Yesterday Simon Fowler said on the blog:
I think we need a library of accurate but concise answers to each of these kinds of questions targeted at laypeople, with references to more detailed information from academic literature or academic blogs. Ideally something like a wiki that would allow it to be collectively improved, updated and expanded.
Do you know of a source of those kinds of explanations? Or do you think it'd need to be something starting from scratch? This is a project I'm seriously considering making a start on, though I'm not sure I'd have the spare capacity to do it justice.
I think that this was partly in response to a comment from Vinnie to which I responded saying:
I am musing on how to address all your questions
What I'd like you to do is frame them in a series
If you wanted a primer on MMT / economics in general, what are the headings for the chapters and main topics within it that you would want addressed?
Now Nick H has said:
In reply to Richard's question to Vinnie about an MMT/economics primer, I'd love to have a small book (or perhaps some online format) with the following chapters/questions, that I can give/send to people I know:
— Why everything you thought you knew about economics is wrong
— Why we don't need austerity
— Why the government does not need to balance the budget
— Why we can't afford the rich
— How we save money by not destroying the planet
— Why the government can never be short of money
— Why most economists are wrong
— Why most newspapers and news programmes are wrong about economics
— Why we need not fear hyperinflation
— Why we can and should have zero unemployment
— Why there is no National Debt
— Who stands to gain from the way economics is presented today?
— Why nobody tells you any of this
— Why the market is rarely right
— Why privatization often puts prices upOther things I'm not sure about:
— Why we don't need the stock market
— Why we don't need private banks
I had already begun to sketch out some ideas on similar themes last night, but was thinking about the practicalities of this. That sketch (on a mind map) was as follows:
There have been a number of questions on the blog of late seeking explanation of quite basic economics questions.
Other questions also address issues at the core of MMT.
And there is an ongoing narrative that what we really need to do to change the world is to create a compelling narrative of why change is required.
I admit I am trying to do some of these things, but a person is finite. And it has struck me that to try to do this by myself is, in any case, absurd when there is a wealth of talent on this blog. It would be crazy to ignore what is available. So I have wondered whether a collective effort is possible?
My thinking is quite straightforward. The process is in several stages. The first is to identify the questions that need answering.
The second is to get people to draft answers , and by this I mean potentially many answers.
The third is to edit those answers down to one per question.
Fourth, the remaining integrity of the whole has then to be checked.
And then, we have the guide.
Before I start let me also say that others have tried this. For example, there is the GIMMS site and I know Bill Mitchell helped on this. And others, have tried.
But there is something unusual about the community here. It is committed to MMT. It is informed. Many people can write coherently. And they seem to like doing it, and often. And collectively there is no lack of willing to answer questions. So what is the harm of trying again?
I would add four things. First, I can host this. But, second, I doubt I have the time to edit it all though, at least with current funding. Third, this will, therefore, require some volunteer time. Fourth, there has to be a willingness to compromise or things are not going to work.
Any thoughts at all before I progress any further. And please wait before suggesting your list of questions. I'll get to that next (although as noted Nick jumped the gun there).
The question of the day is, then, is there any merit in this?
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“The question of the day is, then, is there any merit in this?”
The answer of the day is clear to me – it’s a big fat Yes. Just one example of why is my friend Ken. He is still insisting that austerity is necessary, we can’t afford what we’re doing etc etc. I have a little knowledge of MMT, but not enough to convince him.
It would be so much better if there was one place I could send him.
Thanks
I think it is vital that economic/political/social/ecological issues are explained to a wider public that is completely free from any one political or commercial interest.
Initially a compendium of material should be produced (not too long to start with) that readers can have access to: indexes of source materials such as relevant journals, web sites blogs , useful sections of mass media and informative commentators (for example George Monbiot) who can take a holistic view of major problems and indicate ways to go forward. Each subject section have a page or so summary of the main problems and possible ways forward. Trouble should be taken for wriiting to be in plain English and any technical points and jargon explained so the interested lay person can grasp the issues easily. Later the compendium can be added to maybe taken more sources from around the world and liaising with similar organisations in other countries.. Readers of the compendium should be encouraged to comment and add information for future issues of the compendium Later, when circumstances permit have regional meetings say every quarter with guest speakers.
The trouble is Bill that takes a lot of time…
Agreed Bill.
In a democracy, how can people make informed choices if they don’t have a clue what they are voting on?
The economy has to be THE subject that most consider when voting?
What was the saying?
“It’s the economy, stupid!”
Surveys before elections inevitably put “the economy” at the top of the list of priorities yet even the most basic economics is seldom taught in schools. It ought to right up there with Maths and English as compulsory for all.
Agreed…
Yes, lots of merit!
Although I do think we should keep things very simple to start with.
I’d suggest it boils down to A) where does money come from B) why you can afford what you can do and C) the resilience of society.
I’d also like to see it starting by never mentioning economics!
For example, we could point out that, not economics, but the law of transactional chance means that all societies tend to be unequal – so fairness has to be ‘designed in’.
I rather like that…
Very worthwhile, and I would also go with simple and try to keep economics terms out. That is what I have tried to do with my talks on Scottish currency and the Scottish Currency Game. Keep it at a ‘normal person’ level, practical where possible, and with step by step or everyday examples.
Happy to help on write something on some of these topics.
BTW, I don’t see that you need to get rid of commercial banks, but they need regulation. Also as with all other companies kept small (not more than 10% of any market).
Thanks Tim
Timothy Rideout.
I agree that some of the basic explanations are good to frame the arguments.
Where I get tied in knots, is when I try and apply the basic principals to the actual mechanisms. Bonds, reserves, broad money, over night lending etc. For some, the detail may not be important. The basics is enough.
I however, like/want to know how it all actually works. Well. (Not everything perhaps. I might give derivatives a miss!)
Maybe it needs to be in two sections? May start looking like the size of a mighty tome though!
Most of what you’re trying to explain just does not matter
I keep telling you that
I drive a car and these days I have not a clue how it really works
But I can explain how to drive it…
Richard.
Just a quick though.
I think it would be good to explain how the system could/should be reformed.
That kinda was what I was getting at when I asked the question, “what would the economy look like if we started from scratch”
Timothy for example thinks that private banks are ok and should stay.
In order to understand why, an understanding of the system is required before it becomes clear why they have a part to play.
I guess it may be difficult to find a concensus on some of this stuff the deeper it goes?
I have been asked to write that, but it’s another book
I agree with your car analogy Richard.
But to tackle those thorny issues “government debt” and “government borrowing” a look under the bonnet will probably be needed?!
I think there is great merit in the idea, provided it does not duplicate efforts being made elsewhere. Anything which can counter the simplicity and attractiveness of the misleading “household budget” approach would be helpful.
Whatever has been tried before is not cutting through against the “household budget” despite a few Telegraph and FT articles. Debt is a thing everyone (thinks s/he) understands and as long as Govt spending is framed as debt, progressive politics has an uphill task. As well as targeting an enquiring public, how about targeting progressive MPs and councillors?
A wiki approach would be the most useful, but if the q&a gets too political it may fall foul of the Philip Cross effect. See attached site and search Philip Cross – https://www.craigmurray.org.uk/
Maybe any editors used in getting it up and running can stay on to query/edit amendments?
I have no formal economic grounding, but would be willing to help in any way I can.
“I have no formal economic grounding, but would be willing to help in any way I can.”
I’m not sure that a formal economic grounding would be all that helpful. I studied economics years ago and I’m therefore all too aware of Paul Samuelson. I suspect there is all too much connection between him and the neo-conservative economic model.
Later on I became aware of the damage he had done. See for example here:
https://www.counterpunch.org/2009/12/14/the-problem-with-paul-samuelson/
and here:
https://lawofmarkets.com/2015/09/12/more-on-samuelson-and-the-physics-of-economics/
Agree with you, Brian. Did a first-year course on Economics as part of my degree, and guess whose text-book? Yes, Samuelson!
It’s a curse, that book
It made him a fortune
I really like Nick’s list of chapters for a short prima on ideas progressive.
Great title for the resource would be WHY…
I don’t pretend to be able to make an informed opinion on any of the listed issues, BUT I am willing to copy edit and if necessary contribute to funding the project.
How could we move this project forwards?
Bob
Excellent question on how to move forward
Not sure…but it will be virtual….and by invitation
Who wants an invite?
If I haven’t heard fo you before there’s not much point volunteering without a CV, by the way. But you can mail me
Why is not a complete title…..
Why, How, Who, What: The questions on the economy that need answers
Thoughts?
I would like to contribute.
I have the feeling that the best way I can contribute is by editing the “dense” detailed material on each chapter heading and making it more accessible to politicians, the press and the general population.
Its what I have been doing as my major income stream for over 20 years, simplifying complex issues to make them more accessible to the clients of accountants. I must have written volumes of published material in that time.
I like Nick H’s list of potential chapter headings:
Why everything you thought you knew about economics is wrong
— Why we don’t need austerity
— Why the government does not need to balance the budget
— Why we can’t afford the rich
— How we save money by not destroying the planet
— Why the government can never be short of money
— Why most economists are wrong
— Why most newspapers and news programmes are wrong about economics
— Why we need not fear hyperinflation
— Why we can and should have zero unemployment
— Why there is no National Debt
— Who stands to gain from the way economics is presented today?
— Why nobody tells you any of this
— Why the market is rarely right
— Why privatization often puts prices up
Other things I’m not sure about:
— Why we don’t need the stock market
— Why we don’t need private banks
I would add an introduction that sets out the purpose of the “Little book of money – unravelling the fairy-tales” (another suggested title).
For an intro what about:
In our collective struggle to explain how our complex economies work it is the opinion of the band of adventurers that have contributed to this “Little Book of money” that much has been presented to you as the truth, when these truths may be not be so true.
And further, that belief in these fairy tales has led us to take actions that have misled at best, and in our opinion, have held back our ability to step out from this dusty maze into a rather more supportive and bright future that is presently hidden from us.
This is not a book that promotes a left, right or centrist political point of view. It is rather an attempt to provide a progressive approach to our relationship with money. By definition, this means were motivated to expose – and offer alternatives for – what we believe are the present regressive policies and home-spun beliefs that direct our understanding of the monetary world around us.
There is nothing to intimidate it this little book. We have endeavoured to unravel complex ideas and economic myths in order to counter long held beliefs that presently dominate and limit our ability to see alternative points of view.
Read our little book, pass it on to your friends. Pass it on to your political representatives. Pass it on to your journalist acquaintances. Share the ideas with your children. There has never been a more opportune time than now to open our eyes and seek out a more commendable future. The alternative, is to stay fixated with fairy tales that tell us little about the possibilities for tomorrow and much about the irrelevant myths of yesterday.
In our humble opinion it is time to realise that the Emperor is naked, is wearing no clothes.
Thanks Bob
I admit I don’t like calling it a little book
This might sound odd, but that’s a diminutive and I think we need a bloody great book, even if it’s a small one
But let’s talk….
If it becomes a “little book”, can I suggest it doesn’t have a red cover? 🙂
🙂
Yes, it would be very helpful to be able to point to a book or internet publication that is accessible to all. I agree that it should present fairly simply but backed by in depth research that anyone can access if they wish.
There should be a section on the counter arguments/weakness in MMT and where solutions can be found.
Bill Bryson’s recent book ‘The Body: A Guide for Occupants’ is a good read. Each chapter stands well on its own and is accessible to most.
Perhaps a forum, by invitation only, could be involved to write chapters, contribute, provide constructive criticism, proof read and suggest textual revisions to make it more accessible?
I think this would be such an exciting idea. I heard George Osborne on QT again last week saying that cuts would have to be made due to Covid-19. And yet again no challengers to that from anyone including Anneliese Dodds for Labour.
You may have heard about the Wee Blue Book published by Wings over Scotland before the Scottish referendum setting out the case for Scottish Independence and countering the lies and scare mongering. This was a fantastic success and was widely distributed; 300K copies printed and 550,000 digital downloads. Imagine if we could do that with a book of economic truths. We need to change how we organise our countries in so many ways – this really could be a way of changing public opinion quickly and so facilitating and indeed forcing change. Wings crowdfunded to meet the costs – I’m sure you could do the same.
I think the Wee Blue Book an an interesting idea
As fellow bloggers I know Stuart Campbell a bit – although we have never met in person
I certainly think this a possible model
We would need to deliver it without his twitter embellishments
Have a look at Scotland The Brief, by Gordon MacIntyre-Kemp of Business for Scotland.
It’s great – but would be mighty costly…
There has to be MMT entryism in the Labour Party to succeed for the simple reason MMT is ideological because the super-rich make it so:-
“The modern conservative is not even especially modern. He is engaged, on the contrary, in one of man’s oldest, best financed, most applauded, and, on the whole, least successful exercises in moral philosophy. That is the search for a superior moral justification for selfishness.”
https://wist.info/galbraith-john-kenneth/7463
And:-
https://michael-hudson.com/2020/04/the-use-and-abuse-of-mmt/
I would add why the Labour Party? Because it has to be effective demand widespread!
“Traditional monetarist theory held that changes in the money stock are the best indicator of monetary influence on the economy, and that these influences have a significant impact on the course of economic activity over the business cycle.”
Only a Labour Party will know or ought to know emotionally why this is statement is wrong:-
http://fictionalbarking.blogspot.com/2020/04/the-keynesian-monetarist-debates-and.html
Sadly the Labour Party is now sinking back into the morass of Blairism mark 2. I would not hold your hopes too high for any sort of lead from them!
I would say Yes, to get people out from under those politicians who insist that national economics is the same as household budgets vis Angela Merkel and the Bavarian Hausfrau meme.
This is a great idea. I agree it takes time, but I imagine there are already existing lots of articles, information sources and books that have been well-researched, in some ways ready-made to be edited and made accessible in this way, like positive money, Canary, Left Foot Forward and so on – Housman’s bookshop in London will be stacked with relevant texts. A lot of the groundwork has likely already been done, but there’s still the work of formatting and accessibility of the work, the editorial decisions about how style and appearance. I’d be interested in offering proof-reading and comprehensibility feedback on drafts having experience of essay marking and being a critical friend to my partner whilst he completed his PhD. I work part-time so have time available to do this and am willing to offer this as it’s such an important issue, not only for the times we’re living through now, but for what kind of world we want to live in in the future. We have spent so long to find out that a world governed by a minority only works for the minority who govern. We desperately need to do things differently, and arguably central to that is whether people accurately understand the meaning of a fiat currency – if people understood money, they’d know a different world is entirely possible.
I’m going to post more soon – but am thinking hard on this in between having to do some work!
You know I’m going to say YES Richard!!!!
No way! Really?
🙂
Probably not relevant, but I find biological analogies helpful. For a start, considering the economy as the human body, and money as blood. Each only works when money or blood circulates. Not a perfect analogy, but austerity would be the equivalent of refusing to use a blood transfusion when treating a severed artery.
I am wary of such things – they can be as confusing as they can help
Speaking as a Physiologist I think economies would be better modelled as ecosystems not as bodies. There are some good models of ecosystems than bodies. I’m also not sure we understand the interlocking complexities of bodies well enough yet.
For eg see the hypoxic people with Covid-19 who you would normally expect to be comatose with those levels but who are awake and seemingly lucid. I can only possibly explain that by some mechanism to reserve oxygenated blood to the brain, but how you do that is beyond me.
Yes – long overdue. However, I’m already sensing complexity-creep!
If the project is to achieve its objective of explaining the questions you set out above to ‘ordinary people’ (whatever that means – you will have to define the target audience in terms of educational level), it will have to avoid any language of the lecture hall or text-book. I’d go so far as to prohibit mention of MMT.
I’m not going to say more (now) other than to raise the example of ‘The Bluffer’s Guides’ which, over the years, have brought ‘wit and wisdom’ to a wide range of specialist topics. While I’ve not seen any of the recent ones, the originals were written by recognised experts in the relevant fields and then cleverly edited for popular appeal. Their approach married to that of the more detailed & hugely successful ‘For Dummies’ publications strikes me as the way to go, never losing sight of the’KISS’ principle.
As you have thus far outlined it, there will be a considerable amount of time-consuming work to be done – first to précis the technical and then, equally or even more important, to translate/edit it into the vernacular. I would gladly offer my services on the ‘consumer marketing’ aspects but I think you will have offers from others considerably more qualified (viz. Peter May).
Good luck! (I mean it).
That’s about the right pitch point
John D.
I very much concur. With every heartfelt & genuine response on here my heart was sinking lower as it became clear this is something being done for the ignorant proles.
Oh I realise that is the antithesis of what is intended by each commentator – but I just want to make people realise how patronising much of the responses are. I think before you set the content, we need to take many steps back:
Most importantly – who are your target audience and what level of knowledge do they currently have?
What are you trying to explain, and for what objective?
Where do this target audience currently get their information (medium).
Why would they be looking for alternative info? ( so far, the discussion has been that they need it, not that they want it)
How are you going to entice them to find it / deliver it to them.
I absolutely don’t want to poopoo the initiative. 5 of the readers of this site started down the same road approx 4 hrs ago, and discovered that there have been a number of similar good initiatives (educational YouTube videos, presentations etc – bite size & easily digestible dealing with everything from what is money onwards). All good.
Now how to get those horses to water and make them drink? Judging by the continued state of economic ignorance right up to prime ministerial level, one has to infer that most of them died of thirst.
So who is, and how do you attract your target audience?
Ignorant proles?
Certainly not
But are there ignorant people? Certainly
But not unable to understand, just it has never been explained.
And it has been known for a century how hard this is
And where is that data you refer to? Is that GINMS or something else? Can you share?
And the audience?
Whoever will listen
How to reach? If it’s good it goes viral….
Windsorlass
In my experience it’s not just the ignorant proles that need educating.
Most of my peer group (and I) are graduates and are as clueless on the economy as anyone else.
One blog I see from time to time is Another Angry Voice hosted by Thomas Clark in Yorkshire. He has some good graphics and takes left wing Labour stance. However, he does write ‘blogspots’ which give background information. This is one and one can see some common ground.
https://anotherangryvoice.blogspot.com/p/feeble-right-wing-fallacies.html
It’sd a good blog
That list idea is good
Richard
As a quick example of my confusions.
I started to read Warren Mosler’s paper “Soft Currency Economics”.
The basic description of a Dad trying to get his kids to do chores round the house by issuing business cards was great up to a point. It explains the role of tax and the currency and why the kids want/need to earn the business cards. I was OK up to the point that the kids may want to earn extra than needed (for their tax bill) to trade with eachother. That makes sense, but then…..
He then suggests that “Extra cards not needed for overnight inter sibling transactions would probably be deposited with the Dad”
WHY would the kids or Dad choose to do this?
The Dad may choose to offer interest on the cards he has “borrowed” back.
Again WHY?
I could not read any more of the paper because I could not get beyond this point/hurdle.
I’m sure that there is a perfectly obvious answer.
The point I am making I guess, is that the basics can only take you so far. For some that may be enough, but for me it just created more questions.
Because he wants to control the interest rate in the economy….
It’s only a metaphor
In the real economy real companies do want interest overnight
And that does give the BoE the power to set short term rates
QE sets long term ones now
Vinnie as Richard says the business card thing with his kids is Mosler creating a metaphor. The following much short background reading Mosler created for a visit to Italy to explain his understanding of MMT explains that a government has to choose between setting the price or quantity of money it creates. The price is the bank or base rate and used as an economy regulating tool. Taxes are the other main regulator. Beware, however, falling into the trap of Monetarism because it’s not just quantity it’s also ensuring equitable distribution as part of managing demand in an economy.
This can all get confusing because MMT also argues government has to respond to private clearing banks by creating reserves for the loans they want to make. Of course government can regulate the quantity of money created by such loans by imposing credit restrictions particularly under-writing standards. House price hyper-inflation in the UK for the last half-century is a classic example of successive corrupt governments failing to do this!
http://www00.unibg.it/dati/corsi/910003/64338-Warren%20Mosler%20Bergamo%20paper%20March%2010.pdf
Thanks Helen
Thanks Helen.
I’ll check out the link
Thanks Helen & Richard.
Part of my confusion is that what we are dealing with here are abstract concepts.
I am trying to build ,what are quite complicated, mental pictures to create an understanding. The trouble is my “picture” is going to be different to someone elses. What works for me, may not be appropriate for the next person. It is also difficult for someone else to work out what sort of explanation will flick the switch in my particular case. It’s hard for others to see what my particular stumbling blocks are.
I like Mosler’s metaphor. It helps to create a framework in my head. It just could only take me so far. I’m going to “park” the overnight lending conundrum for now, but will go back to it.I have printed it off and will go back to it again. It usually takes me a few reads for stuff to “stuck”.
Part of the difficulty which the proposed book(let) would rectify, is that I have read lots of really good stuff on the subject (specially on this blog) but can never remember where it was to re-read and cross reference with newer stuff.
For me, a book would work well. I could stick post-it notes in various pages for quick reference etc.
(There is also something about the tactileness of a book and learning. I have an autistic son with sensory processing issues. He is so tactile in his learning and needs to fiddle with things all the time whilst getting the brain working. We all do it to some extent without realising it. Running a pencil through the fingers etc. I much prefer a book to a kindle etc??)
I am playing with ideas…
Richard & Helen.
I have a metaphor of my own to explain the role of tax and bonds in government finance to run past you.
The government uses taxes and bonds to remove previous government spending/(money) from the economy.
“The government needs to do this to create “space” for new government spending to “fill”.
(The government needs to constantly spend into the economy or the public sector grinds to a halt. So it constantly needs to keep creating the “space”)
If the economy was a vessel, for the government to keep spending/filling the vessel, some of the previous spending into the vessel needs to be “drained off”, or else the vessel would overflow. (Inflation)
This is done in one of two ways.
Taxes or Bonds.
Taxes “drain-off” some of the contents of the vessel to a drain. (Destroyed)
Bonds however, remove some of the contents of the vessel for a set period of time into a smaller vessel. There is a very small pipe that connects the smaller vessel back to the large vessel. This pipe causes a very small “leakage” back into the main vessel. (Interest payments on the bonds).
This “leakage” does not reduce the amount of “space” (new spending the government can make into the main vessel without overflowing) because the main vessel is also slowly expanding and so increasing its capacity (the overall amount it can hold). As long as the main vessel is expanding (growth) quicker than the “leakage” is flowing back from the smaller vessel, government spending is not reduced.
The smaller vessel is also expanding to accommodate more bonds. (Government Debt?) as the main vessel expands.
The government persuades people to move their money from the main vessel to the smaller vessel by offering them the interest payments (the “leakage” pipe) on the bonds.
Once money is transferred to the smaller vessel, it can not be spent by the people who own the money, until it is returned to the main vessel.
Any money that is returned to the main vessel (when the bond matures) is instantly replaced by more bonds (money taken out of the main vessel), so the level in the main vessel doesn’t overflow.
The government does not remove (some) of the contents of the main vessel (tax) in order to pour them back in again. The spending is new money.”
How does that sound? Have I got the basics right?
PS I’m a plumber!!!!
That is much better
Bloody typical!
I get my head round it all at last, just before the whole system comes crashing down around us anyway!!!!!
Doh!!!
🙂
A real sticking point for me was the role of bonds.
I got that taxes are used to remove money from the system but I didn’t realise that bonds were as well.
The government debt is just the amount of money (in the form of bonds) that the government has removed from the economy to reduce the “money” in the “vessel”.
If the government ever stopped doing this the vessel would overflow or the government would need to stop spending.
I thought that government sold bonds to finance it expenditure. The money spent by the banks to buy the bonds was then used by the government to spend into the economy. (Hence the “borrowing” as the government gives the money back on maturity date) I couldn’t see the “paper trail” of how the “money” got from A to B. Specially when the “money” is what the government has previously created and spent anyway. Why would it need it back rather than just create more? It looked like some kind of feed-back loop. But of course this isn’t what is happening.
The idea of creating the “space” for government spending in a finite economy works in my head.
Government and the private sector are competing (that’s how the private sector sees it) for the resources/labour available within the economy. The less the government does/spends, the more resources are available for the private sector to exploit. The private sector is motivated by profit (nothing wrong in that) but not all the things a vibrant healthy society needs necessarily are profitable.
I’ve seen water/flows to describe the economy before but never really got what the story was.
Regarding ideas for the Book/website.
I’ve just done some homework with my son on gases. It involved an interactive animation where you pump gas into a container.
The gas particles can be seen bouncing around inside the container. You can increase the number of particles and watch the pressure increase on a gauge. You can play around with temperature and container size and observe how this effects pressure and particle movement.
Its part game part animation/video.
Maybe a similar animation could be used for describing the economy as a series of “flows” from different vessels? The perameters could be changeable and the results observed? Just a thought to add to the many!
I suspect that is too complicated
I still prefer my cappuccino analogy…
Richard.
I seem to have missed your cappucino analogy?????? Where can I find it?
I’ll repost it….
All the contributions here seem to work from the principle that we have a say. We don’t. We have a Tory government with a majority of over 80 and no election for over 3 years. They can and will do as they please. If they want austerity they’ll get it. In the Guardian at the moment is a report about the continued privatisation of the NHS
By the time we’re all safe we won’t have an N in the NHS. That is what the country voted for. We’ll have MMT but it will be used to enrich the rich. Sorry to add some realism here but the country is well and truly f*cked and the new leader of the Labour Party is just watching it all unravel.
I suspect we will get an election much sooner
I could be wrong
But I think things will be very ugly long before then
I will go with your suspicions. This will not be a five year parliament.
I have, elsewhere I think, previously expressed the view that bad as it is, Cv-19 can be construed in some ways as a preview of the consequences of the hard Brexit that Johnson’s backers have wanted all along. There is, however, one other thing that we have to add into the mix.
I am alluding to the fact that after the financial crash of 2007/2008,
1) absolutely nothing has consequently been done to learn from the experience.
2) (vastly) inflated asset values, and non-government and personal debt continued to grow at a greater rate, and 3) work degraded further in quality and wages stagnated for the greater number of workers, particularly at the lower end of the income scale.
4) all the time accompanied by ongoing climate change, an existential threat in itself.
All built on a foundation of huge levels of misinformation, and deliberately fostered ignorance and political impotence.
Another Great Depression would be one helluva bad thing, but 2020/2021 will surely, in it’s potential for cataclysmic economic and corresponding social disruption, be one of the most defining moments or periods of our post-Renaissance era civilisation.
Yes, I am seriously contextualising within that timeframe, but when this mixture goes bang, it will be visible from space.
More than enough to blow this government out of it’s self- made soup.
I agree
A blog is being written on this right now
I do hope you’re right about an election but unless the Labour Party can up its game on the macroeconomics front it will be played out on the neoliberal arguments of who is going to pay for it and we know how this ends.
As far as getting ugly is concerned, I wonder how ugly. Just a small indicator of changes afoot – my daughter manages the Stroud Foodbank and in the past month has seen a threefold increase in amount of food parcels sent out. In the past they could rely on food that people donated at supermarket checkouts but now she is regularly shopping and the local supermarkets have been fantastic in allowing her to take what she needs. I have assisted in this just to help her minimise her trips. One other surprising fact is the generosity of donors, cheques of greater that £1000 are not unusual and the donors don’t wish to be publicised. There is so much good in this country that we deserve better government than we seem to get. We need better opposition too.
Very, very ugly
Maybe I should keep my powder dry for now and hold back on the questions. The whole idea has got me excited though!
Just one final thought for today.
I think a good place to start would be to explain why government spending is NOT like a “households budget”. This is straight forward to explain (even I understand it!) and would set the scene to then put forward the alternative explanation of how the economy works.
If I can help by creating an online slideshow-type presentation of this I would be happy to jump in. I’m talking of a simplified ‘primer’ version that looks good and can be linked to as an online resource for newbies. Just let me know.
Shannon
Might you mail me
Richard.murphy[at]taxresearch.org.uk
This has been under discussion and may be a good place to start
I have been working on a script…
In 2012, Gail Bradbrook, (Now of Extinction Rebellion), tried to do something similar to this which she called Street School Economics https://streetschooleconomics.wordpress.com/basics
There are obvious flaws in the logic and problems with the format, but there maybe lessons to learnt about what works well and what doesn’t. From my experience infographics and slideshows work well to illustrate each point.
Gail has found her niche now
We’ve known each other for a long time…
I think infographics can be good
Presentations can be excellent
But a book(let) also usful
An explanation of the current economic system and a proposal for something better would be a brilliant idea. I am extremely pessimistic about the prospects for anything changing before catastrophic events relating to the collapse of the ecosystem and the failure of capitalism occur but it would be nice to have even a little hope. Knowing there are people who seem to be aware of what is really going on and who have intelligent proposals could be a source of encouragement.
Wow, I didn’t expect my question to trigger such a large response . . .
What prompted my original question is my experience of trying to discuss economic matters with people, on facebook and in person – It’s almost never a situation where I can respond in great detail, and when I do it generally doesn’t end well, since it tends to turn into trying to re-educate them about economics from the ground up. The discussion starts out with a single point (often one of the standard ones, like “how are we going to pay for that”, or “we can’t print money or we’ll end up like Zimbabwe”, or that kind of thing), and the answer to that particular point needs additional framework to explain /why/ the answer is accurate, and it doesn’t take long until the whole thing is a potted history of monetary economics, a lot of which gets discounted by the person I’m talking to because it goes against their pre-existing ideas or “common wisdom”. Most of the time, though, a short, targeted and well written answer along with some supporting links would get through – not trying to change their whole way of thinking about economics, just knocking a brick out of the wall of their current misunderstanding, and maybe laying the foundation of a more accurate understanding.
My idea about how to address that sort of thing was to build a sort of “economics for the layperson (through an MMT lens)” portal, with concise, accurate, carefully worded articles addressing each of the common questions or discussion points that come up regularly when talking about economics. Each question or discussion point (“how are we going to pay for it?”, “governments aren’t like households”, “why do governments borrow money?”, and so on) would be an entry point into the portal, and the article associated would address that point alone, with only as much detail as was absolutely necessary, with links to other articles to provide further depth, and links to supporting references from various sources. The articles would need to be written with an eye to being selectively quoted – the phrasing and construction would need to be done in such a way that you could cut and paste chunks of it, and ideally fit at least a useful summary in a tweet or a short Facebook post. It’d also need to be complete and coherent enough that a layperson reading it in response to a particular question would come away nodding their head – not necessarily someone who already had a background in economics, but a layperson who’s hearing arguments by MMT supporters and is asking the common questions in response.
The other thing you’d really need to focus on would be making sure that the whole thing was internally consistent – you’d need to make sure that each article supported the others, and didn’t end up accidentally contradicting or confusing things. Given we’re talking short stand alone articles this could be quite challenging, but it’s also absolutely essential – if someone follows a few links on the site (which is something we’d like to encourage) and ends up with conflicting arguments then they’ll end up thinking the whole thing is just stupid.
All of that is a bit of a tall order, I know – this is one of the reasons I’m not sure how much of this I could write myself. But there are lots of people around here, around various facebook groups, twitter, and so on, who could contribute – what we need is the framework to put everything together, and enough authoritative assistance to make sure that what we eventually put up is really accurate and well referenced.
Right now I’m still investigating the technical options for hosting and running something like this, and considering how it might be structured – it definitely looks like there are quite a few people who’d be open to the idea of contributing to this kind of resource.
Might you mail me Simon?
Your thinking is sound
https://www.taxresearch.org.uk/Blog/about/
From recent discussions with family & friends it seems to me that the first points should be 1 ‘what is money’, 2 ‘what is credit’ and 3 ‘what is debt’ starting with individuals/households. Everyone thinks in these terms and begins to get lost when trying to define their own money and the nature and implications of credit and debt and what can go wrong for them and who bears the cost.
Out of this the big question is then 4 ‘where does money come from’. Like other contributors, I fail to convince intelligent friends and family of MMT because it seems too simplistic. I’m always up against the commonly held beliefs that government creating money always leads to inflation and that government debt will bad for us all.
Simon’s summary is critical to the success of the project.
I have to work this out…
A wiki format seems a way to work on it
I have a wiki…
But this will need management
Thoughts, anyone?
Some of the management will simply about keeping trolls out, of course
And ensuring there is back up before one tries to break it
Because they will, I promise you….
I’ve heard good things about Slack as a communication platform for coordinating projects, it allows you to create separate work channels and is pretty intuitive
https://slack.com/intl/en-gb/
I couldn’t see a cost so I presume it is big
I believe this would be a highly valuable resource. I am increasingly finding MMT is coming up when down the pub. I find that I have enough knowledge to half convince others but then come across gaps. A comprehensive single source of truth in layman language would be great. A chapter focusing specifically on international movements of fiat currencies due to trade and the role of government bonds in this ecosystem would be very helpful!
I think it’s an excellent idea. I can’t contribute to it, being one of the economically illiterate in the populace, despite reading your blog. I would have thought you have probably answered many of the questions here already, so maybe it’s just a question of going through old blogs and tweaking them? I do like the idea of collaboration too, so I would say, go for it, all of you that have a proper grasp on these things for those of us for whom this stuff remains a little slippery and thank you very much.
Hello Richard
I have an approach to clarifying money myths:
https://www.moneymyths.online/
that tries to inject some amusement, hopefully. This is mainly a rant space that helps me sort out my thinking.
From that, there is the idea of quiz, where essentially all responses are shown, and this could be re-organised as say a wiki to keep things manageable,
I’d be happy to be involved in any aspect of helping more people come to an understanding of how finance actually functions, so that we can overcome its hegemony. I work in IT so can do web stuff to help.
Cheers
JC
Thanks Jay
If nothing else, I could help with editing/proof-reading.
There may be much to do…
I have no idea how to do it as yet….but am working on it…
I thought I’d mentioned this already but I’m going to mention it again (adding posts here is getting to be a bit of chore).
We must go back to first principles – that it what I see missing from all the contributions so far.
The ignorance that we talk of here knows no educational or class boundaries. People from our highest educational establishments display this sort of ignorance too – the ‘received wisdom’ of neo-lib economics for example. There are plenty in Oxford and Cambridge who are in denial.
My view though is to forget about the economists and go for the politicians – we should be writing for them.
Why? Because the power of money (to get the money that we need or want as Richard has stated) can be exercised through the power of Government/State sovereignty. Money belongs to the Government – it even says so on our banknotes. Money is not a product of the market – they just move it around – a lot of the time iniquitously. And instead of saying that they create money under license, we should call what they make what it is: Debt. And it is only that.
All MPs need to know about MMT by building on the notion of sovereignty, because the biggest capitulation has been letting the markets take more control of the utility of money – ever since the Gold Standard was dropped. It needs to be wrestled back, and restated that power does reside in the State. Politicians are here to solve problems, and – yes – throwing money at problems does help, only because for so long, we have been taking it away.
There is no harm BTW, making sure that the economists are also told where sovereignty lies in sovereign currency producing states. But we need to get the politicians to stop listening to orthodox economists first. So we must plant the seeds of rejection or rebellion there in my view.
PSR – seriously – don’t make it a chore!
I appreciate your comments
It’s OK to be selective
I promise, even I am
I could write three times as many as I do….honest!
My computer does not like the blog site – that’s why it’s a chore, it keeps wanting to put my name and mail data in the comment box.
Over than that, I’m just re-iterating that the issue of fiscal sovereignty (related of course to democracy) is an issue that politicians and economist must not be allowed to ignore any longer. Otherwise you can forget about MMT in my view. It is a fundamental principle that must form part of any effort to educate the public, the politicians and economists.
Is anyone else having that problem?
Anything that changes the current economic thinking of our world would a be huge benefit. I think it needs to be fixed in the real world and in language that people understand. Everyone uses money, buys things, most provide labour or have done, know about debt and all can see where inequality has arisen. Many economics terms are loose in their definitions such as “government debt” or “government borrowing” so addressing what these things really are is important.
I will watch this with great interest and contribute if I can.
One thing I would like to see is a list of statements by which you can tell if a politician is either completely ignorant or trying to pull the wool over your eyes. Examples being:
“the economy is like a household budget/credit card”
“the national debt must be paid off”
“raise/use taxes to pay for …”
Thanks Mike
I am working on ideas – and the feedback
There will be more…
Closely counterbalanced with a list of statements that can be used: like,
“The Currency as a Public Monopoly”.
What we should look for is short, crisp ‘punchy’ statements. Our oppenents have used this facility in phrasing to run riot from “household budgets” to “get it done”. The time is long overdue when we produced the appropriate answer – with the advantage of ours being related to the facts. To do this we should not just rely on those with the greatest understanding; but those with good mass market promotional skills. The talents are quite different, and the phrasing is very, very important.
“opponents”; fumble fingers.
Agreed
Might perhaps be a second stage; first get the structure and content in a longer form. Then work on producing the pithy, marketable, economics for dummies version
PS Just checked – there really is an Economics for Dummies edition…! Ive ordered a copy out of curiosity. They are often worryingly good
Tell us when you have read it…..
I would love a resource such as this to be available. My economic knowledge isn’t deep, yet enough to know we cannot go on as we are. Yes, Samuelson was my introduction.
I agree with Mike Curtis – we (also?) need, a bank of replies to politicians who lecture us from a position of ignorance, or an attempt to confuse.
Happy to help with this project when you’re seeking volunteers.
A plan is developing…
We’ll be back
The closest parallel I can think of is Ha Joon Chang’s Things You Did Not Know About Capitalism. Ideally this needs to be accessible to and readable by a very wide audience as we have to change voters’ and hence politicians views, difficult though that is. The discussions rarely get outside of narrow echo chambers, except through the distorting prisms of the media.
Much as I resent the phenomenon of Oxford PPE’s, disproportionately represented in government, and making a right mess of it, one cannot really explain economics without touching on the two Ps as well as the E. The underlying values and morality, and the political economy – how power is used to allocate resources to favoured groups. They tend to be hidden but are often what really drive economic policies rather than the pseudo scientific arguments and rationale that are put forward.
Could be really important piece of work and I too would be more than happy to help with proof reading and constructive feedback
Thanks Robin
Yes Robin.
Ha Joon Chang’s. 23 Things They Don’t Tell You About Capitalism has a good format.
It’s a while since I read it but if I remember correctly, each chapter starts with the “orthodox” thinking and then he explains why it is not correct.
Couple of thoughts about this proposal:
1. Possibility of crowdfunding such a project to enable Richard to edit the answers.
2. Casting the net wider in terms of people’s skills to carry the project to a wider audience eg I’m a web designer by trade, there will be be book designers, illustrators, typographers, video editors, etc
I am wondering whether to make this the focus of the donations appeal
And to appeal for help as stages are reached…
The thought occurred overnight this is the sort of thing George Soros (INET) ought to be funding and any other democratic and left leaning wealthy philanthropist.
That would be good
Anyone know a way in?
I guess it should be a web page. Maybe we should be looking for examples of web pages we can emulate.
My thoughts are that the list of questions and the answers should all be on one web page. List of questions at the top, answers below. The idea being you can either read it from start to finish, or you can jump to the question you’re interested in. A super-simple linear format. Just like a book, really.
The thing I really like about a book is, you know when you’ve finished it and you know you’ve not missed anything.
Then there will be background material, theory, advanced stuff. Perhaps that should be in other “books”.
Perhaps there should be a PDF version too.
Focussing on the area of UK tax, does anything exist similar to the following interactive tool for the US: https://www.taxjusticenow.org/#/#makeYourOwnTaxPlan?
This is quite brilliant in showing that the US could effectively remove >50% of the population from tax almost entirely if the very top 1% were taxed effectively.
The website provides all the background data and tables for free. Given Richard’s recent paper showing how regressive our tax system is, I imagine all the UK data is there, it just needs compiling up into this sort of tool.
It’s hugely accessible and easy to use, see the breakdown in tax etc.
It’s also very simplistic….
There are a lot of different opinions being expressed here, often contradictory, about format, content and audience. First we must determine the target audience, then let form follow function. I do not see the audience as being economists, nor directly politicians, but “the people”. If there is a wider appreciation of what is economically possible among the public at large then politicians will not be able to get away with their bullshit, and will be forced to learn in order to respond satisfactorily to questions. I would go further and specify the young(ish) as, sadly, the older generation (in which I am included) tend to be more fixed in their ways, as shown by their overwhelming support for the political right wing. They are more likely to be persuaded by their children and grandchildren.
There have been plenty of attempts at mass market economics before, e.g. “The Undercover Economist” and “Freakonomics” all with some success but without the mass influence which is now needed. The right wing, as exemplified by the Daily Mail, succeeds by telling stories. When the Mail tells the story of an illegal immigrant committing terrible crimes while taking benefits and being looked after by the NHS, then this becomes the norm and all immigrants get tarred with that brush. The rational left respond with statistics that show such occurrences as being extremely rare in immigrant communities, and how immigration greatly benefits the economy and all our lives, which are ignored because nobody outside the already converted is interested in statistics. If we want to get our message across we need to tell stories.
A few years ago my son and I put together a set of short youtube videos called “Political Briefs” covering a variety of topics including “Money”. I was amazed that with zero publicity we still achieved many tens of thousands of views for some of them. I have been intending to resurrect the series as a podcast (since my son, the video expert, is now too busy), the first of which is already written but not produced, called “The Economy.” I believe that it is in this form, by telling a connected series of short stories on various selected topics in the form of videos and podcasts, that we can grab an audience and awaken interest. This can be backed up by an online presence whose major objective is to answer questions. This could be in the form of a wiki, but the important feature is the ability to search and retrieve answers easily. Perhaps we have among us the expertise to provide some natural language processing interface. I can help a bit (my background is as a Software Development Consultant) but my skills are beginning to atrophy in retirement. In the fullness of time, books may follow, but still trying to stick to the central storytelling theme. Far more important as an influential market these days are games. Are there any game developers out there? Again my son would have helped, and has indeed produced such games in the past, but he is too much in demand now.
Wow…games?
I admit I don’t do gaming…but two in the house do
What was the Youtube channel?
I believe that Monopoly was originally called The Landlord’s Game a was designed to show how all property would eventually end up in one person’s hands under a rentier system.
https://en.m.wikipedia.org/wiki/History_of_the_board_game_Monopoly
You are right
The youtube channel was https://www.youtube.com/channel/UCipaUm9qjmWKQLc5S-PRSNQ
I just checked and saw that our video on Trade Unions has reached 96,000 views!
Thanks Mike
I will look
Hi Richard.
I was wondering if it would be worth keeping this particular blog/thread active for a while yet to allow more comments? There seems to be lots of great ideas coming in but other blogs/threads stop accepting further comments after a few days.
PS. I haven’t sent you a list of question headings as you suggested. I guessed you had plenty to be going in with? Things seem to have snowballed very quickly and it all is very positive and exciting. Alas I don’t think I can offer much in technical support for the project!
Nick’s list seems to be a pretty good starting place.
Will there be a place for people to submit/suggest questions going forward?
I will keep it open for a couple more days
I have had discussions with a couple of people and have tried to summarise ideas
My problem is juggling this with the day job…
I admit it would be great if someone could summarise in an excel list who said they might do what, if they did
Simple commentator name, date and time, and what they said they might do
And if anyone could summaries all the suggested topics and maybe their frequency if they are very similar that would also be useful
But I suggest you say you intend to do this first of all to avoid duplication
AND please email me – especially the volunteer list
Thanks!
This has been a fascinating discussion. I think there are a couple more points which need to be made.
1. Headings.
The headings proposed by Bob Edwards (May 5, 8:06am) need to be split up into two separate sections. Firstly, there should be “The Facts”, and secondly the implications which appear to flow from The Facts. There are really two reasons for this. As I understand it, as a non-psychologist, people tend to be more convinced by conclusions which they work out for themselves than by conclusions spoon-fed to them at the start. For example, Bob’s very first heading “— Why we don’t need austerity” belongs firmly in the conclusions, whereas a study of where money comes from belongs very early on in the work.
I said ” the implications which appear to flow from The Facts” deliberately in order to try and avoid being dogmatic. If the conclusions are presented too dogmatically, people find it too easy to reject them. The last thing that’s needed is a publication which starts looking like another political manifesto.
2. Videos
In this day and age, it would be all too close to the truth to say – If it doesn’t exist on Youtube, it doesn’t exist. It would reach far more people in video form than it would in print.
I think video is key
I am thinking that any script for publication has to be capable of being used that way…
Those who have mentioned skills in that way may be contacted!
I have experience of scripting educational videos, and of online learning design. Happy to be involved with these skills if needed (and I’ll learn heaps too).
I have mailed you
I am a scientist running a small Art Publication business. I would like nothing better than such an explanation in plain English. This site is the only source of information on Economics that I have ever found that I can engage with. It is the only source I have found that I can understand, (at least partially), and the only source that makes sense to me. If only the distilled wisdom here could make it to the public domain it could seriously influence opinion. Please, please go for it.
Thanks Stewart
I have just quoted you in an email to a publisher
This presentation of wealth shown to scale is genius. A friend forwarded it to me.
https://mkorostoff.github.io/1-pixel-wealth/
Just keep scrollin’….
“As Americans debate how and when to open the economy after coronavirus, we are frequently presented with a seemingly impossible choice between risking millions of lives and sliding into a great depression through a continued lock down. This is a repugnant lie.
The money to weather this storm while maintaining quarantine exists, it’s just a matter of finding the political will to take it.”
I wonder if you have any data viz whizzes in your readership…
It’s good
I had seen it
Is everyone aware of Modern Money Basics? I don’t know whether it is Stephanie Kelton’s project?
https://modernmoneybasics.com/facts/
I found their question and answer breakdown to be really useful. The website is well laid out and contains a good glossary, albeit tailored to the US.
They also have a YouTube channel with some nice animations including a caped crusader…
https://www.youtube.com/channel/UCKcwcb3sv8DwUEAzmOcd_NQ
Could this be a starting point?
I really like all the ideas above. I think there is something about a physical book of the right size, weight and tone, that can’t be beaten for sharing ideas.
Thanks
To be added to the resource list
There have been a few good analogies propounded here. though all analogies fail at some point! I prefer the oil in a car engine though that suffers from being too much of a closed system, but it has the advantage of being more dynamic than pots with money being poured in and emptied out. It is better as a “total loss” lubrication system, where all the oil that is poured in exits to some repository and has to be replaced. I expect some of us can remember cars like that.
The amount of oil needed depends on how fast the engine is going, if you put in too much the pressure build until you blow a gasket and start leaking everywhere so you have to put even more in, which is inflation, If you supply too little you will have to slow down or friction causes you to grind to a halt. More or less oil does not cause the engine to go faster or slower, but it has to be balanced. The oil circulates around the engine doing useful work before finally being removed by means of taxes or bonds. Taking out too much over and above the norm into private accounts in tax havens also has a deleterious effect and does have to be replaced from the ultimate source, the government.
Whatever the analogy and whichever audios, visuals and books result, they must be understood by the totally uninitiated. Before too much is set in motion various models should be tried in various scenarios to ensure that they are easily understood. For example, videos are sometimes ok but they do not allow for studying the detail before going on to the next point.
It may be that more than one resource will be the outcome.
I can foresee one for schools, say six formers, and another for local discussion groups and a third aimed at policymakers. Maybe that’s too ambitious.
If there was funding it would not be….
But any funding is going to have to come from here now
I may discuss that tomorrow…