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. 

Intro to economics

My single biggest motivation for starting this blog is my desire to get atheists (especially politically progressive atheists) to start paying more attention to economics. Of the atheists I follow online, I don't know of any who have a strong background in economics. Unfortunately, I don't either. I did major in economics (and philosophy) as an undergraduate, but that seems like a very long time ago, and I've never done anything professionally with that degree. I consider myself nothing more than an interested layman. At the most, I'm just a little bit stronger on economics than average for someone who follows US politics very closely.

This puts me in something of a difficult position. I have a lot that I want to say, and I think that it's really important, but I'm not really the right person to say it. If I were, I'd probably be writing about atheism on "Not Another Econoblog" instead of writing about economics here. But I intend to do the best that I can, and I want to start with a few general remarks about where I'm coming from.

There's something profoundly wrong with how we think about and talk about economics in the political sphere. We have this idea that the economy is a real thing that exists out there in the world, and it is our job (specifically, the job of our elected representatives) to take care of it. The "health" of the economy is of paramount importance, and sometimes people have to make sacrifices in order to make the economy well again. This is one of the major political foundations for the economic policy of austerity. I can't even begin to tell you everything that's wrong with austerity, but the first thing we can say about it is that it gets the relationship between the economy and the people completely backwards. We're not supposed to serve the economy. The economy is supposed to serve us. It's not a natural entity with needs of its own. It's a creation of the government designed to serve a purpose.

I want to use this blog to encourage people to think differently about economics. I hope to encourage people to stop thinking of unemployment, poverty and homelessness as inevitable, and begin to see them as policy variables. Those things exist because our economy creates them, and it doesn't have to.

More specifically, I want to challenge the dominant economic paradigm, because I believe that it is not only harmful (in terms of creating unnecessary suffering), but also profoundly incorrect. Since the Global Financial Crisis, a little bit of room has opened up for the discussion of heterodox approaches, and we're even seeing the welcome beginnings of a more empirically robust approach to the discipline. However, the dominant paradigm (known as Neoclassical economics) is still largely unchallenged in the media and among the political class. This project of tearing down the existing orthodoxy is extremely well-suited for atheists, skeptics, and freethinkers. That orthodoxy is based on what amounts to faith claims. Neoclassical economics should be added in alongside Creationism, homeopathy, and the anti-vaccine movement as a leading target of skeptical scorn.

I also want to talk about what should replace the Neoclassical paradigm, but that gets a bit trickier. It's one thing to realize that the current orthodoxy is hopelessly wrong, but replacing it is another matter. I do have an opinion about where we should be looking for that replacement. One particular school of heterodox economics has been very convincing to me, and that is Modern Monetary Theory, or MMT. It's a little difficult to discuss, though, because I don't really have the expertise to do it justice, and it has some startling implications which seem (to say the least) too good to be true. If MMT is a) more or less correct, and b) widely accepted, it will usher in a radical, revolutionary new approach to political economy which will benefit billions of lives around the world.

But I must warn you to keep your skepticism close. I'm the sort of person who sometimes gets really taken with an idea and then sort of runs away with it. I had a rather intense Ayn Rand period in my late teens, for example. I don't trust my own judgment when it comes to my endorsement of MMT because I don't have the expertise necessary to evaluate it, so I'm not going to ask you to trust me either. But I'm going to try to convince you just the same, because I think it's that important.

So what's that graph up there all about? That's just a tease. We'll get into it later.