Macro N Cheese

Our friend John Harvey is back to answer a question that’s usually accompanied by much wailing and gnashing of teeth: “what happens if people lose faith in the dollar?” The question contains all sorts of assumptions and intentions, which the Cowboy Economist proceeds to dismember, dispelling all sorts of myths – from inflation to the Fed. (He even tells us why China will continue holding US dollars, in case you’re worried.)

One approach taken by the “faith in the dollar” Cassandras is that government is bad, therefore non-governmental currency (Bitcoin!) is better... because the free market is more efficient. However, to say efficiency is good means accepting all sorts of negative social conditions and behaviors, including racism.

John talks about economic models and their need to mirror real world behavior.

...you go back to Milton Friedman's philosophy of positivism. And this is how you do economic research. The idea was that it doesn't matter how unrealistic the assumptions of a model are, as long as they predict well. "Indeed," Friedman goes on to say, "often the most significant models are those with the most unrealistic assumptions."
Try telling a physicist that the most significant theories we put forward in physics have the most unrealistic assumptions.

If it's no longer necessary for me to justify my model assumptions based on real world phenomena, then what is this really allowing me to do? Well, it's allowing me to preconceive my conclusion. I hate the government. So I've got my conclusion already and now I make up premises that will allow me to get there.
John not only dispels the notion that creating currency causes inflation, he also maintains that all inflation is not created equal. Are rising prices a bad thing if wages are increasing even more? If more people are employed?

Steve and John discuss the difference between the financial markets gambling on currencies and the real economy, where people buy and sell and pay taxes.

It all boils down to there not being a clear understanding. Okay, what creates the ultimate value for the dollar? The fact that on April 15, that's the only thing the US government accepts. And faith is irrelevant in that case.
The episode revisits some of the basic insights of MMT. Around here, we can never get too much of that. Money isn’t just dropped into the economy; it’s created when the government spends it into existence. It’s spent on labor, production, real resources, commodities, war... it isn’t dropped from helicopters.

John Harvey speaks in a language anyone can understand, which makes this interview so valuable to us non-economists. It’s packed with answers to the questions and arguments we constantly encounter. Be sure to bookmark it, because you’ll want to refer to it again. And don’t forget – each episode of Macro N Cheese is accompanied by a transcript, making it easily accessible.

John T. Harvey is a Professor of Economics at Texas Christian University in Fort Worth, Texas, where he has been on the faculty for over thirty years. His main areas of research interest are exchange rates and business cycles and his teaching responsibilities include Intermediate Macroeconomics, International Monetary Economics, and Contending Perspectives in Economics. He has published over forty refereed articles, two edited volumes, and two books. John has a YouTube series called The Cowboy Economist and a blog at Forbes.com.

@John_T_Harvey on Twitter

cowboyeconomist.com

MMT, at its most fundamental, shows us the difference between a currency user and the currency issuer. This reality affects policy decisions in ways it would be foolish to ignore. As Fadhel Kaboub and Bill Black explained here recently, even if it were possible to create some inadequate public programs at the state level, they will stall the progressive agenda.

Malcolm Reavell of Modern Money Scotland talks to Steve about the parallel situation he and his compatriots are facing. Scotland’s annual budget is determined and controlled by Westminster, the Parliament of the UK.

Every year they get a block grant from Westminster according to certain calculations, and that block grant is supposed to provide enough money for the Scottish government to do whatever it has to do. It's a totally artificial constraint, and it is used to prove that Scotland can't manage its own finances and it's too poor.
The Scottish government is criticized for not taking sufficient action to combat climate change, for not properly supporting the health service, and for the schools being underfunded. Of course, just like in the states, any money spent on one of these programs reduces the available funds for the others.

Malcolm and Steve share their histories as MMT activists trying to contribute to a new movement. They both relied heavily on familiar experts like Mitchell, Mosler, Hail, and many, many others. Some, like Steve Keen and Mark Blyth, they see as adjacent or “broad MMT.”

Modern Money Scotland and Real Progressives have a common origin story as Facebook groups. We often hear the charge that MMT is US-centric, so it’s a pleasure to have guests from other parts of the world to compare and contrast our mutual journeys as well as differing political and social conditions. For example, Brexit disrupted the trucking industry in Scotland well before COVID disrupted supply chains for the rest of us.

Whether you call it football or soccer, our listeners will recognize Malcolm’s approach to talking MMT to the uninitiated.

Well, just imagine this. If all the goals ever scored had to be paid back, who would you pay them back to? ... Supposing they had a ledger. Every time a football team had a goal scored against them, there was a debit marked against them.

Then if you ended up with a net balance, you had more goals scored against you than you've scored, how would you settle that account?
For more information about Modern Money Scotland and the Scottish National Party, listen to our episode 105, The Case for Scottish Independence with Karin Van Sweeden.

Malcolm Reavell is a co-founder of Modern Money Scotland. According to his Twitter bio, he is an “Ex-Aircraft engineer, retired IT guy, internationally renowned composer, now decomposing, still #MMT though.”

modernmoney.scot

@malcolm_reavell

@ModernMoneyScot

Steve’s guest, Dr. Jason Hickel, is an economic anthropologist whose research focuses on global inequality, political economy, post-development and ecological economics. After listening to this episode, “degrowth” will become part of your vocabulary. For MMTers, it is a natural fit.

Before unpacking the implications of degrowth, we need to understand how the language of growth has served to justify the exploitative ravages of capitalism and, to paraphrase Lenin, its highest stage – imperialism.

Jason tracks inequality between the global South and North from the industrial revolution and the colonial era to the present day. You don’t need to be an economic historian to see that growth in the north relied on forms of appropriation from the south. As Marx pointed out in the 19th century, price inequalities are not natural; they are induced through geopolitical and commercial power.

So in the colonial era, of course, you drove down wages by enclosing Commons and dispossessing people and destroying subsistence economies to create massive unemployed people. Today it is through a variety of different mechanisms, the structural adjustment programs that were imposed across the global south by the World Bank and the IMF, which are controlled by the US government primarily.
G-7 countries made massive cuts in public sector employment as well as labor and environmental standards. Neoliberal structural adjustment programs of the 1970s and 80s further induced price inequalities. Today countries of the global South are heavily dependent on foreign currency and are forced to compete to attract foreign investment. They are in a global race to the bottom to deliver cheap labor and resources to multinational companies effectively as tribute.

This is why I come to degrowth from the perspective of anti-imperialism, recognizing that we live in an imperialist world economy. Degrowth is a demand for ending those patterns of net appropriation that sustains such high levels of access consumption in rich nations ... Rich countries should reduce the resources to get back within sustainable levels, while poor countries should reclaim their resources, mobilizing them around meeting human needs with throughput converging globally at a level that's consistent with universal welfare and ecological stability. That is the world we should be imagining and calling for.
Jason and Steve discuss the gross inadequacies of the GDP as an indicator of growth and the need to break from the ideology that defines growth as a positive, desirable goal or outcome. GDP only counts commodities regardless of their social value or harm. It doesn’t distinguish between $100 of books or bullets. It says nothing about whether people’s needs are met. As an alternative to GDP, Jason leans toward a dashboard approach instead of the Genuine Prosperity Index.

Understanding MMT shows the way to meet the main objectives of degrowth. Jason adds that the MMT proposal for thinking about taxation - i.e., not as a way of funding public activity but as a way of pulling demand out of the economy - can be applied to ecological economics as a tool for reducing excess resource and energy use.
 
Dr. Jason Hickel is an economic anthropologist, author and a Fellow of the Royal Society of Arts. He is a Visiting Senior Fellow at the International Inequalities Institute at the London School of Economics and Professor at the Institute for Environmental Science and Technology at the Autonomous University of Barcelona. He is Associate Editor of the journal World Development and serves on the Statistical Advisory Panel for the UN Human Development Report and the advisory board of the Green New Deal for Europe.

Jason's research focuses on global inequality, political economy, post-development and ecological economics, which are the subjects of his two most recent books: The Divide: A Brief Guide to Global Inequality and its Solutions and Less is More: How Degrowth Will Save the World.

@jasonhickel on Twitter

Jasonhickel.org

Scott Ferguson serves as editor of the Money on the Left (MotL) Editorial Collective and co-host of the Money on the Left podcast. In July, he was guest speaker at Real Progressives’ event, RP Live. This week, Macro N Cheese is presenting his talk, Money and the Limits of Sovereignty, in its entirety, along with most of the Q&A discussion.

Trying to summarize the presentation would be doing it a disservice. The idea of sovereignty is one that has been a point of discussion – and a certain amount of controversy – among the MMT community for some time. The work of MotL has contributed enormously to expanding our understanding and considering it in a new, multi-faceted light.

Scott begins with the semantic history of the term “sovereignty” and its use in 14th or 15th century Europe to introduce a new conception of political rule, though not always with consistency. It has been used to justify political philosophy on both the left and right.
Yet fundamentally, for us, the logic of sovereignty is violent because it denies that everything in this world is interdependent—which is to say, meaningfully and necessarily intertwined--in both social and ecological senses.
Meanwhile, we contend that sovereignty as a concept is false because everything, in our interpretation actually is interdependent, no matter how much the logics or institutions of sovereignty pretend they are not.
Interdependence opens opportunities for participation and cooperation as well as competition. We could replace “sovereignty” with the language of monetary “capacity,” “power,” and “agency” as well as “sustainability” and “resilience.”

We tend to equate money with private exchange, revenue-driven relations, and the profit motive. We operate under the specter of privation. MMT teaches us money is not a zero-sum game; scarcity is a social construct. Scott suggests we extend the vision to political and social relations more generally.

The second half of the episode contains Q&A discussion that followed Scott’s presentation. After listening to the episode, we suggest you read the transcript. The complete text of Scott’s presentation is available on our transcript page and elsewhere on RealProgressives.org.

Scott Ferguson serves as editor for The Money on the Left Editorial Collective. He is a research scholar at the Global Institute for Sustainability Prosperity and co-host of Money on the Left podcast. Scott holds a Ph.D. in Rhetoric and Film Studies.

moneyontheleft.org

@videotroph

Status Coup Media's co-founder and CEO Jordan Chariton joins Real Progressives’ founder and CEO Steve Grumbine for a discussion of our crumbling infrastructure, our inept and complicit corporate media monolith, and they share some ideas about our options going forward.

This conversation seems like a perfectly segued culmination of Jordan’s recent RP Live presentation on the corporate media cover-up of issues like Flint’s notorious water crisis and climate change related issues as well as last week’s Macro N Cheese episode on infrastructure with Bob Hockett. As Jordan has repeatedly asserted, the infrastructure issues plaguing Flint, MI are prevalent in hundreds of other cities across the US right now. Flint is the story of America: deindustrialization, the offshoring of jobs, privatization, and the controlled demolition of the working class. In this case, it was the water supply.

The financial constraints of a state budget, the corruption of politicians, and an inept media apparatus came together to poison an entire city through apathy and greed.

And again, seven and a half years later, the pipes have still not been replaced. So, from a federal perspective, as we always talk about, of course, they had the money to do all of this. They could have sent the Army Corps of Engineers in the next day. Each Flint resident could be getting a monthly stipend or Medicare for All.
Steve calls it a textbook case of environmental racism as well as a model for neglect of the public good while extracting profit from the very things people cannot live without. While the situation in Flint is extreme, it’s not entirely unique. There are contaminated water supplies across the US. The hashtag “water is life” was born at the time of struggle over the Dakota Access Pipeline. Nestlé is trying to take California’s water while the state is literally on fire.

Status Coup has uncovered the many levels of corruption that led to the poisoning of the citizens of Flint as well as the careful cover-up of these crimes. Meanwhile, local and mainstream media have willfully ignored the evidence.

Steve and Jordan talk about the state of electoral politics and the need for divergent groups of activists and workers to unite and assert the kind of power that will be felt at the top.

Jordan Chariton, Status Coup CEO, is an independent progressive journalist who’s worked inside and outside the belly of the corporate media beast for over a decade. He has worked at Fox, MSNBC, and The Young Turks, before starting Status Coup. His team’s investigative work is attracting attention and expanding their reach.

@JordanChariton

@StatusCoup

This week Steve brings back Robert Hockett to help us understand the big “I” word - infrastructure.

Our focus on particular infrastructure depends on the social or public goals we have in mind. If we are a society that values mobility, we will concern ourselves with transportation infrastructure. If this were the 19th or early 20th centuries, we would be prioritizing infrastructure that facilitates industrial productivity. There’s also such a thing as “soft infrastructure.”

It's probably worth noting that a lot of public policy discussion these days seems to be about social productivity. Right? To what extent are we adding to the material wealth of our society? To what extent are we improving our material well-being, society-wise, and we can think of productivity along those lines, right? To what extent are we producing better material lives for ourselves?
Robert and Steve dive into global supply chains, discussing how the Biden regime may be realizing the old methods of outsourcing our domestic supply of critical inputs to producers abroad isn’t working anymore. The pandemic’s disruption of the supply of semi-conductors, which predominantly come from China, caused a US shortage. On the one hand there’s some awareness of the value of nationalizing production, but the Biden administration seems unwilling to spend the money required to invest in the necessary infrastructure.

Bringing production back to the US would create jobs and reduce our reliance on imports, but the question remains: what about the inevitable environmental impact of increased domestic manufacturing? The need to radically evolve our energy production and resource extraction methods is more detrimental than ever as we face economic, and more importantly, ecological, catastrophe.

Robert and Steve discuss the need for a more egalitarian distribution of technology to maximize our ability to be more productive while becoming more efficient and reducing our collective footprint. It’s important to be reminded that any given policy has social implications, productive economic implications, environmental implications, and even mental health implications.

This episode is dense with useful information including, but not limited to, Senate procedures, political posturing, and America’s role in the world for better or worse.

Robert Hockett is the Edward Cornell Professor of Law at Cornell Law School, Visiting Professor of Finance at Georgetown University’s McDonough School of Business, and Senior Counsel at Westwood Capital, LLC. He specializes in the law, economics, and philosophy of money, finance, and enterprise organization in their theoretical and practical, their positive and normative, and their local, national, and transnational dimensions.

Follow Robert on Twitter @rch371

Marianne Garneau is a labor educator and organizer with the historic IWW, Industrial Workers of the World. She’s the publisher of the website Organizing.Work.

According to Marianne, real-life examples of workers taking successful action anywhere, inspires, empowers and emboldens workers everywhere. The crucial tactic our labor movement currently lacks is the ability to exercise the muscle of collective action, acting in an organized, harmonious fashion, building coordinated disruption that defies authority, while spreading trust, preparedness and the very habit of defiance.

Labor has undergone enormous changes from the days of worker-powered assembly lines and shop floors, when workers could engage in day-to-day refusals. One tactic was “whistle bargaining.” The shop steward would blow a whistle, bringing production to a halt. The workers formed a circle around the foreman and voiced their grievances. Another blow of the whistle could send everyone back to work.

Steve recounts the “work to rule” he engaged in as a member of CWA. By fastidiously following every regulation, every safety procedure, the workforce was able to slow things down to a crawl.

Today labor has been reorganized and decentralized, so strategy must adapt to modern conditions. It all comes down to workers understanding the workflow and the ways the employer depends on them.

The need for workers to communicate is as essential as ever. The means of communication are corporate-owned and can be heavily monitored and censored, again requiring creative adaptation. Marianne describes a tactic used by workers for a food delivery service in Canada. They couldn’t contact each other through the app, so they organized the old-fashioned way, person-to-person, identifying each other by company logo and approaching the vehicles.

Marianne and Steve talk about the history of organized labor and the significance of the National Labor Relations Act of 1935.

...a lot of people in the left and in the labor movement still look back on that as a triumph for labor, which in some ways it was. But it was also meant to really regulate and tame the labor movement.
For a movement to build capacity, it must come from the bottom up. To survive, it needs to grow roots, so it is never dependent on individual leaders. Real power comes from mass collective action.
 Marianne Garneau is an organizer with the Industrial Workers of the World, a labor educator, and the publisher of Organizing Work (organizing.work) 

@OrganizingWork on Twitter 

When Bill Black introduced us to Patrick Lovell and Eric Vaughan, they were just wrapping up production of their documentary series, The Con, about the 2008 great financial crisis. More than a year has passed and we’ve become partners on a podcast and video series, The New Untouchables: The Pecora Files. Both series have a second season; TNU’s is five episodes in, and season 2 of The Con is not yet scheduled for release. Stay tuned.

The episode opens with Steve telling Patrick and Eric about the responses to both series. Everyone was affected by the GFC, but many are still struggling to understand it. Eric jumps in to warn we must stop thinking of it as a past event. Just look out your window. We can expect an epidemic of homelessness with the coming spate of evictions and foreclosures.

Patrick and Eric originally came at The Con from opposite directions as each sought to unravel the process. Patrick had been looking for the culprits at the top of the food chain – the CEOs and their ilk. Eric was interested in the victims, who, as we have learned, meet very specific criteria and are just as necessary to the process as the corrupt executives and absentee regulators.

Recent news reports are full of stories about upcoming evictions as the COVID-era moratoriums are coming to an end. Congress has provided $47 billion in rental relief assistance, of which only about $3 billion has reached the people who need it. Patrick compares this to the ‘08 mortgage crisis when, after the trillions spent to prop up the banks, $50 billion was provided by the federal government to prevent foreclosures, to allow homeowners to modify their loans, to prevent foreclosures. Similar to rental relief, most of the money never reached those who needed it, due to a tricky process involving insurance and middlemen. The end result is the same, a corporate entity comes in and vacuums up all the foreclosed properties on the cheap.

Regulators are cops. Fraud and predation are crimes -- some on the books, some not. When it’s legal, it’s a result of the revolving door between the financial industry and politics. Changing the laws to ease up on corruption is itself corruption.

This episode lays out the fraud recipe step by step, from the top of the chain to the bottom, as fees generate fees. It’s not a narrow path. To make it work, they need assessors and underwriters who are willing to sell their souls. Patrick and Eric explain the whys and hows of liars’ loans and documentation fraud, among other practices.

When you see how strategic and cunning the predators had to be to entrap entire poor and minority communities, you must question why anyone would call the victims irresponsible. Yet we continue to hear it. Eric talks about our culture of victim-blaming, which allows us to point the finger at Addie Polk instead of Angelo Mozilo. What regulation we have is aimed in the wrong direction.

And so, we have regulators whose only criminal referrals are coming from the banks against private citizens. And we're not getting criminal referrals from those same regulators because they're looking at the banks, I would term that systemic victim-blaming.
As cynical as many of us have become, whenever we hear stories about the extent of the elite control fraud and predation it still makes the blood boil.

 
THE CON will be available September 21st on Amazon, Apple TV, and XBox

Patrick S. Lovell is a 30-year veteran of media production. He is co-creator of Real Progressives’ series, “The New Untouchables: The Pecora Files.” Patrick is producer and protagonist of the documentary limited series: THE CON.

Eric S. Vaughan is an award-winning commercial director/producer with extensive experience in leading-edge media production from narrative films to VR/immersive experiences. THE CON is his long-form documentary series directorial debut. Eric is co-creator of Real Progressives’ series, “The New Untouchables: The Pecora Files.”

@PatrickLovell1

@TheConSeries

@UntouchablesNew

Esha’s last visit to Macro N Cheese inspired Steve to read Lenin’s What Is to Be Done and John Reed’s Ten Days That Shook the World, igniting a new interest in political theory and revolutions. This, in turn, lit a fire under others on the Real Progressives’ team. In the past half year, we’ve been learning about the Russian, French and Haitian Revolutions. (If you haven’t yet heard last week’s episode on Haiti with Pascal Robert, what are you waiting for?)

Esha’s Historic.ly podcast aims to decolonize history and debunk myths and misinformation taught in school and on corporate media. She has now added “Late Nights with Lenin” and “Soviet Summers” to her programming line-up.

This week Esha is back to lead us through 1917. The Russian Revolution often focuses on individual players: Tsar Nicholai, Kerensky, Lenin. In fact, Russia’s fate was inextricably entwined with and affected by massive geopolitical shifts as the 19th century division of the world amongst the imperial powers of France and Britain was threatened by a late-bloomer, Germany, and unrest in Russia.

In reality, the object of the struggle of the British and French bourgeoisie is to seize the German colonies and to ruin a competing nation which has displayed a more rapid rate of economic development. And, in pursuit of this noble aim, the “advanced” democratic nations are helping the savage tsarist regime to strangle Poland, Ukraine, and so on, and to throttle revolution in Russia more thoroughly. - Lenin, “War and Russian Social Democracy”
Esha compares the players to those on the global stage today and constantly reminds us to question the old narratives. After World War I ended, 14 nations conspired to attack Russia, yet it’s called a “civil war.” Why? American and British newspapers published puff pieces about the Tsar Nicholas, while portraying the Bolsheviks as brutes and tyrants. Why? Whose interests were served by perpetuating such myths?

Esha’s enthusiasm and delight are infectious. She describes events as if she had been there and people as if she knew them. It is hard to avoid finding heroes and villains in history. We learn to discern propaganda so we can study history and theory and consider how to shape the world we want to build.

Esha Krishnaswamy is a writer and media critic whose focus is on history, foreign policy, and Modern Monetary Theory. She is host of Late Nights with Lenin and Soviet Summers. Find her work at historicly.substack.com

@eshaLegal

@historic_ly