(https://twitter.com/MMTpodcast/status/1377314444007641093)
MMT Podcast (Christian Reilly)@MMTpodcast
Out today!
MMT Podcast ep 94: A Job Guarantee For Iceland
@PatriciaNPino & Christian talk to economist & alternate member of the Supervisory Board of the Central Bank of Iceland Olafur Margeirsson (@IcelandicEcon) about his Job Guarantee proposal & more
https://pileusmmt.libsyn.com/94-olafur-margeirsson-a-job-guarantee-for-iceland
Global Institute for Sustainable Prosperity – GISP
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#94 Olafur Margeirsson: A Job Guarantee For Iceland
(https://pileusmmt.libsyn.com/94-olafur-margeirsson-a-job-guarantee-for-iceland)
#94 Olafur Margeirsson: A Job Guarantee For Iceland Mar 31, 2021
Patricia and Christian talk with economist, writer, real estate market strategist and alternate member of the Supervisory Board of the Central Bank of Iceland Olaf Margeirsson about the economy of Iceland and his Job Guarantee proposal.
Follow Olaf on Twitter (@IcelandicEcon): https://twitter.com/IcelandicEcon
Olaf’s writing:
The State Can Afford This – But Should It?: https://sibs.is/fraedsla/greinar/rikid-hefur-efni-a-thessu-en-a-ad-gera-thad/
Iceland: We Need to Talk about Unemployment – and a Job Guarantee: http://www.global-isp.org/wp-content/uploads/PN-122.pdf
Olaf’s blog: https://icelandicecon.blogspot.com/
Transkripzioa
(https://www.patreon.com/posts/49267705)
[Transcript] Opening monologue for episode 94 – Olafur Margeirson: A Job Guarantee For Iceland
At the beginning there, you heard our guest this week, economist, writer, real estate market strategist, and alternate member of the Supervisory Board of the Central Bank of Iceland Olaf Margeirsson, and in a moment, we’re going to be talking with him about the economy of Iceland and his Job Guarantee proposal.
In the conversation, you’ll hear Olaf mention the UMKC buckaroo, which is a currency launched by the University Missouri Kansas City, and it’s a great way into understanding modern money if you’re new to it.
(Ikus Our episode 20 with Warren Mosler on the UMKC Buckaroo (starting at 13:48): https://www.patreon.com/posts/28004824)
The currency itself, the actual buckaroo notes, are, just like all manifestations of fiat currency, intrinsically worthless pieces of paper. So the challenge, as Warren Mosler, the founder of MMT puts it, is to find a way to “turn litter into money”.
The way the buckaroo works is that in order for students to get their grades at the end of a semester, they have to pay 20 buckaroos to the university, who then get to decide what students have to do to earn buckaroos, and in this case the university opted for volunteer work at various community organisations.
So in addition to supplying the community with student labour, this exercise is aimed at showing students the difference between the issuer of a currency and the users of a currency. For the issuer, the university, there’s no shortage of currency, it’s literally spent into existence. The university could’ve chosen to pay students in something they had no control over the supply of, like say gold, but then their capacity to further the public purpose would’ve been limited by an external constraint, rather than the will of the community.
Or the university could’ve chosen to use blades of grass as its currency, but then of course the students, the users of the currency, could just grab what they needed to pay their tax bill from lots of places rather than do work to provision the community, which would’ve defeated the whole purpose of the exercise.
So two conditions that turn litter into money are: one – that the supply of currency tokens is completely under the control of a monopoly issuer, and, two – that the issuer can impose obligations denominated in those tokens.
And in this case, the users of the currency, the students, have to get buckaroos and pay them back to the university to avoid penalties, and the university, the issuer, because it’s a monopoly issuer (and monopolists are price-setters) – the university defines what the currency is worth by saying what the users of the currency have to do in order to get units of it. And since the day it was launched, the value of the Buckaroo has always been defined as one hour of student labour.
Students who don’t want to work for buckaroos can buy them with other currencies from other students who’ve earned more buckaroos than they need to settle their tax obligations, and in the decade or so after its launch, the value of the buckaroo actually increased from five to fifteen US dollars apiece, so this underlines how an internally stable currency, fixed to the value of labour, with a zero interest rate policy, ie the currency issuer doesn’t offer a guaranteed rate of return to savers of the currency – a currency like this can not only strengthen against other currencies, but can even outperform the stock market. And you can hear more about that from Warren Mosler in his own words, in our episode 20.
This university-issued currency works in the same way as many state-issued currencies, such as those of the UK, the US, Japan, Canada or Australia.
In these cases, the state needs to provision itself, and so to bring resources into public sector use, it lays on a tax denominated in its unit of account, its dollars, its pounds, its yen, its unique tokens which no-one else is allowed to issue. And this tax liability creates a nation of currency users, people who need to sell their time and labour to get pounds, dollars, or yen to pay their taxes with, and the government can then spend its otherwise worthless pieces of paper into existence to provision itself.
If you’re new to this, I know it feels like I’m saying that it’s just pure coercion driving this model of how and why money comes into being, and I know that people of all political stripes hate coercion. But consider that the story starts with a state that needs to provision itself, and I’d argue that whether you’re an NHS-loving extremist like me or a libertarian who needs his (let’s face it, it’s always a he) property rights enforcing – both of those situations require some level of governance, which is where the need for collective action arises. So I’m not arguing that governments should or shouldn’t provision themselves this way, I’m asserting that whether we like it or not, governments do provision themselves this way. Modern money systems like the one I just described are the policy tool they use to achieve the things they were voted in to do, and I think the better we understand how and why and they function, the more informed, and therefore the more democratic we become.
Another way we can do this is to have our aspirations limited by the amount of gold we’ve got locked in a vault somewhere, but historically we’ve always had to abandon that when we’ve needed to do something pressing, like, say, fight a war. And arguably we need that kind of large-scale mobilisation right now to tackle climate catastrophe, or our various health crises, or the ubiquity of Piers Morgan. A threat to civilisation is a threat to us all.
Also, similar to last week’s episode, the topic of endogenous money creation comes up – again, this is the recognition that commercial banks don’t lend out other peoples’ money to borrowers, rather they create new money, new bank deposits denominated in the state’s unit of account, when they lend – and they can do that because they’re agents of government in that respect. I gave a brief overview of that in the intro to last week’s episode, it’s a bit complicated, so again, if you’d like to know more, you can listen to our episode 43 with Sam Levey, which I’ve linked to in the show notes.
(Ikus Our episode 43 with Sam Levey on endogenous money: https://www.patreon.com/posts/35073683)
I’ve also linked to where you can follow and support Olaf Margeirsson’s work, (…)
So thanks as ever for the time you put into understanding MMT. Let’s dive in!
Bideoa:
https://www.youtube.com/watch?v=y0wB39SkN1A&feature=youtu.be
