11 March, 2018

Stephanie Kelton - Economist

An Interview on LEFT OUT

The most recent LEFT OUT episode from Democracy at Work was an interview with Stephanie Kelton, an Economics Professor at Stony Brook University in the US, and it was a revelation!

Some idea of her politics is illustrated by the fact that she was on Bernie Sanders team in his effort to be the Democratic Party's candidate in the recent Presidential Election. But, she is far to the left of that pro-Capitalist Party, and penetrating in her revelations of the real factors acting in a modern Floating-Currency Capitalist Economy. Her position allies her with others, like Hudson and Keen (both of whom have also been interviewed by LEFT OUT), but her emphases, though related to theirs, have been both complementary, and different.

A cornerstone in all three accounts has been the role of Government Debt in driving the economy - for their printing of money, then inserted into available resources in the Economy, delivers a boost that is essential.

For, the basic primary processes, in such an Economy, are the buying of products and services, which are essential for the whole Capitalist monolith to roll forwards: The availability of that insertion to investment in better machinery, training and the rest, always increases productivity and so boosts sales of cheaper goods. So, all of this justifies by the expansion so caused by that initial creation of money.

The usual consensus analogy with a family's Household Budget is a fiction!

They are NOT the same!

In effect, the guaranteeing of future growth by such Government actions, as the initial essential boost, is crucial, and, if successful, then increased future Tax returns will, in time, amply justify that effort and that cost. But, in addition, to such a one-off boost, the most important regular built-in factors, ensuring such developments are due, significantly, to ALL the services that the Government necessarily provides, such as:- 


Health Services and Hospitals

Roads and Transport

Fire Services

Police Forces

Ports and Safety at Sea

Energy Production

Water provision & Sewerage

Care Homes 

...and all the rest, which mightily contribute to the future performance of the Economy - see countries that have none of these, and seemingly have no chance of being able to join the fray, except by paying destitution wages: those Services are NOT just liabilities costing money, but necessary investments in current and future economic prosperity.

In particular, the everywhere -proposed ( or just smuggled-in) vast cuts in all of the above, and, very-damagingly, the privatising of such services, all proposed as helping to solve the current problems, are all clearly just lies!

They are, in fact, delivering the best possible opportunity for driving the wages of the bulk of the population down, while also making them pay for those services transferred into private hands!

Several other amplifying points clearly defined a very different view - for example Tax cuts!

Tax cuts for the poor, means they can buy more, and as there are so many of them, it would indeed stimulate the Economy. On the other hand tax cuts for the rich will not do that: they already have ample resources, more, in fact than ever before, so they certainly wont spend it in a way that will stimulate the Economy: and the myth that they will invest it in increasing investment in wholly new ventures, or in enhancing productivity, is also wrong - they will just take over more companies, and buy back their own company's Stock currently in other people's hands - for that inflates the value of shares and hence their own wealth.

The proof that this is correct, and could very easily be blatantly obvious to ordinary workers, forced the Trump government's Tax Cut to actually include a small cut for the Working class, - knowing that, in the short term, this would be immediately reflected in increased sales, and allow them to claim it was working as claimed, when its real aim is to make the Rich richer!

Another suggestion by Kelton, herself, about the necessary provision of local multi-purpose Health Centres, to be built everywhere. reminded me of my own experience in the 1940's after the Labour's Election Victory! For, they did something similar and it was a great success.

I lived in a desperately poor slum area of Manchester, yet the new Government provided a large children's Health Centre, with Doctors, Dentists, Opticians and Nurses. There were links to all local schools and visiting testers for Eyes, Teeth and Hair to find faults and solve them.

The local "park?", Gorton Park, had no flowers, no Trees or even any Grass, but Bowling Greens were provided, accompanied by an Old Peoples' Centre, with staff and cooking facilities to provide meals, with a warm and comfortable place to meet friends, have meals, play card games, old time dancing and the rest!

And these facilities in the midst of a Victorian slum, transformed the people and the place: it had a culture and a life. Can you imagine what it would have been like without these facilities?

Kelton's suggested Health Centres were also seen as Social Facilities, for all the People, and even for health campaigns as we had had in West Gorton.

[By the way, I was born and brought up in West Gorton, but got to Grammar School, and ended up as a Professor in London University]

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