Warren Mosler is an American economist, hedge fund founder, engineer, professional automotive designer, and politician. He was the founder of Mosler Automotive and a co-founder of the Center for Full Employment And Price Stability at University of Missouri-Kansas City. The original concepts of MMT were organized and presented by Warren which were dubbed by colleagues as “Mosler’s Monetary Theory”. As his models began to increasingly prove accurate predictor of financial and socioeconomic trends, his work began to gain wide acceptance and greater push back by austerity-driven neoliberal economists.
Policy is paramount and understanding macroeconomics is key to enacting good Progressive policy. This is “How we pay for it” that ends all counterarguments. In fact, what we make, produce, and the value of our labor is what produces the value of our economy. Therefore, proper investment in us drives economic growth for the nation.
Editors Note: We thank Mr. Mosler for fighting through a storm and talking to us while on generator power. For this reason, we do not have his video image. We apologize to our viewers for this inconvenience, but promise to have him back for more discussions.
1:00 An introduction of MMT macroeconomics
The discussion opens with the problems in explaining these models. “Taxes don’t fund federal spending” is wholly inaccurate and disingenuous to the model.
“That word ‘fund’ is a very ambiguous word. The Fed doesn’t need dollars to be able to spend, but it does need tax liabilities… Tax liabilities support the spending. In that sense, tax liabilities fund spending, but not tax payments.”
11:00 Hyper Capitalism
The Universal Basic Income (UBI) idea comes into question in relation to public spending as an investment in workers through employment opportunities. Critics have claimed basic income will influence workers to stop working. Mosler pushes back on that idea through a hypothetical example of UBU implementation.
“In an extreme moral hazard situation, a small amount of UBI is okay, but there is a tipping point that is not too far away. For example, you can lower the tax to create more employment opportunities in the private sector or you can increase public spending and higher unemployed people looking for paid work. You do this through a Job Guarantee or something like that to make sure there’s employment opportunities for everybody, but they say, ‘What about people who don’t want to work?’ The answer is if you are sick, infirm, or elderly – fine, but if you are able-bodied and able to work, the system functions on collective action. The system functions on everybody working and, if you’re not working, it doesn’t function.”
22:45 Understanding what money is and where the money supply comes from.
Mosler uses an example of coins found in Pompeii to illustrate the life cycle of money as a tool for the overall economy. Mosler describes how the currency issuer, in this case, the Pompeii rulers, can increase the issuance of their coins as the economy and workers grow. This also includes how inflation is triggered through what is for sale and in what currency and how taxation is used to spur action through labor and commerce.
“Spending is not constrained by [tax] revenue. It is constrained by what’s for sale.”
30:45 Taxation and its role in Economics and Incorrect Assessments
Mosler describes the disconnect from some MMT advocates who incorrectly say, “taxes don’t fund spending,” which is inaccurate and counterproductive to understanding money. He further explains the fallacy that money, real wealth. is created from the private sector, when clearly it is not created their either. I t is important not to confuse wealth and money when it comes to the role of taxes.
“The dollars to pay taxes comes from the government and so the idea that the government can run out of money is not applicable; its where money comes from. That gets lost in the ambiguity when you say, ‘taxes don’t fund spending’. Somebody says, ’Without taxes you are going to have hyperinflation’ and people don’t understand that.”
42:00 The Role of Securities, Insurance and Vulture Capitalism
Mosler relates his experience in the securities and housing markets and why the financial sector got it wrong in their modeling. The products that insurance produces and the work these employers are doing is creating wealth for a small group when this market is taking away real wealth from the economy. Service work adds values to the whole – research, medical, innovation, tech, software development and building. This continues into the very real investment in our children through education, health, conservation.
“We have turned our children into an expense rather than an investment... We have made children too expense for the source that has to pay for them and so we are dying out. We are the only spices going extinct because of its own monetary system, not through some natural force.”