A few economic problems that must be dealt with
Editor
The following comments by Dr Geoff Davies appeared in a RWER blog posting by Blair Fix, titled “Why isn’t Modern Monetary Theory common knowledge? [1]. Davies said that MMT enthusiasts do not always recognise that it is not a full description of economic reality.
However the issues that MMT does not directly deal with still need to be under- stood and addressed. These include:
- The private banks still create far too much money, and for non-productive activities like bidding up the prices of assets. They feed the boom and bust cycle of debt.
- The neoclassical equilibrium theory is still nonsense. Markets need to be managed.
- We need ownership structures that ensure wealth flows more fairly – coops and local shared ownership, etc.
- We need to use proper measures of wellbeing, which GDP is not.
- The financial sector trades about 50 times faster than we need, because most of its trading is parasitic. A trans- action tax could remove most of that profit and bring it back to serving us.
- We need to count the ’emergent wealth’ in urban areas due to development of neighbouring properties. This wealth belongs to the community but is currently captured by individuals.
- Dean Baker also has a list of structures that feed wealth to the rich, such as patent law.
1. Real World Econ Rev, 18 July 2020 https://rwer.wordpress.com/2020/07/18/why-isnt-modern-monetary-theory-common-knowledge/
