“The jobs pay for themselves,” she says, by creating new socially productive stuff that makes its way into the economy. What matters isn’t the deficit but whether these new work hours can generate something useful.
Kelton thinks it’s obvious that there’s plenty of room for more work today. Poverty and unemployment are tricks played on the economy by money ― there are no material or productive barriers to eliminating either one.
What if, instead of a Universal Basic Income, as some European nations are currently experimenting with, we talked about a universal jobs guarantee – meaning that the US government would spend whatever it took to ensure good, honest work for every able-bodied person, regardless of the cost.
Your first reaction might be to say “We’ll be broke.” Which is how a head of household or a business owner should be thinking. But households and businesses do not merely create money out of thin air. The federal government does.
Plus, when the government creates money, that money finds itself in the economy, ready to be invested or spent. The big risk then is not insolvency, it is inflation, which the government could control better with taxation than it does currently with the dollar supply.
Or, at least, so goes the thinking of a Modern Monetary Theorist (MMT). Stephanie Kelton has become the most famous of the MMT tribe and she’s profiled in a new piece at the Huffington Post that looks at the popularity of her theories both on Wall Street and amidst the Democratic party.
Zach Carter’s excellent piece includes this great explanation about the way economics is really used by politicians – and it has nothing to do with efficacy or even a track record of having been successful (emphasis mine)…
In Washington, by contrast, being right rarely matters. Politicians don’t generally turn to economists for new insight into how the world works. Economists instead serve as a kind of credibility shield ― experts who can be trotted out to assure the public that there are very complex and sophisticated reasons political leaders should be doing the things they do. A big part of any Washington economics job is providing a sense of scientific certainty to political judgments that are, by their very nature, uncertain. This is true for big policy changes as well as straightforward tasks like projecting growth rates and government revenue.
The job, in other words, is to back up your team. Getting a policy decision wrong isn’t such a big deal, as long as everyone else on the team blows the same call.
Go check out the whole piece and expect to hear a lot more about Ms. Kelton and her arguments as we approach the midterms this fall.