...old enough that I don't really have much time to waste. But I did watch the 5-part, 75-minute Warren Mosler interview recently recommended here by Greg.
My reaction? Yeah, okay: Mosler is the kind of guy that (to use the George W. Bush standard) I'd like to have a beer with. Anytime, Warren. I always have time for a beer.
A problem with the money
At 4:48 into Part 3 of the interview, Mosler says:
The monetary system will facilitate the execution of any strategy we want as long as we have the real resources available.
That is right. The economic problem of our time is monetary imbalance, and the problem could be solved quite easily. There is no reason our monetary system should hinder "any strategy" if we have "the real resources" to support it. Mosler and I arriving independently at the same conclusion strengthens this argument.
Belaboring the obvious
But I don't understand Mosler's appproach. Everybody on the planet already knows the dollar is backed by nothing, and is printed into existence. Yet Mosler dwells on that point and tries to recreate the world upon it.
I completely agree with Mosler that fiat money works by different rules that gold-standard money. But there is more to the story than simply suggesting we can print whatever money we need at any point in time. The suggestion creates false illusions inside and ill will outside the MMT (Modern Monetary Theory) camp.
Mosler avoids offering any hint of theory regarding the management of fiat money, but simply suggests over and over that all we need to do is go ahead and spend what we think we need to spend.
And what does he get for it? A following.
Did a helicopter just go by?
Warren Mosler wants a "payroll tax holiday." He wants to stop collecting Social Security taxes. For how long? "Indefinitely," he says (six minutes into Part 2). Forever. With no hint of addressing any concern that Social Security may be going broke.
I do think Mosler's tax holiday would really boost the economy. For one thing, it increases our take-home pay by 8% (that's Mosler's number). For another thing, the benefit to business is twice that much, because employers match the FICA tax that comes out of our paychecks -- and (though he isn't explicit about it) all of that cost is eliminated under Mosler's plan. In addition, the business cost that is reduced is a labor cost. So it is employment that Mosler's plan stimulates.
Mosler wants a payroll tax holiday. But he says nothing of how to pay for it, except that the Treasury should make the payments for us. The "how," of course, is by printing money, or borrowing money, or waiting for money to fall from the sky.
To be perfectly clear: I do not object to the view that the economic problem is a problem with the money. I do not object to the view that the solution must include "printing" money. And I do not object to Mosler's plan to stimulate the economy with his payroll tax holiday.
I object to the justification that MMT provides for all of this. The "T" in MMT stands for "Theory." You'd think, with a name like that, that MMT would offer better arguments than "changing numbers up" and "changing numbers down".
Then too, because Mosler lacks a good theory, his solution is a shot in the dark. He is only guessing what solution we need.
Mosler's tax holiday is a solution to the problem of a slow economy. But a slow economy is not the problem. The cause of the slow economy is the problem. That cause is the accumulation of private-sector debt. (See also my 4-page Austeria PDF.) Mosler does not address the problem of excessive private debt, though it would add much to his argument, and would take nothing from it.
I would hope to find Warren Mosler among the first to grasp this concept. Over a beer, perhaps?