Thank you, Brett Scott! As a member of the 99%, I've always found the taxman a bit of a conundrum—after all, there's so many uneducated and conflicting opinions out there and it wasn't discussed in my college economics courses.
Well, MMT is a descriptive framework for the operations of monetary system, rather than something that 'works' or 'doesn't work'.
When someone says something like 'MMT doesn't work in poorer countries', what they are really saying is 'a less powerful government has less ability to make use of its money system without ramifications from international markets'.
Imagine, for example, a description of a car as a 'four-wheeled carriage with a motor'. You can have a very powerful car with a high capacity to do stuff, or a very low-capacity car that struggles to even get up a hill, but they both operate with the same mechanism
Likewise, the US dollar has similar operational dynamics to the South African rand, but the former is far more powerful, and so has much more leeway to lean into that power. The reality is that all governments - including conservative governments - always 'do MMT' every single time they spend on anything (for example, when Trump funds ICE to do raids, he's 'doing MMT' and when Cyril Ramaphosa in South Africa funds housing he's doing the same) but they seldom describe it as such.
When conservatives are attacking MMT, what they are attacking is a straw man, in which they imagine that MMT is flagrant spending without caring about inflation, when in reality MMT is a paradigm that *only cares about inflation* as the true constraint on government spending
Thank you, Brett Scott! As a member of the 99%, I've always found the taxman a bit of a conundrum—after all, there's so many uneducated and conflicting opinions out there and it wasn't discussed in my college economics courses.
I read somewhere that the concept of MMT only works in so called “wealthy” countries, e.g. USA, UK etc... what am I missing?
Well, MMT is a descriptive framework for the operations of monetary system, rather than something that 'works' or 'doesn't work'.
When someone says something like 'MMT doesn't work in poorer countries', what they are really saying is 'a less powerful government has less ability to make use of its money system without ramifications from international markets'.
Imagine, for example, a description of a car as a 'four-wheeled carriage with a motor'. You can have a very powerful car with a high capacity to do stuff, or a very low-capacity car that struggles to even get up a hill, but they both operate with the same mechanism
Likewise, the US dollar has similar operational dynamics to the South African rand, but the former is far more powerful, and so has much more leeway to lean into that power. The reality is that all governments - including conservative governments - always 'do MMT' every single time they spend on anything (for example, when Trump funds ICE to do raids, he's 'doing MMT' and when Cyril Ramaphosa in South Africa funds housing he's doing the same) but they seldom describe it as such.
When conservatives are attacking MMT, what they are attacking is a straw man, in which they imagine that MMT is flagrant spending without caring about inflation, when in reality MMT is a paradigm that *only cares about inflation* as the true constraint on government spending
So, MMT is a theory that describes a phenomenon ;-)