Blog-Reference and Blog-Reference
Simon Wren-Lewis summarizes: “But I am also fed up with policy makers implementing bad policies just because they sound good to those policy makers, so I want to subject any policy I intuitively like to rigorous analysis.”
Rigorous analysis of MMT shows the following
• MMT is based on Keynesian macro which is provably false for 80+ years,#1
• MMT profit theory is false,#2
• MMT employment theory is false.#3
False theory leads to false policy guidance.#4 MMT policy guidance has no sound scientific foundations. MMT policy proposals are social on the surface but in essence a wellness program for the one-percenters.#5, #6
#1 How Keynes got macro wrong and Allais got it right
#2 Rectification of MMT macro accounting
#3 Full employment through the price mechanism
#4 MMT: The one deadly error/fraud of Warren Mosler
#5 MMT and the promotion of Wall Street's idea of social policy
#6 For details of the big picture see cross-references MMT
Related 'Everything you know about MMT is wrong' and 'MMT, money creation, stealth taxation, and redistribution'.
There are TWO issues here: the microeconomic = operational details of a Job Guarantee and the macroeconomic effects of MMT policy in general.
So, given one has revisited employment theory#1 and decided on the operational nitty-gritty, the remaining question is how to finance the program: taxes or deficit spending with Central Bank money?
Rigorous analysis shows that budget deficits of the government sector end up one-to-one as profit in the cash box of the business sector. It holds Public Deficit = Private Profit.#2
So, in the final analysis, a tax-financed JG program is advantageous for the household sector = ninety-nine percenters, and a Central-Bank-financed program is advantageous for the business sector = one-percenters.
Why MMT obscures the profit effect of their policy#3 and why the representative economist so eagerly gets lost in the wood of operational details of fake social programs is anybody’s guess.
#1 Full employment through the price mechanism
#2 The profit effect of a Job Guarantee
#3 MMT and the magical profit disappearance