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A few economic problems that must be dealt with


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:

  1. 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.
  2. The neoclassical equilibrium theory is still nonsense. Markets need to be managed.
  3. We need ownership structures that ensure wealth flows more fairly – coops and local shared ownership, etc.
  4. We need to use proper measures of wellbeing, which GDP is not.
  5. 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.
  6. We need to count the emergent wealthin urban areas due to development of neighbouring properties. This wealth belongs to the community but is currently captured by individuals.
  7. 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

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