The Economic Myth–busters are out there in gay profusion.
‘Economic Myth-buster’, meaning economists who refute the principles and premises of the all pervading Chicago School theory so loved by the champions of ‘the free market’.
In Australia, there is a growing number of economists such as Bill Mitchell, Steven Hail, and Steve Keen, who preach the gospel of Modern Monetary Economics often referred to as MMT, or Post Keynesian Economic Theory.
Nor are they preaching to the converted.
Following the GFC, the backlash against Neo-liberal ‘free market’ economics and unregulated financial systems, resulted in both a short term foray into Keynesian economics by the Rudd government, and the long term need for alternative means to achieve economic stability.
Other economic theory such as intitutional, post-Keynesian, behavioural, Marxian, Austrian, feminist, and ecological, quickly came to light, with Post-Keynesian theories as the most prominent, and the most likely to succeed as a credible and necessary alternative to neo-classical economics.
For decades, Bill Mitchell has been championing the cause of MMT and arguing that governments, should run decficits to keep the economy healthy, and one wonders if at times Mitchell feels like Galileo trying to argue facts against blind faith.
Mitchell has long contended the mainstream neo-classical theory of running surpluses and placing the burden of maintaining economic stability entirely on the private sector, which by its nature is constrained by income generation, in favour of public funding and government subsidies – which are not constrained by income – to support the private sector in times of economic downtown.
In other words, the Sun (the population/society) does not go around the Earth (the economy), the Earth goes around the Sun.
In the US, economists Stephanie Kelton, Randall Wray, Warren Mosler, Joseph Stiglitz and the irrepressible Mike Norman have been delivering the same message.
Why then, isn’t an economic theory whose premise rests on achieving a 2% or less unemployment rate and a sound economy (and environment), on the front page of every newspaper and the talk of breakfast television?
The answer lies in the clever use of metaphor by the Right to promote neo-classical economics aided by a compliant media, the results of which have been to produce a political indifference to alternative economic theories.
To convince Joe Average that the public sector should really be in the hands of the private sector, the Right needed to convince the electorate that the keel of the economy, government spending was ‘living beyond our means’ and ‘maxing out the nation’s credit card’.
Budget deficits were portrayed as ‘black holes’ or ‘ballooning deficits and debt’, while public debt and income support became ‘dole bludging’ and ‘welfare dependency’, underpinned by the emotive plea for surplus in order to stave off; ‘mortgaging our future’ and ‘burdening our grand-children with a mountain of debt’.
These metaphors have been delivered so earnestly and so frequently by conservative and left leaning politicians alike over the past two decades, that they stand as a shining example of Goebbels observation that if you tell a lie, make it a big one and then constantly repeat it.
The acceptance of the economic myth that ‘deficit’ is ‘debt’- therefore bad- and ‘surplus’ is ‘saving’ and therefore good, and that government ‘debt’ and ‘income’ are the same as household debt and income, is now as deeply ingrained in the mainstream population’s consciousness as the acceptance of the notion that the Sun moved around the Earth was ingrained in their 16th. century counterparts.
While the MSM remains guilty of promoting these fallacies, it has at times also featured stories on Post Keynesian economic theory and its proponents.
Mitchell, Mosler, Kelton, Wray, and Keen, have all appeared or in the MSM arguing their case.
While their argument continues to gain growing interest, the deeply entrenched belief that government deficits are ‘debt’ and will lead to soaring inflation of Zimbabwe or Weimar Republic like proportions if left unchecked, remains a formidable barrier for Post-Keynesian economists to break down.
The other barrier also produced by the cognitive dissonance of ‘free market economics’ is the political barrier.
Like the loyal servants who gazed on at the emperor with new clothes in Hans Christian Andersen’s tale, todays politicians gaze on at the nakedness of neo-classic economic theory and try to ignore the embarrassing fact that the ‘invisible hand’ of market force economic theory isn’t guiding – it’s wanking.
Yet none of the courtiers or pretenders to the throne dare speak out.
So strong is the myth of government spending as the suppository of all evil, that every party or independent member are held in thrall.
None dares to be the first to challenge the power of the omniscient ‘Market’ and be howled down and hounded by the MSM’s ‘financial wizards’ as a heretic.
At the heart of the myth as it is; government spending = debt=bad; government surplus=savings=good, serves as a handy propaganda weapon for both government and opposition.
As long as the myth is maintained, either side may accuse each other of ‘spending like drunken sailors, maxing out the nation’s credit card with ballooning deficits that will leave a mountain of unsustainable debt to our grand children. In nomine patri et fili spiritu sancte – Amen.’
This cognitive dissonance toward alternate economic theory arises largely through a lassitude best described as a frenzied nonchalance wed to a comfortable and deliberate ignorance.
Mitchell, Keen, Hail, Kelton, Mosler, Stiglitz, and a growing chorus of web-sites, blogs, Facebook groups, economic analysts and commentator’s are working to dispel that ignorance and their voices are being heard, faintly and occasionally in the MSM, but far louder and far broader on the social network.
The Economic Myth Busters are out there in gay profusion, and the barriers that prevent their message being heard are slowly but surely being eroded.
Are YOU listening?