This came out of some discussions I had yesterday. It summarises where I am on green economics, the Green New Deal and MMT about as succinctly as I can achieve it:
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I wish! Unfortunately the Old Guard are in control and judging by public opinion they are happy with it. Where are the voices of GND and MMT being heard? In the USA? A little. In Australia? A little. In the UK? Not at all. All you hear here is ‘How are you going to pay for it?’ How can that be changed?
I don’t know
But the problem is, as I have noted, that it seems that almost all think tanks on the left in the U.K. are obsessed with the ‘how are we going to pay for it?’ question
And that really does not help
Very good! A visual can be more powerful than simple text. Money is not the constraint! Never has been, so I would call them old beliefs or the libertarian worldview, rather than ‘order’ which implies rules.
I tend to think that the main constraints is human knowledge, or more precisely how widely that knowledge is distributed. Whether it is climate or pandemic, the knowledge of leaders and the public in choosing their leaders is critical.
A poorly educated demos is more likely to elect a populist that will lead them to disaster. That has always been part of the plan of the libertarian elites but they had not reckoned with how great those disasters would be.
Beliefs is better, I agree
Yes, I concur. Beliefs is much, much better.
Doesn’t work for me this:
Column Two omits who does the deciding of the things that are possible, who does the deciding of the constraints imposed by requiring a livable planet.
Column One omits that there are many things in reality that are not constrained by lack of money ( repealing the prohibition of khat and menthol cigarettes is desirable but money is not the problem ).
Column One also omits the reality that many things we would like to do are constrained by lack of time.
Once you acknowledge that there is an interchange between time and money as constraints, then you’re looking at a market system. And you apply appropriate consumption taxes to reflect the constraints of nature.
First, you’re trying to over complicate
Second, nature does the deciding as to what is possible, and very definitely is
Third, sure time is an issue – but it is not in what I am addressing in that diagram, I suggest
Does this mean that you don’t consider time a resource?
Interesting
I would argue that time is a resource, but obviously not a physical resource.
So continuing with this (sorry, typing aloud as it were) we get to money is a measure of resources used? Possibly not too far off the mark? And thus back to money is not the constraint, because it is used to measure the resources used, it is not the resource.
Setting money as the limiting factor (for a currency issuer of course) would be the same as telling someone that you can’t build the boat they wanted because you’ve run out of meters. (Crude example, but it’ll do)
Or play a football match because you’ve run out of goals
A fantastic diagram.
I do really like your myth busters but there will be a constituency for whom they are too “intellectual” (and that includes me, sometimes!).
This simple diagram will hit the spot for many. Thank you.
The idea is developing ….. I’ve had good feedback on this one
Yes please to more simple diagrams! And I fully appreciate just how difficult they are – BUT – if it is true it cannot (ultimately) be overturned.
Yes. And the corollary is that when modelling what can be done, start with the biophysical constraints and relationships, and assume that the money/economic mechanism will be forthcoming if the will is there.
I like this a lot. Obviously the details aren’t there but I think that changing people’s awareness will happen more as a result of very simple messages. In conjunction with the comprehensive explanations of the Myth Buster posts, I think this sort of thing can have an impact.
That’s my hope
I will think more on it
Open to suggestions
I am not the fount of all knowledge
I like it. Simple, straight to the point.
Do you mind if I share the image? (with a link to this blog as well 🙂 )
Feel free….
Do you think the right hand column might be called Sustainable Government Finance (SGF)?
http://www.progressivepulse.org/economics/we-print-money-digitally-so-says-the-fed
(Courtesy of Andrew Dickie’s comment.)
Pretty much – yes!
I like the simple message that our ambitions shouldn’t be constrained by artificial accounting constraints, but by the physical and ethical limits of needing to sustain our planet and its ecosystems.
But as someone who admittedly hasn’t yet fully internalised all the implications of MMT I was worried by the phrase “all the money we need”, not least because that allows the conventional economists to discard the approach as impractically idealistic. If I understand your explanations right, surely excessive money creation would destabilise inflation control to the extent when it would need to be limited by taxation. It would seem less inflammatory to write something like “we can find the money when we need it to do things that are possible”.
But perhaps my insufficiently flexible mind is creating the constraints: if so, apologies.
I hoped the phrasing made that clear
If we try to do the things that aren’t possible we get inflation is what it means…
OK, fair enough the planetary constraint is enough to keep the inflation constraint in check. Though I still fear you are opening yourself up to the “magic money tree” taunt which stops anyone reading the detail.
It fits nicely with what Kelton is suggesting – using our imagination a lot more with money.
I wonder how much money has been exchanged in the real estate business in say the UK and the USA since 1979 and what might happen to our efforts to cure cancer, deal with climate change or cope with Covid-19 if we spent the same amount on those matters instead?
I am reading ‘The Deficit Myth’ now and I’ve decided that if there is going to a new economic order the best way I can help realise it is if I buy a copy each for my two children (one of whom is discovering the Left but through ‘identity politics) so hopefully they might see the problem as it is. As you have previously pointed out (as has Mosler) MMT is not really about politics, its about the real world. It’s politics that has really messed macro economics up.
🙂
I have a son reading it now
I think that’s really good – spot on. The physical world we inhabit does what it does, its dimensions are known and the rules it follows are fairly well understood: those rules are at any rate not negotiable, and we rely on that for all out technologies. Money we invent. It’s make-believe, and its power lies solely in our beliefs about it. In principle- big Ifs Buts and Hows there, I know – the rules/laws it operates by can be whatever we decide they should be.
I really like these (and the subsequent one out today)
On “A lack of money constrains everything we do”
Jay-Z’s 99 Problems springs to mind:
“I got ninety nine problems but MONEY ain’t one”
As well as blogging do you write lyrics or rap, Richard? 🙂
https://www.last.fm/music/JAY-Z/_/99+Problems/+lyrics
No….
Not my style
And my teenage sons have headphones
The blessing that has saved me from years of yelling ‘turn it down’
Which was the tale of my teenage years