Commentaries (some of them cheeky or provocative) on economic topics by Ralph Musgrave, Durham, UK. This site is dedicated to Abba Lerner. I disagree with several claims made by Lerner, and made by his intellectual descendants, that is advocates of Modern Monetary Theory (MMT). But I regard MMT on balance as being a breath of fresh air for economics.
Thursday, 15 September 2011
US labour market began deteriorating well before the recent recession.
A recent study published in the National Institute Economic Review finds a significant rise recently in the number of people in the UK doing part time work who would like to work full time. I.e. the UNEMPLOYMENT figures underestimate the amount of slack in the labour market. So the study sets up its own UNDEREMPLOYMENT index.
Modern Monetary Theory:
"Any school of thought that is not 'MMT consistent' is inapplicable with regards to any actual economy. And you can quote me on that." – Warren Mosler.
Mosler’s law: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.
The problem. Deficits and / or national debts allegedly need reducing. The conventional wisdom is that they are reduced by raising taxes and / or cutting government spending, which in turn produces the money with which to repay the debt. But raised taxes or spending cuts destroy jobs: exactly what we don’t want. A quandary.
The solution. The national debt can be reduced at any speed and without austerity as follows. Buy the debt back, obtaining the necessary funds from two sources: A, printing money, and B, increasing tax and/or reduced government spending. A is inflationary and B is deflationary. A and B can be altered to give almost any outcome desired. For example for a faster rate of buy back, apply more of A and B. Or for more deflation while buying back, apply more of B relative to A
1. Using money from 100% safe taxpayer backed bank accounts for commercial purposes is a subsidy of commerce, which is a misallocation of resources. 2. People and businesses have a right to 100% safe accounts, but the relevant money should be kept in a 100% safe manner: at the central bank, where it may earn no interest. 3. Where people and businesses want their money invested in commerce, that is laudable. They will earn some interest, but they are not entitled to taxpayer support. 4. Fractional reserve banking promotes instability.
Publications.
Peer reviewed publications:
1. A Market Imitating Employment Subsidy, in The Future of the Welfare State, (editor: Bent Greve), 2006, published by Ashgate.
2. Flaws in the Benefit Transfer Programme, The Review of Policy Studies, Vol 3 No.3, 1997.
3. Giving pensioners a bigger state pension would be a better way of helping them than free travel, in Local Transport Today, Issue 457, Nov. 2006.
4. Abolishing Unemployment, Economic Research Council Research Study No 7, 1980.
5. Let’s Print Money and Buy Back National Debts. Positive Money.
7. The Debt and Deficit. Jefferson Tree. http://www.thejeffersontree.com/the-debt-and-deficit/
Non-peer reviewed (or only lightly peer reviewed) publications. The coloured clickable links below are EITHER the title of the work, OR a very short summary (where I think a short summary conveys more than the title).
i) The above is not a complete list in that earlier versions of some papers have been omitted. For a more complete list see here, and “browse by author” (top of left hand column).
ii) 7 deals with a wide range of alleged reasons for government borrowing, including Keynsian borrow and spend. 6 is an updated version of the "anti-Keynes" arguments in 7. 5 is an updated version of 1, which in turn is an updated version of 4.
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