Wednesday, 8 February 2012

MMT and why implementation order matters

Scott mentioned on another thread:
Actually, the NAIRU model is all about, explicitly, making sure there are enough people unemployed to ensure inflation doesn’t rise above the target.
The way they do this is to dehumanise the population affected. They start talking in optimal percentages (4%) rather than in real people.

Real people means (in the case of the US) six million real walking, talking human beings, all with hopes and dreams and aspirations, who cannot and will not be able to obtain sufficient to feed and house themselves and the people that depend upon them.

And their only hope of advancement is to replace themselves in that pool of hopelessness by swapping themselves with somebody currently outside it.

Dehumanization and individualization of a systemic problem are the tools by which this carnage is justified. It stinks and it must be stopped.

Which is why an income/something-to-do guarantee of some description has to be the first piece of an MMT style policy programme implemented.

In any political process, political will is at its highest during the euphoria of victory and any sensible strategy that actually believes the economy should work for all will do the most difficult part of the process first. The bill must be lined up with the heavyweights behind it. Delay is fatal - as Obama's heath care bill shows. History will hold Obama up as Captain Compromise. He is no Nye Bevin.

Without a 'guaranteed minimum something to everybody' first, what will happen is that the dispossessed will be quietly forgotten as the economy recovers. You only have to read Prof. Wray's papers from the early millennium to realise that nobody was listening while the partying was in full swing. It's not as if the job/income guarantee is a new idea.

There is also the more serious side, which is of course that once you get to full employment you can indeed get more for your pals by ensuring others have less. And you can do that inside your country by stripping the unemployed of any resources or by regional deprivation or simply by wage suppression. Externally to your country the same happens via mercantile export surplus policies and 'vendor financing'.

Of course for those who don't believe that the economy should work for all it is easy to adopt the quantity expansion ideas in MMT. Selling tax cuts is easy; it's just like selling extra credit cards - more bread and circuses. But when you have nothing fundamental to differentiate yourself from the opposition you become a pale imitation of the real thing - as the British Labour party demonstrates in spades. At that point you may as well just have the real thing.

Yes an alternative has to be practical and it has to be pragmatic. Yes an alternative has to be sold, which requires a marketing line with a particular emphasis. But first and foremost it has to be, and seen to be, an alternative.