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It's not like I'm fundamentally opposed to market based economies. I'm just really not a fan of the way neoliberal schools of thought shape them, primarily by c

It's not like I'm fundamentally opposed to market based economies. I'm just really not a fan of the way neoliberal schools of thought shape them, primarily by cutting the state to a dysfunctional minimum. How bad stuff can really get becomes really apparent when you take a look at Germany as an example, specifically the huge drama that was the federal budget for 2024 (I'm sorry, I don't have any good English sources to recap everything). This debate was entirely shaped by neoliberal schools of thought, not only by the officially neoliberal party (FDP), but also by essentially all other ruling parties (the Greens as well as the SPD), as well as the leading opposition party (CDU/CSU). I firmly believe that a well ran and reasonably strong government, government market participation (i.e. in terms of providing infrastructure) and market intervention (i.e. antitrust legislation and intervention) leads to a net benefit for the vast majority of people in a given economy. Also, especially in terms of something as fundamental fiscal & monetary policy many neoliberal discussions, for example those focussing around government debt, are demonstrably false. For economies that enjoy a large degree of autonomy, schools of thought like the modern monetary theory serve as much better frameworks to explain macroeconomics and are substantially more suitable to build a progressive economy.

zozbot234 3y ago
To the extent that "Modern money theory" makes any logical sense at all, it amounts to essentially a confused retelling of the fiscal theory of the price level (FTPL) - which explains precisely why it is important to keep the national debt under control.
- moooo99 3y ago
  > which explains precisely why it is important to keep the national debt under control. Nobody, including MMT, claims you shouldn't keep the national debt levels under control. But the reasons why you do it, to which extent you do it, and by which means you achieve that are vastly different. Take taxation as an example. Simplified, Neoliberal = taxes bad. MMT considers taxation to be an instrument to control demand and inflation (by proxy).
  - zozbot234 3y ago
    > But the reasons why you do it, to which extent you do it, and by which means you achieve that are vastly different. Not so: the two points of view boil down to the exact same thing logically, even though MMT proponents sometimes fail to highlight this. Again, see FTPL which precisely explains the logical consequences of what you referenced above ("taxation [as] an instrument to control demand and inflation") without abandoning the neo-liberal framework. Simplified, the fiscal stance (taxation + government spending) is indeed one factor in demand and inflation but the central bank "moves last" in that game, so we are free to let other considerations determine the best mix of taxation and spending. It's only when monetary intervention is ineffective that less conventional policies may be needed, for some reason or other. (Deep deflation, or hyperinflation would be examples of this.)
  - junofan 3y ago
    > Take taxation as an example. Simplified, Neoliberal = taxes bad. MMT considers taxation to be an instrument to control demand and inflation (by proxy). I mean oversimplifying is something we can do confidently after a set of ideas has lived up to the standards we expect from a macroeconomic framework. One big problem with MMT is that it’s been basically whatever Stephanie Kelton et al. says it is each time they hop on a podcast and argue for some policy positions. For a while it was hey spending more won’t cause inflation. It sounds like you’re saying now it’s hey taxation is how we control inflation? So with MMT it’s historically been difficult to make definite statements about anything and seems more a tool to argue for policy.
    - moooo99 3y ago
      > It sounds like you’re saying now it’s hey taxation is how we control inflation? Among other things. A (if not the) fundamental idea of MMT is that for a government that issues its own currency, money is *not* a limited resource. The wealth the private sector accumulates is what the government (or rather, its central bank) issued in the first place. Taxes are not there to finance the government and its spending, they're there to establish the government issued currency as a valid form of payment. This is a stark contrast to today, where "the taxpayer pays for the government". Pretty much everything else builds upon this fundamental idea. > For a while it was hey spending more won’t cause inflation. This isn't universally true or false, it's also very much compatible with the idea of MMT. Fundamentally, as introduced, money is considered to not be a limited resource. The restrictions placed on how much debt a government can take on etc. are arbitrary and of political nature. There are, however, very real restrictions that aren't artificial in nature. Human labor as well as the availability of natural resources are the two example that would effectively constrain everything. Regardless of how much money you throw at a given industry, when they cannot fulfil the demand because they don't have the human labor to produce the stuff in demand, prices will go up (=inflation). The same principle applies for natural resources, but in two ways. For one, if your production capacity has reached its natural limited (i.e. there is no more stuff), prices would go up if you continue throwing money at the problem. You're also constrained if you'd have to import resources. The Eurozone can create euros, but if you have to pay for Oil in USD they won't matter much. That is also where the restrictions for MMT in terms of applicability come from. The state needs a large degree of monetary autonomy and the currency is not bound to a physical object (gold standard, etc). Also, as already implied, if you'd have to take on debt in a currency that you do not issue yourself, MMT won't really be applicable either.
amadeuspagel 3y ago
In this comment I miss something which I also miss in the article, and that is any kind of discussion of voters and their views, in this case their dislike of debt, their view of debt as an exception, as something that has to be repaid at some point. "Neoliberalism" embodies an academic mindset, where a group of academics imagines an opposing group of academics, which has opposing views but is otherwise structured the same, around ideas, books, conferences and so forth, but ignores the ordinary voter as an explanation for "neoliberal" policies.

zozbot234 3y ago

To the extent that "Modern money theory" makes any logical sense at all, it amounts to essentially a confused retelling of the fiscal theory of the price level (FTPL) - which explains precisely why it is important to keep the national debt under control.

moooo99 3y ago
> which explains precisely why it is important to keep the national debt under control. Nobody, including MMT, claims you shouldn't keep the national debt levels under control. But the reasons why you do it, to which extent you do it, and by which means you achieve that are vastly different. Take taxation as an example. Simplified, Neoliberal = taxes bad. MMT considers taxation to be an instrument to control demand and inflation (by proxy).
- zozbot234 3y ago
  > But the reasons why you do it, to which extent you do it, and by which means you achieve that are vastly different. Not so: the two points of view boil down to the exact same thing logically, even though MMT proponents sometimes fail to highlight this. Again, see FTPL which precisely explains the logical consequences of what you referenced above ("taxation [as] an instrument to control demand and inflation") without abandoning the neo-liberal framework. Simplified, the fiscal stance (taxation + government spending) is indeed one factor in demand and inflation but the central bank "moves last" in that game, so we are free to let other considerations determine the best mix of taxation and spending. It's only when monetary intervention is ineffective that less conventional policies may be needed, for some reason or other. (Deep deflation, or hyperinflation would be examples of this.)
- junofan 3y ago
  > Take taxation as an example. Simplified, Neoliberal = taxes bad. MMT considers taxation to be an instrument to control demand and inflation (by proxy). I mean oversimplifying is something we can do confidently after a set of ideas has lived up to the standards we expect from a macroeconomic framework. One big problem with MMT is that it’s been basically whatever Stephanie Kelton et al. says it is each time they hop on a podcast and argue for some policy positions. For a while it was hey spending more won’t cause inflation. It sounds like you’re saying now it’s hey taxation is how we control inflation? So with MMT it’s historically been difficult to make definite statements about anything and seems more a tool to argue for policy.
  - moooo99 3y ago
    > It sounds like you’re saying now it’s hey taxation is how we control inflation? Among other things. A (if not the) fundamental idea of MMT is that for a government that issues its own currency, money is *not* a limited resource. The wealth the private sector accumulates is what the government (or rather, its central bank) issued in the first place. Taxes are not there to finance the government and its spending, they're there to establish the government issued currency as a valid form of payment. This is a stark contrast to today, where "the taxpayer pays for the government". Pretty much everything else builds upon this fundamental idea. > For a while it was hey spending more won’t cause inflation. This isn't universally true or false, it's also very much compatible with the idea of MMT. Fundamentally, as introduced, money is considered to not be a limited resource. The restrictions placed on how much debt a government can take on etc. are arbitrary and of political nature. There are, however, very real restrictions that aren't artificial in nature. Human labor as well as the availability of natural resources are the two example that would effectively constrain everything. Regardless of how much money you throw at a given industry, when they cannot fulfil the demand because they don't have the human labor to produce the stuff in demand, prices will go up (=inflation). The same principle applies for natural resources, but in two ways. For one, if your production capacity has reached its natural limited (i.e. there is no more stuff), prices would go up if you continue throwing money at the problem. You're also constrained if you'd have to import resources. The Eurozone can create euros, but if you have to pay for Oil in USD they won't matter much. That is also where the restrictions for MMT in terms of applicability come from. The state needs a large degree of monetary autonomy and the currency is not bound to a physical object (gold standard, etc). Also, as already implied, if you'd have to take on debt in a currency that you do not issue yourself, MMT won't really be applicable either.

amadeuspagel 3y ago

In this comment I miss something which I also miss in the article, and that is any kind of discussion of voters and their views, in this case their dislike of debt, their view of debt as an exception, as something that has to be repaid at some point. "Neoliberalism" embodies an academic mindset, where a group of academics imagines an opposing group of academics, which has opposing views but is otherwise structured the same, around ideas, books, conferences and so forth, but ignores the ordinary voter as an explanation for "neoliberal" policies.