Sunday, January 11, 2015

Further Left

We’re not going to discuss this area in my class, but for curiosity and exposure purposes I want you folks to be aware that there are arguments and politicians who are currently active and to the left of the mainstream of the Democratic party.

The politician is Senator Bernie Sanders (VT), who may run for President … as a Democrat … or a Socialist … or something.

He’s chosen as his top economic advisor an advocate of what’s called Modern Monetary Theory (MMT). Her name is Stephanie Kelton; she doesn’t have a dedicated page at Google Scholar, but here’s the results of a search.

For your purposes, in the contemporary environment, MMT advocates focus much less on the negative effects of government borrowing, and much more on government spending. Essentially, it’s like Keynesian macroeconomics with an assumption that the economy is pretty much never at full employment. In this longer exposé on the policy implications of the theory from the Washington Post, one of the proponents argues that we haven’t been at full employment in a century.

If pressed, I’m dismissive of this whole viewpoint. Having said that, we need to recognize that we don’t have experimental data on this. It would be nice if some country would go out, assert they’re going to follow this practice, and then do so … and then we could all look at the data 20 years later. But that never happens. Without that, I’m kind of left with the fudge of saying that … hmmm … to me it kinda’ sorta’ looks like this is the policy followed by an Argentina or a Greece. That’s not good, but like I said, I tend to be dismissive of these folks.

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