#53 L. Randall Wray: MMT And The Green New Deal
Jun 3, 2020
Patricia and Christian talk to primary MMT academic and author of Understanding Modern Money Professor L. Randall Wray about his early insights into the origins and nature of money and how MMT applies to the Green New Deal.
Entzun hemen: https://pileusmmt.libsyn.com/53-l-randall-wray-mmt-and-the-green-new-deal
Transcript: https://www.patreon.com/posts/37729161
[Transcript] Opening monologue for episode 53 L. Randall Wray: MMT and The Green New Deal
At the beginning there, you heard our guest this week, primary MMT academic and author of “Understanding Modern Money” Professor L. Randall Wray and we’re going to be talking to him in a moment about his early insights into the origins and nature of money and how an understanding of modern money is a vital piece of ammunition for people fighting for an urgent transformation of our economies in the face of today’s global health and climate crises.
When people misunderstand how modern money systems work, they make the mistake of thinking that taxes are the way that governments get the money they need to spend – and therefore, as nations, we can only do what we can afford in terms of money received via taxes. Viewed this way, it makes intuitive sense to think of high income earners and high-wealth individuals as (like it or not) vital contributors to the common good. If only they’d be a bit nicer and pay the government more, we could stop people dying from poverty. Or, if only politicians weren’t so venal and easily bought, we could change our tax laws and then we could afford to stop the planet burning to death.
The MMT analysis shows where the money to pay taxes comes from in the first place, whether it ends up in a slush fund, or paying a nurses salary, or paying for a prime ministerial advisor’s travel expenses on a bank holiday weekend.
Monetarily sovereign governments like the UK, the US, Japan, Canada, Australia, New Zealand (to name a few) are the monopoly issuers of their own currency. The pounds, or dollars, or yen to pay for anything, including to pay taxes or to buy government bonds can only come from government in the first place. They are spent into existence by the government using keystrokes at a central bank.
So where does that leave us with taxes? Taxation takes money out of existence as far as the private sector is concerned – so taxes function to control the spending power of the private sector as a whole – and tax bills (or tax liabilities) are issued in the first instance to get the private sector to need the government’s money and you can listen to our first three episodes if you want more detail on how that works.
So, to paraphrase Professor Wray – we should tax the rich. But we should tax the rich because they’re too rich, and not because we need their money to spend. People are suffering right now who could be helped right now. Climate change is an emergency right now that we could start addressing right now. Tying the ability to solve these urgent problems to the ability to tax the rich will have deadly consequences while we wait. Let’s make the fight for tax justice and the fight for human survival two separate fights. They both need fighting, let’s maybe just do them on different days of the week.
So before we dive in, Randy mentions his first encounter in the 1990s with Warren Mosler, the founder of MMT, who was a fund manager at the time and if you want hear Warren’s story in his own words (and trust me it’s worth it) you can listen to our episodes 20 and 21.
You’ll also hear that Warren at that time shared an insight with Randy that government bond sales are a reserve drain – and if this is your first time hearing that phrase, you can listen to the introduction to our episode 50 for the short version of what that means, but to fully understand it, our more in-depth episodes on central banking, and the interplay between central banks and commercial banks are episodes 13, 30, 31 and 43, in that order. That said, I think this episode makes sense without you having to grasp that right away.
There’s a link to Professor Wray’s paper which he co-authored with Eva Nersisyan called “How To Pay For The Green New Deal” in the show notes and, because we like to help with emotional support wherever we can, if you do happen to be a plutocrat and feeling a bit guilty, and maybe want to do something right for once in your life, let me just say that funding grassroots economics podcasts is a great way to feel good about yourself, and you can become a supporter of our show via patreon dot com slash MMT podcast, and there’s a link the shownotes. Support starts at a dollar month (82 British pence) and that gives you early access to all our episodes and access to patron only Q&A episodes – and it really does help keep the show going and put food on the table. And as a service to corrupt political insiders, we also accept large one-off donations in brown paper bags if you need to get rid of any cash that might become incriminating evidence. Message me for rendezvous details.
Anyway, whatever your status in this wonderful thing we call an economy, thanks for listening and sharing and recommending us to other people… Let’s dive in!
