Macro N Cheese

It’s always a treat to welcome L. Randall Wray, one of our favorite economists and guests, to Macro n Cheese. This episode is an added treat because, in a bit of a departure, Randy talks to Steve about politics and policy, looking through the lens of MMT while putting today’s issues in a historical context. Who better to bring that perspective than someone who lived through it? Maybe he wasn’t around for the Great Depression or World War II, but as a baby boomer, he witnessed first hand much of the massive growth and expansion of the postwar years and talks about what made America great and not-so-great during that period.   Randy states the only reason the policies proposed by Bernie Sanders seem so far outside the mainstream is because the mainstream has become so regressive. The ideas aren’t radical -- the Democratic Party is conservative.   Steve asks him why our society is so regressive. Much of the answer lies in the rise of finance capital -- the financialization of the economy. Wall Street has its fingers in every aspect of society, yet it doesn't produce anything, so the net value added to the economy is massively negative. Randy likens them to the rentier class. They take a percentage of corporate profit right off the top. A percentage of one’s paycheck goes to the FIRE sector -- finance, insurance, and real estate. (Obamacare is a recent example that furthered the process.) Obviously they’re not going to support democracy.   Randy says that in order to assess a policy proposal we shouldn’t ask how much it will cost. The correct questions are: do we know how to do it and do we have the resources. He and Steve go down the list, from free college and daycare, to Medicare for All, to the greening of the economy and public ownership of utilities -- the answer to those questions is “yes.” We have historical examples of some major successes. We also have examples of failures, like JFK’s “war on poverty,” from which to learn and craft more systemic approaches.   They consider the likely deflationary bias of Medicare for All and Randy explains why economists are talking about offsets. This is an episode that will interest everyone who’s interested in real possibilities for shared prosperity.   L. Randall Wray is a Senior Scholar at the Levy Economics Institute of Bard College.   http://www.levyinstitute.org/scholars/l-randall-wray   https://www.goodreads.com/book/show/33657496-macroeconomics

Our guest, Alexandra Scaggs, is a senior writer at Barron’s, where she covers markets and fixed income. The episode begins as an interview about financial journalism and dealing head-on with the neoliberal economic narrative, but evolves into a conversation that is both personal and political in which she and Steve share their experiences with everything from sobriety to learning about MMT. As Alexandra tells it, news organizations maintain the mainstream narrative through ways both subtle and direct. In her career, she hasn’t faced overt censorship. Financial publications often hire young journalists who don’t yet have a sophisticated understanding of functional finance or economics. They tend to respect credentials and positions of authority, thus are likely to accept the word of those in positions of power. Reporters are also dealing with deadlines, leaving them no time to investigate other explanations. Austerity begets austerity; the publication doesn’t hire enough journalists, so each of them are doing the work of several. Sounds like the conditions most workers face, doesn’t it? Steve likes to ask his guests about the “aha moment” -- that point in time when the veil was lifted, the haze cleared, and Modern Monetary Theory pointed them toward the truth. Alexandra remembers that shortly after the 2016 election there were a number of Democrats writing op-eds that sounded the alarm about the economic devastation that the Drumpf presidency would surely cause, driving our fiscal health into the ground, plunging the US into bankruptcy. She was struck by the disingenuousness of it. The political parties don and remove their cloak of fiscal responsibility depending on whose team is in power. She had also been aware that interest rates continue to be low regardless of the size of national debt or deficit. Alexandra credits friend-of-the-podcast Rohan Grey with teaching her about MMT. She was covering the treasury market where certain facts weren’t making sense. She met Rohan, “a very effective advocate, who sat me down and shouted at me until I understood it,” she says, “and I’m so glad he did.” The scarcity mindset pits us against each other in a zero-sum game. If the pie is small, we must scratch and scramble to secure our own little slice. With everyone competing for scraps there's little time to think of an alternative and yet Alexandra’s experience in the recovery community inspires her to imagine a broader collaboration that rejects the neoliberal imperative. She believes we can construct an economic reality in which all are valued and her optimism, in turn, inspires us. Alexandra Scaggs is a senior writer at Barron's covering markets, with a focus on fixed income. She previously wrote news and commentary about markets, the economy, and social issues for the Financial Times and FT Alphaville. Before that, she covered markets for Bloomberg and The Wall Street Journal. https://www.barrons.com/authors/8576 @alexandrascaggs on Twitter

The mainstream media has created a pasteurized and homogenized version of Martin Luther King, Jr, befitting the neoliberal cultural bell jar. That being said, our friend Mathew Forstater reminds us that Dr King had a laser-like focus on economics and unemployment. The massively successful August 1963 march was called The March on Washington for Jobs and Freedom for a reason. Without economic security, the social and political advances of the civil rights movement cannot take hold. Steve kicks off the interview by asking Mat to speak about MLK in the context of today’s debate about a Universal Basic Income versus the Federal Job Guarantee. Dr King and other civil rights leaders promoted an economic bill of rights that was specifically and intentionally not a UBI. The three-part platform demanded a job for anyone willing to work, an income guarantee for those who cannot work, and a raise in the minimum wage sufficient to lift the working poor out of poverty. All three prongs are necessary -- a job guarantee alone doesn’t help those who cannot work; raising the minimum wage doesn’t help the working poor. Dr King’s vision of a job guarantee encompasses four vital components:     1. The development of education and skills must be outcomes of the program and not prerequisites. Rather than being trained for nonexistent jobs, people are to be hired first and trained while they’re being paid.     2. Any jobs should produce community services -- the public and social services that are in short supply and benefit the neediest communities. Labor is directed to our most pressing demands, including environmental and social justice.     3. The program generates income for families that have unmet basic needs. There must be an improvement in basic standards.     4. Acknowledge that there are numerous psychological and social benefits for individuals, families, communities, and the nation as a whole. This is based on MLK's recognition of the social and economic costs of unemployment. Research outside the field of economics (anthropology, social psychology, sociology) confirms the importance of work. In contrast, a UBI provides no development of skills and no production of public services to benefit the community. In a UBI only the income piece is addressed. Supporters of the UBI tend to look at work or human labor not as it was meant to be -- a pursuit of one’s life mission. They're looking at dead-end low-paying jobs with horrible working conditions. It's understandable that they would oppose that kind of work. We have always distinguished our version of a job guarantee from draconian workfare -- the kind that forces welfare mothers to take underpaid jobs where they'll develop no skills or knowledge. Our plan is built around the understanding that people enjoy contributing, working with others, and developing their talents. For models, we look to successful programs of the past like the WPA, CCC, and Argentina’s Plan Jefes. In the rest of the interview, Mat explains that Dr King was not alone in advocating for a JG. He talks about the history of the Humphrey-Hawkins Act, which was originally intended as full-employment legislation but ultimately was gutted. From 1946 to 1978 virtually every major African American leader and organization came out for full employment, including James Farmer of CORE, Bayard Rustin of the AFL-CIO’s A. Philip Randolph Institute, and Oliver C. Cox, who wrote a number of Marxist critiques of capitalism. The second demand of the Black Panther Party’s 10 Point Program was that the government provide “full employment for our people.” We know our Macro n Cheese audience will appreciate this fascinating history of the intersection of the civil rights movement and the ongoing fight for a Federal Job Guarantee. Mathew Forstater is a Professor of Economics at the University of Missouri–Kansas City and Research Director at the Global Institute for Sustainable Prosperity. http://www.global-isp.org/research-director/ @mattybram on Twitter

In the midst of the chaos of the campaign season, it’s important to remember that there’s a whole world out there, where people are suffering in large part due to the actions of the US. Our guest Ajamu Baraka is never far from that reality and his global perspective is woven throughout this interview. He is an internationally recognized leader of the emerging human rights movement in the U.S. and has been at the forefront of efforts to apply the international human rights framework to social justice advocacy in the U.S. for more than 25 years. Ajamu is co-chair of the Embassy Protectors Defense Committee. The Washington, DC, trial will begin on February 11th, and he tells Steve the story of the events leading up to it. Many Americans are unaware of the extent of the international sanctions that have been put in place - by both parties - over the last decade or so. It’s not just Iraq and Iran; there are now around 33 nations under sanctions. Ajamu wants us to understand that US sanctions aren’t simply geared towards top officials but are structured to bring real pain to innocent civilians in hopes that they will rise up against their leaders and achieve the regime change that is the true agenda of the US elite. The problem is that sanctions don’t merely cause discomfort. People are dying. In Venezuela alone, over 40,000 have died as a consequence of US sanctions since 2017. To understand the situation in Venezuela, one must consider the history of colonialism in Latin America and the liberation struggles that emerged in the post-World War II era. Over the last few years, progressive efforts have been undermined in Bolivia, Ecuador. and Brazil. In Venezuela, a phony election in the Senate resulted in the sham “presidency” of Juan Guaidó. Despite the fact that his position is not recognized by the UN nor the majority of the world’s nations, US support for him is steadfast. Against this backdrop, a group of activists occupied the Venezuelan Embassy in Washington, DC, with the support of the legitimate (Maduro) government. They stayed for 37 days until they were forcibly removed by federal and DC police. Ajamu and Steve talk about the stepped-up repression of progressive movements domestically as well as abroad. They discuss our need to recognize and oppose the expansion of the American empire that savages the lives of millions. Given that Ajamu was the Vice Presidential candidate for the Green Party in the 2016 election, Steve wanted to get his take on Bernie, the current campaign season, and whether it’s possible to enact a progressive agenda while the country is hamstrung by the two-party system. Ajamu continues to build support for the Embassy Protectors and is working to organize resistance to aggression towards Iran. Refusal to withdraw forces from Iraq exposes how the US has become a rogue state. Ajamu is raising awareness on the domestic front as well: A few months ago, Drumpf announced what is in effect a domestic military "surge." Under the guise of fighting crime, they will start with the infusion of federal dollars and military assistance to the first seven cities. The prime targets? The brown and black working class. Ajamu Baraka is a human rights defender, member of the leadership, US Peace Council, national spokesperson for Black Alliance for Peace, a geopolitical analyst, United Antiwar Coalition member, and co-chair of the Venezuelan Embassy Defense Committee. He is the former vice presidential candidate for the Green Party. https://www.ajamubaraka.com/about @ajamubaraka on Twitter

The post-war years are widely trumpeted as the golden era for America’s middle class. This is when we became a nation of suburban homeowners. Most would agree that federal programs - like the GI Bill and the FHA - contributed to this prosperity. Where some will differ is the extent to which the government is responsible. Our guest, David Freund, sets us straight.   David pierces through the propaganda and exposes the reality behind the sunny fantasy of the post-war economy. His book, Colored Property: State Policy & White Racial Politics in Suburban America, reveals the mechanics of the federal programs and the institutional racism built into them.   The racial politics of redlining are known to many of us, but there were also significant changes in municipal politics during this era. Among these was the rise in municipal zoning, giving local governments the actual power to legislate those decisions.  There was simultaneous growth of the planning profession and real estate industry. Taken altogether, David argues that these developments created the very familiar late 20th-century US landscape, where the majority of white people own their homes and where most growth is focused in suburban rather than urban areas, with remarkable disparities in wealth.  Interestingly, enormous effort was made to obscure this history from the people living it. There has been a specific political narrative intended to distort our understanding of the federal government’s role in creating segregation and wealth disparity. The mechanics are important to understand and those mechanics help us see why particular narratives were popularized.  The white beneficiaries of the boom became invested in a falsehood: that it was the free enterprise system that was producing the post-war prosperity and literally remaking the nation. It was the golden age of celebrating free-market capitalism. This was the cultural and political landscape.The image is one of bustling economic prosperity with a little bit of assistance from government programs. But the reality was something else entirely.  Prior to the boom, people were afraid of going into debt. A 30-year mortgage was seen as incredibly risky; bankers didn’t want to lend and borrowers didn’t want to borrow. The FHA needed to prime the pump so they applied aggressive marketing techniques. They did extensive groundwork educating the real estate and banking industries. They produced film reels and literature, and FHA officials went on speaking tours to professional conferences. They took their pamphlets door-to-door, contacting millions of households. In the end, they successfully convinced banks to become debtors and consumers to go into debt. This was no small campaign; it went on for a quarter of a century -- all while insisting that these federal programs were not distorting the free market. At the same time, they perpetuated the mythos of the American dream and fed the narrative that anyone could achieve it.The 2020 campaign season has us talking about what it would mean to have a job guarantee, to create a green new deal, and to properly fund public education. As we do, David Freund cautions us to learn the lessons of history - the real history - else we be doomed to repeat it.David M. P. Freund is Associate Professor in the Department of History, University of Maryland, College Park. He is the author of Colored Property: State Policy and White Racial Politics in Suburban America (University of Chicago Press, 2007), which received the 2008 Ellis W. Hawley Prize from the Organization of American Historians, the 2007 Kenneth Jackson Book Award from the Urban History Association, and the 2009 Urban Affairs Association Best Book Award.@MpeterF on Twitter https://www.press.uchicago.edu/ucp/books/book/chicago/C/bo5298959.html

On a podcast that’s primarily about macro, today we’re compelled to talk about the cheese. The last time Bob Hockett was here, he told a skeptical Macro & Cheese audience that Elizabeth Warren was genuinely progressive and, he believed, deserving of our trust. We’ve seen him on Twitter, getting into testy exchanges about her motives. Now he sadly acknowledges that those motives are less than pure. Last week on the debate stage, Warren called into question Bernie’s truthfulness. In apparent collusion with CNN, her campaign released a story alleging a negative attitude about the possibility of a female US president. Nobody who has followed Senator Sander’s career would believe this story but it succeeded in muddying the waters, diluting his message, and hijacking the news cycle. Bob examines all possible hypotheticals of Warren’s motives, sincerity, and beliefs -- and she comes up short. As he puts it, nobody who is serious about helping the working class would employ such a movement-splitting gambit. Even if she truly believes in the programs she proposes, her actions reveal a level of opportunism. In July she was on the same debate stage hugging Bernie, yet she claims that he made this dubious statement in 2018? Either she believes he is misogynous or she doesn’t. What changed last week other than a slip in her poll numbers? Steve and Bob spend much of the episode exploring the reality of political calculations and questioning the invisible hand of the party machine behind certain campaign tactics. They consider the different types of alliances - or “marriages of convenience” - debating how to engage without compromising one’s core principles. It’s a slippery slope for which there are no easy answers. Join us for this thoughtful discussion. 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. @rch371 on Twitter https://www.lawschool.cornell.edu/faculty/bio_robert_hockett.cfm

If you thought you understood the urgency of climate change, our guest, Professor Steve Keen, will shatter those illusions. We’ll be straight with you, this is not an easy episode to hear - but you need to listen anyway. How can we deal with the effects of climate change if we don’t understand the urgency? Professor Keen won’t sugar coat it but he can back up every statement with facts, figures, and astute analysis. Throughout the interview, he refers to - and debunks - the work of William Nordhaus, who won the Nobel Prize for Economics in 2018 “for integrating climate change into long-run macroeconomic analysis.” From Left Foot Forward: "When future generations ask why humanity delayed taking action against climate change for so long, Nordhaus’s model will be one of the prime suspects. The model, known as DICE – Dynamic Integrated model of Climate and the Economy – is a dangerous gamble for humanity’s future.  "Nordhaus’s transgressions are immense. His ‘damage function’ which he uses to estimate global warming damage is incorrect and uses data that has nothing to do with climate change. Despite this, the Intergovernmental Panel on Climate Change (IPCC) uses his model to advise governments about the economic impact of global warming." Nordhaus’s sins trace back to his attacks on 1972’s “Limits to Growth” study. The predecessors to our contemporary climate deniers dismissed its findings, yet it has been proven remarkably accurate. In this interview, Professor Keen compellingly compares facts to fancy. As his home country of Australia is ablaze, he explains why this was predictable. What you learn in this episode will enrage and probably depress you. We can’t afford to ignore it; ignorance is not an option. Professor Keen is a Distinguished Research Fellow at UCL, the author of Debunking Economics (2011) and Can We Avoid Another Financial Crisis? (2017), and one of the few economists to anticipate the Global Financial Crisis of 2008, for which he received the Revere Award from the Real World Economics Review. His main research interests are developing the complex systems approach to macroeconomics and the economics of climate change. @ProfSteveKeen on Twitter https://www.patreon.com/ProfSteveKeen

What are the mental roadblocks to achieving a system that creates prosperity for all? We often talk about the neoliberal narrative on this podcast, but this week’s guest, Lua Yuille, peels the onion a few more layers to reveal the structure beneath the story-telling -- what some may call brain-washing -- showing us how our minds have been colonized and need to be untrained. Our entire legal system is framed and structured to convince people that they are achieving or failing on their own. We frame certain types of support as supporting their initiatives. It’s deeper than storytelling; it’s a structure that exists to make invisible all of the ways the government props you up. If someone buys a house there are tax breaks for the homeowner. Estate laws allow you to inherit a house you didn’t pay for. In these ways you’re rewarded for being an autonomous individual (or being born to one). On the other hand, if you need housing assistance, you’re in public housing. It’s seen as largesse for losers. You can look at any tiny thing that happens in your life and see the ones that are coded positively and negatively. The government has made those choices. The government makes itself undetectable by coding things positively, and it highlights itself - and the people are denigrated - by coding negatively. When we call some support “welfare” but call other kinds of support “breaks” or “benefits” we’re teaching ourselves to see these things in a divisive way. It makes it hard to engage with one another and find solutions. Lua demands that we deal in actual reality. She says we need to engage in a clear-eyed process of “naming, claiming, blaming” -- calling things out for what they are. We must understand the way economic policy itself shapes our brain and convinces us what is possible and what is not. When our conversation about policy includes the “pay for” question we’re training the entire nation to understand that the necessary consideration is “how do we pay for it?” Steve and Lua use the latter part of the interview to talk about their own lives and delve into the complex questions of race and privilege. In the civil rights movement, Black people literally put their lives on the line because they felt they had nothing to lose. Will we reach the point where white people are willing to do the same? In a world of winners and losers -- where very few are winners -- what will it take for people to risk it all? This is a fascinating episode that will add nuance and clarity to your understanding of our social, political, and economic crisis. It may be that nothing short of a revolutionary movement will free us. Lua Kamál Yuille is an interdisciplinary scholar whose current work connects property theory, business law, economics, critical pedagogy, and group identity. She is Associate Professor in the School of Law and Core faculty in the Center for Latin American and Caribbean Studies at the University of Kansas. https://www.profyuille.com/ @ProfYuille on Twitter

The UK’s MMT Podcast has been an inspiration to us since well before we launched Macro n Cheese. As fellow MMT promoters from outside the academy, we consider the co-hosts, Patricia Pino and Christian Reilly, to be kindred spirits. So it’s always a treat to have them as guests on our show. This week, it’s Patricia’s turn to explain the behavior of our UK cousins as we seek to learn lessons from their most recent electoral debacle. When Steve spoke with Patricia, she was still feeling intense disappointment and frustration in the wake of the Tory victory. Many in the Labour Party were in shock, trying to make sense of it all. Unfortunately, the most dominant voices are the least likely to admit fault. Attempting to understand Labour’s loss requires considering a multitude of layers -- economic, cultural and political -- historic issues of democracy which have been ignored for a long time. Patricia believes that the issues of sovereignty and perhaps even national identity, may play a stronger role in the UK than they do in the US. Britain joining the European Union was a blatant step in the continued abandonment of the nation-state. The challenge to their national sovereignty may appear to be less significant to the UK than to the Eurozone nations because the British retained the use of their own currency. Patricia explains that while the UK has more autonomy than the Eurozone countries, the government portrays the neoliberal policies of the EU as if they were mandated or part of an international treaty. The EU has no means of enforcing rules regarding deficits or privatization, but it applies enough political pressure to direct policy in a certain direction, simultaneously providing cover so the government can avoid claiming responsibility for unpopular policies. In both the UK and the US, elements of the right have tapped into discontent felt by marginalized members of society and gained a new throng of voters. Patricia refers to Jeremy Corbyn as a “Euro-skeptic,” which may explain why he understood the voters’ discontent in a way that other members of Labour’s leadership did not. Just as in the US, the party that was supposed to represent the interests of working people has proven to be out of touch. Labour voters had chosen Brexit; the Labour leadership was perceived as blocking it. The rank and file stopped believing their promises. As is always the case with Steve and his guests, the discussion turns to solutions -- specifically, how to deal with those people who are supposed to be on our side yet are still spreading incorrect analysis based on ridiculous assumptions, when applying the lens of MMT would bring things into focus. In the UK, even the so-called leftwing economists engage in the same kind of fear-mongering as the most dedicated neoliberal ideologues. Patricia clarifies that not all MMTers are Brexiters, but knowledge of MMT clearly illuminates the ills of the EU and the consequences of interfering with national sovereignty. Understanding how power is wielded through control of the currency naturally leads one to be an advocate for democratic systems of government. She suggests that she’s ready to step out of the functional finance silo and plans to start working with groups who may not yet support MMT but whose causes will be advanced through knowledge of it. With 5 years of Conservative rule to look forward to, she can’t afford to sit on the sidelines. None of us can. Patricia Pino is a London-based engineer, artist, and activist. She is co-host of the MMT Podcast and a founder of the Gower Institute of Modern Money Studies.  @PatriciaNPino on Twitter https://pileusmmt.libsyn.com/ https://gimms.org.uk/

In April of 2018, Jacobin Magazine published “Why the Left Should Embrace Brexit,” which made the case for this radical break from neoliberalism. To gain perspective on Labour’s trouncing in the recent elections, we called upon our friend, Bill Mitchell, one of the co-authors. Bill has been writing and speaking about the UK’s entry into the Eurozone since the 1990s. As an outside economist, his warnings about the dangers of ceding fiscal control fell upon deaf ears. He addressed these issues in two books, Reclaiming the State -- co-authored with Thomas Fazi -- and Eurozone Dystopia. He recalls that as a young academic he was puzzled by the fact that social democratic political parties in the UK, Europe, and the US were supporting anti-labor policies and enabling the advance of the neoliberal agenda. Reclaiming the State traces the turning points -- those historical moments in the 1970s and 90s when Labour adopted monetarism, threw their support behind austerity politics and became apologists for globalization. Western governments were no longer mediators between workers and capital. The ruling elites created alternate media and think tanks while revamping the legislative structure. They reshaped the state in their own image, reflecting and serving their own needs -- and in the process the people lost the gains made in previous decades. In order to understand the recent UK elections and the significant role played by Brexit, it’s necessary to look back at the post-World War 2 era of nation-building and economic growth, the gains that were made by working people, and the point at which capital had had enough. Compared to the US, the UK maintained a fairly robust social safety network in spite of the capitulation by “New Labour” in the 1990s. When it comes to the question of British membership in the European Union, both Labour and the Tories have been conflicted. Ultimately, accession into the EU was pushed through as a consequence of the rising concepts of globalization and monetarism. After the great financial crisis, the hollowing out of the state proceeded apace in the UK. The Tories inflicted harsh austerity by de-funding local governments, thus shutting down the most basic services that people relied upon. Traditional Labour constituencies in the mining and industrial regions in the North and the Midlands were hard hit by the free trade treaties, deregulation, and the destruction of the manufacturing sector. Meanwhile, the increased financialization of the economy had turned London into a huge international hub which benefited the urban residents who enjoyed access to freedom of travel and relatively high paying jobs. If you’ve forgotten the history of the Brexit vote, Bill sums it up for us here. Both British parties underestimated the seething discontent brought about by membership in the European Union, but the divide within Labour turned out to be fatal. In the latter portion of the episode, Steve and Bill bring it around to the US presidential race, comparing the treatment of Jeremy Corbyn and Bernie Sanders -- not only by the mainstream media but by their own political parties. They speculate on Sanders’ chances for success and talk through potential strategies for future action. Are there lessons to be learned from what we’re seeing in the UK? Bill Mitchell is Professor of Economics at University of Newcastle, Melbourne, Australia, and creator of the first blog devoted to MMT. He is the co-author of Macroeconomics and Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World, and author of Eurozone Dystopia: Groupthink and Denial on a Grand Scale. http://bilbo.economicoutlook.net/blog/ Twitter @billy_blog https://www.jacobinmag.com/2018/04/brexit-labour-party-socialist-left-corbyn https://www.macmillanihe.com/page/detail/Macroeconomics/?K=9781137610669