Crisis Management with Warren Mosler
Title: Crisis Management with Warren Mosler
This second part1 of Steve’s conversation with Warren Mosler was to be about the government response to the pandemic, but first Warren talks about disagreements with some in the MMT community. We here at Macro N Cheese believe in healthy debate and want to bring a range of viewpoints to our listeners.
The federal job guarantee is one area in which Warren disagrees with certain prominent MMTers. He sees the JG as a transitional program to be used during downturns in the business cycle with the goal of getting people hired by the private sector when the economy rebounds. A number of advocates see the job guarantee as a door to more spending on the public purpose. Warren’s position on public purpose jobs is simple: “if you need them, hire them.” We’re all in agreement that skilled workers shouldn’t be working minimum wage jobs, even at the more reasonable rate of a job guarantee minimum, but there’s a vast need for public services that won’t be met by private firms. Mosler says that some MMT proponents feel his position is politically naive; he goes so far as to suggest there’s an ideological war going on. We agree. Real Progressives is fiercely committed to radical systemic change extending beyond the seeming neutrality of MMT.
Whether it’s naive or not, Warren wants to rely on the democratic process and an informed electorate. Steve brings up the reality of fraud within the system and the overwhelming imbalance of power, to which Warren expresses optimism about electing better candidates and brings up his “60-40 plan” to take the money out of politics. This would dilute the power of the 1% but, of course, it would have to be passed into law… by those in power.
Warren is consistent in taking a straightforward approach to federal spending, and expresses skepticism about proposals to “mint the coin” or take advantage of swap lines through the Fed.
…well yeah, that’s fiscal spending and that’s the realm of Congress. You know, if Congress wants to support full employment in Mexico or Bangladesh or Canada or New York, you know, they can do it. They don’t need the Fed to come up with subterfuge of using swap lines for financial assets to get redirected into goods or services.
When the interview gets to COVID, Warren talks about the uniqueness of both the supply shock and demand shock we’re experiencing. They primarily involve non-essentials. Combine this understanding with the fact that the pandemic has resulted in a massive cut in our energy consumption, and there are lessons to be learned that should lead to significant changes in the way we live and do business.
Warren Mosler is an American economist and theorist, and one of the leading voices in the field of Modern Monetary Theory (MMT). Presently, Warren resides on St. Croix, US Virgin Islands, where he owns and operates Valance Co., Inc. He is the author of “The Seven Deadly Innocent Frauds of Economic Policy” and “Soft Currency Economics,” which are available on his website.