レーガン批判、JGP
welcome everyone I am Mariana matsukata I'm the director of the Institute for innovation and public purpose which is collaborating with the British Library on this wonderful series which hopefully you all have a brochure on called rethinking public value in public purpose in 21st century capitalism I a PP is a UCL Institute it's actually a department so we have our own teaching program trying to bring back this concept of public value to the center of economic thinking you'd think that that word even existed in economics unfortunately it doesn't we have words like public goods but they're really narrow words that have actually strangely been used to delimit the areas where public policy is allowed to tread just think of the BBC when it's told its crowding out private broadcasters so at best its allowed to do documentaries about drafts in Africa but how dare it do soap operas and talk shows that's for business and so the word public value that we're trying to revive is really a much more cross-cutting concept of how you actively co-create and Co shape the markets of the future as opposed to just fixing market failures in existing defined markets that can be extremely problematic we have about seven new lectures still to go the whole lecture series is trying actually to bring designers architects musicians and of course economists to think about this concept together including you know just because an area is free to access does it actually mean it's public just because Google is free does it mean it's really public so how do we create proper public realms through public-private partnerships how do we really engage in not tokenistic away civil society in that endeavor and that brings me to tonight's lecture we are extremely proud and happy to have Stephanie with us she's actually on the advisory board of the Institute we had a very interesting discussion today about what it means to have a mission oriented type of economic policy but Stephanie is the professor of public policy and economics at Stony Brook University and previously she was a chief economist of the US Senate Budget Committee and a senior advisor to Bernie Sanders himself and I think shall we be reflecting on that experience tonight she was the founder and editor-in-chief of the top ranked blog new economic perspectives and a member of the top Blanc's network of the nation's best thinkers in 2016 Politico I said that like an Italian Politico recognized her as one of the 50 people across the country the u.s. that is most influencing the political debate and her book the state the market in the Euro published in 2001 actually predicted the debt crisis which was much more than just a debt crisis and economic crisis in the eurozone and elsewhere and her subsequent work correctly predicted that first of all quantitative easing wouldn't lead to high inflation and to that government deficits wouldn't cause a spike in US interest rates and three god these are very carefully written notes by PhD students that the SP downgrade wouldn't cost investors to flee the Treasuries and for that the US would not experience a european-style debt crisis a whole other mess of things happened what she also predicted anyway so this is enough for me and all I can say is that this is an incredibly important lecture tonight because actually thinking about what do we mean by a public budget how it's different from a family budget which of course is constrained by certain factors will hopefully also allow us to really think about that topic that we talked about today in the advisory board which is let's actually think about what we want to be investing in the kind of results the missions the outputs that we want to create in the economy and then let's just create the budget to get us there versus the reverse here's your limited budget within that think in a very narrow way what you can do so Stephanie thank you so much for coming all the way from the US for tonight's event and we're all extremely excited to to have you well thank you very much she's it was a bit of a spoiler so I'm gonna try to fill in some gaps because you nailed it in terms of no no not in a bad way in a good way in a good setup way the way a good introduction goes you let them know what this is what the speaker is going to come and do and that's exactly what I'm gonna come and do so if I had to characterize the way that I approach economics I guess it is fair to say that I am somewhat of a contrarian if I'm here today to tell you that when it comes to the British government money is no object imagine the space that that opens up when mariana talks about not taking a fixed allocation of pounds and saying this is your budget go see what you can do with it if instead you were told what is it you would like to do what kind of an economy would you like to build right what are the missions you're trying to achieve in the economy what is the budget you need to carry out those missions and you could fit the budget to those goals what would that look like could we even do that is that even realistic I think it's fair to say that both here and in the US and across Europe and mostly around the world we do it the other way around right we start with the notion that money is in fact an object and that's why we hear politicians talk about the need to find the money right how are you going to find the money you want to build infrastructure you want to do health care you want to do education where are you going to get the money right finding the money becomes a really critical it's at the starting point you don't leave the starting gate until you answer the critical question how will you pay for it where will the money come from and my position is that this traps us unnecessarily and it traps us in a frame of mind where we're all basically walking around as if we're still operating on a gold standard because that's what it means to say find the money it's like there's something out there it's money it exists where is it who has it how much of it is there and how much of it can you tracked via taxes borrowing how much can you raise to get revenue to finance whatever it is the government is trying to carry out so I'm gonna start with the premise that that is wrong okay and I will try and will recognize the grimaces in the audience that not all of you are with me maybe yet but I hope to persuade you to if you're not already thinking along these lines that we ought to be thinking along these lines that there's far greater space available to countries like the u.s. like the UK in terms of the policy space the options that are available the resources that are out there that could be mobilized and put to public use right to serve the public good and and that the money piece is what stands in the way and part of what is attached to the money piece is the idea that deficits are a problem okay so we got the money piece we have to deal with myths about where the money will come from how to pay for things and then we have the deficit piece the idea that if you don't fully pay for things that is if you don't raise enough revenue via taxation and you have to borrow you're somehow putting the nation at risk solvency risks vulnerabilities with respect to the bond markets burdening next generations we all know the stories right you've all heard them am I correct yes so we're bombarded with this stuff on a daily basis everybody tells us this is the reason we can't have nice things because of the national debt because of the budget deficit because of the need to pay for things so I'm gonna do my best in a limited period of time to disabuse us of some of this rhetoric okay so this is where we are this is how we start our thinking and this is the flaw but right from the beginning we begin with a flawed premise and the flawed premise is that somehow the federal government has to play by the same set of rules as you and I okay the government is really just like a giant household and it must manage its finances in a responsible way just the way that you and I must manage our finances so you look at a family budget and you say okay what is it that comes in every month or on an annual basis what are the expenses what's the outgo and then how do we match the two so that we avoid doing what ending up in the red right ending up with deficits the goal being to adjust your expenditure so you know what the income is you have a salary I know what my budget constraint is it's my income what can I afford what car payment can I afford what is the rent or the mortgage I can afford how much can I afford for my cable bill and you go down through the list of expenses and you fit your expenses to the budget if you can't afford it it doesn't become one of your expenses if things get too tight what do you do you borrow cuz I'm not giving up my standard of living I mean I may borrow or I may say I've got AK I gotta make cuts right so the nanny is a luxury and I've got to take her down from five days a week to three days a week and the housekeeper goes to every other week instead of coming every week and I trim my expenses where I can and I can more or less balance my own budget right I can manage my expenses try to avoid going into debt at least that's the idea right avoid going into debt and build up some kind of savings over time accumulate savings build wealth so that you have a cushion right for later on in life so obviously this makes perfectly good sense for you and I to behave this way just I don't see any problem with this at all right this is a rational stuff what happens though when households get frugal like think of austerity at the household level okay you're trying to manage your expenses so you start cutting some of your expenditures tightening your budget you know you don't have a lot of room on the income side you don't just go up to the boss and say it's getting a little tight I was wondering if you could just you know bump up my salary a little bit so I have a little more Chris not really you know you're forced to deal on the spending side so you start trimming expenditures and at the individual level this can work I can save more by spending less I can pay down my debt I can accumulate savings and for me as an individual this can work out right the problem is if everyone in the economy attempts to behave this way at the same time now why is it that what's good for the individual is catastrophic for the economy as a whole if everybody tries to do it how does it make sense that doing something sensible becomes a disaster if everybody practices that behavior Keynes called it the paradox of thrift right it's a fallacy of composition it's when we try to apply something that works at the micro level to the macro level and what happens is this capitalism our market economy runs on sales kappa this is the easiest way I have found to describe the way that the economy works it runs on sales okay the economy as a whole is organized around production for-profit firms hire workers because they expect that if they hire the worker and incur the costs of paying the wage and benefits of that worker that that worker is going to help the firm produce some output which that firm can turn around and sell for more than the cost of production that is that they can turn a profit right that's why businesses hire and invest because they think it will be profitable so what you have happening in the economy as a whole are loads of firms in the u.s. millions here maybe tens and tens of thousands of firms basically picture them stocking a giant conveyor belt everyone is producing and adding some output for sale like wanting the goal being please be a customer on the other end of this right I'm producing I want someone to buy this so all of this merchandise the idea is to offload it to find demand for that output households carry most of the weight they offload most of the product which is to say that household consumption is most of GDP most of the spending that takes place in the economy is done by households people sometimes think it's government spending right because everyone is always telling me government is so big and such a big part of the economy government does a small amount of the total spending the vast majority is but a household sector so households are pulling boxes off of this conveyor belt they're buying output but what happens when they decide to tighten their belts what happens when they decide to spend less in order to try to save more to be responsible fiscally with their budget what happens some of that stuff doesn't get sold base some of that stuff doesn't get sold so the conveyor belts going around and outs carrying more merchandise that's carrying more merchandise and what happens firms say uh-oh we have a problem there's no demand for the level of production that I'm currently at I have to scale back so I lay off some workers right the rising inventory is the signal to the firm you're producing too much stuff nobody wants this right the demand Falls and unemployment goes up so unemployment rises firms scale back this is what happened in the last recession for the u.s. I don't have a graph that looks exactly like this for the UK but it would look very similar to this okay so in the old days and by the old days I mean you know post-world War two capitalist economies all go through business cycles but no nation on earth has ever eliminated the business cycle we all have booms and they're followed by bust and then they have another boom and you have a bust okay in the old days we used to have a shorter business cycle we used to call them v-shaped recoveries because the economy would turn down but it would recover pretty quickly and so you would get this v-shaped sort of pattern the early recessions but then something starts to change around the 1980s the recessions begin to stretch out look at the 81 recession and then the 90 recession is the black and the 2001 recession is the brown and the last one is the red we have become more and more u-shaped and the eu's are beginning to look more like elves in the sense that we wonder sometimes whether we're ever going to recover from the downturn this recession right here this was 72 months in that six years and the US labor market still had not recovered all of the jobs that were lost during the Great Recession it took us seven years to claw back from the losses of the Great Recession so it was a very a deep and protracted and bad recession and part of the reason is that the policy response was too weak a part of the reason the policy response was too weak was fear of running bigger budget deficits to offset this okay so as consumers pulled back because consumers had leveraged up they had borrowed they had taken on debt they turned their homes into ATM machines they started extracting the equity in the home to finance other things and this drove a tremendous boom in the US economy until it didn't until things crashed and when the housing market collapsed consumption fell and so the boxes on the conveyor belt started to build up and so firms started to layoff workers and that's what happened we were losing 800,000 jobs jobs a month in the US I can hardly say it 800,000 jobs a month right so this is the problem we lost control completely now some people would have said and some economists actually did say even during the Great Recession well the way out of this is to get the rest of the world to buy this stuff so if households in the US won't buy stuff we just have to you know we need a weaker dollar we started to blame China you heard things like that the value of the dollar is too high if we could just get the dollar down the rest of the world would buy our stuff and that would help the US economy recover so let's do you know depend on the rest of the world that's the kind of stuff you're hearing from Donald Trump now right where he says look we have trade deficits this is a problem we have to reverse this we don't want the rest of the world taking advantage of us right we've become their piggy bank this is the kind of language that he's using the problem is if you want demand to recover and you want the rest of the world to engineer that recovery what they're doing is not just helping create the jobs but they're also taking this stuff yes so when you're producing for export the other countries get to enjoy the benefits of consuming the stuff that your people produced so it's your labor time it's your raw materials it's your resources that you're using here at home but then you're sending to the rest of the world to enjoy so one of the things I think that's being this debate about trade especially with Donald Trump is that exports in real terms are a cost to the country that's exporting okay in other words think about it this way you could have used your workers their time your resources your raw materials to produce things and keep them domestically and raise the domestic standard of living instead you sent them abroad to raise someone else's standard of living it's not something you hear people talk about but I think it's important to keep in mind as we have discussions about trade so is there another way if households whose that okay so if households aren't taking the boxes off the conveyor belt and you don't want the rest of the world to take all the boxes away because then your people don't have boxes to consume and raise standard of living is there another way to backfill the lost demand where else could it come from and the only other answer here is from the government is that's the only other place that can come from so I'm asking this question what if the government commits to maintaining a full employment economy what would that look like how would it work if it commits to balancing conditions in the economy rather than committing to balancing the budget so what austerity does is austerity says all right we're gonna force the economy to balance the budget yeah instead allow the budget to balance the economy now what would that look like what does a balanced economy look like now we can have political debates about that for me I would say an imbalanced economy is one that looks like this where the concentration of wealth and income is going increasingly into the hands of a smaller and smaller number of people that's an imbalance it's an imbalance that's not just you know morally upsetting it's an imbalance that causes the economy to malfunction you don't the economy doesn't function as well if you're shoveling most of the income into the hands of people who are least likely to turn around and spend it into the economy that robs you of of sales and custom in demand so it would be far better to rebalance the distribution of wealth and income a balanced economy doesn't have millions of children living in poverty a balanced economy doesn't have infrastructure that's crumbling around you a balanced economy doesn't have seniors who are you know on fixed income living in poverty so imagine yeah and we can all come up with our own definition of what a balanced economy would look like but at least if you set the goals as objective I want to cut the child poverty rate to zero in ten years time I want to repair every structurally deficient bridge so that it's you know not structurally deficient in two years time I want it right mission oriented set the goals and allow the budget to help you achieve those objectives so the budget becomes the tool to carrying out mission oriented budgeting no particular budget outcome is more desirable than any other if it takes a deficit that's equal to three percent of your GDP to balance your economy okay so I have a good economy the kids are healthy the seniors are well cared for the infrastructure is fixed I don't have inflation problem I've got good conditions the number that appears on the ledger that gets written down scroll down you know a Downing Street where okay I don't care if it's three percent or four and a half percent maybe it's a surplus of 1% that number isn't what's important the goals are what's important and the budget is just the tool to get you to achieve those goals so you say well wait a minute Kelton that sounds nice right pie in the sky and all but we we know that we're broke here so this is not an option we can't use the budget to balance the economy because we've already broken the budget all right so here's the letter from Liam how do I say the last name Brian burn it leaves the letter right to the incoming chief secretary dear chief secretary I'm afraid there is no money kind regards and good luck right haha okay so this is this is a joke I mean it is a joke I mean it it is a joke but it isn't a one-off joke it's a redundant recurring theme and it becomes not a joke but it becomes something that we the population begins to believe right and then we all subscribe to it and then we don't want to believe that we've got a government that's broke I mean that's not good and as good patriotic citizens we want to make sure that we fix that and so we'll make the sacrifices so in the US the language during the 2000s was about shared sacrifice right it was about all of us together cutting back and tightening our belts we're in this together for the good of the country right to save our national solvency and so you know that goes way way back in time there is no public money she told us there is only taxpayer money this is a really important line there is no public money right away that says you have to find the money but you're not gonna find it from the public right you're not gonna find it from the public sector you're not find it in government you have to find it outside of government so who has the money where is the money ha it's taxpayer money the taxpayer must pay for whatever it is okay what what is behind this thinking behind this thinking is the idea that the government is constrained like a household or a private business it has to arrange financing if I want to go buy a new automobile I show up at the dealers car lot and I say I like that one now he doesn't let me drive away in the car until I do what pay for it I have to show that I've got the financing so I have to arrange the finance I have to borrow the money after show that okay here's where the money is coming from okay so we think that the government is like a household or a business but it rearranges its financing and then it goes out and it does some spending all right we think the government just like a household can spend more than it collects but only for a period of time and only if it can find money from someone who got it and they can borrow it okay you've got to borrow the money from someone who has it you got to go out and get it you need other people's money in order to be able to spend problem is money is an object its finite there's only so much of it there's a pile of pounds in the world somewhere in a corner and it's massive but there's only so much of it and everybody who wants a piece of it private industry the government household everyone who wants to borrow money has to go to that finite pile of pounds and compete for it the more intense the competition what the higher the price goes so the interest rate so if government wants to borrow more money they're competing with private industry ah that drives up the price of money so interest rates go up now what happens higher interest rates crowd out the far more efficient private sector spending and so investment goes down so now we're scolded for government trying to do anything because it comes at the expense of private industry which as we all know is far more efficient the government at doing everything right so this is the story you got to find the money there's only so much of it the more you try to borrow the less it leaves for someone else next thing you know you've borrowed too much right there's a fine line between being solvent and insolvent we've all seen people probably who go broke the household takes on too much debt has bills they can't pay right they start missing payments the bill collector comes all of a sudden their credit gets downgraded we've seen businesses go under too much debt right businesses fail so we see the debt grow we see creditors begin to worry all of a sudden your credit score goes down we think well that same thing would happen to a government just like when my credit score goes down your credit rating goes down if you get downgraded by Moody's Fitch or Standard & Poor's then just gonna cost you more to borrow next time so now you're becoming even more insolvent right it's harder and harder to pay your bills and we all know what happens you end up like Greece and I'm here to tell you that during the debt crisis in the depths I shouldn't say during I was sort of an odd sort of a rolling debt crisis in the eurozone but during the depths of the crisis 2010 ish I would turn on the television in my kitchen at night and Tom Brokaw one of our leading right commentators news people would come on and the music in the background would go like this donk donk dawn and then he would say the debt crisis in America and the program would begin and I'm like wait what debt crisis in America did we just have how did we get a debt crisis in America but he started off telling viewers the debt crisis in America and then in the backdrop was Greece so the lesson to the American people was this is you if you don't get your fiscal house in order right we were running big budget deficits because the economy had collapsed and we were told every day day in and day out that we had a debt problem that we were gonna end up like the Greeks okay so behind it in the backdrop all of us are bombarded with these means household government like a household government so tighten your belts everybody please we're approaching Great Britain so these are the household means when you read or when you hear your politicians say we must live within our means I we have to watch our budget we must tighten our belts we are running up the credit card going into debt is not the answer right we're going broke those are all that's language that applies to a household or to a private business but not one that is applicable to a government like the United States or like Britain okay so why I love Twain so I quote Twain pretty often so here's Mark Twain right it ain't what you know that gets you into trouble it's what you know for sure that just ain't so I so what is it that we know for sure that just ain't so I'm gonna I have lots of things that I normally use to get the audience warmed up to this idea but because I have a time constraint I'm only going to present one and it didn't require audio so I went with this one look this is the st. Louis Federal Reserve Bank so I think we can trust the st. Louis Fed can we agree that the Fed is not a partisan liberal hack organization this is the st. Louis Federal Reserve and what they're telling us here in research published by the st. Louis Fed is that as the sole manual back surer of dollars whose debt is denominated in dollars the US government can never become insolvent so let's pause we won't even read the rest as the sole manufacturer what is the word that we use in everyday language when there's one maker one manufacturer or something why do we call it a monopolist a monopolist so who's played this game everybody's played this game right or seen this game played or knows what this game is so when you play the game of Monopoly and you open up the instructions I hate this game it never ends right but when you play this game you open up the instructions and what is the first thing you do very good you choose someone who you trust whom you trust to control the currency they issue the money okay most of the time the audience says you pick you fight over the dog in the shoe and I say okay fair enough but the second thing you do is you pick someone to be the banker so you figure out who's going to issue the money in this game okay imagine that you take the board out and you set up all the pieces and somebody says okay before we get the game going I'm gonna need all the players to pay their taxes so you have to fund me right would the game ever begin no it's silly you can't even start the game the first thing that has to happen is that somebody has to spend the currency into the game or the game can't begin so somebody provides an allocation we get to 500 s you get this many 100s and notes it's a and now the players are ready to play okay now there's money what happens you roll the dice you go around if you get lucky you land on the chance and you draw the card and it says you got lucky pay and you got paid $50 whoo okay so I get our payment right maybe it's my social security maybe it's some other form of government payment but here comes money then I keep going and all of a sudden I draw a card and it says IRS pay your taxes yeah so a hundred leaves the game okay so a hundred is paid in taxes that goes out of the game now I'm trying to get by I'm trying to buy things as I go around the board if I make all the way around they taught me up I get 200 for passing go right when does the game end the game ends when more has been collected out than has been paid back in yeah as long as the person who's in charge of the money is putting more into the game than they're taking out the game proceeds problems arise as soon as someone starts taxing out of the game too much and not replacing it with enough now the balances of all the players goes down and pretty soon you have nobody left to play the game okay so this game illustrates something important about being the monopolist being the issuer in fact the rules of the game say that in the event that the game goes on so long that you run out of money to pay in that you write an IOU this is in the instructions of the game okay and you keep the game going why because money is no object right it's just a ledger it's a spreadsheet entry it's a ledger so you continue the game alright so this is a pretty good illustration I think of how public money works in a country like the u.s. in a country like the UK sadly the rest of us we don't have this capacity we aren't issuers of currency we're merely the users of the currency so everybody here is a user of pounds I assume unless you've traveled from elsewhere I'm a user of the US dollar but I don't issue it unfortunately I do not have the power of the public purse puts me in a different relationship it means that language that makes perfectly good sense to apply to me going broke running out of money needing to tighten my belt right all that kind of stuff perfectly sensible when applied to me but nonsensical when applied to the issuer of the currency ok so money is no object for certain governments I'm going to tell you what I mean by that most governments tell you what the unit of account is how they're going to spend in what currency they're going to spend in what currency they're going to collect taxes and in what currency they're going to borrow the government decides this in the US the government has decided the unit of account is called the dollar right the government spends taxes and borrows in u.s. dollars in Britain the unification the British Pound comes from where the British government and it can't come from anywhere else in the US the dollar comes from the US government and it can't legally come from anywhere else if I get caught trying to manufacture dollars in my garage it's called counterfeiting and I go to jail right I can't do it I don't they a big government has given unto itself the exclusive right to issue the currency no one else not China not anybody else can issue the US dollar only the US government can issue the currency in Britain only the British government can issue the pound in Japan only the Japanese government can issue the yen One Nation one money that's how it works in most of the world okay most nations require that taxes be paid in a currency that the state has the exclusive power to issue so my taxes in the US are doing u.s. dollars I can't pay my taxes in any other currency and I can't get the currency from anywhere other than the US government we call this sovereign money so the US Japan the UK they have sovereign money okay governments spend in these countries by instructing their banks their central banks to change the numbers in someone's account upward so you sell goods to the government your account gets credited with US dollars where did the money come from it didn't come from anywhere it came from the keyboard at the New York Federal Reserve Bank which is putting the entries into your account because the government said I bought from him go credit his account so Boeing or Lockheed or whomever gets a credit to their account they're not literally printing money and taking it over to your bank they're not literally taking money from the pile that exists in the world or from someone else's account in transferring they're creating it they're spending it into existence we say taxes drive money as long as the state retains the power to both make and enforce its tax laws the people need the government's money see we've thought of this the wrong way around when Margaret Thatcher said there is no public money there is only taxpayer money she's wrong okay it's not they who need our money it's we who need their money hey we need their money in order to settle our obligations to the state they are taxing us in pounds you have to get the pound where do you get the pound uh-huh from the British government right so we've just flipped this thing around and convinced ourselves that they need our money instead of the other way around the currency itself gets its value from by virtue of the fact that the government demands that we all make payments to government in a currency that they and only they can create that gives the currency value it allows the government to move resources from the private sector into the public domain and here I'll tell a quick story how's my time by the way oh you're so interested you forgot to watch the clock good for you good for you how many Oh for the whole session Oh well I should speed up a bit but I'm not going to so so Britain used to understand this in fact we learned from you okay I'm not my I'm married to a historian so if the history is not perfect I don't even have an excuse I should I should get it really right but I'm gonna give you the the thumbnail version of the history here hey when Britain colonized Africa what happened sail over hop off the boat I'm taking some liberties have a look around and say gee there are some really interesting things here that we don't have back home we sure would like to have some of them how's about we buy them from you right offering up British pounds in payment and the African said what cheerio safe trip home no thank you I why would we want to give up our resources why would we hand our stuff over to you in exchange for this paper was lovely I mean the Queen looks lovely and all but we're really not interested in this swap so what did Britain do I don't think you understand see what worker setting up here is a colony and you're going to need to make payment to the crown Hey and the payments will be doing British pounds oh dear you don't have any British pounds hello how can we pay how can we pay the tax to the crown we can help you with that we can help you with that all you have to do is sell us some of this cool stuff we were admiring will pay you and now you'll have the currency to settle your obligation to the crown see how easy it is to monetize an economy that wasn't previously using money the tax gets value didn't have any value at first gets its value by virtue of the fact that you now need it to keep your right so these are the benefits of retaining your sovereign money the government can never go broke it doesn't make sense to use that language it can afford to buy whatever is for sale in the domestic unit of account so whatever people are trying to sell in order to get pounds is theoretically the limit to what the British government can afford what is for sale in pounds okay it doesn't need to borrow its own currency and it can always set the interest rate that it chooses to pay on any money that it does borrow because borrowing is an option okay if I almost brought my props but I knew I wouldn't have time this gives a country additional policy space it allows you to run better fiscal policy to manage your economy and what happened in the eurozone complete and utter mess in terms of what they did to their monetary system these countries abandon their sovereign currencies okay they said I'm giving up the drachma I'm giving up the lira I'm giving up the Frog and I'm going to start using this foreign currency called the euro notice British Pound u.s. dollar Japanese yen something euro you don't even know what to put in front of that because it's not one nation one money anymore it's one market one money and the euro was created around a completely different philosophy that one market needs one money rather than one nation needs one money okay so the currency is divorced from the nation-state making the euro itself basically like foreign currency these countries have to actually go out and find the money in order to spend they really are revenue constrained they really are subject to the whims of the bond market and they have to pay market interest rates completely different animal here okay they lack the kind of power that a sovereign currency issuer like the UK or the US has this is a quote from an economist who was a contemporary of John Maynard Keynes his name was a balloon er I'm a big fan of much of his work he says here by virtue of the power because a country has the power to create and destroy money by Fiat and take money away from people by taxation it puts the government in a position to keep the spending in the economy at a level necessary to maintain full employment in other words if you have your own currency you can have a good economy this is what learners is saying here now suppose you want to build a good Society John Kenneth Galbraith wrote a book and called it the good Society okay what would that look like what would a good society look like in the first question everyone will want to know is but how will you pay for your good Society okay so now with apologies to his brother who's with us I won't point him out in case he doesn't want it known they did ask me to draw on some experience so I'm gonna do a little bit of this and I think you're with me I don't think I'm losing my audience so if that's okay I'm gonna keep going until I'm finished and we'll use whatever Q&A time is left so I worked for senator Sanders on the budget committee and then I advised the campaign and so I got a little bit of a flavor of what it was like to be in his situation and responding always to press questions and to his political opponents and so forth with these kinds of questions so here's a guy who had an ambitious agenda right wanted to do lots of big things Hillary Clinton the main contender in the race you know challenged him on education on infrastructure where she came in he came in bigger right and so she writes about this in her book where you know it comes out after the race is all over and she says I was so frustrating because every time we tried to do something bold he went bigger and she said so and and she's having an email exchange with someone and that part becomes part of the book and there's someone emails back to her and he says I assume it's a he he says it's like Bernie says I think America should get a pony and Hillary the sensible rational right fiscally responsible candidate says how will you pay for the pony so he's depicted as this pie in the sky agenda completely unaffordable not right right that's the depiction puppies and rainbows and unicorns my position is this is a trap so this is the way that Hillary Clinton approached policymaking she said you cannot cut taxes or increase spending unless you can pay for it hey unless you can pay for it what she's saying here is one must not add to the deficit everything must be deficit-neutral fully offset if you're gonna put a hundred in you either need to take a hundred out in taxes or cut a hundred out of some other part of the budget you must not disturb the deficit right this is her position I'm arguing that as a trap it traps us it limits our policy choices and it leaves us with an economy that is operating far below its means we're not living anywhere near our means okay so if you get trapped in this though where everybody is demanding that you show your work and that's what they did in the race show your work how are you going to pay for everything so he says I want a trillion dollars of infrastructure how would you pay for it he says I want to make public colleges and universities tuition-free how will you pay for it he says I want Medicare for all how will you pay for it and so if you're bound by those rules then you have to show where the money will come from and so he did and what he did was say look if I have to find the money then I have to go where the money is and where is the money the rich people have an idea right the rich people have all the money so we end up going after Amazon Bezos and and Walmart and the Koch brothers and don't get me wrong we should go after them okay but the the it becomes a magnet because that's where the money is so it's the lure we go there because that's where the money is I want to make public colleges and universities tuition-free how will you pay for it Wall Street will pay for it okay we'll put a tax on he said Wall Street speculation or financial transactions tax will raise the money we'll pay for everything right so it becomes this sort of a thing so now the question is okay so if you want a really bold agenda then these are the rules that we currently play by you have to find the money who's got the money rich people have the money so you go get the money from the rich people from wealthy from Wall Street and you tax the money and that gives you the revenue that you need in order to redistribute fun programs help the poor right the elderly whatever the case may be so what it does is it forces you to have to policy fights you don't just have to fight to make public colleges and universities tuition-free and fight for that agenda on its merits you also have to fight to raise taxes on Wall Street or also have to fight you see what I'm saying it sets up simultaneously two battles right because you haven't decoupled the spending from the revenue so you have to both win on the revenue side in order to win on the spending side so if you say we're gonna fix crumbling infrastructure and feed hungry kids the answer is yeah if you can find the money but unless and until you can you're not fixing anything and you're not feeding nobody right because you haven't found the money so in a sense it's cruel by because it holds hostage hungry people sick people suffering people poor people are held hostage while you try to pick some money off of the wealthy and unless and until you win on that you can't take care of business building a good Society okay so it's I find it frustrating okay here's what is the purpose of attacks I'm the movie as quickly as I can through the rest of this this is from a paper that was published in 1946 and it was published by a guy named Beardsley Rummel who was the head of the New York Federal Reserve Bank head of the New York Fed so no slouch okay and what he does is he writes an article and he titles it taxes for revenue are obsolete taxes for revenue what the hell else are taxes for if they're not for revenue right and he says nope obsolete why did he say that he tells you right here in this passage the necessity for government to tax in order to maintain its independence and solvency is true for state and local governments but it is not true for the national government two things have happened which have changed the rules of the game one we got a central bank and we know how to use it too we went off the gold standard there it is right there you're no longer on a gold standard if you're on a gold standard finding the money is a real thing you literally had to dig in the ground in the mines to find the money right and he's saying we suspending the gold standard to go to war so that we would have the fiscal capacity to spend whatever is necessary to win the war and that's exactly what happened the financing was not constrained by revenue government wrapped up deficit spending held interest rates down by telling the central bank exactly where it wanted interest rates pegged and the deficits were run nothing bad happened we won the war and the American economy prospered for decades after that okay so he says look we don't collect taxes because we need the money obviously we're the sole manufacturer of the currency why would we tax to get it we create it we issue it okay so taxes do other stuff they allow the government to spend money into the economy without inflating the economy without causing inflation if I want to spend a trillion into the economy on infrastructure and I say yeah I don't need the revenue so I'm not going to tax anything out holy-moly you might get an inflation problem just spending a trillion in so the question becomes how much can you safely spend to mobilize resources that are currently unused right unemployment if you have construction workers architects engineers you have steel you have concrete you have machinery that's not being used by anyone in the economy so you're not gonna crowd it out you say aha I'm gonna spend hiring these construction workers that engineer that architect I'm going to take these machines that move heavy stuff and make concrete I'm gonna hire all these things and I'm gonna spend on that and if I try to do too much I'm gonna get an inflation problem so I'm gonna have to pull some income out of the economy tax some money out in order to guard against the risk of inflation so taxes do that taxes are important because they help redistribute income they take income away from people if you think they have too much so taxes play an important role there they incentivize or disincentivize behaviors you might provide tax incentives to encourage people to drive electric cars or to discourage people from smoking or eating too much sugar or whatever so taxes do important things but rummells point was they you don't need them in order to raise revenue that's not what they do okay so go back to this picture and now look at it from this vantage point we're gonna take from the Waltons from Jeff Bezos and from the Koch brothers not because we're desperate for their cash in order to care for our people but because they have too damn much cash you do it because it's that degree of inequality is bad for democracy it's bad for the functioning of the economy not because you're you're helpless at caring for the people in your in your nation without their help I don't need them you can go around them you don't have to go through them but you do it because you want to rebalance the distribution of income you want a balanced economy go here I want to make public colleges and universities tuition-free I'm not going to tax Wall Street because I need their money to pay the tuition I'm going to tax Wall Street because I want to disincentivize Wall Street speculation and if I'm successful what happens to Wall Street speculation if my taxi successful it goes down people do less of it right people say oh they put a sin tax on speculation so I'm gonna do less of it now you don't want to say that my revenue to pay for free college is dependent upon something that I abhor which is Wall Street speculation so you could say we're going to do a financial transactions tax because I think there's too much speculative behavior and it creates bubbling economies and it creates financial instability and so forth right so you could rethink the way that you talk about taxes so my position is when we think of government budgeting we have it completely backwards I'm gonna do this quickly because I've already said it many times we think taxing and borrowing come first that's first order the government says okay I'm gonna put together a budget but before I do I'm going to see how much revenue I can raise so I'm gonna raise taxes I'm gonna collect now I'm gonna borrow so I'm going to get some more pounds now I have money and now I can spend so who's going to pay the tab it becomes the question who's gonna pick up the tab how will you pay for it you need taxes and and you got to borrow before you can do anything no it's the other way around government think of Monopoly game government has to spend the currency into the economy before anyone can have it and once it's spent into the economy people now have some to return in payment of taxes and they have some to swap out to get bonds which are interest-bearing and kind of cool because they're super safe investment vehicle that you can own if you want to give up some of your currency in exchange for bond but the spending has to come first just like lee britain colonized Africa you couldn't collect the tax until the government first spent the pounds into into the economy okay so it models the debate what we do muddles the debate this thinking right here from a newspaper just two days ago I think she says oh we face a dilemma because you know we have this crisis we want to take care of health care and we have three choices we can either raise taxes raise the revenue /span okay austerity cuts to other programs to free up some money or break our spending rules guess which one I'm in favor of okay there's one year that makes a lot more sense than the other two from my perspective so you just put the handcuffs on you tie your shoes together and complain you can't run so bend over untie your shoes and go run around and that's basically what has to happen here you've committed to austere you've committed to budget rules you've committed to trying to force the economy to balance the budget instead of allowing the budget to balance the economy and so if you don't want to disregard your rules then these are your only two choices right you're going to increase taxes or you're gonna slash government programs in order to try to sustain something instead of keeping your eye on what really matters and here is the last I think slide and what I'm gonna try to do is you know bring it all together and say we're too stuck on the money question we're too stuck on the financing we're too stuck on the how will you pay for it in money terms what matters is the real stuff in our economy what matters are the resources the real resources that are at our disposal so if you have millions of people who are unemployed factories operating far below their capacity resources available to be mobilized then the government can do what Mariana said and say what should the mission be we have all of these things lying around there's the market is not bidding for that there is a zero bid for unemployed labor yeah the price of unemployed labor is your run there's no bid so if I'm looking out at the vast resources that are available to me and I say what could we be doing with the riches that we have then you focus on the real things and now you have a tough choice to make because you have to prioritize should we do infrastructure should we do childcare if we do health care so you'd have competing alternative uses for all of the available resources that you have but the money pushes those resources into productive uses right remember the government can afford to buy whatever is for sale in British pounds so if you have people unemployed unemployment is evidence of people looking for what paid work okay so you can put those people to work so in the u.s. right now senator Sanders and others including I think most of the people that we think would probably be running for president in 2020 including senator Cory Booker and Kirsten Gillibrand House members and they're all putting forward legislation around trying to create good jobs good good jobs meaning high-paying jobs so in the case of senator Sanders as as as is his norm he's going bigger than everybody else and so he's announced that he's going to be putting forward legislation to introduce a federal job guarantee program which is basically a public option in a labor market which says if you're unemployed and you would like to be working we will find a job for you okay will be a federally funded program but it will be locally administered so the idea is that local communities will have a say in the type of work that gets done so you know imagine Britain and think of all of the communities where there are pockets of high unemployment and you were to go into those communities and say what would you have people do if somebody provided you with workers to do things would you want community gardens would you want to deal with climate issues soil erosion would yours your library need new bookshelves how about your elder care facilities are there enough staff there to hold hands talk to read to play checkers with what what is a good society look like to you in the community you propose projects and the projects go up through the chain of approval and if they're approved they get federally funded right and so you can imagine what kinds of opportunities would be available if we let go of the how will you pay for it where will the money come from questions and focused on what really matters right the resources that we have at our disposal and how best to put them to use to serve the public good yeah does it is that okay [Music] oh yeah sure do you want me to just yeah sure my name is Debra and I was the two things I'm an NHS campaigner they're campaigning for the National Health Service mm-hmm which you referred to there in one of your slides and and I was looking at your last the last slide about have we lost sight of things and looking at the title rethinking how public value is created and I was wondering whether in here in the UK whether it shouldn't be more rediscovering how public value is greater because we created a welfare state in the National Health Service after Second World War which was at a time of absolute devastation in poverty and you know absolute need in the country and the government did precisely what you're talking about now it spent and Bevin who actually was the an Aaron Bevin who was the creator of the of the NHS and he said something when he resigned that I think will really resonate with you about what you're talking about because and he resigned because they were being in charges into the NHS and he wanted it to be entirely free he said the country could afford for it to be entirely free and the the argument that took place in the Cabinet Office was about spending on defense and he said there was nothing to buy that the everything had gone the the precious metals and everything they needed all the all the special chemicals they needed to make the arms they've been used up in the war and that they America which was very powerful because it had sent a lot of its real resources to the rest of the world during the war and the rest of world were now having to send it back again to America they said there was the English bribe they said why would you give them the defense budget money when there's nothing for them to buy when we've got people who are sick all over the place who really do need the mind and when when Theresa May makes those three choices and she says we can we have to either increase the taxes which impoverishes people yeah actually literally takes money out of their pocket or we can cut the other services which have already been cuts with a call yeah or we can weaken deficits friend death spend is the only one yeah it doesn't harm not only that it improves things so let me do this I was gonna as mentioned I was gonna bring my props and I ended up not doing it because we would have gone in extra 15 minutes but very quickly most of the audience's that I talk to are in the financial community I for whatever reason I end up talking to lots and lots of people who are financial advisors financial planners and there will be rooms with 4 or 800 or 1400 people and these are people who work in finance so you would expect that they would you know know something about money and finance and yet I go in and you talk to them about the government's but now remind let me remind you they tell all their clients spend less than you earn save and pay down your debt that's the advice to every one of their clients and it's perfectly rational advice so they come into that with that mindset and they believe the federal government like everybody else should play by that set of rules then I do a little exercise with them and I say okay let's find out whether you understand the deficit and the national debt so you would think that they would because again they work with money on finance they don't have a clue they hate it and they're mad at the deficit until I get done with them and so here's what I do I go in and I say okay I'll be there I'll play the role of the government and so I have my basically monopoly money but it has my picture on it and so they're kept there Kelvin bucks right so I'm the government so I'm gonna spend some money into the economy you're all in the private sector of my economy businesses households and so I'm going to spend 10 into the economy so I hand someone ten now they have ten right and I say but I'm gonna collect taxes now so I'm gonna tax back seven so they hand me back seven and I say what did I do I ran a deficit so I go and I scroll it down minus three Celt government of Kelton so now you're supposed to be very angry at me because I did this irresponsible thing called running a budget deficit by minus three how mad are you you're sitting there holding three where'd you get it you got it from me and you wouldn't have that three if I hadn't put in more than I took out so now they're thinking huh and I say but wait let's do it let's do it the proper way let's balance the budget so give me the money back we'll do it so I spent 10 in I tax 10 out now I've balanced my budget I go right down balanced budget smiley face everybody is supposed to be happy are you happy no I miss my three right I miss my three so I say well okay hang on let's go do it the Clinton way because this is what really excites the Democrats right those Clinton surpluses so oh but now you know you have a problem because in order for me to run a surplus I have to collect more from you and then I put back into the economy so taxes have to be higher than government spending so now you see yourself going into the red so that I can go into the black so you're you have to deficit I have to surplus how do you feel and they go miserable right give me back my deficit so the point is people don't have the foggiest idea and then you do the national debt what is the national debt I spend 10 into the economy I tax 7 out you're holding 3 kellton dollars I hold up 3 Treasuries I also have them laminated with my picture and these are Treasuries right and I say who would like to buy these 3 Kelton Treasury bonds and sure enough the person in the audience who's got the 3 kellton dollars don't pay any interest would like to swap them for the Treasuries which pay interest now you feel even happier because not only did I give you money I'm subsidizing your savings with free interest money right which is what's happening when the government borrows the money to buy the bonds comes from the deficit spending itself so you're not even out anything you're up your wealth is up your income is up the problem is with the distribution because who holds those Treasuries they're not equitably distributed across the economy they're mostly concentrated in the hands of the wealthy who can afford to save and put money into investment vehicles like Treasuries and so forth so if it isn't that the national debt is a bad thing it's your asset my liability it's your asset right and you're getting a risk-free asset and I'm paying you to have it we could talk about why I do that oh I don't like to be the one to take the questions I'll give shorter answers so everybody can hi Stephanie my name is Tomas I'm second year PhD student at the I IPP at UCL great and one of the main interests I mean especially for when it comes to my research is about monitoring the financial system so I know a bit about the MMT which is the main school of thought that comes from the US and and I was wondering whether you can you could comment on the outcome of a very friend and that was that these whistle ins couple of days ago in which the citizens were asked to a street the private banking sector from the power of creating money well a special kind of money which is not government money because especially these somehow shows that in the current financial system there's no just government money or public money but there's different sorts of money or cash or financial liabilities if he wants so and I would say there's a hierarchy of money which is both the National at the international level because if we look at money across nations we can see the US dollar having a different role from I don't know Japanese yen the euro and so how would you imagine a financial system different from the current one maybe a sort of financial system that actually is aligned with the public interest you know democratise okay lobby because you are a PhD student I will give you assignments rather than it's a big question and we could have a long conversation over a drink about it but instead I'll say two things I don't know the outcome of the referendum good that would have been I was tweeting about it I'm sure that had something to do with its failure no people here in the UK like Ampata 4 and Francis Coppola we're also weighing in also taking the position that I took as well people are doing crazy things I think because they see they try to diagnose the problem and they see that private banks were somehow involved in creating credit that somehow drove the housing bubble that ended up collapsing the economy and therefore working backwards the way to stop something like this from happening again is to strip private banks of the ability to make loans that create deposits ok this is not my position so you asked how I would go about restructuring the financial system to make it safer and that sort of thing there's a very good outline and it's quite detailed and it was written by Warren Mosler it's published at Huffington Post it's a proposal to reform the banking system as I think what it's called and I we worked on it together as a group so you you should look at that because it's not a short answer lots needs to be done thank you very much I enjoyed your presentation my question is do you have to be a globally powerful sovereign currency for your argument holds the examples are used by the u.s. in the UK obviously a lot of investment is needed in infrastructure in developing countries in the global south how much of what you presented would you have to change yeah great question too if you were to be talking about different kinds of country great question so keep in mind two key points one is that the government is spending borrowing taxing only in its own currency so if you've got countries like Ecuador or you know Argentina with its you know messed up system where so much is u.s. dollar denominated those countries are not going to be able to exercise the the fiscal capacities but what do you have to be a country like the US or the UK or Japan in order to do this the answer is no what you have to and remember I said the limit the upper limit is what is for sale in your currency so you know India has an employer of last resort program or I don't know a lot about it but and and you could I'm sure talk to me a lot about and I'd love to hear that but look if you are a country that has a sovereign currency even if you're a small open economy you can say what are the resources that are available here domestically and if they're for sale I can mobilize them I can buy them if there's labor that's unemployed that wants to work for my currency I can hire it I can put it to work that doesn't mean that I can have access to the rest of the world's resources that are not available domestically raw materials and things like that I'm gonna have to trade for those I'm gonna have to get the other countries currency if they won't accept mine so there are some limits but the the limit is what's for sale in your own currency you can do a lot with that okay thank you I really enjoyed that Stephanie thank you I just wanted to mention though you you've brought up the game of Monopoly I don't know whether you used it as the modernization of the creation of money but I don't know you're aware it was actually intended to demonstrate the monopoly of land it was actually called the land rights game yes but also and just because we come from the land value taxation sort of movement and we're very interested in the MMT combination but you did mention about taxation I mean the big thing of course you know is that actually repricing the land market is totally dysfunction yeah and so that is one of the important taxes that has to be you know the work of Michael Hudson of course to do of course so I was just with Michael we did a panel together last week in New York City and so we've we've done dog and pony shows in the past so there's a nice complement to the MMT and the Georgia School and of course you have a perfectly rational justification for putting up taxes in order to address problems associated with lambda values overvaluation yes perfectly compatible oh I won't remember even one presentation thank you very much my name is Peter I'm a notice they're showing the slides with Bernie Sanders night you were opposing Bernie Sanders but the slides you showed showed him in effect as a worker the thought came to me not following your advice so I'm kind of quite interested in the arguments that are put by people who don't follow your theory not so much from within their own theories aware but within your own theory it seems to me that that's where we need to get to in terms of the political acceptability and viability of the theory sort of playing out in in the US and and in the UK Thanks hi my name is Patricia from the Gower Institute I want to originally from South America a lot of countries over there have borrowed over the years from the IMF in dollars right now Argentina is doing that I believe this country also has some history with borrowing from the IMF is there ever a good idea to do that is it all any necessary to do that well it's it's not oh right right right right right Anthony Malloy from the labeling campaign Stephanie at the beginning you thought about demand and supply and later on you talked about socially beneficial government deficit spending you know but how do you mix those two like I mean presumably you're you're advocating a job guarantee rather than a universal basic income because they'll form a stimulate supply as well as demand is that right way looking at it okay Peter so I think the tide is shifting so his question to remind was was my advice disregarded because senator Sanders attempt to expand for everything right to be fair I started working for him in January and he announced that he was going to run in April or May so it takes a while to warm up to me he you know and what I said is Israel you are bound by the rules of Washington and imagine how much less serious he would have appeared I think had he not attempted to dialogue the way that other candidates dialogue I will point out however that he likes to say this phrase change doesn't come from the top down change comes from where the bottom up so what I do is I try very hard to go into communities to give public talks to get myself out there in social media and to communicate with regular people because I think that's the pressure point I really do believe that our politicians will be more likely to let go of some of that rhetoric when we stop holding their feet to the fire every time they show up for a town hall meeting and we're asking them about the deficit they think well I opposite because all of my constituents are asking me about so let's stop doing that let's make sure that we tell them that we want them to unleash the full force of the public purse to serve our interests because the Republicans just demonstrated that they have no qualms whatsoever adding to the deficit if it means achieving their goals and their goals are cutting corporate taxes and giving big tax breaks to the donor class so that's their agenda their laser-focused and they're not about to let the deficit stand in their way they'll run right through the deficit and then they say oh it'll pay for itself hand-wave hand-wave i'm going there and democrats are going i have to pay for everything i have to find a way no no no no no you don't they just gave you the freedom to now right open up and so there's an interesting senator his name is brian schatz he's a senator from Hawaii and he's got legislation out right now for debt-free college so it's very similar to what senator Sanders was trying to do with public colleges and universities and he goes and he sits down for an interview and they said to him debt-free college huh how you gonna pay for it and you know what he said I'm not going to answer that question he said it's a trap it's a trap he said the Republicans don't pay for anything he said why is it only progressive only the progressive agenda has to be paid for I thought it was brilliant and what you're seeing is I'm hearing from House members and from Senate staffers that the conversations are changing in the background they're all trying to fairly write to me and say you know I'm talking with at least 20 candidates who are running right now across the country for the House and Senate mostly for the house who are calling to say how do I talk about the deficit how do I avoid this kind of stuff so I think we're getting there I just think that really it's gonna take more of us giving them the space that they can then say okay you know you're not gonna primary me and and hold me accountable if I don't Patricia IMF huh does it ever make sense to borrow from the IMF not if you can help it not if you can help her because those IMF loans come with strings attached and the strings they're designed to hang you so I would but sometimes a country has debt so the choices do I default on this for and denominated a dime Russia I'm Argentina right I borrowed US dollars so now my commitment is to repay dollars but don't have the dollar patent so I don't issue the dollar I gotta find the dollars and if I can't earn them then I need to get them from someone who has them the IMF can arrange that loan but it's gonna come with very ugly strings attached right so well I think I'd look at that on a case-by-case basis but because some countries have done just that Russia defaulted not just on the dollar-denominated debt but on some of its ruble debt which was crazy it could have paid all of that right what else Anthoni basic income so here's my thing I am NOT categorically opposed to a basic income I just don't know what people are really trying to do when they say basic income because there are a thousand and one varieties of this thing sometimes people say and some of my some of the people I know who are very wealthy say we should just have a basic income and get rid of all other social programs so Social Security Medicare Medicaid food stamps housing assistance all that stuff goes away and then we just send you a basic income 30,000 a year you'll figure out how to save for your retirement you'll figure out how to get your health care you figure out right and we'll send you a check and then you work all that other stuff out so we are pay for is eviscerating this social safety net I think that is extraordinarily reckless I think that replacing programs that have constituencies lobbying groups people who are prepared to stand to fight for to defend those programs swiping all of that away and replacing it with a promise of a check free money if you like the next Congress that comes in what's the first thing they're gonna cut the free money the basic it could be the first thing to go it'll get whittled down until it's all gone meanwhile you've compromised the safety net now not everybody puts forward that some people say it's not a replacement for it's a supplement to and then I'm willing to to talk about that but yeah I generally prefer the job guarantee because it aims the spending at the people who it aims at the unemployed I don't need a basic income check and people who make more than I do certainly don't need a basic and so I might worry one worry I have does everybody know what this basic income is you get a check and you'll get a check and you everybody gets a check so $30,000 well if you're poor you're gonna eat right through your basic income it's gonna be gone but if you're wealthy you're gonna take your 30,000 and you're gonna buy Apple stock or we are gonna whatever and so you're what it does to wealth inequality concerns me a great deal because the poor are gonna go right through it consume the whole thing the wealthy are gonna invest and then it's gonna exacerbate already dangerous levels of inequality so that's my concern take-up you there's a hierarchy of missions and I think that you rather neatly hopped over saying these are going to be sorted out and approve I think there's a great question of power and politics in this and how are you gonna jump over that you mean with respect to the job guarantee program no oh generally in your mom okay ash we can always talk anytime but oh I'm sorry we talked it no I'm sorry and I'll see one quiz because I've got it soft noon which is if the constraint is real resource what's to stop an economy land-grabbing other countries resources you know to expand the base at which you can spend money into what do you mean land-grabbing other I suppose if opposed it was once known as leavings from you need to acquire other people's territory in order to have money to spend into it if he will constrain his real resources because you want to spend money buying stuff you have wait why well I'm missing there via what channel well only if your cars here is defined by your national territory you can buy things in anything that is denominated in pounds sterling yeah why not expand the Territory in which you can buy stuff in pound sterling and therefore become a more powerful that's already an incentive I mean that's not Emma that's not Kelton I don't think that follows from what I said I think that countries with imperial ambitions are already exercising their imperial ambitions and I don't think that it's carefully thought through in terms of the currency itself right I mean I think it's more about the resources the drive is to acquire territories rich in natural resources and strategic geopolitical strategic locations so I don't think it follows from what I've so it's definitely first of all apologies for coffee through your speech this is questions from my 13 year old daughter and she wants to know because she why can't somebody who's got a debt in a different currency just swap it for that current swap their own currency for that one she doesn't understand connects I couldn't explain it to her because I I don't know I'm saying yeah well she has to buy it yes and swaptions she could do that if she could engage in some derivatives markets and find somebody who wanted debt denominated in her currency but okay let me let me circle back yes okay priorities look it's already the case nothing I said nothing I said isn't already the case so what I'm suggesting is that we're not making full use of the powers that we have right there is more that we could do to expand fiscal policy if you like whether it's tax cuts for those who would most benefit or spending increases but it's always the case that there are competing alternatives you're gonna have Atkins at UNC in the house whoo you know this group wants transportation because their state is is really into the the way that I would suggest thinking about this is suppose you look suppose somebody runs on an agenda to do these 12 things yeah and wins the majority vote then you could say this person has an effective mandate from the population this is what the population has voted for these are the things I want now it's up to the administration working through Congress to say how much of this agenda can we get done right but the priorities come out of the budgeting process and lots of voices get heard in that process and they don't always or even usually reflect the the will of the majority I'm not so you're saying the local can stand in the way of the different from what issues politicians Theresa May alright so how does one adjust what's all you can do is pass legislation we did it in the US with ACA with the American healthcare also called Obamacare and that relied upon voluntary participation by the states states had to expand Medicaid in order to fully participate in Obamacare 20 states 21 states did not do that and so you weren't able to roll out health care reform in nearly half of the country because the states stood in the way so that can happen in the federal job guarantee that we're talking about we're imagining what happens if you have a deep red state and you don't have buy-in your people don't want to participate in the federal job guarantee but you have population of people who desperately won't work but there are blockades being put in the way through state and local governments and our solution is the federal government can directly employ those people so you can end run you can't always get away with that but yeah it's a legitimate question and you can't resolve it in every case but we're thinking about that with respect to the jobs yeah terrific [Music] [Applause]
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