Understanding Economics is Important for Meaningful and Lasting Change

Here is a recording and written summary of a podcast interview on MMT, budget deficit myths, and a number of economic topics with economist Stephanie Kelton who used to be a chief economist on the US Senate Budget Committee and was an economic adviser to the Bernie 2016 presidential campaign:

First, the iTunes link for those who can use podcast technology (say during a long commute). It’s 1:52 hours long!

It’s also available as a Youtube audio:

(Note: if the video linked above gets deleted, you may search the Internet for the title: “Left Out: [FULL EPISODE] Stephanie Kelton on MMT and debunking budget deficit myths”)

 

Summary #1 (with a little added spice from me, of course):  

1. It’s an obvious myth that there is never supposed to be enough money available for the government to spend on its people, but always more than enough to spend on the war profiteering machine (military-industrial complex) or for tax breaks for the rich.

2. Social Security isn’t going broke (unless our corrupt politicians raid it time and again and starve it on purpose) as long as our productivity stays up.

3. A great government investment would be in building out community health centers that provide primary care for everybody free of charge. It would fix the main healthcare problems and create a lot of jobs.

4. With a nation that creates its own fiat currency, the limits are not in the currently existing money but the real economy, meaning things like productivity, available labor and productivity that can be mobilized, the economics’ capacity to absorb government investment, the money flow which decides if the resources go to where they are needed as opposed to gathering dust in billionaire’s vaults…

5. Dems have allowed themselves to be painted as the tax-and-spend party by the Reps who have painted themselves as the tax-cutting party. The question, what’s good about tax cuts mostly for the rich (who don’t need them) counterbalanced by cuts in government spending on those who desperately need it (the middle class and poor)? For example: countless wannabe professionals are under huge student debt now because of government cuts to higher education spending. And all those college educated people can no longer pay much into the economy since so much of their income goes into paying their loans and interests on those loans.

6.: Minor tax cuts which are counterbalanced with cuts to healthcare service end up losing us money when our healthcare costs shoot up much more than what little we save in taxes.

7.: Many important issues would not get discussed without Bernie Sanders constantly putting them on the table, and Bernie is beyond tireless.

By the way, you can follow Left Out on their Twitter account: @leftoutpodcast

 

For those who prefer to listen to Stephanie Kelton themselves but don’t have a lot of time, here is a shortish video (23 min) in which she explains the gist of MMT’s significance in political debates (perk: you also get to see a younger version of the infamous sociopath Paul Ryan):

(Note: if the video linked above gets deleted, you may search the Internet for the title: “Modern Monetary Theory for Non Economists – Professor Stephanie Kelton – Feb 2018”)

 

Summary #2:

A. Politicians use the myth of money scarcity as a cover against demands from the pulic.

B. Only the U.S. federal government is allowed to create U.S. dollars, and there exists no limitation on how much it can create at any moment. Hence there is no limit on deficit spending and federal budget crisis is a myth. What really matters if the economy has the resources to provide what the government decides to buy, and this depends to no small degree on where the government spends its money. A simple example would be: if our pharmaceutical industry can’t make the medications or senior care homes and care workers are too scarce, then all the money in the world can’t uy them; but if our government invests in drug research and purchases, in care centers and the education and salaries of care givers, and the rest of the economy can continue to cover our material needs, then good care for all of us when we get old is easy peasy, just as it was possible for the U.S. to become the dominating global military power dwarfing all others simply because Washington decided to spend so much on that.

C. Our huge income inequality (greatest in almost 100 years) is reversible by acting on multiple fronts (such as FDR’s second bill of rights, A.K.A. the unfinished business of the “Democratic” Party that suddenly went neoliberal on us instead).

 

Conclusion:

We all understand that we need better politics to properly deal with severe problems affecting us all such as too few jobs, too small salaries, unaffordable education and healthcare. Many of these problems are of an economic nature, and – as Stephanie Kelton explained in these interviews – our politicians tend to squirm out of making economic improvements using false myths like the deficit myth and trickle-down economy to befuddle voters. Therefore, to improve our situation, we need to better understand economics so we can no longer be hoodwinked with such myths. I would add to this that we must go even further and understand how an economy that creates huge wealth and income inequality naturally results in democracy being undermined by super-rich people and their servile corporations turning politics into an additional weapon they wield against the people. Hence we need to not only demand sound government spending which lifts us all up and is more just (like federal job programs and a basic income guarantee), but also demand economic rules which prevent big inequality (maximum income and wealth caps and a shared-assets economy, for instance) and democratize the marketplace (replacing authoritarian corporations with democratically run worker co-ops, for example). As Stephanie Kelton remarked, there are many fronts on which we need to implement change.

~

Ending Note: It takes me at least 100 hours a month to research and write for this site and work on my book. Please widely share links to these articles or help in other ways, so this work is not for naught. Donations are really great, too! Thanks. Only together can we change this messed-up world. 🙂

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