Thomas Biggs
6th February 2012, 15:36
I was hoping to get some views on MMT just before I go on to the main topic as it feeds in, if you haven't spoken about this already. For the purpose of this thread, 'we' does not refer to the working class or any classification of social order, it is the whole country, including the 'Bourgeoisie' and the State.
MMT is fairly simple. It is the recognition that in the FIAT monetary system we have in Europe and USA, we do not have a 'solvency' problem. We can never run out of money that we print ourselves. If the Government wants to print £100m today it can. The only issue we can consider is inflation. However, MMT aims to answer some basic questions about putting new money in the economy. Most importantly, it addresses the question of inflation. It is possible to inspire growth, both in a Capitalist and Socialist economy, via the printing of money.
When Aggregate Supply increases, prices in the economy generally decrease. This is done through supply-side policies, E.g. breaking up trade unions, decreasing the minimum wage and government supply-side projects, such as infrastructure building. I do not agree with the two former, so don't ban me just yet! But if we picked the latter, it would increase the capacity for our economies to grow which will reduce costs. We do this by employing people using 'new' money. This is where 'theory' really comes in. We have to predict how much capacity we add to our economy, against how many dollars/pounds/euro's we create. If we spend $1000 and it turns out we only make $600 worth of roads or railways, the $400 left will become inflationary. However we can avoid this using 'Employer of Last Resort' strategy.
I'm not sure what figures are for other countries, but in the UK we have 2.68m people unemployed. More than 1m of those is youth unemployment. Now, in the UK the Minimum Wage is slightly higher than £6, but I'm just going to call it £6 dead for simplicity. In the UK, also, if you're unemployed you get £3400 unemployment benefits per year. £3400 / 52 = £65 which = more than 10hrs of work a week. If you don't get that, basically I've just worked out if someone was being paid minimum wage and earned £3400 that's how much they'd work - 10 hours. The Government becomes the 'Employer of Last Resort' so that nobody goes out of the job.
10 hours x 52 = 520 hours a year. 520 hours x 2.68m people unemployed = 1.394bln hours of work. Imagine what kind of things that much labour can do? It can improve the infrastructure, supply-side policy like I said. if we combine this with MMT, in theory we can increase their hours too. This should lead the way to growth as businesses will have more capacity to to employ people. Of course, because these people are on minimum wage for very low hours, the Private Sector will easily be able to compete for jobs - offering better employment prospects.
I think this is how we should get our economy going. Of course, Capitalism is ultimately flawed in the long-term: I agree with that. But I have a range of policies that tie fairly neatly in to this one that aim to 'Democratise' our Economy - that is, real democracy.
MMT is fairly simple. It is the recognition that in the FIAT monetary system we have in Europe and USA, we do not have a 'solvency' problem. We can never run out of money that we print ourselves. If the Government wants to print £100m today it can. The only issue we can consider is inflation. However, MMT aims to answer some basic questions about putting new money in the economy. Most importantly, it addresses the question of inflation. It is possible to inspire growth, both in a Capitalist and Socialist economy, via the printing of money.
When Aggregate Supply increases, prices in the economy generally decrease. This is done through supply-side policies, E.g. breaking up trade unions, decreasing the minimum wage and government supply-side projects, such as infrastructure building. I do not agree with the two former, so don't ban me just yet! But if we picked the latter, it would increase the capacity for our economies to grow which will reduce costs. We do this by employing people using 'new' money. This is where 'theory' really comes in. We have to predict how much capacity we add to our economy, against how many dollars/pounds/euro's we create. If we spend $1000 and it turns out we only make $600 worth of roads or railways, the $400 left will become inflationary. However we can avoid this using 'Employer of Last Resort' strategy.
I'm not sure what figures are for other countries, but in the UK we have 2.68m people unemployed. More than 1m of those is youth unemployment. Now, in the UK the Minimum Wage is slightly higher than £6, but I'm just going to call it £6 dead for simplicity. In the UK, also, if you're unemployed you get £3400 unemployment benefits per year. £3400 / 52 = £65 which = more than 10hrs of work a week. If you don't get that, basically I've just worked out if someone was being paid minimum wage and earned £3400 that's how much they'd work - 10 hours. The Government becomes the 'Employer of Last Resort' so that nobody goes out of the job.
10 hours x 52 = 520 hours a year. 520 hours x 2.68m people unemployed = 1.394bln hours of work. Imagine what kind of things that much labour can do? It can improve the infrastructure, supply-side policy like I said. if we combine this with MMT, in theory we can increase their hours too. This should lead the way to growth as businesses will have more capacity to to employ people. Of course, because these people are on minimum wage for very low hours, the Private Sector will easily be able to compete for jobs - offering better employment prospects.
I think this is how we should get our economy going. Of course, Capitalism is ultimately flawed in the long-term: I agree with that. But I have a range of policies that tie fairly neatly in to this one that aim to 'Democratise' our Economy - that is, real democracy.