I was extremely surprised and touched by the supportive responses I had on my previous post where I declared my intention not to blog about economics anymore.
I had no idea how many people took an interest in my blog. I was also flattered by having very intelligent people write to tell me that my contributions are valued. Some even asked me if I was doing ok. I am moved by all this show of support.
I suppose what has happened is that I feel that I’ve run up against a problem I don’t know how to solve.
When I met Warren Mosler, I noticed how often he uses the phrase “the public purpose”. I think it’s a very good phrase – John Kenneth Galbraith’s Economics and the Public Purpose is likewise a very good book. But to use it opens up some deep philosophical questions. I have every intention of continuing to think and write about these questions. But I no longer think (if I ever thought it) that economics is the right way to approach them.
The questions are: What is the public purpose? Who gets to decide what it is? And what institutions are required to serve it?
It is good to make logical arguments in favour of certain answers to these questions. But they’re for everyone to think about, not for me to pontificate upon. Speaking to people in Britain has revealed to me that I just don’t know what people want.
Almost everybody here in the UK complains about greedy, corrupt bankers. Mosler has a very simple policy outline: give banks a list of what they can do – what serves the public purpose – and ban them from doing anything else. Ban them from taking financial assets as collateral, from selling debt to third parties, and other things that are not in the public purpose. Yet this direct and simple solution has zero uptake in the UK. Nobody writes about it in the newspapers. I haven’t heard a single politician even mention it. And activist organisations specifically focussed on banking reform, such as Positive Money UK, are fixated on far more radical solutions that seem aimed at centralising and consolidating the power of banking interests rather than regulating it.
Again, almost everybody here says they want people off welfare and into work and that they want better public services. There is obviously a very simple way of solving both problems at once: offer public sector jobs to anyone currently on welfare who would rather work for a living wage. Again, zero uptake in the UK. Instead, a growing number of people support the idea of a universal basic income. So almost the whole population thinks that one problem for the UK is too many people on welfare and too few people in work, and then half of them think the solution is just to take away the welfare while the other half think it’s to give welfare to everybody. Almost nobody thinks the solution is to offer work to the people on welfare. I just don’t get it.
Neil Wilson suggested to me that maybe it’s politics rather than economics that I don’t understand. I think it’s deeper than that: I just don’t understand the British public. They say they want a banking system that doesn’t just serve the greed of the few. Ok, here’s how to make banking work in the interests of the many instead. No interest. They say they want people to have the chance to work rather than living on government handouts. Ok, here’s how to effect that change simply and straightforwardly. No interest.
I know what I think the public purpose should be. But I have no idea what people in general think it is. And clearly I can’t take what they say they think it is at face value, since they completely ignore the most obvious policies for bringing that about.
To explain my previous point about MMT: I don’t think the problem is that people don’t understand how government spending works. The two policies above don’t even seem like they’d be particularly costly – not in comparison with the status quo. So it’s not that people think they would like these things but believe them to be unaffordable (look at the number of people that support universal basic income). The problem is much deeper and weirder. Are the policies too good – too effective at serving what the public declares to be the public purpose? Are the British worried they might not have enough to complain about if such things are implemented? I just don’t know.
Until I work this out, I don’t know how to contribute anymore. Any help is greatly appreciated.