Sunday, December 7, 2014

A truly progressive agenda

(Updated 12/7/14, 1:15pm)

Proponents of Modern Monetary Theory (MMT) will often tell you that it is a value-free description of the world, and that its insights are equally applicable to progressive or conservative economic priorities. Strictly speaking, that's quite true. MMT corrects several fundamental misunderstanding about how the monetary system works for a country that controls its own currency. For conservatives as well as progressives, an accurate understanding of the system as it actually exists (as opposed to how it's modeled in economics textbooks) makes it easier to achieve one's policy goals, whatever they may be. And yet most of the commentary I've see on MMT has associated it with the left, and it's not difficult to see why. For a demonstration of this, take a look at the latest entry by Joe Firestone at New Economic Perspectives.
Senator Bernie Sanders just released his “Economic Agenda for America.” While that agenda is certainly more progressive than the talk we hear from Democrats, and certainly is progressive in its expression of generalities. It is not nearly sufficiently progressive in its specifics.
Firestone then proceeds to address Sanders's agenda point by point, and in doing so, he clearly demonstrates the enormous gulf between a relatively progressive economic agenda and a truly progressive economic agenda. Of course, politics being the art of compromise, there are all manner of non-policy considerations that shape any political agenda. On the other hand, let's be clear: Bernie Sanders is not going to be the Democratic Party's nominee for president in 2016, and he's never going to be president. I say that with considerable regret, and I fervently hope to have the opportunity to vote for him in New Jersey's Democratic primary. But it's true: Sanders's agenda will never have to face the obstructionism of Republicans in Congress, or the timidity of Democrats, for that matter. The benefit of being a "fringe" candidate is that you have the leeway to say what you really think.

When Sanders says he wants $1 trillion in infrastructure investment, Firestone thinks that's great as far as it goes, but what's actually needed is more like $3.6 trillion. Since Sanders isn't going to be president, I can see no reason for him to compromise so much right off the bat. The other side of the coin is that, since everyone knows he won't be president, no one pays much attention to his agenda anyway. But as the only self-described socialist in the United States Congress, many people (especially in the media) view Sanders as the left-most fringe of mainstream American politics. If $1 trillion in infrastructure investment represents the left-most fringe, then Clinton will presumably support much less than that, and a divided Congress will deliver even less. And yet the level of infrastructure investment required hasn't changed... it's still $3.6 trillion.

Anyway, it's a long article, but please check it out. It includes references to a number of important progressive policy goals rarely discussed in mainstream political discourse, like free college education, a federal jobs guarantee program, a basic income guarantee (controversial even within MMT), and the doubling of Social Security benefits across-the-board. If these ideas seem ludicrous to you, you're right, but only politically speaking. Politicians and pundits (including most economists) will tell you that they're ludicrous because they are "unaffordable" or something like that, but they're not. Everything Firestone mentions in his article is really doable. One of the key insights of MMT is that "affordability" is a concept which simply doesn't apply to a government with its own sovereign currency.

Update: Economist L. Randall Wray offers his own commentary to the Senator's plan. 

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