One of the themes of my blog here is that reality is complex. While many if not most people (especially conservatives) cling to simple, black and white, alternatives to every issue, and think the right answer is always white, the truth is almost always gray, sometimes circumstantial.
Thus the H.L. Mencken quote: “For every complex problem there is an answer that is clear, simple, and wrong.”
Today’s example comes from an op-ed by New York Times technology columnist Farhad Manjoo (https://en.wikipedia.org/wiki/Farhad_Manjoo) who contributes both to NYT and NPR (and who lives in the Bay Area, I think, but can’t find a confirming source at the moment).
Today’s essay: America Looks Hopelessly Broke. It Isn’t. Subtitle: “For 40 years, both the left and the right have been unnecessarily obsessed with deficits, to the detriment of the well-being of citizens.”
Print title: “How to Fix America: Spend, Spend, Spend”
This sounds intuitively suspect, because Republicans are always worrying about the federal deficit, when it comes to social services and pandemic relief, except when they’re not, when it comes to cutting taxes for the wealthy or to expanding the military budget. (These last two are always priorities of Republicans, no matter what the state of the economy or the world.)
The point, as Paul Krugman and others have made, is that the government is not like your household. The federal deficit is not like your mortgage and car loan. (Actually, the point there is that many households carry such debt for years, decades, and don’t consider it a moral failing, as Republicans feel about the federal deficit.)
This point dovetails with recent posts about the idea of Universal Basic Income, or the economic theories in that early Heinlein novel, which suggest that the government’s role in the economy is, literally, to simply print enough money to grease the economy, to keep it going, because the innovators and inventors keep creating new potential wealth. The idea that money should be tied to the gold standard, say, is a fantasy: it implies that cumulative wealth is fixed, a non-zero sum game. But that can’t be true, otherwise cumulative wealth would never have increased since we were all living in caves. OK, or all living as farmers and herders. But it does increase, and the government’s job is to facilitate the spread of that wealth throughout the economy. By literally printing money if necessary.
But let’s hear from Farhad Manjoo, who’s read a couple recent books, by Carter and Kelton:
And whenever anyone is brave enough to suggest that the government itself should provide useful services to Americans — whether big-ticket items like health care, child care and college education, or smaller things like an upgraded electric grid or a national broadband service — the first reaction from many on the right and the left is one of defeat and resignation. “How will you pay for it?” they ask. And, often, the whole conversation stops right there, because with a trillion national debt, America looks hopelessly broke.
It is not. Kelton argues that our government’s inability to provide for citizens isn’t due to a lack for money; instead, our leaders lack political will.
Kelton — who has worked as an economist for Democrats in the Senate and as an adviser to Bernie Sanders’s presidential campaigns — is one of the leading proponents of Modern Monetary Theory, or M.M.T. The theory argues that because the government is in charge of its own currency, it cannot “run out” of money the way a household or a business can, and it therefore does not need to raise taxes to fund government spending.
M.M.T. is controversial even among left-leaning economists — Lawrence H. Summers, who once worked as Barack Obama’s director of the National Economic Council, has called it “a recipe for disaster” — and it’s easy for non-economists to get lost in the many technical debates surrounding the idea.
But one doesn’t need to buy into everything about M.M.T. to see Kelton’s fundamental point — that in the 40 years since Ronald Reagan won the White House, both the left and the right have been unnecessarily obsessed with deficits, to the detriment of the well-being of citizens.
(I see here the text online has been revised form the version in print today!)
He follows up with a dig at Obama’s 2008 stimulus after the Great Recession—because he “lowballed” it; it wasn’t enough.