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Travelling across the world today to escape the famine that MMT will cause

Summary:
I am travelling all day today and I will resurface, in blog terms, on Monday. A quiz will pop up tomorrow as usual. For now a brief excursion into the Dutch press, which has decided to join the wannabees attacking Modern Monetary Theory (MMT). The scenario outlined in the article I read earlier today takes the criticisms to a new level. We are no longer worried about hyperinflation, crowding out, sky high interest rates. No, things are likely to get much worse than that. If any government takes on MMT (noting it is not a regime that can be taken on) to operationalise a Green New Deal then tax rates will have to rise to around 100 per cent, households and firms will stop working and producing, and a massive famine in possible where millions die. Sort of Project Fear stuff that has marked

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I am travelling all day today and I will resurface, in blog terms, on Monday. A quiz will pop up tomorrow as usual. For now a brief excursion into the Dutch press, which has decided to join the wannabees attacking Modern Monetary Theory (MMT). The scenario outlined in the article I read earlier today takes the criticisms to a new level. We are no longer worried about hyperinflation, crowding out, sky high interest rates. No, things are likely to get much worse than that. If any government takes on MMT (noting it is not a regime that can be taken on) to operationalise a Green New Deal then tax rates will have to rise to around 100 per cent, households and firms will stop working and producing, and a massive famine in possible where millions die. Sort of Project Fear stuff that has marked the Remain position in the Brexit debate!

Dutch press join the wannabees

I was in Amsterdam earlier today and read de Volkskrant (after a tip from Ruud – thanks) article – Hoe is de Green New Deal van Ocasio-Cortez anders dan de centrale planeconomie onder Mao? (March 12, 2019).

The title was the warning: How is the Green New Deal from Ocasio-Cortez different to a centrally planned economy under Mao?

de Volkskrant is a daily Dutch newspaper that started life as a centre-left Catholic media source but has since moved to a centrist position in ideological terms.

Centrist is not a fixed position of course and what we might have called centrist 3 decades ago is firmly neoliberal Right these days.

If the Dutch readers took this article seriously then they will be victims of a organised global propaganda exercise designed to shore up mainstream macroeconomics as it bleeds to death in its own irrelevance.

The journalist decided to stake her claim in the ‘MMT is garbage’ campaign that has spread throughout the world in the last few weeks.

And it just gets more extreme as we move on.

In this article, the journalist provides some scary numbers for the Green New Deal – “voor het komende decennium tussen 51 en 93 biljoen dollar” – 51 to 93 billion USD over the next decade.

This is converted into a per capita number of $US600 thousand per person over the next decade and we are told that on average households only earn $US60,000 per year.

So what is what a reasonable economist would respond to these numbers.

The article calls on Paul Krugman and Ken Rogoff as authorities who are concerned (“om de noodklok te luiden” – sounding the alarm) with the way the the GND will be funded.

But apparently, AOC has become besotted with Modern Monetary Theory (MMT) and:

Volgens Ocasio-Cortez moeten we af van het beleid waarbij de overheid elk jaar een begroting opstelt en de inkomsten en uitgaven zo goed mogelijk in balans brengt.

That is, AOC thinks the government must abandon the practice of drawing up an annual budget which balances income and expenditure.

Which governments actually do that? Not many.

The journalist then claims that:

Aanhangers van MMT geloven dat begrotingstekorten er niet toe doen voor een overheid die in haar eigen valuta kan lenen.

The same old – “Supporters of MMT believe that budget deficits do not matter for a government that can borrow in its own currency.”

Misrepresentation continues.

And so it goes until it builds to the climax:

Maar hoe is de Green New Deal anders dan de centrale planeconomie onder Mao? Om de kosten van de enorme sociale plannen te kunnen financieren moet de overheid uiteindelijk bijna 100 procent van de inkomens afromen. Het belasten van bedrijfswinsten levert bij lange na niet genoeg op.

Yes:

1. The Green New Deal is really just central planning à la Mao’s China.

2. To finance the huge GND, the government will tax almost 100 per cent of incomes.

3. There is not enough company profits to cover the cost.

And then she predicts with near 100 per cent tax rates, companies and households will have no incentive to work or produce.

And … “de economie snel krimpen” – a quickly collapsing economy.

Which then gives us the finale:

Het verwijt aan Mao is niet dat hij met de Grote Sprong Voorwaarts genocidaire bedoelingen had. Het verwijt is dat Mao de grote hongersnood die naar schatting 35 miljoen Chinezen het leven kostte, op de koop toe nam.

Do you want me to translate that?

Summary: Mao’s Great Leap Forward killed 35 million people because it caused a massive famine.

Inference: GND will kill millions because all firms and households will stop working and producing and shelves will empty and supplies will dry up and all of us will, while clutching the new MMT Macroeconomics textbook (subtle advertising going on here) and chanting sections of it, curl up and die from starvation.

Conclusion: MMT is dangerous.

What could top that?

Enter: W.J. McKibbon predicting hyperinflation like an idiot.

All of this is redolent of the Project Fear stuff that has marked the Remain position in the Brexit debate!

Go on, get the Tweets going you lot!

Music to travel with

I have always liked this song – Famous Blue Raincoat – which was on his third album – Songs of Love and Hate (1971).

The switch from minor key (A) in the verse, to the major key (C) in the chorus is very nifty.

I always wondered what it was about and often imposed situations on the lyrics as they arose in life.

And while we are at it, and given my proximity in the last few days, I thought this was apposite and terrific.

First We Take Manhattan – from his 1988 album – I’m Your Man.

Leaonard Cohen was asked about the song during an Interview before a show in Toronto in November 1988.

He said:

I’m not sure of what it means right now because I had this long voyage from Chicago. I think it means exactly what it says. It is a terrorist song. I think it’s a response to terrorism. There’s something about terrorism that I’ve always admired. The fact that there are no alibis or no compromises. That position is always very attractive. I don’t like it when it’s manifested on the physical plane – I don’t really enjoy the terrorist activities – buy Psychic Terrorism. I remember there was a great poem by Irving Layton that I once read, I’ll give you a paraphrase of it. It was ‘well, you guys blow up an occasional airline and kill a few children here and there’, he says. ‘But our terrorists, Jesus, Freud, Marx, Einstein. The whole world is still quaking…

I think of that in the context of the recent attacks on MMT from senior members of my academic profession and all the wannabees who are now lining up to join them, thinking they had better declare which side they are on.

The profession is “quaking”.

I will resurface Monday.

That is enough for today!

(c) Copyright 2019 William Mitchell. All Rights Reserved.

Bill Mitchell
Bill Mitchell is a Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at the University of Newcastle, NSW, Australia. He is also a professional musician and plays guitar with the Melbourne Reggae-Dub band – Pressure Drop. The band was popular around the live music scene in Melbourne in the late 1970s and early 1980s. The band reformed in late 2010.

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