Apr 22, 2020
Welcome to episode 25 of activist #MMT. Today I talk with third-year MMT activist and Scotland resident, James Feal-Martinez. James is an electrical engineer with the British Navy, with which he has served for 20 years. In 2018, a serious injury left him homebound for the first time in many years. After binge watching a large amount of movies and television series, he turned to reading philosophy and then economics. Despite having no background in economics, he could tell that neoclassical economists “make some very strange assumptions," resulting in predictions that are wrong “again, again, again, and again.” Worst, those incorrect predictions are scaled up by these same economists to apply to the entire economy, greatly magnifying the errors.
James was determined to find economists who interpreted and saw the economy properly, first leading him to New Zealander and fellow engineer, Steve Keen. Although Keen has some important disagreements with Modern Monetary Theory, he is largely in agreement with its core tenets.
James and I spend much of our time discussing our own lives and the state of the world under the new normal of the coronavirus health crisis. We talk about how, although internet tools such as Chromebooks, Google Classroom, and Kahn Academy may be less than ideal during normal in-person instruction, they allow schools to function as normally as can be expected during this crisis. They do this by providing regular structure and socialization opportunities for teachers, students, and parents; not to mention a regular paycheck for teachers and the families that depend on them.
Like war and climate change, the coronavirus pandemic is truly a crisis for all, which uniquely includes the privileged. The “how are you going to pay for it?“ question is always asked when it relates to something intended to alleviate suffering for the disadvantaged. When it comes to the potential suffering of the privileged during a crisis such as this, the question is cast aside for programs requiring orders of magnitude more spending by central governments. An example brought up by James is how the UK Chancellor of the Exchequer (which is the equivalent of the United States Treasury Secretary) introduced £350 billion pounds of spending for crisis relief. This is on top of the existing budget. The media has not asked how these funds would be “paid for.“ Yet only two months ago, this same media incessantly asked how the Labour Party’s manifesto would be paid for, despite its requiring only around £400 billion in spending over ten years, which is about 11% in comparison (£400 billion over 10 years is $40 billion per year, versus £350 billion pounds in a single year). It is possible that even this is a substantial over estimation regarding the cost of the manifesto.
We end by discussing a story I wrote to introduce MMT to kids. The story was partially inspired and encouraged by James late last year, after he read a Twitter tutorial I created on the subject of reserve accounting. I have since presented the story to an eighth grade math class. I tell James about how I have decided to change the beginning of the story, and the insights those changes reveal.
Other topics, concepts and resources discussed:
Before getting to my conversation with James, I’m going to tell you the full kid story. Note that this is normally an interactive conversation, so I am going to insert some common responses that I have received.
When you play Monopoly, what’s the very first thing that happens? You choose a banker, and then what must that banker do? Does he have to go and find people that played the game months ago, in order to get enough money to play with? Or does he just...give out the money?
Do movie theaters or sports stadiums give people newly created tickets? Or do they have to first collect old tickets from former patrons? A theater could give every single patron five thousand tickets. They could. No problem. But there are only so many seats in the theater.
(This story was inspired by a kid I met who told me he got in trouble for stealing hundreds of dollars from his parents. He did this by taking their credit cards and using them for “in app“ game purchases.)
Imagine you have no money. I mean no money. Not in your bank account, not in your wallet, not in your piggy bank. Nothing. You and your entire family are totally broke.
Then one morning, you wake up and you are granted the power to create money, whenever you needed it. Just you. You go into a store, find something you want and it’s really expensive. You go to the cashier, stick out your hand, palm up, and – pssssht! Money appears in your hand. Just enough to buy what you want.
The only rule is that you’re not allowed to keep it; you can only spend it. You can only give it.
The question is: if you had this power, does it really matter that you **have no money**? Of course not. Who cares? You can create it whenever you need it.
So what would you do with this power? Your first instinct is probably to spoil yourself. By yourself lots of cool toys, gadgets, and technology. Maybe take all of your friends on a trip to Disney World for a couple of years.
How would you use this power to help? Really help. Pay off your mom and dad‘s house and cars. Pay off the credit cards and loans for all your friends and their families. Maybe provide all the kids in your school free lunch and school supplies for a whole year.
But why stop there? Your teachers buy lots of school supplies with their own money, so why not help all of them? You could buy a home for every homeless person in the entire town if you wanted. There’s a lot of good things that you could do.
Now. How could you use this power to hurt people? (What do you mean, hurt people? How could creating money hurt people???) Well, how about finding the most awful and evil kid in school and giving them $1 billion and nothing to anybody else. How about, early in the morning, you go to the school cafeteria and buy all the food and then throw it in the dumpster? Or all the food at the entire grocery store? How about going to a busy toy store and giving every customer $10 million at the very same time. They would all start fighting because there aren’t enough toys in the store for them to buy!
But the worst thing you can do is to take a trip to the city and find the most destitute, desperate homeless person you can. Someone who’s in really bad shape. Talk to him. He tells you he’s been homeless for a long time, living in his broken car with his wife, 10-year-old girl, and little baby boy. They’re always cold, always hungry, his kids have nowhere to play, and when they get sick, they can’t even go to the doctor.
You listen to their story and it’s really sad. You even cry a little bit and hug each other. Then you tell him, “I really wish I could help you but I can’t. I don’t have any money. I’m so sorry.“
I mean, you’re not lying. You don’t have any money. But you sure are leaving out something important. Since he doesn’t know that you have this power (and how could he, since you’re the only one in the world who can do it) he’s not angry, just sad and disappointed. He thinks you’re also just sad and disappointed.
How do you think he would feel if he realized that you did have this power?
For an overview of Modern Monetary Theory (MMT) with many reliable sources to learn more, here is a good place to start:
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