation that they will do anything but side with monied interests.
Where is the Dem version of Project 2025? Where is the full-throated support of FDR’s Second Bill Of Rights? Until Dems, and their liberal supporters, quit whining about GOP evil, and quit offering up tepid, corporate-friendly policy responses like the ACA, which only exacerbate the concentration of wealth, we will indeed hit the iceberg.
It’s a binary choice: We either actually, tangibly, threaten the wallets of the robber baron billionaires, or accept the role of serf instead of citizen.
I think I get the idea behind taxes not directly paying for government spending, and why lefties aren't necessarily correct to propose paying for government social spending with taxes on rich people. But that doesn't mean we shouldn't tax the rich more, right? Like just because wealth is such a corrupting force...limiting how much people can horde seems like a good thing to me.
It absolutely does not mean we shouldn't tax the rich. Taxing the rich is good because inequality is unjust and also has awful political and social and economic effects on society. It's just important to understand that the federal government doesn't directly pay for stuff with tax revenue because believing that cedes ground to austerity arguments unnecessarily.
Spot on. Inequality in both income & wealth is at the heart of pretty much all social ills and, ironically, has lead to the sort of shallow & populist government now in charge in the US and elsewhere. "Things are bad and it's all their fault" where they are anyone other than the few% causing it. So tax is a great tool to restrict their influence/power as well as their polluting activities (the top 1% emit more CO2 than the bottom 2/3rds of humanity).
It should be noted that this only valid at the Federal level. State and local governments are more financially constrained, as they are not currency issuers.
In my opinion, this is why Republicans are always trying to offload social spending and other programs onto the states. They claim it has to do with "local control," but that's BS. Even if that were true, there's no contradiction between local control and where the money comes from.
In reality it's because, unlike the Federal government, local governments face tighter budgeting constraints and often do have to raise taxes and/or borrow. As a result, during a downturn when these programs need countercyclical funding, they are instead subjected to cuts.
Got it. I wanna be clear that I didn't mean to imply that Prof Kelton was suggesting otherwise. I honestly just didn't know how to phrase a question about it.
Buying into MMT means changing your rationale for WHY we need to tax the rich. Ms. Kelton explains it much more effectively than I ever could of course, which is why you should read the book.
The short version: The government uses taxation to discourage behavior in all corners of public life - congestion taxes, HOV lanes, astronomical tobacco taxes, hell even tariffs. So it would be entirely reasonable to apply that same logic to wealth accumulation in the form of not only tax shelters and the like, but also in neoliberal corporate governance where the insatiable desire for profits and share price always screw the worker.
If the tax loopholes were closed and corporate profits were taxed like they used to be, there's no longer any reason to horde those profits. Instead, they'll spend the money on improving the business, and no matter how they do that, reinvesting money back into the company will at least be a step back in the right direction for workers, and the economy as a whole.
Note that all of this is a tangent away from the core thesis of MMT, but it is a foundational discussion in her defense of MMT. Or am I taking this from Doughnut Economics....? I don't remember at the moment, and I have lent out both of those books so I can't look it up...
Most important reason to tax the wealthy is because when the wealthy have too much money they do think like buy elections. Part of the reason American politics is so distorted is because politicians are owned by a single billionaire who tells them everything to do. And if they disagree, their billionaire won’t buy them the next election.
The Deficit Myth was THE transformative book for me in my evolution of thought from "shit's fucked" to full-blown leftist. It was the cypher for finally decoding the lies of neoliberalism and the possibilities in a world of abundance.
The Deficit Myth, Doughnut Economics, and The Sum of Us are the three-book syllabus for any aspirational economic discussion I have with anyone I meet.
I will be telling every person who will listen to read this interview and then badgering them into a follow-up conversation about both of you.
I loved "The Deficit Myth" too but you should know there's been a huge leftist backlash against the book/MMT since then including some writers I really admire like Doug Henwood, who's been on a Jihad against MMT for a long time. The main substantive left wing arguments against it afaik are:
1. The whole thing is entirely dependent upon US hegemony/empire. If the US dollar stopped being the reserve currency of the entire world the entire argument falls apart. So essentially you're rooting for US imperialism
2. More broadly and the one that more people know is that she's too dismissive on the effects of inflation on working class people etc.
Even accepting all that I still think MMT is incredibly important for helping people understand the US economy better i.e. the US making a budget isn't at all like a family sitting down at the kitchen table to make a budget and the deficit isn't some amount of money that the government or worse the average citizen owes to someone
Those points are well-taken and make complete sense. I would certainly be willing to adjust the course of my thinking on MMT. I'll have to look into Henwood's writing. While you're here, do you have a blurb explanation for non-inflationary leftist monetary policy in the absence of a sovereign currency hegemony? Wouldn't the mechanics of the argument still work even if the US Dollar is no longer a sovereign currency? I imagine that would look something like "abolish private debt held by private equity and purely financialized institutions", but that's just spitballing.
For states that don't simply create the money that their debts are denominated in MMT basically doesn't work because they have to borrow from someone else in another currency (most likely dollars). In practice this means they end up having to borrow from the IMF and so if they get into a lot of debt this can create huge problems as the IMF will demand they impose austerity privatize services etc as has been seen in the case of Greece for instance
I'm a Kelton fan. MMT is ground truth no matter what anyone says. The government creates money as "needed".
The real world constrains use of the money in terms of what it can purchase. People with money bid and people with goods and services decide.
I always look for one sentence summaries of ground truths.
Blair Fix satisfied me with: "having a correct theory of money is a bit like having a correct theory of traffic lights. Traffic lights (like money) are a social convention."
For completeness, the other constraint is the political and financial world outside our borders which may structure transactions with holders of our money for political goals beyond the economic.
And finally there is the financial bloat - money not needed for real world needs but available for the holders to play with. I look at it as if a body had too much blood swelling up organs and big blisters.
Not a pretty sight and certainly detrimental to the body.
Kelton's take on MMT has been a real eye opener. Someone needs to put her charge of the Federal Reserve.
She is also exactly right in her criticism of the dem party. They are not going to be the cavalry coming to our rescue. They have no comprehensive plan or policy, except "let's do the same thing again...except better."
Please keep in mind that business interests have been behind all of the “conservative’s” moves to dominate American governance for the past 43 years in accordance with Lewis Powell’s September 1971 detailed takeover plan. Corporate America and the capitalist owners thereof, the Oligarchs, followed that plan and brought America to where it is today.
The elected “conservatives” in Congress and elsewhere are now owned by Corporate America and the oligarchs, as are all of the people across the aisle, the “progressives” out of necessity. None are free from business interest influence and control.
Trump is but a mildly tolerated but unwitting beneficiary of Powell’s program and essentially serves their purposes. Trump’s intentions are purely selfish and driven by a lifetime of hatred. But, like all plans, unexpected events often produce unanticipated results. Musk appears to be turning the tide toward Technoligarcic control of American governance for their sole benefit, to Trump’s annoyance.
“To sort of sit back and say “Well, the Republicans are gonna burn it all down. So we’ll count on, two years from now, getting the House back and picking up seats, and maybe then we can put forward an alternative plan.” We don’t have two years. You won’t be able to pick up the pieces. And if your message is, “We’ll pick up the pieces and assemble them the way before”—people didn’t like the way the system was structured before. That’s why, in part, Donald Trump won in the first place. You have to offer people a different vision if you want to actually win. If your message is, “Put us back in charge, and we’ll give you back the economy we had before they destroyed it,” I don’t think that’s where Democrats should be right now“
This is the *best* analysis I have seen about the dramatic mistakes dems are making in both messaging and in policy.
Excellent interview! Will be looking for more articles by and about Stephanie Kelton.
Question for people who follow Kelton or are commenting here: I think she’s saying that running deficits are not a problem. I’ve always believed that’s mostly true, but is there a point where government debt really does negatively affect the economy because the government has to spend inordinate amounts to service the debt? Not trolling at all - genuinely interested in an answer. Thanks.
Nolan with his questions And Kelton with her answers put it very clear. Regretably autoritarian goverments are blooming all over the world with help of disinformation spread by the power of social media and internet. It is very sad but the destroyers of the institutions in countries where they are in power will continue and that Will bring suffering to people around the world. Meanwhile, Putin, Xin Ping and other guys like them rejoice on the chaos that all this Will bring to the western culture which we know they want to destroy.
Regardless of how we got here it's time to define the problem of HOW to move forward and get to the better place we need to be without the gripp on everyone to cut the throat of reason. It's problem solving time and the GOP is not even trying to pretend they have any answers except blow it all up??? I'm convinced many in the center don't want this ongoing failure. Public administration is not a business is the first truth. Governments don't exist to make a profit. The purpose is to protect us and provide a safe environment in which to live. For all of us not just the rich. Is this administration doing this so far. Hell no!
We shouldn’t be surprised by the silence from the business sector. It’s not 2016, Trump is organized and more powerful than ever, fully equipped and willing to take retribution against any detractors. He has the FBI, DOD, Supreme Court, big tech which functions as media misinformation machines, all on his side to attack his enemies with whatever tool best fits.
We’re at the stage where it’s every man for himself in the upper ranks, while the broader population is misinformed into pacification or demoralized into submission, hence not many protests sprouting up around the country. He said on the campaign trail he would use the military on protesters. He sued ABC with no grounds and they capitulated. He gave Elon carte Blanche to tear down our institutions and dox judges/political enemies in the modern day public square of Twitter.
Much of Trumps early actions are warnings to his previously powerful opposition here and abroad that would oppose him. He’s daring them to call his bluff.
This obviously always ends badly for men like Trump. The question is will it last 4 years? A decade? Bashar Assad’s family ruled Syria with an Iron fist for 50 years. Putin 30+ years. Pinochet 17 years. Mussolini 21 years.
To overcome this, first his supporters will have to feel the pain of him being in power to turn on him. By then he’ll have fortified himself too much for it to matter, and that’s the stage we’re at now. He’s flexing his muscles behind the bulletproof glass of the White House. But once his supporters feel enough pain, we can organize and figure out a way forward.
AI/social media as a tool for misinformation is the one piece that separates him from other dictators in recent history. There’s a chance AI misinformation becomes so powerful that they warp even the worst realities into something tolerable for MAGA folks, and Trump’s support never wavers enough for a strong resistance to form. As we saw with this recent election where Trump told us what he was going to do, yet Arabs voted for Palestine to be turned into Trump Hotels, Latinos voted to be sent to camps, and white women voted against DEI/women’s rights. It’s going to be a long road ahead, but there’s no time to despair if we want to leave the world better than we found it.
Just for clarification on the point about tax dollars not directly being used for government--this just means that our tax dollars are actually spent paying down our debts, correct? That wasn't really clear in her answer. I get that it's not like a household budget, where each year, we take in money and then decide how to spend it. But please tell me someone in the CBO is tracking the amount of tax revenue they're receiving and there is technically a revenue/expenditure budget out there?
The federal government is constantly creating money and destroying money (you can think of taxes as pulling money out of the money supply). There is no fixed amount of money. The trick is having enough money to oil the machine of the real economy to allow us to have maximum prosperity without having harmful levels of inflation.
Damn, she's good. She gets it. Assertions where they make sense, qualifications where they make sense. And the kicker is we don't have two years. We might already be irrevocably lost but there's still a best course of action and Stephanie gets that. We should have been doing what she recommends in the Clinton and Obama years and they blew it. Clinton more because of personal failings and Obama, I think, because he was left such a mess and then he got shellacked. I never figured out what happened with Obama. All he had to do was provide a narrative.
Clinton/Obama blew it because they were owned by corporate masters. They both had daddy issues, just like Bush/Trump, and sought the love/approval of those closest to them, i.e., their monied interest donors. Obama had a (false) narrative: Hope and (No) Change.
Watch the interview linked below. We are, as a citizenry, red and blue, ruled by magical thinking. Elections will not save us. We are at the point Aristotle referenced when the oligarchs take control, in which the only choice left is binary: tyranny or revolution?
https://www.youtube.com/watch?v=5EDKRGkgLsI
I disagree that Clinton and Obama were equivalent to Trump/Bush. Where the latter were aligned with monied interests, the former existed under the thumb of it. Clinton came in with a Democratic Party that was reeling after 20+ years of Republicans decimating Dems in pres elections, and Obama came in after 8 years of Republican war and tax cuts. Along with a population primed to vote against their best interest. I think Clinton, Obama, and Biden did what they could under the pressure of Republicans who’ve been deteriorating democracy since Nixon, and leftists screaming that Dem are not doing enough, all while trying to hold on to the progress of the New Deal/CRM and order of law.
Obama and the whiplash that followed, reps blockading legislation, the rise of the tea party, and reps capitulating to Trump was a pivotal point that showed Republicans hands and I sympathize with centrists and leftists alike on what they thought the solution was, but we too often equivocate the two parties when we shouldn’t. Things have went how they went so it’s easy to point fingers, but republicans goals were to always force Dems hands into subverting rule of law like forcing Obama into using EOs, so they could justify using it when they got into office, so even in a timeline where leftists went full send and expanded the Supreme Court and pushed through student loan forgiveness, I could see republicans using that as a “false flag” of sorts to justify impeach/get us to the same point we’re at now anyway.
This may come off as making excuses, but I feel it’s more important than ever to be united against the real enemy and not nitpicking each other over who has the perfect solution.
The real enemy are the corporatists (Dems/Old GOP) and the oligarchs (Trump/Soros/Musk/Gates/Thiel, etc).
I’m united against both, because both, despite their differences, side with monied interests (capital) over people (labor). Every time, since Carter/Reagan embraced the neoliberal economic fantasy back in the 70s. And that fact is more important than all others combined.
The solution is democratic socialism, in which workers have actual power in the means of production. Not control, but an actual role in how things are run and profits shared. Anything short of that, we’ll continue to circle the drain.
More on FDR, and how the current Dems are clueless - https://www.youtube.com/watch?v=VVuF8EoeVfQ
Yes, thanks, I know Hedges' opinions and align with him almost always. I disagree with him somewhat on how we got there. I'm both easier on Democrats but also more enraged with them because of how unnecessarily they failed. I don't think they walked to the right but got pulled or pushed. They capitulated too easily but they didn't understand what was happening and they should have. How did Clinton get there?
The South has been holding the country hostage since its inception. Johnson, a southerner. Carter, a southerner. Clinton, a southerner. Obama was the first Yankee president since Kennedy, any Republican being an honorary southerner since the advent of the Southern Strategy. This to me has defined everything. We were no more a cohesive, stable country than Yugoslavia, just rich enough to keep it glued together for a while.
As soon as desegregation got started it was a question of one country on what terms. The Yankees didn't even know we were fighting a war. Now it's been decided -- on the terms of the Confederacy. I could go on but, anyway, thanks for commenting. This is also instructive, though it doesn't go back far enough into the origins of the thing ...
https://americanarchive.org/catalog/cpb-aacip-bd1c29b73de
Loved those old Moyers interviews. It’s not so much the Confederacy won, but capital did. Slavery, and racism, in America, were always economy-based at the core.
Due respect, but to say the Dems were pushed/pulled into their transgressions over the past half-century is akin to the battered wife using her husband’s childhood trauma as a reason to drop the assault/battery charge. Better to just stick with what was, as is the case with Biden/Harris/Blinken and the Gaza genocide, and decry the lack of both intelligence and moral compass.
Here’s one more take on the Dem demise since the Clintonistas took over - https://kathleenlwallace.substack.com/p/how-did-we-get-here
I can only hope the old saying “those who don’t listen, must feel” is a strong enough lesson for us to turn this thing around, but I can see this going more like the titanic, and instead of people jumping off, half the country will go down smiling, knowing they “owned the libs”
I agree, there were possible off ramps Dems could have taken, but what are your thoughts on the 40-50 year indoctrination of half the country by the right by the Newt Ginchriches of the world? The affordable care act, while flawed saved lives and materially helped millions. The Chips and Inflation act created jobs and put money in people’s pockets. Yet half the country is not in tune with reality. Arabs voted for Trump Towers in Gaza, Latinos voted for deportation, and Blacks(men tbf) voted for someone who’s openly racist and uses “DEI” in place of the N word. Yes, this didn’t start in 2016, or even 2008, and social media misinformation is more powerful than past comms republicans had at their disposal, but Fox News and christofascist talk radio have been radicalizing half the country and holding us hostage for a long time. It’s so malicious it should have been considered an act of war because the reality of today is the only logical outcome we can assume they were aiming for.
I agree, Dems should have punched first like when you see the bully approaching you on the playground, but to use your battered spouse analogy, the conservatives in this country are the battered spouse that fights the cops when they answer the domestic violence call every 4 years. Pragmatically, you should do your job, in reality, the police just go home.
We’ve all been indoctrinated since George Washington laid waste to that cherry tree.
Your defense of Dems in bringing up the ACA is exactly the problem, for it highlights the constant deflection/rationalization used by Blue MAGA to ignore the class war in lieu of crumbs; it fattened the pockets of the health care corporate behemoths and exacerbated wealth inequality, despite helping millions, and kept everyone save for those on Medicare in a horrific, dysfunctional, oppressive, anxiety-inducing system.
There is no politics but class politics. There is nothing pragmatic about incremental solutions to catastrophic problems. I don’t care about what Republicans do; I have zero expectation that they will do anything but side with monied interests.
Where is the Dem version of Project 2025? Where is the full-throated support of FDR’s Second Bill Of Rights? Until Dems, and their liberal supporters, quit whining about GOP evil, and quit offering up tepid, corporate-friendly policy responses like the ACA, which only exacerbate the concentration of wealth, we will indeed hit the iceberg.
It’s a binary choice: We either actually, tangibly, threaten the wallets of the robber baron billionaires, or accept the role of serf instead of citizen.
Excellent. Esp deafening silence of business.
I think I get the idea behind taxes not directly paying for government spending, and why lefties aren't necessarily correct to propose paying for government social spending with taxes on rich people. But that doesn't mean we shouldn't tax the rich more, right? Like just because wealth is such a corrupting force...limiting how much people can horde seems like a good thing to me.
It absolutely does not mean we shouldn't tax the rich. Taxing the rich is good because inequality is unjust and also has awful political and social and economic effects on society. It's just important to understand that the federal government doesn't directly pay for stuff with tax revenue because believing that cedes ground to austerity arguments unnecessarily.
Spot on. Inequality in both income & wealth is at the heart of pretty much all social ills and, ironically, has lead to the sort of shallow & populist government now in charge in the US and elsewhere. "Things are bad and it's all their fault" where they are anyone other than the few% causing it. So tax is a great tool to restrict their influence/power as well as their polluting activities (the top 1% emit more CO2 than the bottom 2/3rds of humanity).
It should be noted that this only valid at the Federal level. State and local governments are more financially constrained, as they are not currency issuers.
In my opinion, this is why Republicans are always trying to offload social spending and other programs onto the states. They claim it has to do with "local control," but that's BS. Even if that were true, there's no contradiction between local control and where the money comes from.
In reality it's because, unlike the Federal government, local governments face tighter budgeting constraints and often do have to raise taxes and/or borrow. As a result, during a downturn when these programs need countercyclical funding, they are instead subjected to cuts.
Got it. I wanna be clear that I didn't mean to imply that Prof Kelton was suggesting otherwise. I honestly just didn't know how to phrase a question about it.
Buying into MMT means changing your rationale for WHY we need to tax the rich. Ms. Kelton explains it much more effectively than I ever could of course, which is why you should read the book.
The short version: The government uses taxation to discourage behavior in all corners of public life - congestion taxes, HOV lanes, astronomical tobacco taxes, hell even tariffs. So it would be entirely reasonable to apply that same logic to wealth accumulation in the form of not only tax shelters and the like, but also in neoliberal corporate governance where the insatiable desire for profits and share price always screw the worker.
If the tax loopholes were closed and corporate profits were taxed like they used to be, there's no longer any reason to horde those profits. Instead, they'll spend the money on improving the business, and no matter how they do that, reinvesting money back into the company will at least be a step back in the right direction for workers, and the economy as a whole.
Note that all of this is a tangent away from the core thesis of MMT, but it is a foundational discussion in her defense of MMT. Or am I taking this from Doughnut Economics....? I don't remember at the moment, and I have lent out both of those books so I can't look it up...
This is a great explanation. Thank you.
Most important reason to tax the wealthy is because when the wealthy have too much money they do think like buy elections. Part of the reason American politics is so distorted is because politicians are owned by a single billionaire who tells them everything to do. And if they disagree, their billionaire won’t buy them the next election.
The Deficit Myth was THE transformative book for me in my evolution of thought from "shit's fucked" to full-blown leftist. It was the cypher for finally decoding the lies of neoliberalism and the possibilities in a world of abundance.
The Deficit Myth, Doughnut Economics, and The Sum of Us are the three-book syllabus for any aspirational economic discussion I have with anyone I meet.
I will be telling every person who will listen to read this interview and then badgering them into a follow-up conversation about both of you.
Thanks to both of you!
I loved "The Deficit Myth" too but you should know there's been a huge leftist backlash against the book/MMT since then including some writers I really admire like Doug Henwood, who's been on a Jihad against MMT for a long time. The main substantive left wing arguments against it afaik are:
1. The whole thing is entirely dependent upon US hegemony/empire. If the US dollar stopped being the reserve currency of the entire world the entire argument falls apart. So essentially you're rooting for US imperialism
2. More broadly and the one that more people know is that she's too dismissive on the effects of inflation on working class people etc.
Even accepting all that I still think MMT is incredibly important for helping people understand the US economy better i.e. the US making a budget isn't at all like a family sitting down at the kitchen table to make a budget and the deficit isn't some amount of money that the government or worse the average citizen owes to someone
Those points are well-taken and make complete sense. I would certainly be willing to adjust the course of my thinking on MMT. I'll have to look into Henwood's writing. While you're here, do you have a blurb explanation for non-inflationary leftist monetary policy in the absence of a sovereign currency hegemony? Wouldn't the mechanics of the argument still work even if the US Dollar is no longer a sovereign currency? I imagine that would look something like "abolish private debt held by private equity and purely financialized institutions", but that's just spitballing.
For states that don't simply create the money that their debts are denominated in MMT basically doesn't work because they have to borrow from someone else in another currency (most likely dollars). In practice this means they end up having to borrow from the IMF and so if they get into a lot of debt this can create huge problems as the IMF will demand they impose austerity privatize services etc as has been seen in the case of Greece for instance
Very good. An alternative vision on the way, from HELU: https://nonprofitquarterly.org/can-labor-save-higher-education-as-a-public-good/?utm_campaign=shareaholic&utm_medium=copy_link&utm_source=bookmark
I'm a Kelton fan. MMT is ground truth no matter what anyone says. The government creates money as "needed".
The real world constrains use of the money in terms of what it can purchase. People with money bid and people with goods and services decide.
I always look for one sentence summaries of ground truths.
Blair Fix satisfied me with: "having a correct theory of money is a bit like having a correct theory of traffic lights. Traffic lights (like money) are a social convention."
https://economicsfromthetopdown.com/2020/07/05/why-isnt-modern-monetary-theory-common-knowledge/
For completeness, the other constraint is the political and financial world outside our borders which may structure transactions with holders of our money for political goals beyond the economic.
And finally there is the financial bloat - money not needed for real world needs but available for the holders to play with. I look at it as if a body had too much blood swelling up organs and big blisters.
Not a pretty sight and certainly detrimental to the body.
Kelton's take on MMT has been a real eye opener. Someone needs to put her charge of the Federal Reserve.
She is also exactly right in her criticism of the dem party. They are not going to be the cavalry coming to our rescue. They have no comprehensive plan or policy, except "let's do the same thing again...except better."
Please keep in mind that business interests have been behind all of the “conservative’s” moves to dominate American governance for the past 43 years in accordance with Lewis Powell’s September 1971 detailed takeover plan. Corporate America and the capitalist owners thereof, the Oligarchs, followed that plan and brought America to where it is today.
The elected “conservatives” in Congress and elsewhere are now owned by Corporate America and the oligarchs, as are all of the people across the aisle, the “progressives” out of necessity. None are free from business interest influence and control.
Trump is but a mildly tolerated but unwitting beneficiary of Powell’s program and essentially serves their purposes. Trump’s intentions are purely selfish and driven by a lifetime of hatred. But, like all plans, unexpected events often produce unanticipated results. Musk appears to be turning the tide toward Technoligarcic control of American governance for their sole benefit, to Trump’s annoyance.
Where all of this leads to is the big question.
Good interview, and she makes valuable points even if one has issues with MMF, as some lefty economists do.
Not that I even wanna get into it. This is meant as a prophylactic anti-“splitting” comment! 😊 United front!
I get into a bit up above
“To sort of sit back and say “Well, the Republicans are gonna burn it all down. So we’ll count on, two years from now, getting the House back and picking up seats, and maybe then we can put forward an alternative plan.” We don’t have two years. You won’t be able to pick up the pieces. And if your message is, “We’ll pick up the pieces and assemble them the way before”—people didn’t like the way the system was structured before. That’s why, in part, Donald Trump won in the first place. You have to offer people a different vision if you want to actually win. If your message is, “Put us back in charge, and we’ll give you back the economy we had before they destroyed it,” I don’t think that’s where Democrats should be right now“
This is the *best* analysis I have seen about the dramatic mistakes dems are making in both messaging and in policy.
Excellent interview! Will be looking for more articles by and about Stephanie Kelton.
Question for people who follow Kelton or are commenting here: I think she’s saying that running deficits are not a problem. I’ve always believed that’s mostly true, but is there a point where government debt really does negatively affect the economy because the government has to spend inordinate amounts to service the debt? Not trolling at all - genuinely interested in an answer. Thanks.
Disastrous for her and hers perhaps.
Nolan with his questions And Kelton with her answers put it very clear. Regretably autoritarian goverments are blooming all over the world with help of disinformation spread by the power of social media and internet. It is very sad but the destroyers of the institutions in countries where they are in power will continue and that Will bring suffering to people around the world. Meanwhile, Putin, Xin Ping and other guys like them rejoice on the chaos that all this Will bring to the western culture which we know they want to destroy.
Regardless of how we got here it's time to define the problem of HOW to move forward and get to the better place we need to be without the gripp on everyone to cut the throat of reason. It's problem solving time and the GOP is not even trying to pretend they have any answers except blow it all up??? I'm convinced many in the center don't want this ongoing failure. Public administration is not a business is the first truth. Governments don't exist to make a profit. The purpose is to protect us and provide a safe environment in which to live. For all of us not just the rich. Is this administration doing this so far. Hell no!
We shouldn’t be surprised by the silence from the business sector. It’s not 2016, Trump is organized and more powerful than ever, fully equipped and willing to take retribution against any detractors. He has the FBI, DOD, Supreme Court, big tech which functions as media misinformation machines, all on his side to attack his enemies with whatever tool best fits.
We’re at the stage where it’s every man for himself in the upper ranks, while the broader population is misinformed into pacification or demoralized into submission, hence not many protests sprouting up around the country. He said on the campaign trail he would use the military on protesters. He sued ABC with no grounds and they capitulated. He gave Elon carte Blanche to tear down our institutions and dox judges/political enemies in the modern day public square of Twitter.
Much of Trumps early actions are warnings to his previously powerful opposition here and abroad that would oppose him. He’s daring them to call his bluff.
This obviously always ends badly for men like Trump. The question is will it last 4 years? A decade? Bashar Assad’s family ruled Syria with an Iron fist for 50 years. Putin 30+ years. Pinochet 17 years. Mussolini 21 years.
To overcome this, first his supporters will have to feel the pain of him being in power to turn on him. By then he’ll have fortified himself too much for it to matter, and that’s the stage we’re at now. He’s flexing his muscles behind the bulletproof glass of the White House. But once his supporters feel enough pain, we can organize and figure out a way forward.
AI/social media as a tool for misinformation is the one piece that separates him from other dictators in recent history. There’s a chance AI misinformation becomes so powerful that they warp even the worst realities into something tolerable for MAGA folks, and Trump’s support never wavers enough for a strong resistance to form. As we saw with this recent election where Trump told us what he was going to do, yet Arabs voted for Palestine to be turned into Trump Hotels, Latinos voted to be sent to camps, and white women voted against DEI/women’s rights. It’s going to be a long road ahead, but there’s no time to despair if we want to leave the world better than we found it.
Just for clarification on the point about tax dollars not directly being used for government--this just means that our tax dollars are actually spent paying down our debts, correct? That wasn't really clear in her answer. I get that it's not like a household budget, where each year, we take in money and then decide how to spend it. But please tell me someone in the CBO is tracking the amount of tax revenue they're receiving and there is technically a revenue/expenditure budget out there?
The federal government is constantly creating money and destroying money (you can think of taxes as pulling money out of the money supply). There is no fixed amount of money. The trick is having enough money to oil the machine of the real economy to allow us to have maximum prosperity without having harmful levels of inflation.