Government’s track record in creating public goods that are of actual value to people and that do not waste resources is nothing short of dismal. Then add the public choice aspect to the whole thing, that politicians have their own interests and therefore may not pursue the public good even if they know it. The assumption that government will fix the economy and increase our standard of living beyond what entrepreneurs can do is unbearably naïve.
I do not think these problems matter much to proponents of MMT, however. Because it is not a theory of how the economy works and so does not concern itself with worldly things like production, innovation, entrepreneurship, scarcity (other than as potentially causing inflation), or time. It is a pseudoreligious conviction that anything is possible and that the one and only solution is always Glorious Government.
September 14, 2021
The Political Alchemy Called Modern Monetary Theory
[This article is the best explanation I have read on why MMT cannot work.
Some of big takeaways not outlined in the quote above:
- Government creation of currency is not the same as creating money.
- Government spending diverts resources from meeting the demands of the public markets.
- Reducing the production of goods and services in the market result in inflation.
- Idle/unused resources are sometime idle/unused for a good reason and are best left that way for now.
Previous critiques have left me somewhat unconvinced. I was certain MMT was fatally flawed, but I couldn’t find the clear flaws and conclusively prove to myself it was a terrible disaster in the making I was certain it had to be. This article was a huge help to me.—Joe]