As I noted on Saturday, I gave a talk on the above theme on Saturday, for which a YoutTube will be available in due course.
In the meantime, I realised that the practice recording that I made in advance of that presentation would make a better podcast than a stripped-down Youtube recording might.
In the presentation, which is longer than I usually plan for this podcast, I explain why the left of UK politics needs a new economic paradigm, what that paradigm might be and how the money might be found to fund it, all of it in fairly straightforward terms. I suggest £100 billion a year could be found to sound the society we want.
I hope some politicians are listening.
I have no transcript for this podcast: the notes that supported it are, however, here.
NB: I admit that I also used this podcast to learn a great deal about editing. I have always avoided sound editing, usually re-recording a whole piece to correct an error rather than make changes by editing. I think I have definitely overcome that now. I will be interested to hear if people can spot the joins.
There is no music as yet, but I am in discussion with a composer on this issue.
I have also discovered as a result of a weekend watching far too many YouTube videos (and thank goodness for YouTube, which is the closest thing to life-long learning that we now have) that AI does have a role to play in editing.
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Really good podcast!
I started re-reading L. Randall Wray’s book “Why Minksy Matters” last night and I realised that I missed out on understanding the implication of Minksy’s famously memorable statement that “Stability is destablising.” It completely contradicts right-wing Libertarians’ propaganda that the market always easily achieves equilibrium, that it adjusts without causing too much trauma and in the best cost-efficient manner. It’s this un-nuanced belief that leads to right-wing thinking that only goods and services produced by the private sector market have value. Minksy realised that it’s only government institutional rule making and money creation capacity as lender of last resort and injector of spending that keeps the private sector market show on the road especially after it generates one of its “Minsky moments” a predictable and periodic financial crisis.
Indeed
And thanks
Good reminder
Personally, I think the starting point for overturning neoliberal orthodoxy is not MMT, but Minsky. MMT has already formed depressing religious cults (a deep and troubling characteristic of Microeconomists, who seem to think they own the discipline); and whom can be detected because they too readily claim suzerainty over a Holy MMT script they are eager to own as an ideology.
You can read Minsky without the fetishistic comedy; and the usable substance of MMT is notably shared by his disciples, but rarely the dogma. My own preference is Mehrling, a Minsky disciple who has sympathy for MMT, but appears studiously detached. He studies how money actually flows; where it comes from, where it goes. He demonstrates the power and function of money, through the principles of double-entry bookkeeping. It is an approach that restrains the oppression of ideology, to which economics is sadly so prone.
More on this tomorrow
Here’s Perry on Minsky:-
https://sites.bu.edu/perry/files/2019/04/The-Vision-of-Hyman-P.-Minsky.pdf
Oh God!
Another book.
OK – I submit. I’ll dig it out.
Perry Mehrling – yes – I don’t find his writing easy, but if you stick with it, you enter oases of clarity that makes it worth it. I prefer Christine Desan myself, because money is also a project of history. I’ve noted here the odd negative sounding comment on the ‘creation theories’ of money and I don’t understand why really. Creation stories link in with Kelton and her accurate assertion about sovereignty seems to me to be no different to Mehrling’s hierarchy of money. Creation theories are part of remembering as Milan Kundera told us ‘“The struggle of man against power is the struggle of memory against forgetting”.
And we must also recognise that capital’s desire to dominate the money supply – which it does – is also an expression of an attempt to subjugate the state and by extension democracy itself (read Mirowski and Mattei for example). The two are innately connected.
And capital seems to be doing rather well – just look at the CBRA and the state of the NHS.
Minskyian economics destroys Neoliberalism or Thatcherite Free Market Fundamentalism for one basic reason Minsky discovered or realised the following:-
“… the modern business cycle is a financial cycle.”
page 31 “Why Minsky Matters” L. Randall Wray
This is given explanation further down the page where Wray says:-
“… modern investment is expensive and must be financed – and it is the financing that generates structural fragility.”
That financing as Minksy famously explained in his Financial Instability Hypothesis goes from hedge financing to speculative and finally Ponzi. Of course the human propensity amongst some human beings to be greedy or free-ride lies behind Minsky’s hypothesis. We can see this in Britain’s over five decade long house price bubble where lax government control over mortgage under-writing standards drives the inflationary bubble. Of course UK banks prefer mortgage investment to investment in goods and services production because the collateral appears safer and they know the government no longer concerns itself much with moral hazard by its willingness to be the lender of last resort.
The notes were a very good – if daunting- summary
Please, Richard, do NOT include any music.
Someone, somewhere is bound to hate whatever you choose and stop listening. I have found myself doing that with otherwise excellent tutorials on YouTube.
But 90% expect it
And it would be very brief with no talking over it.
And it can punctuate sections in a podcast very successfully – today’s needed that
Given the level of economic illiteracy in the Uk, and the fact the BBC have a duty to educate and inform there must be an opening for you Richard to present a TV series. Like Attenborough you would reveal a hidden world, a mysterious world of finance and how we can save our future, and as your podcast shows you provide an explanation that can be understood by all.
Thanks
But I really can’t see that happening
Hi Richard, the best option for audio editing for us beginners is an app called Descript, it saves a huge amount of time. https://www.descript.com/ A friend told me about it as I have started a podcast..
It’s OK
But little use for podcasting as it is MP4 orientated
OK for transcription though
Thanks Richard agree on all points. However if as you rightly say government does not require tax money to fund public goods or services then your suggestion to use part of the current tax relief funds to fund socially productive industries to provide the society we want is unnecessary. Following your logic the government could simply instruct the BoE to provide money to the Treasury for use by line ministries to invest in ways that can provide sustainable socially desirable goods and services without modifications to the tax system.
They could
But why leave money with the wealthy who are using it inappropriately to disrupt the economy
Tax is about stopping things that should not happen, amongst other things
So, your logic is incomplete
I think the fact that governments don’t need to tax or to redistribute taxes to provision themselves is a crucial observation. In addition it is certainly true we could better utilise monies that are not put to productive use for example redirecting funds that are currently used for financial speculation and other purposes to increase the production of physical goods and availability of services but that is a separate concept I would venture.
I was talking to Warren Mosler yesterday
We absolutely agreed that governments need to tax
They don’t need to do so to fund their spending but your claim that governments don’t need to tax to provision themselves is narrow and only technically, at best, cotrrtect. Asd a result it is misleading and you are misleading yourself and others to make that claim.
Thanks for the op to discuss and exchange. This is a healthy, enriching and innovative experience. I have also discussed these issues directly with Warren Mosler. I’m a novice in macroeconomics like many but have a thirst for knowledge in recognition that understanding money and tax is empowering. I have learnt that the functions of tax include giving value to money, acting to control inflation, influencing consumption and of course exacerbating or reducing inequalities. But they do not include providing financial support for public expenditures. That was my point. My failure to mention this in my initial post was for brevity and we’re not intended to mislead anyone.
Thanks
The trouble is short cuts on this issue are the way to losing credibility
My Journey in Life has been a confusing one . At school i was more interested in trying to become a Professional Footballer like so many kids then and more so Today . To aspire to this , results in 99% failure . Then for my sins i decided to join the Army , where you literally become Brainwashed to serve a particular purpose. After 8 years i left and i have been confused ever since with this nagging feeling that something was not quite right about our Society . it seemed unfair , unjust and rigged to some extent . My first Port of Call in re-education was reading about Marxism …. Question for Richard or anyone in fact .. Does Marxism have any relevance in helping to explain Today’s Societal Problems and if not , why not ?
I then came across this Blog which i now read Daily and have done for a while , reading about MMT has been Mind Blowing ! and reading books suggested on here such as Rentier Capitalism and The Capital Order by Clara E. Mattei { thanks PSR ! } have been enlightening . The jigsaw is far from being complete and probably never will be, as it seems as a species we are so easily led and manipulated ……
I regret I do not have time to address that right now
Others might….
Thanks Richard , maybe some other time , i appreciate you are a very busy man .