Randall Wray-ri egindako elkarrizketa, 2020an

OK, Boomer. Great Again Isn’t Good Enough with L. Randall Wray


Feb 29, 2020

It’s always a treat to welcome L. Randall Wray, one of our favorite economists and guests, to Macro n Cheese. This episode is an added treat because, in a bit of a departure, Randy talks to Steve about politics and policy, looking through the lens of MMT while putting today’s issues in a historical context. Who better to bring that perspective than someone who lived through it? Maybe he wasn’t around for the Great Depression or World War II, but as a baby boomer, he witnessed first hand much of the massive growth and expansion of the postwar years and talks about what made America great and not-so-great during that period.

Randy states the only reason the policies proposed by Bernie Sanders seem so far outside the mainstream is because the mainstream has become so regressive. The ideas aren’t radical — the Democratic Party is conservative.

Steve asks him why our society is so regressive. Much of the answer lies in the rise of finance capitalthe financialization of the economy. Wall Street has its fingers in every aspect of society, yet it doesn’t produce anything, so the net value added to the economy is massively negative. Randy likens them to the rentier class. They take a percentage of corporate profit right off the top. A percentage of one’s paycheck goes to the FIRE sectorfinance, insurance, and real estate. (Obamacare is a recent example that furthered the process.) Obviously they’re not going to support democracy.

Randy says that in order to assess a policy proposal we shouldn’t ask how much it will cost. The correct questions are: do we know how to do it and do we have the resources. He and Steve go down the list, from free college and daycare, to Medicare for All, to the greening of the economy and public ownership of utilities — the answer to those questions is “yes.” We have historical examples of some major successes. We also have examples of failures, like JFK’s “war on poverty,” from which to learn and craft more systemic approaches.

They consider the likely deflationary bias of Medicare for All and Randy explains why economists are talking about offsets. This is an episode that will interest everyone who’s interested in real possibilities for shared prosperity.

L. Randall Wray is a Senior Scholar at the Levy Economics Institute of Bard College.

Iruzkinak (2)

    • joseba

      Counterpoint: MMT’s Evaluation of AMI’s Positive Money with L. Randall Wray


      An alternate title for this episode could be “Back to Basics.” It reminds us why Randall Wray’s MMT Primer continues to be a definitive resource for the Macro & Cheese community.

      This 2017 interview came about when the American Monetary Institute (AMI) published an article critiquing MMT. Randy Wray was mentioned and quoted throughout, so Steve invited him on to set the record straight — and maybe shed some light on AMI and its theory of “positive money.” If you don’t come away with a clear understanding of it, it’s because Randy himself can’t always get to the bottom of AMIs logic. It turns out they have some less than pristine methodology. It’s hard to assess the strength of their theory when you can’t pin down the theory. They don’t even produce balance sheets.

      AMI wants the Treasury to print greenbacks because they posit that the Federal Reserve is private and independent, with full control over the US dollar. Randy explains that we do, indeed, have a sovereign currency, and suggests that we read the Federal Reserve Act of 1913. The Fed is a creature of government, under the control of the Congress. Its very limited independence consists of the freedom to set overnight interest rate targets.

      It’s easier for Randy to debunk AMI’s critique of Modern Monetary Theory, and a large part of the interview takes us through the fundamentals of MMT — how money is created, the differing roles of the Treasury and the Fed, the causes of hyperinflation, sectoral balances, and why the US will always have a trade deficit. In our lifetimes, at least.

      We end with a long discussion of solutions to inequality. Since taxing the rich is politically unfeasible, Randy says a better way to reduce their wealth is to attack it at its source, where vast wealth is amassed. He wants to forbid corporations from buying back their stocks. Corporate CEOs and upper management receive outsized compensation in the form of stock options. Corporations spend more on stock buybacks than on investment in plants and equipment, which would create jobs. The buybacks raise the value of the shares, then the CEOs exercise their stock options for huge amounts of money. There’s no reason to allow it.

      This is an episode you’ll want to listen to right before trying to explain MMT to your uncle. Better yet, send him the link.

      L. Randall Wray is a Professor of Economics at Bard College and Senior Scholar at the Levy Economics Institute.

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