Oct 29, 2020
Welcome to episode 52 of Activist #MMT. Today I talk with one of the original developers of Modern Money Theory, L. Randall Wray. Dr. Wray tells the story before the story: his life before meeting Warren Mosler and Bill Mitchell in the Post-Keynesian Talk or PKT email forums in 1996, where MMT came to be.
Dr. Wray originally set out to be a fourth grade elementary school teacher and did his student teaching in Mexico City. Since the OPEC oil crises made it difficult to start a teaching career, he instead got a job in solid waste management in Sacramento County, California. He got the job thanks to the Jimmy Carter administration's Comprehensive Employment and Training Act, or CETA, which was a New-Deal style public-sector job creation program. It was here where he had the opportunity to take free college courses, but only if they somehow applied to his job. His boss suggested he take some courses in economics, which he did at Sacramento State College. Dr. Wray said that he really liked the mainstream courses he took... because they took so little thinking, as long as you could do a bit of mathematics. He says he immediately knew how unrealistic it was, and to such an extent that he felt it wasn't even worthy of choosing a garbage truck, which happened to be part of his subsequent job at the Sacramento County Solid Waste Facility under the Governor Brown administration. He took every course he could, in both mainstream and heterodox, and despite still wanting to be an elementary school teacher, he decided to try a PhD. in economics. He ended up studying under Hyman Minsky, who he was told was "the best Keynesian there is," at Washington University in St. Louis, Missouri.
We end today's episode by discussing Dr. Wray's November 2019 Congressional testimony, which was partially in response to the March 2019 Republican resolution to denounce MMT. We look back at a particularly unfriendly set of questions he had to endure, and how the hearing that was supposed to contain many friendly faces, due to a last-minute vote, unfortunately had fewer than expected.
Here's the full audio of the 2.5 hour hearing (and the video where it comes from), and a fifty-minute edited version that I believe will be of interest to MMTers (and the video where it comes from). The latter contains all of Dr. Wray's testimony, plus interesting (and painful) statements by Congress members on both sides of the aisle.
Finally, we discuss his written testimony, as submitted in advance. This is a unique document written exclusively to a mainstream audience, identifying and validating their fears of deficit and debt and then slowly walking them, step-by-step, to exactly why deficits are not fearful in the way they think, and that they are largely not even under their direct control as members of Congress. Dr. Wray calls it the best, strongest case he's ever made using data.
In part two, we move on to some general MMT questions, and especially focus on two subjects: the real meaning of the word productivity, and an overview of the entirety of MMT specifically from the Kansas City point of view. A full introduction will also be included before part two.
Many resources, both related to part one and two of this interview, can be found in the show notes, including the full audio to the hearing in which Dr. Wray participated, and another, both in audio and video formats, that contains only highlights I believe will be interesting to MMTers.
Note: Before we get started, two small corrections: Dr. Wray wanted me to mention that he believes Warren Mosler's initial undergraduate degree was in fact, engineering. In addition, from Dr. Wray: "The garbage trucks were for Sacramento County solid waste, not the California energy commission--where i projected energy use in the Ca agriculture sector."
Resources
- MMT: REPORT FROM THE FRONT, parts one, two, and three.
- A direct link to the full video of the congressional hearing, and Dr. Wray's written testimony, which includes a question by Minnesota representative Ilhan Omar, and a detailed response
- Dr. Wray's July 2020 paper, The "Kansas City" Approach to Modern Money Theory and a a 2018 post that is a kind of precursor to the KC paper.
- "It is irrational to fear deficits more than we fear the annihilation of human civilization."
- His 1997 paper, which serves an excellent introduction to the MMT-JG guarantee, "Government As Employer of Last Resort: Full Employment without Inflation"
- The two MMT-resource-posts inspired by my conversation with Dr. Wray:
#LearnMMT
For an overview of Modern Monetary Theory (MMT) with many reliable sources to learn more, here is a good place to start:
- On the web: My large set of resources with many expert sources and layperson tutorials.
- On Facebook: Follow this podcast :) The pinned post contains the above web-article. Also, the pinned post on Modern Monetary for Real Progressives contains a wealth of information.
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