PARADIGN SHIFT TO MMT ? - Open email to Bill Mitchell

  1. 21 Posts.

    Thisweek, Bill Mitchell, Professor of Economics at Newcastle University, stated onhis MMT blog that the paradigm shift to Modern Monetary Theory (MMT) iscontinuing in Australia.

    Theinner Groupthink camp is breaking up – paradigm shift continues

    Monday, September 28, 2020

    “Lastweek, there were some rather significant shifts in the public discoursesurrounding macroeconomic policy and challenges made to the orthodox economicstaboos that have been used to prevent governments from acting in the bestinterest of the citizens. … the Australian treasurer broke away from thegovernment’s previous obsession with fiscal surplus pursuit to announce thatfor the foreseeable future it was only going to concentrate on jobs and growth.”

    Isubmitted the following comment:

    “It is too early to conclude that the Federal LNP Coalitiongovernment has done anything other than accept the political necessity of expandingthe deficit to prevent Australia's first recession in almost 30 years fromdeepening to a depression. That is a direct consequence of the second wave of the COVID-19 infections and deaths in Victoria.

    Mainstream economists, and more often than not even businesseconomists going back many decades, have advocated, or at least countenanced,increases in government spending and budget deficits to end recessions.

    Since the Great Depression, Labor and even Conservativegovernments in Australia have run deficits to reduce unemployment.

    The Treasurer, Josh Frydenberg, has not abandoned deficits anddebt. A full paradigm shift to policy based on MMT would require the government to abandon using taxation revenue and sales of government securities to fund government expenditure.

    The paradigm shift is only partial and it may only be temporaryuntil the economy has recovered.”

    My comment was rejected by the blog’s moderator.

    Roger Tonkin
    30th September, 2020



 
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