This article is generally, missing the mark. A company can issue as many shares as it likes. You as an individual, can sign as much debt as you like. A bank can create as much deposits as it likes(obviously some laws apply). We already afford private individuals, companies, and any other financial entity, the ability to issue financial assets. MMT is merely recognizing, the extent to which a government also enjoys this flexibility.
There are a couple issues. Traditionally, the way to view inflation, was in terms flows. So in a given time period, a certain amount of money is spent, a certain amount of money is held, and a certain amount of goods and services are offered in exchange. Well, the probably with viewing the value in terms of flows, is that it can completely change in any time period, and it relies on aggregates and averages.
A much more simple and direct way to view inflation is in terms of the "stock', so the total amount people have saved in that currency. For a private company, this is the "market cap", for cryptocurrencies we similarly use the phrase "market cap". But for a countries currency, this is in essence called the "National Debt". Whereas a company wants to increase its value, we typically view an increase in national debts, as a bad thing. But really, it's no different. When a company issues shares, they use the money to buy things, and if they invest wisely, it increases their total value, more than the cost of the shares issued. For a government issuing currency it is the same. When you issue more money, that is not automatically good or bad, it depends on what it is spent on.
The typical problem, in the modern world, is not, in fact scarcity, but surplus, which leads to unemployment... Imagine that the United States was divided into two halves: east and west, and east and west fought against each other. They would spend a lot on arms, fortifications, planning, preparing, not to mention the costs if full blown conflict emerged.
Well, the value of a government, is creating a peaceful environment for commerce and welfare of its citizens. Admittedly, how well governments do this, varies. But if a government does its job well, then that creates a lot of opportunities, for entrepreneurs to start businesses, for people to specialize and trade, and all the costs that would have gone to fighting each other, now go toward trade and commerce.
Often, the result is, that (some) prices get pushed down lower, and it is ironically harder for many individuals to earn a decent living. If all prices get pushed lower, you have not problem, because prices are relative. But generally some resources are easier to control: land, housing, etc.
So some prices get pushed down very low: food, air travel, service industry etc. Meanwhile some prices stay high or even rise: housing, education, legal fees healthcare. In such an environment, it can be hard for normal people to make a living. Not everyone can be doctors, dentists or lawyers.
So the paradox is, because we have abundance, there is a shortage, not of goods or services, but of useful things to do, without excessively high barriers. Now admittedly, the trades: plumbers, construction, drivers, electricians, are great careers right now. They require enough commitment and skill, usually a long term career choice, and they often have trade organizations that ensure both quality and a bit of protectionism.
Many economists talk about a "lump of labor fallacy". They say that comments like "people are taking our jobs", or "automation will take jobs", ignore the fact that new jobs always get created. While it's true that new jobs are created all the time, sometimes these aren't as accessible. If you look at just food, or just clothing, people have a very specific level of need. Once someone gets their daily calories, and has enough quality clothing for their wardrobe, then it becomes very hard to sell them any more.
So today, we see more economic activities than ever before: music, entertainment, streaming services. It's a good thing that people are able to diversify into providing these different services. But there is an issue. Typically, unemployment hits the people on the bottom the hardest, so when food service, agriculture, textiles, manufacturing, if some of these industries contract, it's not like everyone can go out and get jobs working for a film crew...
Even if the movie industry takes in more money, than what is lost by the contraction of other industries, a film made by a few hundred people, can be distributed to millions.
So the irony is, because we have abundant wealth, some people lose their jobs and face deprivation. This isn't anything that fixes itself automatically. So what is to be done?
Well the MMT solution, is to create more work in the public sector. So you see, if the issue really is, that normal jobs have become redundant, that means we have excess wealth, surplus goods and services. So just like a company, when their share price appreciates, when we have surplus or abundance, the government has its "share price" increase... Because we have an excess of real goods and services, our currency becomes more valuable. It can be used by people all around the world to buy things, whether that's food or entertainment.
But as for the people at home without work now, what can we do? As I was saying, we can create public service jobs: clean up litter, beautify parks, build hiking or biking trails. Create anything of value. Basically, having abundance is not a good reason to force people into unemployment.
Now whether you agree with that politically or not is one thing, but the argument by MMT, is that we can afford it, especially when the nature of the problem is one of abundance and not scarcity. Right now our issues may be a little different in that we have some supply chain disruption, from decades of consolidation, efficiency boosts, and eliminating redundancies. The irony is that shortages now, are a result of surpluses in the past being an excuse to trim down workforces and outsource work.
You give a pretty good and fair overview of some principles from MMT, but I thought it would help to clarify some of these specifics.
This article is generally, missing the mark. A company can issue as many shares as it likes. You as an individual, can sign as much debt as you like. A bank can create as much deposits as it likes(obviously some laws apply). We already afford private individuals, companies, and any other financial entity, the ability to issue financial assets. MMT is merely recognizing, the extent to which a government also enjoys this flexibility.
There are a couple issues. Traditionally, the way to view inflation, was in terms flows. So in a given time period, a certain amount of money is spent, a certain amount of money is held, and a certain amount of goods and services are offered in exchange. Well, the probably with viewing the value in terms of flows, is that it can completely change in any time period, and it relies on aggregates and averages.
A much more simple and direct way to view inflation is in terms of the "stock', so the total amount people have saved in that currency. For a private company, this is the "market cap", for cryptocurrencies we similarly use the phrase "market cap". But for a countries currency, this is in essence called the "National Debt". Whereas a company wants to increase its value, we typically view an increase in national debts, as a bad thing. But really, it's no different. When a company issues shares, they use the money to buy things, and if they invest wisely, it increases their total value, more than the cost of the shares issued. For a government issuing currency it is the same. When you issue more money, that is not automatically good or bad, it depends on what it is spent on.
The typical problem, in the modern world, is not, in fact scarcity, but surplus, which leads to unemployment... Imagine that the United States was divided into two halves: east and west, and east and west fought against each other. They would spend a lot on arms, fortifications, planning, preparing, not to mention the costs if full blown conflict emerged.
Well, the value of a government, is creating a peaceful environment for commerce and welfare of its citizens. Admittedly, how well governments do this, varies. But if a government does its job well, then that creates a lot of opportunities, for entrepreneurs to start businesses, for people to specialize and trade, and all the costs that would have gone to fighting each other, now go toward trade and commerce.
Often, the result is, that (some) prices get pushed down lower, and it is ironically harder for many individuals to earn a decent living. If all prices get pushed lower, you have not problem, because prices are relative. But generally some resources are easier to control: land, housing, etc.
So some prices get pushed down very low: food, air travel, service industry etc. Meanwhile some prices stay high or even rise: housing, education, legal fees healthcare. In such an environment, it can be hard for normal people to make a living. Not everyone can be doctors, dentists or lawyers.
So the paradox is, because we have abundance, there is a shortage, not of goods or services, but of useful things to do, without excessively high barriers. Now admittedly, the trades: plumbers, construction, drivers, electricians, are great careers right now. They require enough commitment and skill, usually a long term career choice, and they often have trade organizations that ensure both quality and a bit of protectionism.
Many economists talk about a "lump of labor fallacy". They say that comments like "people are taking our jobs", or "automation will take jobs", ignore the fact that new jobs always get created. While it's true that new jobs are created all the time, sometimes these aren't as accessible. If you look at just food, or just clothing, people have a very specific level of need. Once someone gets their daily calories, and has enough quality clothing for their wardrobe, then it becomes very hard to sell them any more.
So today, we see more economic activities than ever before: music, entertainment, streaming services. It's a good thing that people are able to diversify into providing these different services. But there is an issue. Typically, unemployment hits the people on the bottom the hardest, so when food service, agriculture, textiles, manufacturing, if some of these industries contract, it's not like everyone can go out and get jobs working for a film crew...
Even if the movie industry takes in more money, than what is lost by the contraction of other industries, a film made by a few hundred people, can be distributed to millions.
So the irony is, because we have abundant wealth, some people lose their jobs and face deprivation. This isn't anything that fixes itself automatically. So what is to be done?
Well the MMT solution, is to create more work in the public sector. So you see, if the issue really is, that normal jobs have become redundant, that means we have excess wealth, surplus goods and services. So just like a company, when their share price appreciates, when we have surplus or abundance, the government has its "share price" increase... Because we have an excess of real goods and services, our currency becomes more valuable. It can be used by people all around the world to buy things, whether that's food or entertainment.
But as for the people at home without work now, what can we do? As I was saying, we can create public service jobs: clean up litter, beautify parks, build hiking or biking trails. Create anything of value. Basically, having abundance is not a good reason to force people into unemployment.
Now whether you agree with that politically or not is one thing, but the argument by MMT, is that we can afford it, especially when the nature of the problem is one of abundance and not scarcity. Right now our issues may be a little different in that we have some supply chain disruption, from decades of consolidation, efficiency boosts, and eliminating redundancies. The irony is that shortages now, are a result of surpluses in the past being an excuse to trim down workforces and outsource work.
You give a pretty good and fair overview of some principles from MMT, but I thought it would help to clarify some of these specifics.