Hasierarako, ikus Moneta-Teoria Modernoa (MTM): Bill eta Warren-en abentura bikaina.
Segida:
Video of Australian book launch of ‘Modern Monetary Theory: Bill and Warren’s Excellent Adventure’
(https://billmitchell.org/blog/?p=62057)
October 16, 2024
… Today, I publish the video of Australian launch of our new book – Modern Monetary Theory: Bill and Warren’s Excellent Adventure. 8…)
Melbourne Book of my latest book
On September 12, 2024, Readings Bookshop hosted the Australian book launch for my new book with Warren Mosler – Modern Monetary Theory: Bill and Warren’s Excellent Adventure (published July 2015 by Lola Books).
The ABC Finance presenter and financial journalist – Alan Kohler and I discussed the book before a live audience of about 60 people.
There was a Q&A session to follow our discussion.
It was a nice evening and the response of the audience was positive.
Many thanks to Pauline at Readings, Alan and film maker Adam Farrington-Williams and his team for hosting, asking questions, and providing the footage (in that order). (…)
Bideoa: https://www.youtube.com/watch?v=vNfN3NX5KF8
This edited video records the Australian launch of the book by William Mitchell and Warren Mosler – Modern Monetary Theory: Bill and Warren’s Excellent Adventure – https://www.lolabooks.eu/products/mod… – which was published in July 2024. The launch was held on September 12, 2024 at Readings Books in Hawthorn (Melbourne). National Broadcaster (ABC) finance personality Alan Kohler asked the questions and we thank him for his time and assistance. Film maker Adam Farrington-Williams and his team provided the footage
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my name is Pine welcome to hor for readings on behalf of myself and my colleagues Noah Mark and who are here
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with us tonight and thank you for joining in this wonderful event where we
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have um two esteemed gentlemen to keep us entertained and engaged this evening
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um Alan doesn’t really need much introduction and some of you may have seen him here a couple of weeks ago so
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we’re getting first bases with Al here in war and
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friend of course Bill I’ve never met before um had a quick glance at his book
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and I just wanted to note because I don’t know if some of you are like me that when things come to money if it
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wasn’t for Alan you wouldn’t pay any attention to finance matters whatsoever but
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um when I picked up this book I thought it’s not like the typical Finance book
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that you find on the shelf and I hope you would just indulge me a moment while I read the dedication Bill’s dedication
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which he’s given me permission to read says dedicated to the millions of
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unemployed and their families who have been treated as fodder by policy makers
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around the world in their misguided attempts to advance The Profit interests of the wealthy so I read that and I
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thought it’s not your typical Finance book so it made me ready to hear a bit
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more so um please welcome the two gentlemen here tonight [Applause]
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thank you good I bill is that is that working hello yes
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um yeah so Alan microphone very close
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we’ve uh we we’re just going to add Le and when I spoke to Ellen earlier this week we decided our objective was to
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have some fun so that’s what we’re just going to take it from there so and I thought we
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uh if you we would open for questions from you too uh at some after I’ve
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exhausted myself or run out a question and I’ve got questions for you by the way oh he’s got question she’s
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question that’s not allowed sorry can’t I possibly have that I’ve got a list of him now listen I thought maybe we could
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start uh firstly I want to say what a great book it is i’ I’ve read it it’s really worth reading it’s engaging and
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informative so I thought maybe you could start by telling us about how you first came across
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Warren uh M cuz it’s an excellent adventure the whole thing’s about your adventure with Warren in you know
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developing modern monetary Theory and maybe because it’s interesting how you two came across each other yeah it’s uh
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sort of a chalk and cheese story that’s right uh there’s me in my blue suit with
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my running shoes and there’s uh Warren in his polo shirt
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uh and he’s a tennis addict he lives in the Virgin Islands in the
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Caribbean and uh Warren is a very eccentric guy but he you know he’s he’s
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he has some of the largest uh speculative trades in foreign currencies
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in history you know that’s sort of the sort of character is he’s a Wall Street ex- Wall Street
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Banker Speculator but a really creative individual like he builds racing cars
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and stuff like that you know and it’s it’s one of those Unity of
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science stories because um you know I’m just a conventional
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academic in the sense that you know I live in an ivory Tower or sit in front
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of computers these days in in the P that was in libraries and you know I work things out
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deductively and and think think things out whereas Warren is an experienced
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sort of guy and you know he’s got an undergraduate degree from a college system in America uh but he’s he’s a
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genius and uh uh in the very early days of the internet mmt modern monetary theory is
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an internet phenomenon because in the early days of the internet so we’re going back to 94
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now 1994 and I was a young academic and uh and it was the first of the lth serves
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if you remember those these email discussion lists and uh in the past when you know
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you as a young academic you’d sort of want to know something about a a famous
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economist in my case you’d write a snail mail letter and ask some questions or seek
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some data or something and you know like 3 months later you might get a rep and so these email lists in the
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early ’90s ’94 this particular one started uh it was like a revolution to
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us you know because every day you could interact with the top economists in the world who were who were on the list and
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uh one day this guy Warren mosa turned up on the list so it was it started off
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an academic list and then it got invaded by all of these spooky Libertarians and
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Austrian economists and everyone all these unpalatable types and and they all had a plan for
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save the world and when Warren turned up here you know I thought oh bloody hell
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another one of these characters and he he started writing and
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uh to the list and uh it was the only person I’d ever run into had similar
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ideas to my own cuz I was on the outside of the profession Anyway by then well
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always and um so yeah we got to know each other
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through that list in 1996 and uh then one day uh I got a phone call and
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uh uh in Newcastle Saturday afternoon and uh this
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American accent says oh I’m Warren MOS I’ve come I’ve fly to Australia how did he how did he get your phone number uh I
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don’t know maybe it was uh through the email list oh actually those are the days of the White Pages yeah he probably
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just looked you up in the phone book he might have but but also I think because we had signatures on our emails at that
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stage oh okay he probably got he probably found it there cuz I’m not sure
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I had a mobile phone and I had a mobile phone around then one of those
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huge uh noia remember that yeah I do that you pulled out the area yeah it was like it pretty cool but uh yeah he said
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look flowing out to Australia to meet you so so what did you do you and Warren when he arrived so he showed up in
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Newcastle we had lunch you had lunch where’d you go in my backyard oh in your
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backyard right yeah I mean I was living on a little little farm sort of a
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permaculture that that uh a couple of Acres down the bottom end of Lake mcar
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if you know that area you know that area and uh I we were experimenting with per
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culture and stuff and yeah so we had a big backyard actually and uh yeah we just sat in the
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backyard and and at that point had the term modern monary Theory been invented
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or we didn’t even know what we what we were doing I mean we were we were just sketching ideas in
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those days and uh trying to work out where how we could bring cuz Warren has
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not I’ve got an academic mind I know the literature I read all the Classics and
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you know so I I build knowledge up that way he builds it by trading he that’s how he learned you know he’s he’s he you
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you’d have more Affinity with waren because of your association with those
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the the professional side of the markets and he had just worked everything out worked everything out by inductive logic
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just doing it and so the thing I suppose the thing we need to get into now is that you you
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each approach the subject from a different point of view right so you approached it from the point of view of
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employment and you had at that point come up with what you call the buffer
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stock of employment B ID BSE model and
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Warren approached it from another point of view which was a financial one which was the the bond markets the bond
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markets but also the uh the issue of or the question of how uh money is made and
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how and how money uh and how governments spend money and so on and he and his uh
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idea as I understand it was and I’ve also interviewed Warren so I kind of uh
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got that from him as well was the idea that um uh taxation is what creates
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unemployment yeah and so he so you you both kind of ended up talking about unemployment but came at it from
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different ways it would be great to just hear you explain to us
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uh firstly how you got there um what what your what your process of thinking
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was that got you there and then to describe as you understand it how Warren got there well I got there many years
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earlier as a fourth year student at Melbourne University and in those days you did a a
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minor for your honors year you did that’s your fourth year you did six
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coursework units and a minor thesis and uh one of the subjects I took my my
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electives was agricultural economics and this was 1978 and if you if there’s old people
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old enough to remember what was going on there in the room 1978 was the as
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unemployment was starting to rise it was just after the Lynch Fraser razor gang
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that started to hack into government employment apprenticeships spending
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and for the first time unemployment really started to rise so I’m sitting in this agricultural economics class AG
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Lloyd was the famous agricultural Economist of Australia he taught me I mean I was really privileged to and you
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learned about the wool price mechanism yeah he was teaching us one day the wool price stabilization scheme and uh for
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those who don’t know this was a scheme if you remember back in the Years those big red buildings in the inner suburbs
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those monstrous four-story buildings so were the wall stor and they’re now gentrified Apartments
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but they were in all the cities and this was scheme the the the Australian
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government was lobbied by the farm because up Farm Lobby because up until then the farm incomes would fluctuate
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wildly uh depending on the clip and the state of the the clip and so they
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lobbied the government the National Party lobbied the government to bring in a price stabilization scheme to even out
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their income and this involved the government buying wool if there was a surplus wool in the
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market so that it wouldn’t drive the price down or and and then they’d store it in their big red brick buildings and
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then if the price looked like going above the the stabilized price because
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there was an excess demand of wool the government would sell it out of the wool stores so I’m you know I wasn’t that
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interested in Wool uh but I was sort of thinking
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during that lecture the first lecture on that scheme I said bloody ell this is a this is a full employment award scheme
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and I was a leftwing boy and uh and my profession the most disgusting
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profession in history economics economists um that steady
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on that was that was uh soft
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G uh they were all at that time they were all writing in the literature that
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our only the Full Employment was now 8% you know we’d had 2% for three three
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or four decades and then unemployment was starting to rise they said oh yeah the Full Employment level of unemployment now the stabilized
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inflation was about 8% and the government had to force unemployment up
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to stabilize inflation because if you remember inflation was a problem in the 70s because of the op oil prices Rises
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when you know price of oil in October 73 doubled overnight and um so I just had a thought
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during that day I’m in El and I said okay this is full employment of War this
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means that the government could create full employment of Labor by buying up Surplus labor and selling it back at a
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fixed price to when there was high demand for labor in the private sector
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and that I could and then I started to get really interested in buffer stocks where governments and and these had a
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long history agricultural economics where governments would have commodity would have commodity buffers to
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stabilize prices and I figured that that could be the way we could we could deal
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with the inflation [Music] problem which required the government to cut
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spending but not create unemployment in other words they would
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force workers through spending cuts out of their private jobs and then absorb
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them back into this buffer stock of public sector jobs and um that’s where I got the idea
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from and uh I called that the BC model buffer stock employment model of course
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in my academic Bend and then of course in the ’90s the mad cow disease came
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along which was BSC oh that’s right and I thought bloody we better not I better
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change it and we we event and then I met Warren who had worked out a similar pattern that’s the unity of science
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aspect yes and uh from totally different principles and so we decided to call it
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the job guarantee now he had worked out he had worked it all out
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from and and the other thing that I that I suddenly realized was that a the government could
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buy whatever available resources were there were out in available in its own
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currency that’s that’s coroller of the BSC model and that by government
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setting the price of one commodity in other words the wage of that it was
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willing to pay for this job guarantee worker they could condition the overall
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price level and so I sort of worked out that the government had no Financial
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constraint but also could condition general price level by targeting one
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price labor and offering a fixed price to anyone who didn’t have a
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job and and that was and what what in your mind was the fixed
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price well some socially inclusive wage now was it was it the minimum wage
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well it would become the minimum wage it would have to become the minimum wage yes you’re right of course because the
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private sector wouldn’t be able to employ anyone below that uh because they
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would all go into the government job and uh and how do you imagine that the government would decide on that
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wage well this you know later work I did and this was work I did in for the South
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African government on setting their minimum wage system up what the work I did in South Africa on their minimum
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wage designing their minimum wage system for the government was to abandon the concept of capacity to
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pay and uh create and say that the minimum wage should be set at the level
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of sophistication you want your Society the minimum level of sophistication you want your Society to function at and
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then the private sector has to adjust to that and of course I remember when I was in Johannesburg the IMF official said ah
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yeah but all these private sectors companies can’t charge wouldn’t be able to afford that it’s a bit like the
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Harvester Judgment of 907 exactly and and uh the Harvest judgment was the
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famous judgment that set up the whole AR arbitrated wage system in Australia the award system and yeah the argument I
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gave back to the IMF and the World Bank official that day was that well if if these private companies can’t pay the
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minimum wage then they either go out of business or they invest in better Capital so they lift productivity which
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would allow them to pay the wage because you know society’s got to make judgments
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about what your minimum standards of living are not not capitalists so society makes and government’s our agent
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so it should do it on our part that’s that’s I was surprised to read in your book about Benjamin Graham being uh
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referred to and and i’ I’ve known Benjamin Graham as the author of the intelligent investor and being a and
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being a value investment Guru uh obviously from the 1930s and 40s and
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being the um the guru or the the the thinking behind Warren Buffett um but
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but for you he’s something different well he work on stocks he he did a lot
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of work on commodity buffers as a way to stabilize prices in commodity markets
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because he was speculating in commodity markets and he he wanted to he wanted to
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work out ways in which you could control the variance of the price so I got interested in him as part of that work
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in my fourth year of Union uh that was in my term paper in that subject
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I you quoted him saying the first conclusion is that whenever wherever Surplus has been conserved primarily for
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future use the plan has been sensible and successful unless marred by glaring erors of administration the second
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conclusion is that when the Surplus has been acquired and held primarily for future sale the plan’s been vulnerable
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to adverse development so it’s it depends on how it’s used right yeah and and I mean one of the one of the big
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differences between a primary commodity so buffer stocks have been used to stabilize prices in agriculture markets
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but one of the problems of say the the using agricultural Commodities is that
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they rot or they deteriorate and the other problem of
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course is that uh once you have a have a expectation from the farmer that they
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can just keep keep over produce and sell their over production you get the classic subsid problem that they’ll just
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produce forever because they’ve got a fixed Market to buy in now you know a
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lot of mainstream economists attacked me have attacked me over the years
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about about buffer stock solutions to unemployment but if you think about it
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no family is going to start breeding like crazy to increase the number of
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workers just to create unemployment so they’ll be on a social inclusive minimum wage and secondly you
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know if you’ve got people in employment the the problem of unemployment one of the pathologies of
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unemployment is you know that that people you know social psychologists
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have studied this in depth that you start off with a social network this big
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and after several months of unemployment your network starts to shrink and and and eventually you’re lying in bed in
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fetal position depressed that’s one of the problems of unemployment whereas if you’ve got a if
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you’ve a job if you’re never facing unemployment well then you’re less likely to have those sort of pathologies
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so it’s not as if you’re going to rot so the the problems that pervade agricultural buffer stock systems
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wouldn’t be pertinent to so so the wool uh buffer stock system was funded by
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levy on uh Sheep Growers right how would be how would the employment buffer stock
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be funded well I mean this then you here we [Laughter]
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go now I’ll ask a question of the audience how many of people do you in
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the audience here have a really good understanding on the why the government
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spends yeah the mmts who know me do how many people know where government
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spending comes from you have you thought about this how many
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people think that your ta that you as taxpayers provide currency for the
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government to spend come on get your hands up yeah and how many people think that
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if the government spends more than it raises in tax revenue they borrow from the financial markets to spend yeah will
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they bring money can you well after this can you
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take me find a printer the way the government spends
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taxes do not provide the funds for the federal government of Australia to
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spend the federal government of Australia issues the currency that we
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use so it’s like PRS the money it’s it doesn’t print
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anything it’s it’s like saying that now I V from Melbourne unfortunately he dos
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bre through S which is just as about as bad but um it’s worse come on oh I don’t
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know but imagine in the 3 minutes into the third quarter of a footy game there
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suddenly an announcement goes over the MCG broadcasting system sorry the game
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has to stop because the scoreboards run out of
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points what would you think about that you’d say this is absurd get off to digital scoreboard bang bang bang
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they just the the computer operator just as goals get created or
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points imagine if you were standing at at the Tramway system said oh we’ve
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run out of tickets today you’d say you can’t run out of
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tickets they’re digital you might not be able to get on the train because there’s not enough
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capacity but you can’t run out of tickets you’ve always got a ticket the Australian government can
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never run out of Australian dollars because it issues the currency and how does the government
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spend well every day the treasury Department advises the Department of Finance to advise The Reserve Bank of
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Australia to type numbers into bank
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accounts that’s it that’s government spending it’s it’s already funded it’s already financed by the typing
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so then you ask me well why would they what do your taxes do and this relates
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to you you point about Warren yeah so so maybe this is a good
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opportunity to just to talk a little about what what Warren’s insights were
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yeah Warren Warren was a fixed income Trader which means that fixed income
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means government bonds or anything with a fixed fixed yield on the asset
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and he made his name by trading government bonds particularly cross currency trades he worked out
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that currency issuing governments can never run out of money and so then you ask yourself well
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God well what does that mean you know what what are all the because that’s a foundational principle of mainstream
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economics that the government is like a household and and all of us have
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financing problems so I’m at work today because I’m need
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income and if I don’t if I want to spend more than my income I have to perhaps
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run down prior savings or I have to go on eBay and sell something or I go to
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the bank and borrow so I’ve got a financial constraint Ellen’s got a financial
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constraint we all have why because we’re users of the currency whose currency is it
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governments they’ve got no Financial constraint and think about this if I suddenly declared today I’m taking over
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this room and making a new country on I’ve got a military out there and if you try to get out there
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bang and for the privilege of being in my country you now owe me $100 in
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tax now it’s my currency it’s I’ve got a new currency as well so what’s your
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problem I’m just to stay in my country you now
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have to pay me $100 a week what’s your problem hundred of Bill dollars not
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Australian dollars Willies what we’ll call them Willies whatever you
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want you don’t have it exactly you don’t have it how are you going to get
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it put off off off no who too you well
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I’m not I’m not a financer I’m the government who’s offering Public Services how are you going to get my
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currency you’ve got to offer your resources to me and I’ve got to procure
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them and pay you my currency as income then you can pay your
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taxes so if you’ve done first year logic at Uni or any time you don’t even need
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to do logic to work this out how can some that comes after
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something cause something can’t so before you can pay your taxes I
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have to spend the currency so the spending of the currency actually finances your ability to pay
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the taxes not the other way around that’s sort of what Warren had worked out yeah and that that’s a that’s
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a massive breakthrough in uh
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as opposed to mainstream thinking massive massive restructuring of
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thought it is correct so this all came about because I asked you how you’re
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going to fund the BSC oh yeah well they the job guarantee well they’re going to fund the fund full employment all as
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they fund anything by typing numbers into computers that’s it it’s
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funded that’s as simple as it I mean you might be surprised by that that’s how government spend so the constraint on
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government spending is inflation not the existence of money right so so why isn’t
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a job guarantee inflationary because it’s it’s a fixed price for a resource
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that has zero Market bid so this what had what that’s jargon what does it mean
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well what it means is let’s say that there’s all the productive resources including labor are fully
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employed you know we we got enough spending in the economy to have everything humming along at full
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capacity then the government gets an idea it wants to have a green transition of some sort that means it’s got to
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require more public resources uh public production and it’s
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got to go out in the markets and somehow get hold of more resources to fulfill its new program so yeah it can go out
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into the market and get those resources how by out bitting the current users
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because it’s everyone’s being used now if it it it can do it because it’s got
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no Financial constraint it can buy whatever was available for sale in Australian dollars but what will that do
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it will create excess demand for the goods for the resources
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inflation so in that situation how can the government still fulfill
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its ambition and not cause inflation not not come up against inflation well the
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answer is it’s got to deprive some of the existing users of those resources of the ability to use
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them how does how might it do that well it could do it through dictate just say
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you know we’re taking them off here it doesn’t do that of course how else might
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it do it well it’s got to reduce our disposable income because if it reduces our as a
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sector if it reduces our disposable income then we can’t buy as stuff and
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there will be resources that are unused so how does it do that enter
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taxation taxation doesn’t fund the spending and I I’ll say this very slowly
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it creates the resource space for government to spend into and not cause
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inflation and a simpler way of saying that is it causes unemployment
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because it deprives us of the ability to buy
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resources spend or for firms to buy labor
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whatever it deprives the non-government sector us of the ability to use all the
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available productive resources and then the government can bring spend and bring those unemployed
31:53
resources back into productive use without causing inflation so taxation
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that’s the role of Taxation so that answers the question that I often used to get asked at the
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beginning of all of this if the bill if the government hasn’t got any Financial constraint then
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why the hell do we get taxed well that’s why you get taxed because the government has to ensure
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that there’s enough unused resources to fulfill it we call it the provisioning story of
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mmt it’s to provision itself cuz the government doesn’t have any resources
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we’re the ones with the trucks and the labor and the skills Etc so the
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government has to work out how to provision itself so that it can provide services and build
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infrastructure and it does that by depriving us of the use of resources through taxation and then brings them
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back into productive use through its spending the taxes do not fund the
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spending right so but just but getting back to the job guarantee now so the no okay so
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so uh the taxation creates unemployment um the job guarantee soaks
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up the unemployment is I mean join those dots for us okay so it’s
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it’s it’s a sec SECU join up because they’re not necessarily the same
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logic now what do I mean by that the job the job guarantee isn’t a
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job creation program a lot of people and some mmts even the more the ones that
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came after us who have picked up on our work have said oh the job guarantee is a solution to everything it’s you know
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it’s well for Warren and I the goal for government always should be
33:52
to absolutely minimize the job guarantee size
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the last thing you want to Aspire to is to create minimum wage jobs there all we said at the time and
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since and we explained that in the book is that the job guarantee is better than
34:13
unemployment it’s better than unemployment but if you if you want to
34:18
have you know a lot of people a lot of the American mmts say oh we if we have what they call a green New Deal and I
34:24
hate that expression but they say let’s have a green New Deal and they they understand it’s going to
34:30
be incredibly dislocating in employment markets you
34:35
know TR you know transitioning from carbon to non-carbon is going to be
34:41
diabolical and it’s going to create you know labor that’s going to be shed so
34:46
their solution or let’s have a job guarantee well that’s not but never what Warren and
34:53
I conceived we s that if in that case you’d want the government to have very
34:59
carefully worked out public sector work a career high paid productive career
35:05
based work that should be the aspiration of government at all times but the but
35:11
when you have to put the brakes on demand and create unemployment as we’re
35:17
doing at the moment then the job guarantee is better than unemployment so what would people
35:24
who are on the job guarantee and pay the minimum wage be doing well in 2008 I got
35:31
an Australian research Council Grant one of one of one of several that I’ve had
35:37
but uh that particular was a linkage project where I worked with jobs Australia which was sort of the uh Peak
35:44
body of all of the not for-profit job job uh Network agencies at the
35:51
time so they weren’t they weren’t the profiteering ones so they’re not for profit agency and that project we did a
35:59
national survey of all the local governments and we asked them if the federal government funded a social
36:04
inclusive minimum wage job what what sort of jobs could you
36:10
create and supervise and provide for uh in environmental care services personal
36:16
care services Community Development we got millions of our inventory of jobs is in the
36:23
millions that they could offer so there’s no what we learned was that no shortage which would be really value
36:29
adding jobs what we learned was that there’s and it’s a fundamental principle is that
36:35
there’s no shortage of jobs there’s just a shortage of people who want to pay for them the work and you know when I was developing
36:42
these ideas as a younger academic I wanted to also push the sort of limits of the debate a bit and uh I’d get asked
36:50
well who would who would what sort of jobs would you allow to be in the job
36:55
guarantee and you know I’ve been a surfer and one of the problems on the
37:01
Australian summer is the number of people who drown in the sea and last
37:07
summer there were several drownings and so I said okay will not employ
37:13
Surfers what would they do surf
37:18
obviously and have fun and what else would they do then well they would take
37:25
uh water safety classes for school kids on features because as a surfer you know the rips and you know the quickest way
37:31
to get out to the break and so the surface could as as their Mutual obligation as their
37:38
reciprocal obligation under the job guarantee scheme they could surf a bit and they could take school kid classes
37:45
on water safety would that be productive well under the way we measure productivity at the moment that wouldn’t
37:50
be productive work but the way I measure productivity in terms of social value rather than private profit value that
37:57
would be incredibly productive imagine the family tragedies of all these people
38:03
that drown all the time so that’s an example of well you just you just have to in order to make it productive you’d
38:10
have to just add it to GDP yeah well the wage the wage you PID would add it to GDP but you know one of
38:16
the things that the critics bring up all the time is they use this expression boond
38:23
Doling boond Doling just to put down for art it’s just make work you know I’ve been on these So-Cal Mate
38:29
work and painting Rock schams I’ve never painted a rock in my life but uh you know and the sort of and we I talk about
38:35
it a bit in the book you know I when I was a unemployed Surfer musician down on
38:41
the coast in my younger years we pl we planted out all of the
38:47
sand Junes down along B heads beach with maram go and saved those junit they were
38:54
they were government Community Development jobs in those do and you go
38:59
back much earlier the 1930s well who built the Great Ocean
39:04
Road you you hang out down the Great Ocean Road who built it yeah yeah yeah
39:11
Community job job jobs during the Depression now it’s a multi-billion
39:16
Dollar Resort tourist Resorts yeah so is it is it fair to say that for you modern
39:22
monetary theory is really all about the job guarantee about employment no
39:28
okay what else is it about it’s about under it’s about understanding the
39:33
capacities of the currency issuing government and the consequences of using those capacities and the way in
39:41
which us as a general
39:47
body understand the capacities of our federal government is erroneous we don’t
39:54
understand it and we’ve been led by my profession to accept a fictional
40:00
World which then leads us to accept poor policy that’s actually
40:08
damaging to the nation damaging to The Climate damaging to ourselves so so the
40:14
I suppose this is before I go to audience questions but the question is
40:19
obviously why hasn’t this taken off I mean what what has stopped these ideas
40:27
years of yours and of your Warren actually becoming part of government policy well it’s quite interesting CU
40:34
there was a famous quote uh Paul samon was an American
40:39
macroeconomist famous American Economist and he in his later years he
40:45
gave an interview to as part of a movie sponsored by Cambridge University in
40:50
England on the uh 50 years of Kes and and and in that in
40:58
that interview he said all and I’m
41:03
paraphrasing the stuff that economists talk about budgets and stuff he said effectively was saying
41:13
it’s okay to lie we lie about that because the LIE is is
41:21
useful because it maintains social stability and said because if people
41:28
found and I’m paraphrasing if people found out the truth about what how government finances are and what they
41:35
can do and what they can’t do then there would be so many demands on the government to do stuff that it would
41:41
become unviable and he said that economics is a bit like it it serves the same purpose
41:47
as religion has served historically to maintain social order and I think that was in other
41:54
words lie to the people so that that they don’t get baly so I take it from I
42:00
I take it you don’t believe that’s valid no I don’t think you should lie to the people because lying to the people means
42:08
that we we accept we we ask different questions of our
42:13
politicians and we accept answers different answers than we would if we knew the truth I don’t accept hardly
42:20
anything the politicians say because I think I know what the reality is whereas
42:26
people in audience who think their taxes are funding government spending will accept different answers from
42:32
politicians and there’ll be answers that will undermine our prosperity that’s why I ask you about
42:39
the job guarantee being the basis of what you’re on about because I mean apart from the existence of
42:45
unemployment it could be argued that the I the the idea of government as a household is a reasonable proxy for
42:54
keeping the politicians under control except for the fact that they that the
43:00
current policies do result in people being unemployed well unemployed we’ve now at the last count there’s 800,000
43:08
shortage of social houses there’s decaying infrastructure triy workking in
43:13
the University system these days it’s a it’s a chaos it’s a disgrace what’s happening to our education system our
43:21
privatized training system is a disaster our energy Supply is a
43:28
disaster I mean you know we’re about to import gas when we produce much more gas than we ever need why because of all
43:36
this stuff so it’s not just unemployment unemployment is a social tragedy but all
43:41
these other things our way of you know the climates we’re 1.7 over the
43:47
regenerative power capacity of the earth and what are we doing about it we’re allowing more gas to be
43:54
produced you know we’ve got our expol ex prime minister bring in lumps of coal to
44:01
Parliament okay I’m chased thanks um anyone else got a question
44:08
here you go um You You Begin by talking about the
44:15
um ability of national governments to print their money I didn’t say print oh
44:23
sorry say just just can I just can I just clarify that the way in which you frame things and
44:29
the words you use is very important to conditioning the way people then understand the phenomenon so when
44:38
mainstream economists continually talk about printing money they immediately invoke VMA Republic Zimbabwe and all of
44:46
the negativity involved in government fiscal policy and the but the reality as I said
44:53
is there’s no printers involved so it’s been used as a as a p majority of term to frame and put that language frames
45:01
you into immediately accepting that government deficits are in some way bad
45:07
it’s okay yeah um my question really relates to whether you have a currency
45:13
like Bitcoin which is not controlled by a nation is that a disruptor to any of
45:18
this well the the answer to your question is
45:23
that the demand for a current the viability of a Fed of a nation’s
45:29
currency depends upon what’s accepted to relinquish your tax
45:36
obligations that’s I mean we don’t no longer have commodity-backed
45:42
currencies the the the the coins and are worthless they’re worthless tokens so
45:50
what gives them value the fact that you’ve got to get them to pay your taxes
45:55
you can’t pay your taxes with Bitcoin you can’t pay your taxes with us
46:00
doll you’ve got to get Australian dollars and that’s why you know I’m not against all of these let schemes these
46:07
local local little exchange type transaction systems but they can never become a
46:14
broader currency because the Australian government will never accept them in return for for their your tax
46:22
obligations that’s what gives demand to the worthless fed currency
46:28
would you accept the use of the word create as opposed to print the the government spends its own
46:36
currency into existence yeah that’s how that’s that’s
46:42
that’s government spending it spends its own currency into existence and if you really it comes from
46:49
nowhere how can a keystroke come from anywhere there’s no story you know we
46:57
could go on a sort of tour to try to find where all this currency is well we’d never find it it comes from
47:04
nowhere do you want this my my question I think is marginally relevant to your
47:10
discussion but it seems to when politicians strut up and down saying
47:15
we’ve got a surplus I think that’s a failure of governance you shouldn’t have a surplus you should be spending at all
47:24
well a lot of people you know this is a really interesting thing
47:30
because Australian government since data goes back to the you know 1920s or
47:35
something that we’ve got sort of coherent data has run fiscal deficits about 80% of the
47:42
time and so this period of cost the couple of years of King and then cost
47:48
all 10 out of 11 years they were abnormal not the norm we keep we’ve been
47:55
conditioned to think that that that’s the norm we’ve got to get that the Surplus is the norm and deficits
48:01
abnormal that’s not historically correct but here’s the thing about
48:06
surpluses let’s go back to my little arithmetic example so you’ve got say you’ve got 20 bucks in the Bank from my
48:14
currency because I’ve been running deficits and then one year I decide the
48:19
IMF Rings me up and says hell you’re going to go broke and so you’ve got to you’ve got to reduce national debt blah
48:26
blah so I give you $80 in employment but I want
48:32
$100 back in taxes what’s your problem now so I’m running a surplus aren’t I
48:40
spending 80 getting 100 in tax I’m running a surplus of 20 what’s your
48:46
problem I’ve got the deficit I think you’ve got a deficit now haven’t you non-government sector’s in deficit
48:53
because you’re only getting 100 income from the government and you but you got pay sorry 80 from the government and
48:58
you’ve got to pay 100 so your problem is you got a deficit what’s your problem you got to finance
49:04
that deficit where you going to get the money from you all sell sell sell wealth
49:11
liquidate wealth FIS when when Costello
49:17
was saying we’re getting the debt monkey off our back when he said we’ll get the debt
49:22
monkey off our back what he should have been saying was I’m systematically destroying non-government sector wealth
49:30
that’s what a fiscal Surplus does systematically destroys non-government
49:35
sector wealth what about um when the Surplus as it did under Costello comes
49:42
from uh commodity exports good
49:50
question there’s no good or bad deficits the fiscal position can’t can’t
49:56
be evaluated without a contextual reference so if the a 2% fiscal deficit
50:04
of GDP is no better than a 10% deficit or a 4% Surplus it all
50:12
depends so take a country like Norway that has really large
50:21
export income from its North Sea energy resources
50:27
so that’s coming in from the rest of the world it can still provide first
50:33
class Public Services it the private sector can still
50:38
s private domestic sector can still save some overall yet the government has to
50:44
run a surplus why because otherwise the economy would overheat because of the
50:49
external income coming in whereas take a country like Australia we typically
50:55
would to run 3% current account deficit since the 70s
51:00
this current period is a bit of an abnormal thing well so was the mid 2000s
51:05
but yeah yeah but we’ve typically run on average about 3% deficits on external sector that means we’re losing our
51:12
income to the rest of the world the income we’re producing in Australia isn’t getting recycled back into
51:18
Australian spending it’s going elsewhere so in that case and if the private
51:25
domestic sector that’s household and firms want to save a bit so they’re going to withdraw some of their income
51:31
from the spending stream well the government has to run a deficit in that case and inject spending into the stream
51:38
or else the economy will go into deep recession has to so see the context it
51:46
depends upon what the other sectors are doing and the idea by the way that leads to the other important Insight the idea
51:53
that the government can actually control its fiscal outcome it deficit or its Surplus is
52:00
erroneous so when you see treasurers get up and say oh we’re going to deliver this sort of surplus or this sort of
52:06
deficit well they’ve got no clue they can do that because it its final fiscal
52:11
position is dependent upon what we do because if we stop spending it’s
52:17
going to go into deficit no matter what it can Target a surplus and it will still record a deficit because we are
52:24
not spending enough employment is going to fall tax revenue Falls welfare spending increases it goes into deficit
52:31
whether it likes it or not the non-government sector determines the fiscal outcome not the government
52:37
there’s a question down there you might so gets picked
52:43
up um thanks so much bill um look forward to reading this book your others um I guess really the big question is
52:51
what is it going to take to change the narrative in the public policy narrative I mean obviously know the you know
52:58
economic professions have been holding to um you know World macroeconomics but
53:04
what will it take to really articulate and bring about the public policy narrative that we desperately need when
53:10
we’re facing the existential threat of climate change and so much else yeah thanks yeah and that relates to Ellen’s
53:17
question really that I didn’t fully answer about you know politicians and stuff I
53:24
mean when we when Warren and I first started in the mid 90s and he brought another couple of
53:31
Americans into the project very early they were sort of like the uh grid
53:38
iron cheer squads they said oh no worries this will be all over by the end of the century
53:44
that’s true they were really optimistic but once we got this written out
53:49
and went out and gave a conference presentations the profession would change now I said my response that the
53:56
time was were you bloody Americans you know this is beyond this is beyond my
54:03
lifetime and that I saw my work and I’ve seen my academic work as for posterity
54:10
as lying out lying out the knowledge base that will eventually be taken up
54:18
maybe that’s what I saw my RO but the the place that has picked it
54:23
up um is Japan so of sort of but so what
54:29
is it about Japan that that enabled them to sort of pick it up was it the the
54:35
8990 collapse that sort of made them caused them to have to do it yeah I mean
54:42
Japan’s so Japan’s my laboratory I I work in Japan now each year for a few months and uh uh I’ve got really close
54:49
contacts in Japan with with officials and things and uh Japan
54:57
is a really interesting and there’s a chapter in the book about Japan and uh Japan had a as alen
55:04
referred to had a massive collapse in 91 they had a an incredible asset price
55:11
boom in particularly in commercial real estate in Tokyo mainly Tokyo a bit of in
55:18
Asaka and of course that collapsed in ‘ 91 and Japan had one quarter of negative
55:24
GDP in in in the following period now if that happened in Mel in Australia we
55:31
would have a a 91 style recession for for months for quarters and quarters and
55:38
quarters and what they they last year I was actually talking to
55:44
a business an owner of a business in in U Koto where I
55:49
work and and he said what you ought to understand well I was talking to him
55:56
about research and stuff and he said what you’ve got to understand is that business the corporate sector hates to
56:02
create unemployment hates to lay workers off they’ll do everything possible not to
56:09
lay off a worker and that that sort of solidaristic view is in imp permeated
56:16
throughout Japanese Society why I say it’s my laboratory is that their fiscal policy in the
56:23
90s was outrageous via mainstream standards you know
56:28
running 10% GDP deficits it’s huge relative relatively and you know you’d had the
56:35
Nobel Prize winners from America going across swanning across your Japan as as
56:40
economists tend to Swan around the joint applying their one siiz fits all to
56:46
everything and uh telling the Japanese government and the bank of Japan are you’re going to go broke you’re going to
56:52
get Exel Bond markets will stop buying uh the Japanese government bonds the
56:58
there’ll be accelerating inflation blah blah none of that ever happened
57:04
because because of what’s in there that’s why I call it my laboratory
57:09
they’ve Dem they’ve pushed policy limits beyond what anybody imagined and none of
57:15
the mainstream predictions have ever come true so so so
57:22
is it simply that the culture that caused them because because I mean obviously when everyone when anyone has
57:27
a recession there’s a there’s a big fiscal response you know um particularly
57:32
an automatic one yeah what no but also you know in Australia when we had the GFC there was a huge fiscal response
57:40
another there was huge fiscal response to the pandemic as well but but it never lasts right but the difference in
57:46
Japan is it lasted um from 91 till basically till now till now yes so uh is
57:53
it simply culture I mean but the other thing you didn’t say was that their unemployment rate is
58:01
never hardly goes above three or four 3% a crisis to them is an unemployment rate
58:07
of 4% so do do they have they care about their people more so they’re willing to run bigger deficits to keep unemployment
58:13
down to keep the Transport Systems operating they’ve got first class rail transport they and there’s very little
58:20
homelessness in in everybody’s got access to First Class Health Care
58:26
that’s requires deficits they really value education public
58:33
education their their public infrastructure is first class that requires deficits and that’s
58:40
because they’ve got a vision of a society that benefits people we’ve abandoned we think that the role of
58:48
government is to run surpluses so so Japan Japan kind of proves that modern monetary theory is
58:55
not not inflation definitely does yeah I mean the bank of
59:00
Japan since since 2008 when Shinzo in
59:05
with these aroms the bank of Japan has bought almost all of the I no it’s bought more than the government debt
59:12
that’s been issued in that time printing money
59:19
[Music]
59:28
PE that’s what I get from you
59:35
[Music]
59:43
[Music]
1:00:04
[Music]
oooooo
Gehigarria: Nazio maltzurrak
In https://billmitchell.org/blog/?p=62057
I… comment on the current situation in the Middle East Rogue nations
It is hard to get my head around all the shocking carnage and human rights violations that Israel and their Western enablers such as the US and Britain are creating in the Middle East.
I know that a scale of it has been going on for decades as the Zionists work away to eliminate any semblance of the – State of Palestine – is officially recognised by 146 out of 193 UN Member States.
But what is happening at present in Gaza, the West Bank, Lebanon, Yemen, is of such a scale that it would be unbelievable if it wasn’t true.
Here is the list of the states that provide – International recognition of the State of Palestine.
My own country – Australia – shamefully tries to pretend it cares for the Palestinian people but refuses to join the majority of nations recognising the Palestinian state.
Even Labor politicians are pro-Israel, which realistically means they are against Palestine.
The recognition was forced on the Labor Party at its annual conference in 2021 (Source) but now they are in government, they are still refusing to follow through on their own policy.
Disgusting.
Most Western European governments have equivocated.
The US position is equally disgusting.
In 2011, Barack Obama claimed that the US would not support the Palestinian State because:
… genuine peace can only be realized between Israelis and Palestinians themselves … Ultimately, it is Israelis and Palestinians – not us – who must reach an agreement on the issues that divide them
Meanwhile, he and all the Presidents have signed laws that facilitate massive weapons and armaments from the US to Israel – I guess to help the realisation ‘between Israelis and Palestinians themselves’!
The role of the UN in all this is also telling.
Basically, the UN cannot do anything that the US doesn’t agree with, which has always made the body ineffective in dealing with actual problems.
But I thought this UK Guardian article (October 15, 2024) – Israel is a rogue nation. It should be removed from the United Nations – by British journalist Mehdi Hasan, was interesting.
He lists the way in which the Israeli government has violently targetted the UN over an extended period and concludes that Israel should be:
… expelled from an organization that it is relentlessly and shamelessly attacking and undermining …
The UK Guardian editorial (October 15, 2024) – The Guardian view on Israel and the UN: undermining a vital institution – runs a similar line.
It points out that the “UN is now a beleaguered institution, stuck on the sidelines of recent major conflicts” and any sense of a “rules-based international order” is fading.
It also implicates the role of the US, which it describes as “mealy-mouthed” because the US position will always ensure Israel “will be financially and militarily supported whatever it does”.
Supported to slaughter, maim and destroy Palestinian civic society.
It is a difficult period in human history.
People ask me what my solution would be.
I will leave it to another day perhaps but ending the illegal occupation and the apartheid and walls etc would be a good place to start.
But I know that expelling the thousands of violent Israeli settlers who steal Palestinian land and eject the legitimate residents is unlikely to happen now.
So that means a so-called ‘two state’ solution is probably unattainable.
I have also received a lot of E-mails asking me whether there is an Modern Monetary Theory (MMT) position on all this given some MMTers have chosen to take the Israeli position and deny that genocide is happening.
There is no MMT position in that sense and our work should not be implicated in the opinions of some (either side of the issue).
It is genocide that is happening and I abhor it.
Even if I was a mainstream economist I would abhor it.