In my third article about Modern Monetary Theory (MMT), I try to understand the policies of the Carney government through the lense of this new way of looking at public finance.
https://open.substack.com/pub/billhulet/p/modern-monetary-theory-part-three
I see no reason why advocates of MMT wouldn’t have the same kind of reaction I do to the spending on oil pipelines, the military, the capital gains tax cut, the new ministry for AI, the new ministry for online censorship, the carbon capture idiocy — you’re spending how much on what!?
Of course. That’s why I focused on other projects.
That doesn’t mean that I agree with you 100% about the oil pipelines, military spending, etc. I personally think, for example, Canada needs to spend more on defense. But these are separate issues from whether or not the country can afford to do them.
Of those, defence needs mentioning as it is the biggest by a large margin.
You mean we could afford it now, or we could afford it if some form of MMT were adopted? I think readers might benefit from it being noted that there is a difference.
Well that’s the thing I point out at the end of the article. Carney doesn’t have to say he follows MMT. In fact, I suggest it would be best not to mention it if he does. But if he does believe, then he’s not going to be anywhere as concerned about the cost as he would otherwise. (And, as I point out, him having been in charge of two monetary systems uniquely prepares him to accept the basic premises of MMT.)
I’m not sure about the defense spending being the largest ‘by a large margin’. There are details that need considering. A large fraction of getting to 2% of GDP was by making the Coast Guard part of the military–like it is almost everywhere else in the world. Also, a significant fraction of the defense spending can involve things like building a road, airport, and deep water port in Nunavut. The benefit would not primarily be for the military, but they are certainly something that increases the defense capabilities. Also, investing in building airplanes in Canada–like with both the Gripen Fighter and the Swedish AWACS plane–helps the entire economy. There’s also the dramatic expansion of the reserves that’s being proposed. What I’ve heard being proposed is more like a citizen-based emergency preparedness structure. Of course it would be useful in a war, but it would also have been really useful during COVID and fire and flood seasons. From what I’ve read, a lot of the proposed investment is going towards a very wide definition of ‘national defense’.
So yes, the submarines are eye-wateringly expensive. But Canada does have the world’s longest coastline. And we simply cannot trust the USA anymore. And if we want to have allies we can depend on (ie: Sweden, Norway, Denmark, Finland, Germany, etc), we have to be willing to ‘do our bit’. But I’m not a pacifist. And I don’t see all soldiers as being ‘baby killers’.
When it was announced that Mr. Carney would run for office, the first thing I did to find out about him was to watch a video of one of his recent speeches to a big business audience. There is no way he would think of MMT as acceptable. He’s a huge fan of the way things are, so we will keep spending a significant percentage of the government budget directly on satisfying the greed of the rentiers.
What a surprise! Carney tells big business people what they want to hear.
I also listened to his BBC lectures about how economics is only of value if it is in service of the public good.
Carney couldn’t be as successful as he has been without learning how to be ‘all things to all people’. I’m not convinced that I know who he is. But I strongly suspect that other people who are absolutely convinced they do might not be right.
I voted for him because I was sure that he would be better than Poilievre. I still think he’s better than anyone else on offer. Maybe you’re right and he’s a closet neo-liberal. But I don’t want to dismiss him out of hand because I think you can also look at what he’s done and see something else altogether.
I remember hearing once that F.D.R. was called ‘a sphinx’ because no one could tell what he really thought. I think Carney is a sphinx too.
He wasn’t exactly sphynx-like in the speech I was thinking of. He spoke with eloquence, but directly and plainly. It did indeed seem clear that he sincerely believes that the existing banking system — which he had a hand in running for so long — operates in service of the public good.
I never understood the MMT and what it’s good for. The theory - if it is a theory at all - has many flaws that don’t add up in my humble opinion. It also reminds me more on Keynes (which has as many flaws imo) than on Money Theory. But that’s just my 2 cents, maybe I am wrong.
Your critique of Modern Monetary Theory does not suggest that your study of the concept has been comprehensive enough to include glancing at the Wikipedia page about it.
