Jul 30, 2020
Welcome to episode 39 of Activist #MMT. Today I talk with Clint Ballinger (Twitter/@clintballinger) about his 2019 book, 1000 Castaways: Fundamentals Of Economics [Amazon, Barnes & Noble]. Clint grew up in Texas and has lived in Bolivia, Costa Rica, the Republic of Georgia, and China. He now resides in Australia. Looking back on the years he wrote the dissertation for his economic geography PhD., Clint says, now knowing MMT, that of the many academic papers he read written by mainstream economists, only five percent of them have what he would still consider as useful and accurate.
We spend most of our time talking about Clint’s book, but first we discuss a common experience we shared, which is to independently research and compare Monetary Reform and MMT. I did this with the American Monetary Institute and the United States Green Party, and he with Positive Money in the UK. (Links to related articles written by both of us, can be found in the below resources.) Both MMT and Positive Money agree that the banking system needs serious reform but Positive Money believes that MMT doesn’t go far enough. The reform recommended by MMTers such as Warren Mosler and Randy Wray would shrink the banking system by around 90%. Clint believes this to be sufficient, and that Positive Money and MMT should join forces at least until MMT’s recommendations are fully implemented.
Regarding his book, Clint and I talk about what kinds of programs and services can be successfully implemented and managed only by the central government (which he calls System Two. The banking system is System One). The concept revolves around a 2014 post by June Sekera, which says that networks as a whole are inherently inappropriate for for-profit corporations. Networks include communication systems (internet, phone, and postal mail), transportation (highways and roads) and energy (plants, pipes, and wires). In addition to networks, only the central government can successfully implement programs and systems deemed so important that the cost and consequences don’t matter. This includes libraries, museums, and parks; clean air and water; safe food and drugs; 911 service; and surviving existential threats such as global pandemics, foreign attack, and climate collapse.
The major lesson I take from Clint's book, however, is that at the federal level, the decision to do something is the funding. In the United States, this means that the decision is the votes in each house of Congress and the President’s signature. As Clint says, "When the gavel hits the desk and they say we're going to build a bridge, that’s the funding."
Once law, currency is issued by the central government in order to communicate that decision to the non-government sector (meaning, private citizens in the economy). This is so they know what to do, what to do it with, and how and when to do it. (At tax time, that same currency serves as proof that it was done – or at least, someone did something.)
Knowing this, the "How’re you gonna pay for it?" question is revealed to be nonsensical (and the answer even more obvious: "it’s funded by the votes").
Taking it one step further, a federal representative expressing concern over inflation is nonsense on top of nonsense.
Do you want to do this program or not? Do you believe healthcare is a right for all or do you not? As a federal representative, you have access to almost any expert in the country. Have you had these experts analyze the practical, resource, and inflationary impacts of that program? What was their conclusion? Not knowing the answer can only mean that you have not asked the question. Therefore, how can we conclude anything but: you don’t care enough about the problem to even look into it?
Finally, we as citizens must use this knowledge to demand our representatives make different decisions. If they won't do it, then perhaps we should replace them with someone who will – or become that someone who will.
This is part one of a two part episode, and part five of a larger five part series on MMT versus Monetary Reform [Episodes one and two are with Joe Firestone, three and four with Monetary Reformer Dan Sullivan]. Enjoy.
Resources and more
Here is my review of the book:
A lot of insight in a small package.My name is Jeff Epstein and I’m host of a podcast called Activist #MMT. After reading Clint’s book twice (in preparation for an interview we just recorded), all of the major concepts that I've learned during my just-over-two years of studying Modern Monetary Theory (MMT), now feel more tightly glued together. His island of a thousand citizens allows the reader to see the entire financial system at once, something that popular economic coverage makes (intentionally?) extremely difficult. For the first time, I feel a rudimentary understanding of international trade and exchange thanks to a small set of neighboring islands near the end of the book, each with a different set of capabilities and resources within its borders. The book also provides what I see as a particularly unique take on the job guarantee.
I'd consider 1,000 Castaways as one of the more important non-academic reads (at 107 pages, it only took me around three hours to get through) for those wanting a solid overview of how our economic system – and all "modern" economic systems over the past ~5,000 years – actually work.
- An interview with Clint on Macro and Cheese from December, 2019.
- Clint's old and current blogs.
- Australian economist Phil Lawn's review of Clint's book, stating that once a society reaches a certain point (such as when the population reaches millions or billions) then ecological limits must be considered.
- Baby-Sitting the Economy by Paul Krugman (1998)
- Heteconomist post: Exercising Currency Sovereignty Under Self-Imposed Constraints
- Clint's post about the myth of barter and why he chose to do chapters one and two in the order he did. Another regarding myth of barter as it relates to David Graeber's book.
Positive Money and Monetary Reform
- My article describing the core differences between MMT and Monetary Reform.
- Articles by Clint:
- Positive Money's response to Clint's 2014 post (2015): TO WHAT EXTENT CAN POSITIVE MONEY AND MODERN MONETARY THEORY JOIN FORCES?
Books and articles by Fred Lee:
- Microeconomic Theory: A Heterodox Approach
- What if There Are No Conventional Price Mechanisms? (2013 post on New Economic Perspectives)
- Microeconomic Theory: A Heterodox Approach (intro online, PDF)
- Post Keynesian Price Theory (PDF, 1999)
#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 layperson intro with many expert sources listed at the bottom.
- On Twitter: My massive pinned tweet with 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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