I listened to the BBC Radio 4 programme ‘The Magic Money Forest' last night.
I will save you the time doing so. This was a profoundly pro-economic establishment view of the economics of deficit that focussed on Robert Chote (the ex-IFS leader who ran the Office for Budget Responsibility for a decade and who got every forecast it made seriously wrong by always assuming everything would go back to ‘normal') and Philip Hammond (yes, that one) telling us that we do have a debt problem and that it is critical that at some time it be addressed. That would seem to require repaying debt, as they see it.
Andrew Sentance whined, as usual. I have a strong feeling that the quotes from Danny Blanchflower were chosen to mute his views. Miatta Fahnbulleh From the New Economics Foundation provided a Keynesian voice. Torsten Bell from the Resolution Foundation was anodyne. Dame DeAnne Julius wanted interest rates to rise significantly, because that would be fair to the owners of capital. The interests of those in debt were not mentioned.
And after 24 out of 27 (frustrated) minutes they finally got to MMT. The quotes from Stephanie Kelton were of less than 30 seconds duration. There was not enough time to hardly explain a thing. Then Robert Chote was given much longer to mansplain it instead. His argument? It was not modern. And it had all been said in the 30s and 40s. And all it said was put resources to use in the economy, and we knew that anyway.
Except, of course, it was obvious that we do not, because as the presenter, Dharshini David, said, they could find no one to really support it and it was too contentious to be considered. So very clearly it must be different, or it would definitely not be contentious at all. Chote was dissembling then, and the BBC were at best ducking the issue.
And in this way is the groundwork for austerity laid.
Deeply depressing.
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They are laying ground work for a wealth tax under guise of equality and paying for pandemic (perhaps also brave patriotic British pulling their all together to make a sovereign worthy success of Brexit). It’s true purpose will be to increase inequality, enslave us and push us back to more feudal society
Also depressing is the fact that there’s not even any point in complaining because the BBC do no wrong and in any case, as is becoming more and more clear, they are part of the Government propaganda unit – as they have always been, but more surreptitiously. Tom Mills explains in The BBC: Myth of a public service. (radio 3 and sport aren’t bad, but news, politics and economics are dire)
Has any major media organization consistently promoted MMT views?
Any suggestions?
No, none has
Don’t think it was so depressing. People are worried about money because that is what people usually worry about, they this cant help transposing that worry onto the national finances. We just need to wean them of their security blankets. I suggest we carry on saying the right things and invest in some worry beads for those who want to worry about the so called nations money problem.
The biggest fallacy for me in that programme was Hammond. The idea of having a “fiscal headroom” is just plain daft and has been discredited several time since the idea was mooted. As Kelton says the goal is balancing economies, not balancing budgets, so Hammond is putting the cart before the horse. Some years will need big deficits and some years will not, no big deal ,there is absolutely no need for fiscal buffers or headrooms or govt savings or whatever they want to call it. Fiscal headrooms are utterly and entirely pointless. Like panic buying toilet rolls and filling the house with them when there was never a shortage, I can just go out and buy some when I need them.
We did indeed see MMT type solutions in the 30 s and 40 s for good reason so that’s not even a valid criticism. The financial crash of 1929 and ensuing depression cause much reflection on what to do about it. Then came WWII and all that was forgotten and we came into a post world Bretton Woods system of the Fed becoming the worlds central bank, that only lasted so long , we did largely get by in a fairly benign economic/peaceful period(bar the 70 oil crisis), but eventually it was allowed to explode in 2007/08 as it did in the 30’s. So we are back to square one and all those alive in the 30s and 40s have long gone and the people we have in charge now have forgotten all those hard learned lessons. It is up to us to now hand out the worry beads and enlighten them that those 30 and 40s solutions were in fact the right ones for the time ,as it is now.
More a case of their not caring, I’d suggest. Many currently prominent would sink without trace were there not such profound inequality in the culture.
They could find no one who really supported MMT? They can’t have looked very hard, given that the Bank of England essentially accepts it correctly describes the way money is created and used in the economy. It can’t be trite and bonkers at the same time. I guess no one asked you to contribute to the discussion, Richard? How peculiar.
Your recent single threat – https://www.taxresearch.org.uk/Blog/2020/12/12/macroeconomics-money-and-post-brexit-recovery-all-in-one-twitter-thread/ – is probably the best simple one-page explanation that exists. I can easily see that turning into the backbone of a radio programme. Has Dharshini Dave seen it?
I was not asked
The fact that you weren’t, Richard, is clear evidence that the programme was shockingly weak, biased, or most likely, both. Quite why the BBC is so indulgent of Darshini David, I can only guess. She is in my opinion either gullible, ignorant, or under the influence of some hardline neo-liberal “think-tank”. Or, the BBC management is. Take your pick, everyone.
As you and others have correctly pointed out, MMT is little more than a description of how a modern monetary system works. Progress has been made (see the Fed recognition) in shifting the dialogue but the single biggest problem facing a wider understanding of how the monetary system works is that fact that (both sides) wrap what should be a simple debate in unnecessary and unhelpful political baggage. The job of anyone who understands MMT is to explain it clearly in an apolitical manner and without the hyperbole.
I am trying…
It’s fairly easy to understand why the UK is in such a mess. Far too many people brought up to believe they owe no obligation to anybody else. This is why at rock bottom they can’t understand money or rather their sovereign currency.
Technically it’s a debt asset the transactional quality of which is interim before its retired.
More plainly it’s a Community Service Pass which helps you avoid turning up and providing your labour for free to clean the toilets in the Houses of Parliament or help some old person with severe dementia dress themselves for example!
Indeed it completely bypasses most people that it was the need to provide community service that spawned a sovereign currency which then generated the market which in turn enabled private enterprise capitalism!
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3557233
There is a really important point here, and Desan is extraordinarily enlightening in her ‘thought experiments’. It is noticeable that in money it is double-entry and law, rather than economics that provides the most illuminating insights. The observation here I wish to emphasise is very neatly summarised for this forum by Desan by identifying money as sovereign debt, which is enhanced in the public’s hands as cash: “because each of them represents a legal initiative that fundamentally reconfigures a society’s political economy. Crucially, Desan goes on: “In that moment, money departs its reputation as a neutral technology and the market loses its claim as the product of private choice”. And there is the dagger in neoliberalism’s heart.
Neatly put
Yes, in other words it is the latent capacity of money to improve society as a whole – the collective – is that which is negated by the neo-liberal view that money is just a matter of ‘private means’ and that the market only exists to help those who see it that way to keep it that way.
From what you say any pretence of “balance” in BBC reporting is completely abandoned if Stephanie Kelton only got 30 seconds out of a 30 minute programme (1.67%) Far worse than previous years’ discussions on climate when they used to drag in a climate change denier to make a balance of 50:50 despite the fact that for decades over 95% of climate change scientists believed that climate change was a grave threat to our survival.
I dare not listen to it.
And I’m furious.
I look forward to when the BBC is sold off.
Netflix offer more genuine alterative content than that bunch of idiots at the BBC.
They gave more air time to a discussion about Strictly Come Dancing!!!
The BBC:
Broadcasting
Banal
Crap
Stick a fork in their arse and turn them over: they’re done!
No-one to comment on MMT !!! They obviously don’t do research anymore.
Or they do the research in order to decide which aspects to leave out.
I wish I had read this blog before sitting through the broadcast just now on BBC Sounds.
Here’s the complaint I wrote to the BBC:
This programme was not balanced in it’s reporting of MMT. Most of the programme was devoted to debating ‘Austerity Economics’ – these issues have been aired time and again over the past 10 years. The economic expert on MMT, Stephanie Kelton, was given at most 30 seconds towards the end of the broadcast. When she started to get into the nuts and bolts of MMT – the programme cut back to a previous contributor who gave a waffled explanation of why the theory doesn’t work. The narrator then dismissed MMT as a fringe idea, which is not considered by governments.
I was looking forward to a considered presentation of the pros and cons of MMT but this programme skimmed over the issues it set out to address.
Thanks
@ Richard,
Try not to be too depressed.
The argument goes that firstly they ignore you, then they try to ridicule you (Weimar Republic, Zimbabwe etc), then they say that you’re not saying anything new, then finally they agree with you but they claim they knew it all along.
So we’re well past the ignoring stage. There’s still some attempt to ridicule but it looks like we’re into stage 3. So just one more to go!
🙂
I find Al Jazeerah reporting factual and comparatively unbiased.
Seldom use BBC nowadays.
Meanwhile, in the USA (current national debt $27.5 trillion):
“Airlines in the US will get another $17 billion taxpayer-funded bailout if the $748 billion “bipartisan” stimulus proposal that the four most senior Congressional leaders are discussing this afternoon makes it into law”
https://wolfstreet.com/2020/12/15/congress-to-pass-17-billion-bailout-of-airline-shareholders-bondholders-to-top-off-prior-bailout-industry-applauds-airline-stocks-jump/
As I said on an earlier comment, I feel it’s important to understand why MMT is actively marginalised. It’s not simple resistance towards a usurper challenging tradition. Rather it’s two crucial features of MMT which strikes fear into the hearts of the Tories. The first is that it removes the ability to claim the unaffordability of decent, caring policies e.g. welfare and falsely claim the need for austerity. The second is that provides an incredibly powerful election weapon against Labour: that they will ruin the country with wildly unaffordable policies. (Remember how Andrew Neil tore into Corbin who had no idea about MMT?) So supporters of MMT have a massive mountain to climb. We are fortunate that Richard is leading the battle here. Thank you!
Sorry, Corbyn not Corbin!
Radio 4
11.00pm
Today 16th December.
Explaining how the government turned on the money taps.
Is it a repeat of the article above?
I suspect so
It was. 🙁
Today’s ruling by the Supreme Court in favour of the £14 billion third Heathrow runway seems to be a test of the Government’s economic policy. If, as likely, they eventually get the go-ahead they will splash the cash with not a thought for the need for fiscal constraints, exactly as they have for HS2. Ironically, their reasoning is pure MMT – that it will benefit the economy so that the Debt/GDP ratio is not raised! Which seems to suggest that a select few in the treasury understand MMT perfectly well. But they use it when it suits them and deride when it doesn’t. Par for the Tory course.
Indeed, this is profoundly depressing news regarding the fleeting mention of MMT in the said program; yet hardly surprising given the orthodox ‘frames of reference’ the BBC employs across many issues.
Funnily enough, I was talking to my stepdaughter last night, as a follow-up to your summary of MMT which I forwarded to her on Sunday. She is very excited about finally gaining a powerful insight into the creation of money; and more importantly the game changing implications that MMT provides for a future ‘ New Society.
We are in the process of forwarding your ‘Forty years in four hours’ summary to at least 2000 contacts that we have. I live near Malaga and am explaining MMT to people in appropriate conversations
whenver possible. I am finding that people from all walks of life are very interested in the creation of money and what the national debt is etc. Clearly, many people are looking for new ideas and solutions. Therefore, for these kind of reasons, on one level I see your advocacy being in the vanguard of a grassroots movement that will initiate the debate that is needed to challenge the old orthodoxies of capitalist society and its’ dominant ideology. I feel your work is redefining the ‘art of the possible’ and conveys the message that it doesn’t have to be this way. Pass it on!
Thank you
And good luck!
Can I just say though that if you can, buy Kelton’s book and give it to people as a gift because that is what the Deficit Myth is to this debate – a gift.
The goal is it not, is to reveal the facts – the realities of money creation, so that we can then engage properly with the choices that are currently being made (which are bad ones), so that we can be in a position to demand better for ourselves and each other?
Reading a book like Kelton’s (and Desan’s paper) makes us begin to see what is actually possible.
As things stand, the rich are just keeping money to themselves when as even Marx noted, the power of money benefits everyone – and as a public utility – so it should!