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Job Guarantee

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An Open Letter to Don Beyer, VA – 8th Candidate for Congress

My Congressman, Jim Moran, is retiring this year and his seat is up for grabs in the VA – 8th Congressional District. This is a solidly blue district made even more solid by the Republican gerrymander following their win in the disastrous elections (for poor people, for women, for the middle class, and for minorities) of 2010 in Virginia. So, the question is, which of the eleven candidates who are running in the primary will win it, and become the heavy favorite to win the Congressional election in November.

The heavy primary favorite is Don Beyer, a noted auto dealer in Northern Virginia, who has served as Lieutenant Governor twice, and also as Ambassador to Switzerland. My impression of Ambassador Beyer has been favorable. I have a friend who bought cars from him over many years and who had his Volvos serviced at his dealership all the while, and he had nothing but good things to say about the integrity of the service he received.

That said, however, and personal characteristics aside, I'd like Beyer to clarify his positions on the issues. So, I'm addressing this open letter to him. Read below the fold...

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What Would You Have the President Do? Part II, Getting to Full Employment

Responding to a Post at Naked Capitalism by Michael Hudson with some additions by Yves Smith, a commenter, objecting to the criticism of the President's Knox College speech, issued the challenge ”What would u have him do?” in connection with his promised effort to restore prosperity to the middle class and the poor. In this series I'm giving my answer to that question. In Part I, “Necessary First Moves,” I offered and described two of these. Ending the filibuster, and using High Value Platinum Coin Seigniorage (HVPCS) to fill the Treasury General Account (TGA) with $60 Trillion in reserves.

The purpose of the first was to prepare the way for substantive policies by removing the Republican minority's power to tie up legislation. The purpose of the second, was to neutralize austerian fiscal responsibility justifications for subjecting every policy proposal to a deficit neutrality test, and for opposing deficit spending on grounds that it adds to the national debt and imposes heavy risks that the bond markets will demand very high interest rates on US debt. Of course, HVPCS gets rid of both the debt and bond market concerns for good.

Neither of these two policies, however, addresses substantive needs such as creating and maintaining full employment. This post is about the policies for getting to full employment I want the President to propose and try to implement. All of these policies have been previously proposed by MMT economists including Warren Mosler, Randy Wray, Bill Mitchell, Stephanie Kelton, and others. Read below the fold...

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It's Not About the Food Stamps; It's About a Job At a Living Wage

Got this in an e-mail yesterday from my brother, Hal:

“June food stamp Recipients Hit All Time High As Three Times As Many Americans Enter Poverty As Find Jobs, bringing the total to a new all time high of 46.670 million and once again rising fast.”

Read below the fold...
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QE for the People?

Anatole Kaletsky in Reuters has been advocating Quantitative Easing for the People (QEP) in two recent posts (h/t to Lambert for alerting me). In the first, he begins by making the point that QE hasn't worked to lift the economies of the US and the UK, and suggests new and more radical measures must be considered. Then he says: Read below the fold...

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The Fiscal Summit Counter-Narrative: Part Eight, Narrative and Counter-Narrative For Fiscal Sustainability

I started this lengthy series by saying:

Well, it's Springtime in DC. Time for the Peter G. Peterson Foundation's annual event. The Fiscal Summit, to be held on May 15, better named the Fiscal Cesspool of distortions, half-truths and lies, is a propaganda extravaganza designed to maintain and strengthen the Washington and national elite consensuses on the existence of a debt crisis, the long-term ravages of entitlement spending on America's fiscal well-being, and the need for long-term deficit reductions plans to combat this truly phantom menace. The purpose of maintaining that consensus is to keep an impenetrable screen of fantasy intact in order to justify policies of economic austerity. that have been impoverishing people and transferring financial and real wealth to the globalizing elite comprised of the 1% or far less of the population, depending on which nation one is talking about.

I then pointed to the first two Fiscal Summit Conferences in 2010 and 2011, identified some of the featured participants in both of these, and the then pending 2012 conference, and identified the primary myths used to form the neoliberal-based deficit hawk/austerian “fiscal sustainability”/”fiscal responsibility” narrative driving the politics of fiscal policy towards debate, discussion and passage of a long-term fiscal policy plan focused primarily on deficit reduction and long-term “fiscal responsibility” and “fiscal sustainability.” I then set out to present a detailed account of the five sessions of the April 2010 Fiscal Sustainability Teach-In Counter-Conference along with comments and references (links) to posts appearing since the Teach-In. The five sessions and accompanying Q & A, covered in posts 2-7 of this series, supplemented by additional post-conference work provide a fiscal sustainability/fiscal responsibility counter-narrative based on the Modern Monetary Theory (MMT) approach to economics.

In this final post of the series, I'll juxtapose the primary claims underlying the neoliberal austerian fiscal sustainability/fiscal responsibility narrative, and the MMT answers to them. The austerian claims all link to MMT-based posts that critique them. The paragraphs following each austerian claim summarize the MMT answers, and the counter-narrative. Read below the fold...

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The Fiscal Summit Counter-Narrative: Part Six, Policy Proposals for Fiscal Sustainability

The way we designed the program of the Fiscal Sustainability Teach-In Counter-Conference, was to introduce the fundamental ideas of Modern Monetary Theory (MMT) in the first three presentations on defining fiscal sustainability, whether or not there are spending constraints on governments sovereign in their currency, and whether deficits, debts, and debt-to-GDP ratios are really a problem for entitlement programs and our grandchildren. Then Presentation Four, by Marshall Auerback, was given to consider the main critique of MMT's stance on deficit spending, the possibility of inflation or hyperinflation.

Finally, Presentation Five, which we'll cover in this post was designed to highlight the proposals for full recovery favored by the MMT economists. These proposals are the counter to the austerity proposals of Paul Ryan, Pete Peterson, Erskine Bowles and Alan Simpson, David Walker, Barack Obama, and the rest of those convinced that the US Government has solvency/debt/deficit problems that must be solved by some combination of spending cuts and tax increases. Read below the fold...

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(MMT - JG) + Medicare for All Not = MMT


In my last post, I discussed the first part of Beowulf's post entitled: “(MMT - JG) + Medicare for All = MMT,” and also some dialogues between Jamie Galbraith and both TomThumb and Beowulf related to the MMT Job Guarantee at one of FiredogLake's Book Salon's featuring Jamie's n Read below the fold...

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Dialogues with Jamie Galbraith and the MMT Job Guarantee

A few days ago my friend Beowulf decided to exercise his wry sense of humor with this title of a post he offered for our consideration: “(MMT - JG) + Medicare for All = MMT.” Beo then goes on to talk about some details of a comment exchange with Jamie Galbraith at one of FiredogLak Read below the fold...

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The WaPo MMT Post Explosion: Dean Baker's Second Try On MMT (3)

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The WaPo MMT Post Explosion: Dean Baker's Second Try On MMT (2)

This is the second installment of a critical review of Dean Baker's second reaction to the debate kicked off by the WaPo's piece on Modern Monetary Theory, written by Dylan Matthews. The first installment discussed Dean's views on using the monetary channel to boost aggregate demand, and began criticism on his views on devaluing the currency and increasing exports. This post continues that critique, and later takes up his views on work sharing.

Expanding US Exports at the Expense of Decreasing Real Wealth? (continued)

Dean goes on:

”To see this point, imagine a more extreme case. Suppose that we had a trade deficit equal to 50 percent of GDP. If the countries who were buying up dollar assets then decided that they had enough, so we could no longer rely on imports to meet half of our domestic demand, does anyone believe that the U.S. economy could quickly and painlessly replace our imports with domestic production?”

No, of course not! But, why do economists like Dean and Paul Krugman insist on relying on far-fetched scenarios to try to argue against simple truths that may apply today? The current account balance will probably be around 4-5% of GDP this year. As the economy recovers it will probably rise to 6% of GDP again, which represents a very real benefit to the United States. But there's no reason to expect that this growth would continue indefinitely or ever reach 50% of GDP. Why should it? What are the dynamics that would drive things this way, and make other nations value the dollar so much, that they will keep their own populations barefoot?

China, India, and Japan are all under pressure domestically to change their policies and make more of their production available to their own people. Europe may also abandon austerity soon, as they experience its ravages.

The long-term trend in the current account balance won't be up, It will be down, gradually down, for reasons I mentioned above. It just doesn't make sense for foreign nations to continue giving more than they're getting from the US. So, the 50% GDP scenario is just ridiculous. Why even bother suggesting it? What does the thought experiment prove, except that Dean Baker isn't thinking through a realistic model of the forces accounting for the international trade patterns we see?

In fact, Dean isn't even really serious about suggesting that this scenario somehow corresponds to a result of MMT economics. He says:

”I would not attribute this view to the MMTers, but then the question becomes one of a degree. Perhaps a trade deficit of 6 percent of GDP is okay, but presumably somewhere between 6 percent and 50 percent we get into a problem. It seems the question then has to be how quickly the U.S. economy could adjust to a much lower trade deficit and what is the risk that foreign countries will slow or stop their purchases of U.S. assets? We may differ on the answer to these questions, but they are the questions that must be asked.”

I think these are important questions. We should ask them. But, has Dean answered them? And do his answers indicate any serious problems for the United States economy? And if so, how does that relate to MMT? If these changes could possibly produce cost-push inflation in the United States, then MMT has some answers for that kind of problem. On the other hand, if other nations stop exporting so much to the US, then that may create less demand leakage for our economy. In which case, MMT predicts that we will get closer to full employment and also that we will have to moderate deficit spending as full employment is approached.

Dean continues with more scenarios about what would happen if foreign nations began to charge us more from imports. I won't reproduce each of these here or critique them. But, invariably, there is a general pattern to them. Read below the fold...

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The WaPo MMT Post Explosion: Kevin Drum's Take on MMT

Kevin Drum, posting in Mother Jones, also threw his hat into the ring of discussion about Dylan Matthews's post about Modern Monetary Theory (MMT). Kevin begins by characterizing MMT as “. . . . Read below the fold...

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The WaPo MMT Post Explosion: Dean Baker Weighs In on MMT

Dean Baker weighed in on MMT in the aftermath of Dylan Matthews's, MMT post on Ezra Klein's blog. Dean said:

I consider many of the leading proponents of MMT to be friends and generally find myself on the same side of political debates. However, I have to confess to being a bit unclear as to what exactly separates MMT from the good old Keynesian economics I learned in my youth.

Read below the fold...
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The WaPo MMT Post Explosion: Jared Bernstein's Cool Up To a Point

After stating his general approval for Dylan Matthews's, MMT post on Ezra Klein's blog, and his agreement with MMT on the issue of solvency, a big point that MMT's been trying to get across to the mainstream for years, Jared brought forth a number of points of disagreement, which I'll reply to based on my interpretation of the MMT perspective.

Tax Cuts Hard to Unwind? Not If You Legislate Properly! Read below the fold...


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