By Denis Hay
Description
Explore how social justice in Australia can reshape our political system using monetary sovereignty, with taxation as a tool for equity, not revenue.
Introduction: The Need for Social Justice
Social justice, a term often discussed but less often understood, is about creating a fair society where every individual has equal access to opportunities and resources. In Australia, despite our capacity for monetary sovereignty – the ability to issue our own currency – inequality persists. Neoliberal policies have widened the gap between the wealthy and disadvantaged, leaving many Australians without proper access to healthcare, education, or housing.
The failure to use Australia’s monetary sovereignty to fully fund essential services has resulted in growing inequality. Instead, policies have often favoured corporate interests, leaving public services underfunded. Many Australians are left to wonder: if our government can create money, why is there still a struggle to fund programs that help society?
By understanding how social justice works in tandem with monetary sovereignty, citizens can push for a fairer use of public money. Taxes, in this context, are not used to “fund” government programs but play a crucial role in managing the economy, redistributing wealth, and ensuring a fair society.
What Is Social Justice?
Definition of Social Justice
Social justice in Australia refers to the pursuit of a fair society, where resources, rights, and opportunities are distributed equitably. It looks to address systemic inequalities and ensure that marginalized groups have the same access to opportunities as others. In Australia, social justice is essential to addressing disparities in income, healthcare, education, and housing.
Key Principles of Social Justice
- Equity: Ensuring that resources are distributed fairly, based on need.
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Access: Guaranteeing that everyone has access to the services and opportunities necessary for a dignified life.
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Participation: Enabling all individuals to take part in the decisions that affect their lives.
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Human Rights: Upholding the fundamental rights of every individual, irrespective of socioeconomic status.
The Importance of Social Justice in Australia
Economic Inequality and Neoliberalism
Neoliberal economic policies have eroded Australia’s ability to ensure social justice. These policies prioritize market-driven solutions and corporate profits, leaving public services underfunded and increasing economic inequality. While Australia has monetary sovereignty and could fully fund social programs like healthcare and education, political choices have often led to austerity instead of investment in these areas.
The Role of Indigenous Australians in Social Justice
Indigenous Australians face significant disparities compared to the broader population, particularly in life expectancy, education, and housing. Social justice movements argue that these disparities reflect systemic injustice and call for policies that address these issues, such as land rights and better access to healthcare and education. Incorporating Indigenous knowledge into environmental and societal policies is also crucial for achieving justice.
Monetary Sovereignty and Social Justice
Australia, as a sovereign currency issuer, can create its own money. This means that the federal government can never run out of money and does not need taxes or borrowing to “fund” its spending. However, despite this, we often see cuts to public services. This is not due to a lack of financial capacity but a result of political choices that prioritize balancing the budget over addressing inequality. If properly understood and used, monetary sovereignty could transform Australia’s social landscape by ensuring that all citizens have access to essential services.
Why Taxes Matter in a Monetarily Sovereign Economy
Understanding the Role of Taxes in a Currency-Issuing Nation
In a nation like Australia that issues its own currency, taxes do not fund government spending. Instead, taxes play other important roles:
1. Controlling Inflation
When the government spends money, it injects new currency into the economy. Without taxation, too much money in circulation could lead to inflation. By taxing some money out of the economy, the government can control demand and ensure prices stay stable.
2. Redistributing Wealth
Taxes are a powerful tool for reducing inequality. By taxing higher-income individuals and corporations more, the government can reduce the wealth gap and ensure that public money is used to fund programs that help everyone.
3. Regulating Behaviours
Taxes can be used to encourage or discourage certain behaviours. For example, taxes on harmful products like tobacco can reduce consumption, while tax incentives can encourage investments in renewable energy or public services.
4. Supporting Public Accountability
Even though the government doesn’t need taxes to fund spending, collecting taxes still ensures that citizens are invested in how public money is spent. This creates a sense of responsibility and connection between the government and its citizens.
How Social Justice Connects to Tax Policy
Progressive Taxation and Social Justice
A progressive tax system ensures that those who earn more contribute more to society. This helps redistribute wealth, closing the income gap and funding essential public services like healthcare, education, and housing – areas that are vital for social justice in Australia. In a socially just society, tax policy is designed to ensure that everyone receives help from Australia’s economic success, rather than a select few.
Public Money, Public Services
In a currency-sovereign system like Australia’s, the government has the financial ability to fully fund universal services without needing to “find” the money. Public money should be directed toward services that help all citizens, particularly those who are disadvantaged. Universal healthcare, free education, and affordable housing are critical elements of a just society.
Why Social Justice Matters: Impact on Society
Health and Well-being
Inequality in access to healthcare and other services leads to poorer health outcomes for disadvantaged groups. Research shows that more fair societies – where social justice principles are applied – experience better health outcomes. Ensuring everyone has access to healthcare is not only a moral imperative but also economically beneficial, as it leads to a healthier, more productive population.
Crime and Social Unrest
Economic inequality often correlates with higher crime rates and social unrest. When individuals feel excluded from economic opportunities, they are more likely to engage in criminal behaviour or protest. Social justice initiatives that address the root causes of inequality – such as access to fair wages, education, and housing – are critical for reducing crime and promoting social cohesion.
How Can Australia Achieve Social Justice?
Monetary Sovereignty for Public Good
Australia’s capacity for monetary sovereignty offers a unique opportunity to achieve social justice. By fully using this capacity, the government could invest in universal services without needing to rely on taxes or borrowing from private markets. Instead, public money could be directed toward building a fairer society.
Prioritizing Public Services Over Corporate Interests
Governments must prioritize funding for essential services like healthcare, education, and housing rather than giving tax breaks and subsidies to large corporations. This would ensure that all Australians have access to the resources and opportunities they need to thrive, reducing the current imbalance of power between corporations and citizens.
A Fair Tax System for Social Justice
A progressive tax system is still essential for redistributing wealth and ensuring fairness in society. While the government does not need taxes to fund its spending, taxation is a key tool for reducing inequality, encouraging fair economic participation, and managing inflation. By taxing higher incomes and large corporations, Australia can reduce the wealth gap and foster a more just society.
Conclusion: Building a Just Future for Australia
Social justice in Australia is not merely an ideal but a necessary framework for creating a fair and fair society. By using Australia’s monetary sovereignty, we can fully fund public services that support all citizens. Taxes, in this context, are not about funding programs but about controlling inflation, redistributing wealth, and promoting fairness.
For Australia to realize its full potential as a socially just society, citizens and leaders must advocate for policies that prioritize equity and universal access to essential services.
What changes do you think are necessary to build a more compassionate political system in Australia?
Call to Action
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Easy said, but under the Dutton led Conservatives and surprising the Greens will never support this!!
I worked with V/Line when I was living in Melbourne before I resigned and came across to Perth in January 1900.
As I was a public servant and very proud to be a public servant the way I see things the public service must not to be decreased!!
Every country must have an efficient public service that’s fully dedicated to there portfolio!!!
the problem us that the conservatives don’t want to accept the had work that the public servants can attribute so they are more than likely to sack these public servants and waste millions with privatize consultants!!!
“In a currency-sovereign system like Australia’s, the government has the financial ability to fully fund universal services without needing to “find” the money.”
Can someone please shout this from the rooftops. I’ve almost given up trying to educate friends and acquaintances around the subject of Taxation, Surpluses & Deficits, and how they play no part in paying for “public services”.
I admire your perseverance Denis, I think we are probably of a similar age, but I’ve lost the will to enlighten people regarding Sovereign Economy realities.
Hi Truth Teller,
I’m 83. I now do my best to include something about MMT and the federal governments ability to fully pay for social services. Taxpayers DO NOT pay for any federal government expenditure.
Well, Truth Teller, and Denis Hay … – I truly do not enjoy raining on your parade, but the long and the short of it is that MMT is bollocks!
I’ve made several attempts right here on The AIMN, in response to previous articles by Denis Hay, to explain why, if looked at from an anarchist communist perspective, ascribing special powers to state authority special powers to manipulate the controlling medium of capitalist commerce (read: money) is utterly misguided.
It’s kind of like bending the speedometer needle to make a car go faster. Things just don’t work like that.
Arnd, I fully understand and agree with your concerns about giving state authorities extra powers, but if a state Constitution is channeling those powers to useful ends, does that not overcome those concerns?
China seems to be doing this successfully.
And it would appear that serving the common good is now part of Chinese culture.
“In the Chinese context, there are a lot of talks about remembering your original mission. The original mission is to eliminate inequality/inequity” – Wang Dan, chief economist of Hang Seng Bank China.
This is not just talk from the Chinese.
They are improving the welfare of the masses to an unprecedented extent, and they penalise with vigour those capitalists who try to play outside the sand-pit.
SD, your observations are accurate. My partner is a smart Chinese woman, well-educated, confident, courageous in her affairs, well-versed in balancing risk & reward, and deeply familiar with both the ancient and modern elements of Chinese history. Just two days ago she gave me yet another lesson on how the current government is dealing with the issues it faces. She outlined how western capital had migrated to China in the sense of shifting manufacture there as a function of chasing cheaper labour costs, and how there had been since the outset of that process in the late 1970s a willingness of western businesses to exploit Chinese workers.
All that has changed, she noted. The Chinese government has implemented laws that require these foreign businesses to provide substantial financial benefits to workers, including health insurance & retirement plans as well as appropriate wage structures. She said it is a function of the government’s commitment to its people, to assure that they are adequately compensated for their labour. She noted that many western businesses are now withdrawing from that country and relocating to other Asian regions where costs are lower and the protection of workers is less well-regulated.
Canguro, thanks for confirming the info I got from pro-China sources.
Unfortunately, in regard to Chinese affairs, there’s not much positive coverage from the MSM, so one has to be extra careful with sources.
I was not aware that the Chinese govt had intervened in labour rights — that’s fascinating.
Please thank the Boss for that. 🙂
Arnd,
Mike Hall shared a link.
Admin · May 20, 2017
New to MMT?.. Or want to learn more?
Newsflash, March 2019 – The new MMT textbook is now out, and it’s every bit as superb as we expected!
https://www.macmillanihe.com/page/detail/Macroeconomics/…
There is an exhaustive archive of blogs, videos (and even a few MSM pieces) in numerous samples linked here…
All deliberately written for a non-expert, lay, audience by academics and finance operations’ experts, over a period of 9 or 10 years. A lot of it, usefully, written as part of a commentary on economic issues that were in the news.
(MMT’s academic history, under that adopted title, goes back to around 1997, with hundreds of papers written since that time. Though MMT draws on the work of many economists back to the beginning of the 20th Century and earlier.)
I’ve continued to add links in the comments and encourage you as a beginner to just dip in and see what tempts and speaks to you. If a piece doesn’t draw you in, I suggest it’s left aside, and another piece chosen for study.
But be in no doubt, MMT is a thorough, academically grounded topic. Whilst the basic logic is accessible to all, the academic detail is substantial. The introductory, college level text book is many hundreds of pages, concisely written. An ‘Intermediate’ level textbook of similar depth is due later this year.
This is a great intro to MMT by Geoff Coventry.
A great introductory education video featuring Stephanie Kelton (Part 1, more to follow):
http://www.actvism.org/…/modern-monetary-theory-stephanie-…/
22 short videos introducing key MMT points, by MMT academics and experts themselves.
https://www.youtube.com/playlist…
Dozens of excellent MMT learning resources have been aggregated here:
https://modernmoneyview.wordpress.com/faqs/
A brief Wikipedia definition of MMT. quite accurate imo, as at 2nd Aug 2017
https://en.wikipedia.org/wiki/Modern_Monetary_Theory
MMT is what is, not what might be’ – A great intro and framing piece from Prof Bill Mitchell, superb.
http://bilbo.economicoutlook.net/blog/?p=35836
Dr Ellis Winningham’s superb 5-part blog on the basics. Beautifully written for an inexperienced reader. Just take your time and go step by step. (Probably one of my all-time favourite MMT basic explainers.
http://elliswinningham.net/index.php/the-basics/
The University of Missouri Kansas City econ faculty blog
http://neweconomicperspectives.org/
7 Deadly Innocent Frauds, by Warren Mosler: (63 pages, free download)
http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf
Also, free epub version of Warren’s brilliant 7DIF…
https://drive.google.com/…/0B6l7lWGIDTnkbWZVU3VXSTlEQW8/view
Modern Monetary Theory Primer from A-Z Wray:
http://neweconomicperspectives.org/modern-monetary-theory-p…
Pavlina Tcherneva’s resource list on the Job Guarantee is superb (also some useful critiques of JG vs UBI)
https://www.pavlina-tcherneva.net/job-guarantee
MMT on a Postcard..
http://www.nakedcapitalism.com/2014/05/mmt-postcard.html…
How Fiat Money Works
http://neweconomicperspectives.org/…/…/fiat-money-works.html
Federal Reserve interest rates should be zero forever – Warren Mosler
https://www.usnews.com/…/federal-reserve-interest-rates-sho…
Taxes For Revenue are Obsolete – Beardsley Ruml
http://home.hiwaay.net/~becraft/RUMLTAXES.html
Can the US ‘Print’ Money to Pay Down ‘Debt’? – Wray
https://www.bloomberg.com/…/can-the-u-s-print-money-to-pay-…
Wray debunking the lie about the Fed’s independence part 1
http://neweconomicperspectives.org/…/greatest-myth-propagat…
Wray debunking the lie about the Fed’s independence part2
http://neweconomicperspectives.org/…/greatest-myth-propagat…
Money Growth Does Not Cause Inflation by John Harvey:
https://www.forbes.com/…/money-growth-does-not-cause-infl…/…
Can Taxes and Bonds Finance Government Spending? – Stephanie Bell (now Kelton)
http://www.levyinstitute.org/pubs/wp244.pdf
How Modern Money Theory Replies To Hyperinflation Hyperventilators Part 1
http://www.economonitor.com/…/zimbabwe-weimer-republic-how…/
Taxpayers don’t fund anything by Mitchell:
http://bilbo.economicoutlook.net/blog/?p=9281
J.D. Alt’s “The Millennials’ Money”:
Replacing budget constraint with Inflation constraint by Fullwiler:
http://neweconomicperspectives.org/…/replacing-budget-const…
How to Pay for Jill Stein’s Student Debt Forgiveness Plan:
http://www.marketwatch.com/…/john-oliver-says-jill-stein-do…
neweconomicperspectives.org
New Economic Perspectives
Dedicated to modern money theory (MMT) and policies to promote…
• Mike Hall 56 mins of the incomparable Warren Mosler, explaining money, the monetary system & the economic policy implications, all in relatively simple terms. Essential viewing for every citizen imho, and the perfect antidote to decades of Neoliberal mainstream intellectual fraud… 🙂 (From #MMT2017 Conference at UMKC)
https://www.youtube.com/watch?v=vqDbtijvXFg&feature=share
•
youtube.com
The Good Dream is Factual MMT Warren Mosler
The Good Dream is Factual MMT Warren Mosler
Mike Hall Useful selection of MMT presentations, interviews and blogs can be found here 🙂
http://homosociologicus.com/neoliberalism-3
•
homosociologicus.com
Homosociologicus
Mike Hall This article by lecturer John Harvey, published by Forbes is probably the best ever at busting the common myth that Gov spending more money – adding to the ‘money supply – is automatically inflationary. 🙂
https://www.forbes.com/…/money-growth-does-not…/…
Money Growth Does Not Cause Inflation!
Money Growth Does Not Cause Inflation!
Mike Hall This is a great piece discussing UBI options at the different income levels – an important distinction to understand the macro economy effects –
https://jacobinmag.com/…/universal-basic-income…
jacobinmag.com
The Case Against a Basic Income
Mike Hall A great response to the ‘private Fed’ conspiracy nonsense that pervades the web..
https://www.reddit.com/…/draft_of_rebuttal_to_claims…/
reddit.com
Draft of Rebuttal To Claims of The Fed Is Independent From The Govt and Uses…
Draft of Rebuttal To Claims of The Fed Is Independent From The Govt and Uses A Fractional Reserve Banking System • r/mmt_economics
Mike Hall Chapter and verse from Professor Randall Wray 🙂
http://neweconomicperspectives.org/…/greatest-myth…
•
neweconomicperspectives.org
The Greatest Myth Propagated About The FED: Central Bank Independence…
The Greatest Myth Propagated About The FED: Central Bank Independence (Part 1)
Mike Hall From 2014, an important piece for MMTers to note, by Randall Wray 🙂
“.. the MMT principles apply to all sovereign countries. Yes, they can have full employment at home. Yes, that could lead to trade deficits. Yes that could (possibly) lead to currency deprecia…See More
•
neweconomicperspectives.org
MMT AND EXTERNAL CONSTRAINTS
Mike Hall A rather excellent listing (modestly, ‘not exhaustive’) of MMT academic papers… pretty much from the beginning of the MMT school.
alittleecon.wordpress.com
Academic MMT
Mike Hall The first 45mins of this presentation by Fadhel Kaboub is an excellent introduction and summary of key principles, of the MMT (Modern Monetary Theory) macro economics framework.
The framework thinking that all citizens and politicians should be aware o…See More
Mike Hall This is a superb commentary on points raised in this widely shared Washington Post piece on a #JobGuarantee. A long and thorough piece and must read and share imho 🙂
“.. “It completely undercuts a lot of industries and companies,” said Brian Riedl, …See More
Mike Hall Warren Mosler’s responses to Bernie Sanders’ NYT op-ed, “To Rein In Wall Street, Fix the Fed” [Essential reading!]
December 23, 2015…See More
Mike Hall Mosler/ Sanders continued…..
SANDERS: Board members should be nominated by the president and chosen by the Senate. …See More
•
nytimes.com
Opinion | Bernie Sanders: To Rein In Wall Street, Fix the Fed
Mike Hall Warren Mosler offered a policy methodology in a ‘draft’ speech he wrote for Bernie Sanders, had he been able to win the US presidency…it’s must read.. MMT in action 🙂
https://www.facebook.com/groups/495835247249857/permalink/540423562791025/?hc_location=ufi
Mike Hall In this quite brilliant interview, Professor Robert Hockett of Cornell Law (and prior ‘Occupy Wall St.’ activist) explains in everyday terms what money is, and how a monetary system works. The Government’s role, banking, Bitcoin, the Gold Standard are …See More
•
youtube.com
Cryptocurrency Explained: Nomiki Konst Interview w/ Robert Hockett
Mike Hall This is a short, simply explained piece, providing a key MMT insight into the monetary system and Gov’s actual role 🙂
“.. At year zero, the UK has to introduce that currency into the economy, it can give it to its citizens and it can pay them to pro…See More
•
stevenwatson.co.uk
Taxation and government spending: which comes first?
Mike Hall Again, we see the macro stability importance of the JG in this paper from University of Flinders’ Dr Philip Lawn…
“.. What can one make of all of this? Firstly, if a nation‟s rate of resource throughput is well within ecological limits and its econ…See More
Mike Hall Long-ish piece, but very thorough, from MMT economist Ellis Winningham 🙂
Mike Hall Very informative talk by MMT academic Nathan Tankus (30mins)
youtube.com
Monetary Sovereignty and Our Dollar World – Nathan Cedric Tankus
Mike Hall Very accessible for learners, the basic understanding of macro economics that every citizen should have 🙂
About 1hr 30mins, with a Q&A session. Great recording with slides integrated, organised by UCL (University College London)
youtube.com
Stephanie Kelton: The Public Purse
Mike Hall The MMT University, international, online based, is starting in Oct 2018 🙂
http://www.mmtuniversity.org/
mmtuniversity.org
MMT University – Home of Education in Modern Monetary Theory
MMT University – Home of Education in Modern Monetary Theory
This is a superb 6 part series, which by its nature describes many key MMT points. Whilst a bit technical in parts, a lot of explanation is also given.
http://neweconomicperspectives.org/…/mmt-101-reply…
neweconomicperspectives.org
MMT 101: A Reply to Critics Part 1
Mike Hall This description of the money circuit by Warren Mosler and Mathew Forstater is somewhat technical, but is the most essential reading for students of MMT that I’ve read in 9yrs of studying and activism on MMT 🙂
http://moslereconomics.com/…/a-general-analytical…/
moslereconomics.com
A General Analytical Framework for the Analysis of Currencies and Other Commodities – The Center of the Universe
Mike Hall The diagrams are missing from the above piece by Warren and Mathew, but they are here in this earlier pdf version of it 🙂
http://cas2.umkc.edu/…/GeneralFrameworkAnalysisOfCurren…
Mike Hall Experts confirm that federal taxes do not fund federal spending…. (confirming Warren Mosler’s analysis and experience, as he formally laid out)…..
“Federal taxes do not fund federal spending.…See More
• papers.ssrn.com
Can Taxes and Bonds Finance Government Spending? by Stephanie Bell :: SSRN
Mike Hall Bank of England ‘Money Creation In The Modern Economy’ 2014 https://www.bankofengland.co.uk/…/money-creation-in-the…
Mike Hall https://www.nakedcapitalism.com/…/federal-job-guarantee…
nakedcapitalism.com
The Federal Job Guarantee Is Not Just “Better” Than a Universal Basic…
The Federal Job Guarantee Is Not Just “Better” Than a Universal Basic Income. It’s the Only Reasonable Option. Universal Basic Income Is Sinister | naked capitalism
Mike Hall From Christian Reilly of the UK’s ‘Pileus’ publication..
“.. I interviewed Modern Money Network research scholar and star of “Boom Bust Boom” [2016 feature, avail on Netflix] Nathan Tankus. We cover how currencies work, what makes them valuable, excha…See More
pileusmmt.libsyn.com
Reknr hosts: The MMT Podcast: #6 What makes a currency valuable?
Mike Hall From 2yrs ago, and quite long (1hr 45 mins), but is an excellent talk by MMT’s Prof Wray, given for a ‘lay’ audience.
Really great viewing if you have the time. 🙂
#MMT #JobGuarantee…See More
youtube.com
L. Randall Wray – Modern Money Theory: Intellectual Origins and Policy Implications
Mike Hall Nice compilation of answers to basic questions – almost an MMT ‘FAQ’s effort? Definitely one for beginners to view and watch (numerous video clips included). 🙂
https://threadreaderapp.com/thread/1031182912656433154.html
threadreaderapp.com
Thread by @citizensmediatv: ““Then why does the military budget keep going up as social programs keep getting cut?” Now that’s a good question. [thread – versi […]” #LearnMMT #MMT #Bernie2016
Mike Hall From MMT co-founder, Prof Randall Wray….
“.. 10 bullet points of what I include in MMT..…See More
neweconomicperspectives.org
MODERN MONEY THEORY: How I came to MMT and what I include in MMT
Mike Hall Great bullet point list for MMTers from Dr Steven Hail 🙂
“.. Someone recently shared this list of 100 facts about MMT I made up last year, and have somehow misplaced, so I’ll share them again.…See More
Mike Hall Just adding some great statements from Warren Mosler.. 🙂
The ‘good economy’…
Mike Hall
Mike Hall
Mike Hall Great piece from Randall Wray 🙂 (dismissing idiotic narratives from AMI/Positive Money)
http://neweconomicperspectives.org/…/debt-free-money…
neweconomicperspectives.org
DEBT-FREE MONEY AND BANANA REPUBLICS
Mike Hall This is nice piece from UK MMTer Alan Hutchison, describing how the UMKC campus ‘currency’ very simply illustrates and mirrors how a national sovereign currency works. 🙂 (A talk by Wray and Mitchell on the UMKC campus currency – the ‘buckaroo’ – was an MMT light bulb moment for me, as a learn…See More
matchesinthedark.uk
Currency, coercion and campuses
Mike Hall Important piece from Bill Mitchell (Dec 2018).. 🙂
“… Last week, Warren Mosler and I had one of our regular catchups and we discussed at length the state of play in Modern Monetary Theory (MMT). We are quite protective of it. We mused about how we …See More
bilbo.economicoutlook.net
When two original MMT developers get together to discuss their work
Mike Hall This is an excellent, and very concise, summary piece on UBI vs #JobGuarantee by Pavlina Tcherneva. 🙂 (The go-to piece imho for discussions on this subject.)
“.. If the program is implemented as an ‘add-on,’ rather than a replacement for exist-ing government programs, spending on UBI could be as high as 20–35% of GDP annually (Tcherneva 2017). UBI would be an enormous fiscal impulse by any me…See More
• link.springer.com
The High Costs of UBI are not Financial: They are Real
Mike Hall Not formally part of MMT as Macroeconomic operating structure, but to counter the silly ‘critique’ that suggests MMTers ignore banking..
Proposals written by #MMT co-founder and Finance Professional Warren Mosler. Translatable to any country, no ‘PositiveMoney’ ‘AMI’ etc. fraudulent drivel required ;)…See More
huffingtonpost.com
Proposals for the Banking System
Proposals for the Banking System
Mike Hall ICYMI.. useful info..
“.. Warren Mosler’s Proposals for the Treasury, the Federal Reserve, the FDIC, and the Banking System.. ”
http://neweconomicperspectives.org/…/warren-moslers…
neweconomicperspectives.org
Warren Mosler’s Proposals for the Treasury, the Federal Reserve, the FDIC, and the Banking System
Mike Hall Great piece from John Harvey (short and simple) making an important point about the grossly misunderstood topic of inflation 🙂
“.. Inflation is always and everywhere a redistribution of income. If you truly want to understand an episode of inflation, you have to ask, “Who’s…See More
forbes.com
Inflation…Huh…What Is It Good For?
Mike Hall Very simple explanation by Ellis Winningham 🙂
https://www.realprogressivesusa.com/…/2017-06-29-the…?
realprogressivesusa.com
The Operational Reason Why Federal Taxes are Not Revenue for the Federal Government
Mike Hall Mathew Forstater is one of the early academic contributors and teachers in MMT, with a great many publications and papers to his name.
This is a list of publications that he recently provided for us, many putting MMT into a broader socioeconomic context. Highly recommended reading 🙂
https://www.facebook.com/groups/775060285953883/permalink/1986072131519353/
Mike Hall This is a very well written article explaining the value of a (Universal) Job Guarantee program to an economy and society. By Australian economics scholar Edward Miller.
greenagenda.org.au
A Universal Job Guarantee: An End To The Neoliberal Employment Landscape?
Mike Hall Good piece from Brendan Greeley about an important aspect of MMT’s views on inflation control – in short, watch out for those market rigging ‘rentiers’ – you need more than fiscal or monetary policy to deal with that 😉
“.. Two weeks ago Alphaville published a clarifica…See More
ftalphaville.ft.com
When DoJ and the FCC slowed inflation
Mike Hall Superb piece explaining the operations of banking, central banking (Fed) and Treasury accounting. Confirming #MMT’s correct description and summarising of the monetary system.
https://medium.com/…/you-dont-understand-the-debt…
medium.com
You Don’t Understand the Debt
Mike Hall Great piece by Dr Steven Hail, outlining some of the nuances of expression used in describing the underlying facts of MMT..
Mike Hall https://prezi.com/…/simulating-the-logic-effects-and…/
prezi.com
Simulating the Logic, Effects, and Costs of the Job Guarantee 2016
Mike Hall This is a quite brilliant MMT/Macro/Monetary Economics learning experience from Warren Mosler. (I have to say, at this point, as ever! Thank you Warren, and Ed Harrison.)
57 minutes, don’t miss it. Warren makes very precise statements, even tho’ he may appear to be presen…See More
realvision.com
Theory Vs. Practice: The Father of MMT on Policy, Profits, and Politics
Steve, I year you … – but I still disagree. As to MMT in particular, I can see it as nothing more than inciting governments to “cook the books”. No good can come of it!!
As for Denis’s other taxation proposals, such as wealth tax, Pigouvian Taxes, or outright vice levies – sure, let’s talk about it. You might want to be careful overdoing them – see how excessive tobacco taxation is now driving criminal supply of chop-chop – but yes, generally speaking, I’m negotiable.
But you don’t need MMT for any of those. MMT in this context is a seriously misleading distraction! Rather than turbo-charging the capitalist addiction infinite economic growth through the intravenous injection of MMT steroids, I’d consider it far more useful to review various proposals concerning what is called steady state economics.
As for governments seeking to fix their citizens’ lives by legislative fiat more generally: these are bandaid measures, which can be and often are useful. In the short term! Categorical reliance on legislative and technocratic fixes as sole method to advance collective and individual wellbeing and eudaimonia in the long term is, in my view, indicative of a misguided and flawed understanding of the human condition generally.
I am aware that the great majority will disagree with that view. Still, I subscribe to it.
As for political leaders in China getting and keeping matters under control, I remain unconvinced. As Canguro’s partner notes:
Quite!
This is what Marx had to say about this in the Communist Manifesto, some 175 years ago:
There’s quite a few other choice passages in that small volume that seem exquisitely prescient (except that, in a delicious twist of attitudes, it is now the Europeas and US Americans who are all cagey about global “free” markets, whereas two centuries ago, they sent their gunboats to Japan and up the Yellow River to open up East Asian markets to amongst other things, industrial quantities of opium).
Maybe Canguro’s partner could translate a few excerpts from the Manifesto into Mandarin, and make them available to the leadership of the Chinese Communist Party … ?
Arnd, my partner said that when she was a primary school student, the walls of the classrooms were plastered with slogans; Mao to the front, Marx & Engels at the sides and Lenin at the back. She read Marx as a high-school student. Given her demographic, there’s no reason to assume that similarly-aged members of the CCP, now the leadership, didn’t!
It was, as is well known, Deng Xiaoping, Mao Zedong’s successor following Mao’s death in 1976, who was responsible for the reform and opening up that transformed China’s economy into a socialist market economy.
That societal transformation is a mixed blessing. Some would assert that the environmental costs of the last 50 years of industrialisation and development outweigh the benefits. Others will argue that the lifting of millions out of poverty is worth that cost. Still others argue that the increasing degree of intrusive control over citizens’ lives is an egregious act of interference and invasion of privacy. Millions of citizens are completely disenchanted with the CCP, one of whose main planks in the governmental platform appears to be to just throw money and material benefits at the citizens.
I hesitate to offer an opinion… a country of ~1,400,000,000 citizens, of ~>50 distinct ethnic groups and thousands of dialects, with 5,000+ years of history; the only thing I’m comfortable with is the fact of the one-party government and that no other form would be able to keep a rein on such a potentially fragmented set of circumstances.
Denis …, DENIS!!!
Brother!
Seriously?
Look, thanks for putting in the effort – how long did you spend linking all these references.
I brushed up against MMT quite a few years ago on The Conversation. Slightly dumbfounded and taken by surprise by this novel idea, I did spend hours and hours rummaging around on Bill Mitchell’s site, checking out Warren Mosler and Stephanie Kelton, as well as a few others I can’t remember anymore.
The curious thing about MMT is that with me, it is trying sooo hard to muscle in through a door which is wide open already – I am conversant with, and largely subscribe to, the Marxist description, analysis and critique of capitalism (even if I disagree with numerous remedies that were originally proposed).
Denis, the explanations and exhortations offered by the proponents of MMT are invariably aimed at those still fully convinced of the validity of the basic precepts of capitalism. I AM NOT ONE OF THEM! I’ve seen through the empty promises and the institutionalised hypocrisy of capitalism over 30 years ago!
MMT purports to offer a way to better manage those hypocrisies, and actually enable capitalism finally to make good on its empty promises – whereas it is my sincerely held and closely reasoned understanding that capitalism cannot make good.
Capitalism is an inherently exploitative and dehumanising economic arrangement, which is doomed to fail. Rearranging taxation the MMT way will not prevent that from happening.
Very specifically, MMT advised to invert the revenue-expenditure cycle of government finance. To those not familiar with the Marxist analysis of capitalism, this will be a novel way of looking at the economics of government finance.
But for Marxists like myself, who are well familiar with the notion of c-m-c type industrial capitalism (commodity-money-commodity, implicit in Adam Smith’s version of the Labour Theory of Value) inverting into m-c-m type financial capitalism (money-commodity-money, the explicit base for the Marxist analysis and critique of finance capitalism) – for Marxists like myself, MMT is the utterly transparent idea that state authority should play by the rules of this finance capitalism, for the good of its citizens. And that idea, for me, is just a retrograde step which I am not willing to take!
Denis, I do (begrudgingly) admire your enthusiasm and resolve, and your commentary generally raises useful points.
But to any self-respecting Marxist, MMT is no more than yet another forlorn bourgeois trompe-l’oil, and not even a particularly good one.
Sorry, mate!
Denis, I tried a few of your links, but most don’t actually connect.
Arnd, I agree that we should not see capitalism as an end in itself, even if highly regulated.
I further agree that referring back to Marx is essential.
But he did advise that progress through a capitalist phase was essential to the eventual establishment of a fair system.
Canguro, I think I might find a Q and A with your partner hugely interesting. Not least because many years ago I had a somewhat disjointed 15-year relationship with a Chinese, originally from Singapore. Her parents were migrants from mainland China, who, it seemed, didn’t fit in all that easily with Lee Kuan Yew’s vigorously pursued agenda of state-sponsored developmental capitalism (which, in hindsight, doesn’t seem all that different from Deng Xiaoping’s “developmental communism”?
“We did learn a lot from each other”, were some of her last words on occasion of our final, enervated break-up.
She did read Jung Chang’s Wild Swans when it first came out. As did I – a very interesting first-hand account of “real existing communism”.
Hence, I would truly be interested to find out what your partner might have to say about her communist indoctrination?
My sister-in-law grew up in “socialist” East Germany, and she can’t quite understand my communist enthusiasm. Even if she can see that with my current thinking I would have been one of those communists who would have been in deep, deep trouble with Erich Mielke’s Stasi.
In hindsight, the history of communism so far clearly is a very fraught one. Of particular importance is the intersection of the communist agenda with the struggle for decolonisation, creating repeated conflicts between nationalist aims and the necessarily internationalist aspects of communism proper.
A rather underappreciated fact is that the basic tenets of communism include the idea of the eventual “withering away of the state [authority]” – but I can certainly see no withering taking place in any of the still extant “communist” regimes.
And let’s not forget that already Karl Marx himself had tweaked to the fact that not all socialism are created equal. He tore strips off, variously, “bourgeois” socialism, and “petit-bourgeois”, “feudalistic” and “utopian” socialism. He did reserve his greatest contempt for “German” or “True” Socialism – and though I was born almost 150 years after Marx, I think I can see quite clearly why.
I’m rather certain Marx may have found things to say about “Socialism with Chinese Characteristics”. (He did take Bakunin to task for proposing, “in the name of freedom, a most repressive barracks communism”.)
This, it does look like the details of establishing some sort of social justice (or “social equity”, or as I prefer, “social equitability”) are complex. And somewhat more demanding than a relatively painless subscription to the ideas of MMT.
Steve:
True! And yet another widely under- appreciated aspect of the Marxist historiololgy and theory of human development.
I read of an interview with Hannah Arendt, were she was asked about her attitude towards capitalism. She answered that she did “not share Marx’s great enthusiasm for capitalism. Read the first few pages of the Communist Manifesto, and you will encounter the greatest song of praise of capitalism you will ever lay your eyes on!”
You might know that one fairly common criticism of Bolshevism has it that it wasn’t socialism at all, but merely “State Monopoly Capitalism”. Capitalism, with state authorities enforcing a monopoly on entrepreneurial decision-making.
Ditto for Mao’s “Great Leap Forward”, which was not about creating a better society for the denizens of China, but about creating the capital infrastructure (steelworks, railroads, tractor factories, …) upon which social improvements were to be realised at some future point in time. Socially coordinated capitalism, in other words.
A developmental outlook, which in one way or another was effected by virtually all countries seeking to follow the example of England during the Industrial Revolution, to forcibly shift from agriculture to industrial production. Most notable examples include Germany, Japan, South Korea, and now China.
But then again, the post-WWII boom – the Wirtschaftswunder, or “Trentes Glorieuses”, “Miracolo Economico”, petered out in the 70s. Japan has still not really recovered from its real estate shock in the 90s and some of the weirder consequences include radical social withdrawal, or hikikomori, South Korea’s economic prowess is paid for with a ruthless competitiveness that generates atrocious rates of youth suicide and has women forgetting to fall pregnant.
China now has the phenomenon of Tang ping.
In other words: at a certain developmental point in a nation’s economic life, capitalism becomes so obviously a liability that replacing it with a more appropriate set of economic precepts becomes an unavoidable ethical duty.
Yes, indeed Arnd.
The thing about evolution is that it never stops.
Hence the appearance of Tang Ping in China.
It’s interesting that the linked article made no mention of the obvious link between Tang Ping and Taoism.
And still on the China theme, “May you live in interesting times” might be never more relevant than today.
The US is giving a very good impression of a declining power fighting wars on several fronts as it tries to cling to a power and an influence that it has already lost.
Steve/Arnd, to come at “Sovereign Economies” from a (possibly) different angle, MMT is not new at all. It is a new acronym for the way most western economies have operated for some time.
EG – The Morrison Gov’t left a $1 trillion debt. Where did that go? It certainly wasn’t ‘paid back’ by taxation increases. The debt (usually unsold Fed Gov Bonds) is basically retired.
Don’t get hung up by talk of ‘Free Money’ raining down on all citizens. The point that Denis and many others are trying to explain is that at the most basic level, Gov’ts with a sovereign currency (Aus, US, UK, NZ, etc) don’t need, or use, taxation to pay for Public Services – Health, Education, Trains/Trams/Buses, Social Security. Taxation only exists to throttle burgeoning demand, or to ensure that the current money in circulation is not concentrated in too few hands.
I’ve made this point before but I will re-state it. When a Bank approves your house mortgage, they are not ‘lending’ you funds that another person has in a deposit account at that bank. They basically just credit your mortgage account with whatever amount was approved for you.
I know it all sounds like money from nowhere, but there still has to be strategies and targets for how and where the Federal money is spread through society.
The Morrison Gov’t recent cash splash was atrocious in it’s targetting and we are only now finally getting to grips with the inflation that must follow such profligate spending.
Keep in mind only the Feds create money, State Gov’ts, local councils, etc have to actually ‘balance their budgets’. The Feds do not.
Hey, Truth Teller … – is your real name Brandon Young? He held forth interminably on MMT on The Conversation, back when they still allowed comment on every article published. Exactly what you are saying, almost verbatim! And, if I may be so frank, ad nauseum, too.
Please don’t make this sound like an utterly novel and stupefying insight. I was introduced to the wonders of fractional reserve banking by my social sciences teacher, Frau Seiler, in year 9 junior high school, Bosse Realschule, Bielefeld, Germany, in 1977. She also explained that it is not just governments who mint and circulate money, but that that we all do so. The very instant I write a cheque, I create money to the indicated amount. If I don’t cross it out as “Not Negotiable”, it even is a fully negotiable financial instrument which could, in theory, make a tour of the local economy, from the butcher, to the baker, to the candlestick maker, to the local hardware, to the firewood merchant, … – and possibly even right back to myself, without ever being cashed or deposited.
As well, it’s not just banks that merely keep track of your expenditure by debiting or crediting your accounts, without actually shifting any real money. The Blue Mountains Local Exchange and Trading System used to do exactly the same: you go and buy something on credits, and all they did was to track your expenditure. They certainly did not mint any actual “Blue Mountains Credits” and shuffle those between accounts. It’s just iterated bits of double-entry book-keeping.
The Blue Mountains LETS folded. Due to lack of interest, I guess. Blue Mountains Credits were not convertible, meaning that the most you could buy were a few home-grown veggies, or perhaps some iridology or tarot reading services – not exactly a thriving and productive economy! Yet the ATO, obtusely, insisted on being paid its cut – in Australian Dollars, and converted at parity!! No wonder our LETS never gathered any worthwhile momentum.
The ATO fixing a 1:1 conversion rate (by fiat!) reminded me of the East German government fixing (by fiat) a 1:1 conversion rate from their East German Ostmark to the famed and internationally convertible West-German Deutsche Mark. The black market exchange rate was close to 10:1. If you could find someone prepared to swap at all.
In short, government officials endeavouring to keep sovereign control of their currency by way of administrative edict and legislative fiat issued from inside their plush offices and sumptuously appointed board rooms does invariably encourage fancyful delusions and wishful thinking.
I recommend strongly against it!
Thank you Arnd. One small correction – when you write a cheque that amount is debited from your account when the recipient deposits the cheque.
When a bank approves a mortgage there is NO money debited from anyone or anywhere. The loan amount is simply credited to your account so you can use the loan amount to pay for your house purchase. The seller of the house receives the newly created balance in their account at settlement.
I say again MMT is merely a new acronym for the existing system. The main issue is that the Fed Gov’t does not require ‘Taxation’ to pay for services. They just want to keep the population believing that there will be no Age Pension, etc because we don’t have enough money.
Thanks back to you, Truth Teller.
That’s why I went to the effort of illustrating a hypothetical round trip through the local economy of a cheque not crossed out as “Not Negotiable”. Until it is cashed in or deposited, a cheque really is “newly created money”, or else a “banknote” in the truest sense of the word: a note to the bank to pay to the bearer the amount stated. If I understand correctly (and I think I do, but please correct me if I don’t), in writing a cheque, I have “created currency”, or “spent currency into existence” in exactly the same sense that a sovereign fiat currency issuing government authority “spends money into existence” by paying for whatever it is they choose to pay for (hospitals, roads and bridges, social services, Bushmaster APCs …).
And just as I must (be able to) “repatriate” the cheque I wrote, by having money in my account to cover the cheque once it is deposited, or else become known as someone whose cheques tend to bounce, so also a government must (be able to) “repatriate” the “promissory notes” (fiat money) it issues through raising public income, so as to maintain public confidence in its fiat money, or else become known as a government that issues empty “promissory notes”.
In other words: there is no qualitative difference between Arnd issuing a promissory note, and the Reserve Bank of Australia or the US Federal Reserve issuing promissory notes.
There is a quantitative difference. Obviously! Arnd mismanaging his economic affairs will result in bounced cheques and consequent commercial credibility crash within months, if not weeks or days.
The US mismanaging its economy may continue unnoticed by international currency markets for decades – it took half a century for the British Pound Sterling to lose its status as global reserve currency to the USD. Size does bestow inertia. Not least because of the old adage that if you owe the bank a million dollars and can’t pay it back, you have a problem, and the bank might just foreclose. But if you owe the bank 100 million dollars and can’t pay it back, it’s the bank that got the problem, and it will go to greatest lengths to avoid foreclosure. In that sense, the US as the owner of the most important reserve currency in the world can bank (please pardon the pun!) on other major reserve banks taking all possible steps to avoid the devaluation of the billions of USDs they hold as currency reserves.
The Australian Dollar is a minor reserve currency, and it is on that status, rather than its status as “sovereign fiat currency”, that it can withstand a limited amounts of government abuse. Thus, here again, I can’t see how MMT precepts might add anything useful to our understanding of currency management or government finance.
Whereas, in my reasoned view, the Marxist critique of capitalism certainly does.