This post answers the common question posed to MMT-ers, which is often a thinly veiled criticism: “Why do so many MMTers advocate for increased government spending?”
(Basically, when speaking in the national context, the answer is to stop focusing on “the money” and start focusing on the real world.)
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This post was last updated January 3, 2022.
Disclaimer: I have studied MMT since February of 2018. I’m not an economist or academic and I don’t speak for the MMT project. The information in this post is my best understanding but I don’t assert it to be perfectly accurate. In order to ensure accuracy, you should rely on the expert sources linked throughout. If you have feedback to improve this post, please get in touch.
“Why do so many MMTers advocate for increased government spending?”
“Advocating for increased government spending” is a misrepresentation and a loaded statement. It suggests the desire for more government spending just for the sake of “more spending” – a wish list of luxuries. In reality, MMT reveals the withholding of certain kinds of national programs, on the sole basis of financial excuses (fear mongering about debt, deficit, and inflation, and how’re you gonna pay for it) is bulls**t.
The point is not that “the national government can spend more”, the point is that their excuse for not spending on these very specific things (things desperately needed by millions) is revealed to be inaccurate at best. At worst, it’s a lie to hide the fact that they simply want to deprive the poor. They use these economic falsehoods to deceive the public into thinking that depriving the poor is “unfortunate but necessary”. We’re saying that – if we are to survive as a species – we can and must do what’s desperately needed by millions.
Spending (creating) the money to do specifically these things is quite obviously safe, because we have the productive capacity to do it. How do we know this? Because we looked into it. Here are four recent examples of inflationary and resource impact studies (all published by The Levy Economics Institute unless otherwise stated):
1. Medicare For All, 2020, by Yale, published in The Lancet
2. Green New Deal, 2019
3. Cancelling all student debt, 2018
4. The MMT-designed federal jobs guarantee, 2018
(To be clear, only the job guarantee is specifically prescribed by MMT.)
You’re focusing in the money. We’re focusing on what needs to be done in the real world. Precisely because these specific things are doable in the real world (speaking in the national context only), it means the money is a complete non-issue.
Simplistically, we’re told the just-driven-off-the-lot super car is actually a child’s tricycle capable of going no more than ten miles per hour. We’re calling that out as complete bulls**t. We’re not saying floor it! We’re saying you’re wrong about – and needlessly throttling – its capabilities. Driving too slow is dangerous. Driving too fast is dangerous. Just go the speed limit.
But we’re not talking about a car. We’re talking about a government; the only institution capable of giving millions what they need to survive. As far as the poor are concerned, the national government is driving WAY to slow.
To conclude: When speaking in the national context, stop focusing on “the money” and start focusing on the real world. Sure, we can “spend more” – for public purpose and within our productive and planetary boundaries. The real fight is not over “money” but how we choose to define public purpose.