Nice to see an article about MMT that “gets it,” i.e., that realizes that the emerging relevance of MMT arises from the emerging fact of abundance, from excess capacity and falling marginal costs.

MMT is essentially a superset of traditional economic thinking. Under the scarcity regime, for example, Fisher’s equation MV=PT was always applied as if T, the amount of goods and services changing hands, was slow to change and had a severely constrained upper limit, and V, which measures the tendency of people to hold money in proportion to their intent to spend it, was a constant. Under that regime, increasing M meant increasing P. MMT says that T is as dependent a variable as technology allows it to be: if we can make more stuff quickly, then increasing demand for it will just bring out more of it, without raising prices. In other words, there is absolutely nothing “new” about MMT. Fisher’s identity still holds. Only the facts on the ground have changed.

I would quibble with two points. First, I think people tend to see MMT as rejecting monetary policy. I don’t see how that is necessarily so. MMT says that inflation is the bogey, full stop. Taxation controls inflation, but so, too, does monetary policy. If the government will borrow from me at a high enough price, I will not lend my money to some entrepreneur who will risk it to produce cars that people cannot afford to buy because the interest rate on car loans is too high. In other words, government borrowing sequesters money from volunteers for a price, where taxation simply takes money from whomever politics says to take it from. Both methods of offsetting spending have their uses, but I believe MMT is essentially agnostic on the choice, even if some prominent MMTers are not.

Second, I don’t like the job guarantee. Too many round peg employees need to fit into necessarily square job slots. The frictional costs are ridiculous, and the ability to do years-long projects with JG workers who may be recalled to “real” jobs at any time is destroyed. A UBI is better than makework, and any government spending worth doing is worth paying competitive wage to get done. I’m all for spending when resources are idle, but not for hiring when there is nothing worth paying compensatory wages to be done.

I like the APT because it is an excise tax on a resource-wasting activity. Wringing the last tenth of a penny out of transactions is simply not worth the brainpower and other efforts being diverted to the effort. Those resources should be curing cancer. Taxing away a small marginal benefit of the last ounce of arbitrage is good policy. That it reduces the need to tax other things is nice, but in fact, any tax regime should start with excises on socially destructive economic incentives and then move on to other things.