Intervento alla Prima Conferenza Europea MMT a Berlino (Febbraio 2019)


 

THE IMPORTANCE OF A MMT PERSPECTIVE FOR POLICYMAKERS


The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back. I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas. John Maynard Keynes

When I came into contact with MMT in 2010, the first idea that crossed my mind was that we were free to implement economic and social policies we did not even dare to think before. The second was that the analysis of the state of play in the economy was completely flawed. I wondered how we could take any decision if we were so detached from reality. We were actually trying to guess the right move from some old map or model. Misinformation leads to bad decisions, and bad decisions lead to bad outcomes. Millions of people were suffering as a result.

MMT gives a deep analysis and a clear insight into the real functioning of monetary systems and provides some very effective macroeconomic tools to tackle the challenges of an open, globalized, and highly financialized economy, in order to reach full employment and price stability.

Yet, except for some suggestions on the very basics, MMT never says that there is only one way to manage the economy, as all other theories love to say – they are like religions, you have to follow their prescriptions to the letter – MMT simply says that it always depends on what you want to achieve and that is a POLITICAL CHOICE.

MMT is the economic theory that gives almost full responsibility to politics for any economic outcomes or incompetence in dealing with exogenous shocks and, at the same time, it empowers it with a wide range of macroeconomic instruments and options. Economics isn’t and cannot be politically neutral. It never was, and it will never be. MMT is a political economy at the highest level.

But this is also why policymakers don’t like MMT.

It looks like a paradox but it’s not. They prefer the automatic pilot, they prefer to downsize their role and their accountability to any possible constraint, in order to preserve their reputation and not be punished at the next election.

We are witnessing a dangerous shift from government to governance, from internal management to external management relying on pretended objective parameters, which usually derive from neoliberal ideology and become a substitute for democratic processes.  Models and objectivity preclude the public and political debate on any proposed legislation which is necessary for the exercise of democracy. Think about the trap of the debt ceiling in the USA and even more in the Eurozone. The clear result of this practice is the weakening of democracy itself.

There is another aspect, especially relevant today,  when modern forms of “populism” arise all around the world, from USA and Trump to Europe and the Populist Government in Italy.

It’s simple and it pays well in votes riding the unease of unemployed and exploited workers and their “rage against the machine” of globalization if there are some safe limits to their claims that will finally obliterate them. Their ability lays in enhancing policies that are good for some vested interests and implementing laws that will not in any way disrupt the social structure and the balance of powers. The battle of the M5S against poverty and to increase deficit spending for that matter has turned out to be the old same story of subsidies to business. Because there are budget constraints and this is the only way, they say. TINA. The reality is that under the mask of populism, they hide the backing of lobbies that remain in the dark and that would be unveiled if those limits were removed.  As they were forced to step in the political arena openly and people could see whose interests are actually involved. Not theirs.

Politics deals with conflict, the conflict among different interests. And mediation is a very hard job. The last thing politicians want is an electorate aware of the real financial constraints. Mediation would be terribly hard.  

The main lesson coming from the MMT perspective is that we need brave and competent policymakers, ready to do their job which is much more challenging than participating to talk shows.

There are some of them who take just some aspect of MMT only because they don’t grasp the entirely new perspective. We truly appreciate the effort, but it’s not enough. We need MMT politicians to get real progress for our societies. And what Ocasio-Cortes’ success teaches us is that MMT politicians are always on the point and they break through myths, fears, and ignoble omissions. They win. They are able to find a sustainable alternative to the present situation.

My wish is that MMT could arise economic awareness all around the world, in particular here, in Europe, and that there will be more MMT politicians in leading roles in the future.



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