Posts Tagged ‘Greece’

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US-austerity

We often associate austerity with the economic policies imposed in Europe, especially Greece, since the crash of 2007-08.

However, as the chart above demonstrates (from the Wall Street Journal), the United States has pursued its own version of austerity in the years since the Great Recession began in late 2007. Total state, local and federal government spending, adjusted for inflation, shrank 3.3 percent since the beginning of the recession, compared with an average increase of 23.5 percent over comparable periods in past postwar expansions.

And, of course, the effects of such austerity have been unevenly distributed across the population, with large corporations and wealthy individuals gaining and everyone else finding themselves on the losing end.

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MMT

Apparently, the deficit owls of Modern Monetary Theory have found a perch in Washington, D.C.—in the form of Stephanie Kelton, who late in 2014 became the chief economist for the minority of the Senate budget committee.

I discovered Kelton’s appointment when trying to figure out who Bernie Sanders’s economic advisers are. Well, I failed. Here’s a link to his 12-point Agenda for America but I still don’t know who’s advising him on economic issues during his presidential campaign.

But I did found out that Sanders became the ranking member of the Senate Budget Committee (which among other things oversees the Congressional Budget Office) in January and named Kelton (an associate professor and chairwoman of the economics department at the University of Missouri-Kansas City) to the post.

Kelton was the Founder and Editor-in-Chief of the blog New Economic Perspectives, which (with William K. Black, Randall Wray, and others) is closely associated with Modern Monetary Theory.

I’ve written a bit about Modern Monetary Theory over the years, and it’s been increasingly finding its way into my teaching and public talks (on U.S. budget deficits, the crisis in Greece, and other topics). Here’s a link to a good, short primer by Dylan Matthews.

I still don’t know who Sanders’s economic advisers are. But his focus on class issues complemented by some Modern Monetary Theory is not a bad start for fundamentally reorienting economic thinking in the United States.