Chapter 2: Think of Inflation
I have half a chance of meeting my goals this chapter: after taking notes I find I have only 1373 words.
Ostensibly about inflation, this chapter spends more time talking about unemployment and a government jobs bank. Yes, in service of controlling inflation, but never fully demonstrating the assertion that we ought not consider deficits, but rather focus on inflation as the sign of government over spending.
Page 69: Asserts again, “The real danger is not deficit. It’s excessive inflation.” Oh?
“The Deficit has been kept historically too small. Evidence of too small a deficit is unemployment.” Again, an assertion which I’m not saying is wrong… but an assertion.
Kelton’s “Goldilocks” Inflation: 2% is considered good. Why? Because it reflects a strong economy. Lower is a reflection of a weaker economy. I hope she grounds this assertion, or else it looks like, “Because I said so, 2 % is good.”
It does bring up the issue of setting arbitrary, definitional limits on economic stats. What is the “right” amount of inflation? If we can arbitrarily set that, why not a cap on “enough” profit, to make the optimal society?
MMT: Responses to inflation should be taxes and spending, not Fed Rate changes.
“what matters is not whether the government’s budget is in surplus or deficit, but whether the government is using its budget to achieve good outcomes for the rest of the economy.” (My emphasis). This demands we ask, “Cui Bono?” Who’s in, and who’s out? Who says what constitutes “Good” outcomes? Power.)
MMT contains a Federal job guarantee. Such jobs oriented around a “care” economy; jobs that care for the community, people, and planet. A “public option” in the labor market, Kelton calls it. A nice turn of phrase, latching on to the semi-understood concept of a healthcare “public option.” Again, it’s a rhetorical maneuver.
Even if blatantly false, when Republicans say “Privatize Everything” they argue that the reason is because businesses are efficient and the service will be done better. It never is, but at least they have their rhetoric aligned and strong. They do not want a “care economy.” They want unrestricted right to profit.
If Kelton wants MMT to take hold, more education needs to get into establishing the powerful rhetorical imagery and frames required to lead people to WANT MMT the way a banker wants overdraft fees. The way Ghislaine Maxwell wants a pardon. But why should I like “public.” What’s in it for ME, and for US, the U.S.?
A Federal Jobs Bank:
A federal shock absorber against recession, unemployment, viral pandemics. A pool of jobs and projects the Federal government commits to funding. It’s Universal Basic Income (UBI) but with a work component.
Who determines which jobs go into the bank? What prevents these jobs becoming “peonage?” Who will say which jobs benefit “public” need, and which benefit private contractors, like privatized prisons? There is regress in this proposal to a discussion about WHAT is PUBLIC? Kelton probably has the entire Jobs Bank model sketched somewhere, but it’s elided from chapter 2, if not the whole book.
Why would anyone oppose a jobs bank? Because people in search of profit rely on the ability to drive their profit, in part, on labor costs. A job bank takes away their “right” to squeeze labor markets. It actively defeats predatory, slave-trading-esque bids for the most desperate labor. It removes desperation.
If there is one description for the goal of MMT, it seems to be “Let’s remove desperation as a motivating factor for our economic activities.” This is fine, as long as your motivation is not “profit at any cost, by any means necessary”… in which case, MMT is directly antithetical to your way of living, because desperation is profitable. Ask a payday lender. Ask a company town.
Pp 72 “… we want agencies, like the CBO helping to evaluate new legislation…”
Kelton’s entire argument hinges on a society-wide desire to maintain a fair game.
It appears MMT will run on neutrally gathered and maintained data. What happens when the very agencies designed to provide objective guidance fall into the hands of a political party who so despises data, objectivity and regulation that they either hamstring or gut the agencies, or head them with unapproved cronies who fudge numbers?
We see with today’s autocratic Trump regime and “take my ball and go home” Republican lawlessness, Kelton’s premise is under mighty assault. When one of the two players is more focused on retaining power than on shaping and managing this thing we call “America,” it is no longer a fair game; all bets and premises are off.
MMT recommends… a federal budgeting process that integrates inflation risk into spending decisions. Not deficits.
Page 72: “The point is, Congress should work backward to arrive at the answer, rather than starting with the presumption that every new dollar of spending needs to be fully offset.”
Almost certainly Kelton is onto something here: Arbitrary stakes in the sand create inflexibility and preclude options. But — and here’s the part that needs to be said out loud – Remember that group mentioned above that does not want to play in a fair game? Inflexibility is precisely what the Republicans have intended in passing many of the laws they pass. They are working toward a vision: the death of government power, in exchange for corporate/warlord power. Also known as fascism.
Remove Government ability to spend flexibly… because they hate government. Cap tax increases, but not decreases. Remove Government ability to separate Church from State (RFRA) because they want theocracy. Remove Government adjudication of our disputes (Stand your ground laws) because they want to be the deciders, not some judge, or jury or agent of the “Gubmint!” They understand clearly the definition of society they want, and they legislate to make it so. They have rhetorically sold us for decades on the idea that “Government should run like a business.” Where is Kelton’s counter to THAT?
We remain rhetorically adrift. Where’s the New Deal? Social Security? The Common Good? Where the rhetorically powerful incitement to “society.” And how, even if we get the rhetoric right, can we attempt to prove the claims we make are correct and “the right direction” when the other party is adamant, nay actively destructive, in making sure our project fails?
The Boldest Assertion: “We can and should use use discretionary policy to try to tame the business cycle. Smoother rides are preferable to bumpy ones.”
Oh? Tell that to a wing-suit flyer, plummeting headfirst down the Zugspitze. Tell that to an X-games bike jumper. Smoother is better – Yes, so think the people who seek to avoid disruption.
But large portions of society do not seek to avoid disruption. To these elements of any society, “stability” is seen as unjustifiable restriction on freedom. They seek disruption because they feel constrained by a status quo, and know how to squeeze higher profits from a more chaotic environment. “Creative Destruction” is a risk they’re willing to take, in exchange for higher profit margins.
But can a society survive if the people who get off on disruption take charge? What does it take for a “society”… say, a group of 20 in a lifeboat… to tell the one fucker standing, rocking the boat as he sells “capsize insurance,” “NO! You cannot do that in our society!!”
What is it Kelton wants to say? “No, you cannot create chaos in order to make more profit.” I’d like to agree. Then who enforces against those agents of chaos? We have to… It’s where we already live. Agents of chaos run free, because through their communications they have convinced enough people to believe that chaos is the preferable state: “You, too, might one day become a billionaire!”
So whether or not Kelton will prove in the remaining chapters that she is scientifically correct, she is already rhetorically floundering.
Page 71: “We need to tax the wealthy, not to cover spending, but to rebalance wealth distribution…. A small annual tax, on a fraction of his (Jeff Bezos’s) net worth, isn’t going to crowd out much of his spending.”
The rhetoric of a wealth tax. Do you think any of the wealthy will respond positively to the argument, “Hey, we’re taking some of “your” money because you won’t miss it, and the country needs it.” The argument cannot be so patently whiny and entitled… “You shouldn’t have so much. Give it to me.”
Conversely, will the people being hurt by inequitable wealth policy advocate to change what is being done to them? The existence of Q-Anon and an unwavering 42% base support for Donald Trump seems to indicate the answer is no.
Kelton attempts to appeal to a large group of “regular people” by saying, “Think about how little it will hurt Jeff Bezos if we take 2% of his 110 billion.” This seems too easy for Republicans to parry away, saying, “First they come for Jeff Bezos, but eventually they’ll come for YOUR money, too.”
It seems to me, and I know I’m not the author, that better rhetoric is to explain WHY wealth distribution hurts democracy. Because it puts fungible power into too concentrated a group. They will use their leverage against everyone else, to lock in the profits the system generates for them. They wish to preserve financial autonomy at the expense of everyone. We fought to escape financially driven control (kings, feudalism). We fought the civil war to break economic systems locking people in chains. Economic coercion is criminal. It is up to the “government” to define how much is enough and maintain the balance to prevent the abuses.
There is a “good” level of maximum wealth, beneficial to the most people. State it!
Establish why society is damaged by the imbalance… and then establish a SYSTEM that kicks in to maintain the optimum balance… i.e. progressive taxation that effectively prevents billionaires from existing.
The argument SEEMs to need to be “By establishing limits on top wealth we do indeed prevent individuals from becoming kings, and simultaneously do limit their “freedom” to do “anything they want.”… but that is the price of FREEDOM FROM KINGS, DICTATORS and ROBBER BARONS. We want a society where everyone has some “shock absorbing” wealth, and where everyone has freedom of opportunity. But opportunity achieved by amassing coercive quantities of wealth kills democratic freedom. WE will not allow that.”
Again… Changing this is a generations-long rhetorical task, to install and maintain this “ethos” when you KNOW the other side is actively working to maintain the other message. Through disinformation and destruction. Right or wrong, it is effective when they appeal to the lust for a lottery win, over the assurances that our system will make the boat float safely.
Page 73: MMT is about harnessing the power of the public purse to build an economy that lives up to its full potential, while maintaining “appropriate” checks on that power. … to elevate the human condition without risking inflation.”
Appropriate checks on power? Isn’t that what is negotiated every day in Congress? “Reasonable men,” “undue Burdens,” and “appropriate checks.”
I began reading this book with a wrong lens. I was focused on the idea that this author would present a more “right” way of looking at objective data, or a measurable scientific theory of economics. But she has so far only revealed that we are in a war of rhetoric over what we should want our government and society to do and be.
It is a rhetorical battle between short and long term thinking, and “short” has so many immediately detectable advantages… to those incapable of long term thinking, or not interested in long term thinking. Long term thinking is no fun. It takes away spontaneity.
This war will only be won by convincing a majority to side with us, and by enforcing against the substantial plurality that refuses to be held accountable to the rules of the game; refuses to work toward common goals.
=== Alas, 2003 words. Democratic Spin: “I’ve reduced the per blog deficit by 50%!”
Republican Spin: “He’s still living beyond his word budget. Privatize him!”