Wednesday, January 10, 2018

But How Will We Pay For It?

truth-out |  One of the theoretical forerunners and bases of MMT is chartalism, an economic theory which argues that money is a creature of the state designed to direct economic activity. The theory has recently been popularized by David Graeber's book Debt: The First 5,000 Years, a wide-ranging work that touches upon issues ranging from gift economies, the linkage between quantification and violence, and the relationship between debt and conceptions of sin. In charting out the history of money, Graeber notes that, despite anthropological evidence to the contrary, economists have long clung to the myth of barter. 

However, money does not emerge from barter-based economic activities, but rather from the sovereign's desire to organize economic activity. The state issues currency and then imposes taxes. Because citizens are forced to use the state's currency to pay their taxes, they can trust that the currency will carry value in day-to-day economic activities. Governments with their own currency and a floating exchange rate (sovereign currency issuers like the United States) do not have to borrow from "bond vigilantes" to spend. They themselves first spend the money into existence and then collect it through taxation to enforce its usage. The state can spend unlimited amounts of money. It is only constrained by biophysical resources, and if the state spends beyond the availability of resources, the result is inflation, which can be mitigated by taxation. 

These simple facts carry radical policy implications. Taxes are not being used to fund spending, but rather to control inflation and redistribute income (and Trump's tax plan is certainly continuing the redistribution of income upward). Thus, we can make the case for progressive taxation from a moral standpoint concerned with social justice: We should tax rich people because their wealth is the product of exploitation and an affront to any truly democratic society, not because our transitional political program depends upon it. Congress can simply authorize the Treasury and the Federal Reserve to spend the money necessary for single-payer health care.

If we apply MMT to Medicare for All, the aforementioned "viability" debate and ungrounded fears about "printing money" fades into the background. Rather, our concerns shift toward examining our available resources and thinking about how to best provision them in such a way to as to advance social justice. This means training doctors, nurses and other medical practitioners. And it also means medical facilities being supplied with the necessary instruments, tools and technologies to provide care and treatment to patients and their communities. 

This carries implications for policymaking beyond Medicare for All. If money belongs to the public, then questions about who and what the public is will arise. By extension, money, financing and investment should be subject to popular control through directly democratic participatory processes.