Think-tanker starts to reflect MMT approach to policy
James Keenan
It's always encouraging when you see someone in public life starting to "get" MMT. By "public life" here I mean people like elected officials, journalists and academics who are in a position to influence public policy but for whom Modern Money Theory would generally fall "outside the Overton window" of topics acceptable to discussion. An example: the point when, late in his political career, Kentucky congressman John Yarmuth read Stephanie Kelton's The Deficit Myth and endorsed MMT.
There are a lot of policy wonks and think-tanks in Washington, D.C., and elsewhere whose thinking lies on the left-liberal side of the Democratic party, but they rarely explicitly discuss MMT. So often you have to read between the lines of their blog posts to detect MMT-influenced thinking. That's what I spotted last week in an August 21 post by Dean Baker, co-founder and chief economist at the Center for Economic and Policy Research (CEPR) entitled, "Putting Universal Medicare Front and Center". Baker argues that simply opposing Donald Trump is not a sufficient strategy for the Democratic party; the Dems need bold policy initiatives as well. He argues that "universal Medicare" would be most effective in this regard. In the course of his discussion he writes:
"In moving towards universal Medicare, it is important to recognize the distinction between the budgetary implications and the real demands on resources. There is no doubt that a universal Medicare program will require a large amount of additional spending, although the increase can be exaggerated. (Emphasis added -- JK.)
"We will save at least $400 billion a year (5 percent of the federal budget) on what we pay the insurance industry to shuffle papers and deny people care. Prescription drugs and other pharmaceutical products would also be cheap if the government didn’t give out patent monopolies for these items. We will spend over $700 billion this year for drugs that would likely cost around $150 billion in a free market. The difference of $550 billion comes to $4,400 per household annually."
Hmm, sounds familiar. Later he adds:
"[We] need to remember that the actual constraint to the government’s spending is not revenue, it is the availability of real resources. In the case of universal Medicare that means the doctors, physicians’ assistants, nurses, medical technicians, home health care aides, and other people who directly provide health care to patients." (Emphasis added -- JK.)
Once again, this sounds very Kelton-esque. To me it sounds even more like Yeva Nersisyan and Randy Wray's seminal 2019 paper, How to Pay for the Green New Deal. Always worth re-reading.
Sanford Friedman
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