1 00:00:10,840 --> 00:00:13,680 Speaker 1: Hello, and welcome to another episode of the All Thoughts 2 00:00:13,720 --> 00:00:18,200 Speaker 1: Podcast on Tracy Alloway and I'm Joe Wisenthal. So, Joe, 3 00:00:18,280 --> 00:00:21,759 Speaker 1: I really enjoyed our m m T discussion from last week. 4 00:00:22,680 --> 00:00:25,600 Speaker 1: I did too, and uh, you know, it was kind 5 00:00:25,600 --> 00:00:28,960 Speaker 1: of interesting because we never really did like an introductory 6 00:00:29,120 --> 00:00:32,720 Speaker 1: to m MT episode. We immediately started with a critic 7 00:00:32,880 --> 00:00:36,320 Speaker 1: although you know, some people pointed out A the criticism 8 00:00:36,400 --> 00:00:38,879 Speaker 1: wasn't too harsh, and B we did sort of introduce 9 00:00:38,960 --> 00:00:42,279 Speaker 1: the concept. But now we're going to go backwards and 10 00:00:42,479 --> 00:00:47,599 Speaker 1: sort of keep building the foundation. Right. Well, actually, actually 11 00:00:47,720 --> 00:00:51,680 Speaker 1: I would argue we're going forward and we're picking We're 12 00:00:51,720 --> 00:00:55,560 Speaker 1: picking up from where we left off in that previous conversation, 13 00:00:55,720 --> 00:00:58,960 Speaker 1: which was I think at the end, we were discussing 14 00:00:59,000 --> 00:01:03,400 Speaker 1: about whether or not MMT could ever work outside of 15 00:01:03,440 --> 00:01:07,360 Speaker 1: the United States. Right, So obviously when people talk about 16 00:01:07,360 --> 00:01:11,240 Speaker 1: how the US can have much higher sustained deficits than 17 00:01:11,280 --> 00:01:14,039 Speaker 1: other places or than than we've had, they're like, well, yeah, 18 00:01:14,080 --> 00:01:16,280 Speaker 1: sure of course the US can, but that's only because 19 00:01:16,319 --> 00:01:20,280 Speaker 1: the dollars the global world reserve currency. And so the 20 00:01:20,840 --> 00:01:26,800 Speaker 1: accusation towards mm T is that it's generalizing from the 21 00:01:26,920 --> 00:01:31,120 Speaker 1: US example, to something that wouldn't be applicable to countries 22 00:01:31,160 --> 00:01:34,920 Speaker 1: that maybe don't enjoy that same status for their currency, 23 00:01:35,200 --> 00:01:38,720 Speaker 1: right exactly. The argument is that the US is in 24 00:01:38,800 --> 00:01:42,840 Speaker 1: some way hashtag blessed with a number of financial attributes, 25 00:01:42,880 --> 00:01:45,959 Speaker 1: such as the reserve currency status UH and the safe 26 00:01:45,959 --> 00:01:49,800 Speaker 1: haven nature of U S treasuries relative to other assets, 27 00:01:50,200 --> 00:01:52,760 Speaker 1: and that it is special in some way, and that 28 00:01:52,800 --> 00:01:58,160 Speaker 1: you can't apply MMT to other jurisdictions, in particular developing 29 00:01:58,640 --> 00:02:02,280 Speaker 1: or emerging market economies. There was one other thing that 30 00:02:02,280 --> 00:02:06,080 Speaker 1: that conversation actually brought up, and this was the notion that, well, 31 00:02:06,160 --> 00:02:10,360 Speaker 1: we haven't really seen any real life applications of MMT 32 00:02:10,680 --> 00:02:13,920 Speaker 1: just yet, right. So the argument is that and of 33 00:02:13,960 --> 00:02:16,919 Speaker 1: course this gets into the distinction between m m T 34 00:02:17,200 --> 00:02:20,480 Speaker 1: as the descriptive framework. Basically, m m T s attempt 35 00:02:20,520 --> 00:02:23,760 Speaker 1: to describe the money system how it actually is, versus 36 00:02:23,800 --> 00:02:26,960 Speaker 1: the implications the prescriptions, where it's like, okay, well, if 37 00:02:26,960 --> 00:02:29,280 Speaker 1: you know this is how the money system works, then 38 00:02:29,360 --> 00:02:32,320 Speaker 1: this is the policies that you can do. And the 39 00:02:32,480 --> 00:02:35,440 Speaker 1: argument is that we really don't know what it would 40 00:02:35,440 --> 00:02:39,200 Speaker 1: look like for any country to adopt some of the 41 00:02:39,280 --> 00:02:43,880 Speaker 1: prescriptive side of m m T and whether whether the 42 00:02:44,000 --> 00:02:47,240 Speaker 1: sort of fiscal latitude that m m T s as 43 00:02:47,280 --> 00:02:52,600 Speaker 1: many countries enjoy would actually improve the economy. Absolutely right. 44 00:02:52,639 --> 00:02:55,080 Speaker 1: So there's two big questions that came out of that 45 00:02:55,280 --> 00:02:58,079 Speaker 1: big discussion, one of which is whether or not mm 46 00:02:58,120 --> 00:03:00,160 Speaker 1: T works outside the U S and the other is 47 00:03:00,200 --> 00:03:04,280 Speaker 1: whether or not the prescriptive social policies of MMT could 48 00:03:04,320 --> 00:03:07,920 Speaker 1: actually work in some capacity. So I'm really pleased to 49 00:03:08,000 --> 00:03:10,959 Speaker 1: say that we have a guest on Today Show who 50 00:03:11,000 --> 00:03:14,560 Speaker 1: can deal with both of those two very very large 51 00:03:14,600 --> 00:03:18,400 Speaker 1: and complex topics. Our guest is going to be Fattle Kaboob. 52 00:03:18,440 --> 00:03:21,280 Speaker 1: He's someone who's able to talk about both these things. 53 00:03:21,320 --> 00:03:25,280 Speaker 1: He's an associate professor at Dennison University, and he was 54 00:03:25,320 --> 00:03:30,400 Speaker 1: actually suggested by Nathan Tankus on Twitter as a possible guest. 55 00:03:30,440 --> 00:03:33,679 Speaker 1: And I should say Joe, because we did get some 56 00:03:33,760 --> 00:03:36,600 Speaker 1: blowback from people who said that our last MMT guest 57 00:03:36,720 --> 00:03:40,800 Speaker 1: was too much of a critic. Fattle comes recommended by 58 00:03:40,840 --> 00:03:43,840 Speaker 1: Stephanie Kelton as well, who said that he's doing some 59 00:03:44,040 --> 00:03:47,000 Speaker 1: very very interesting work outside the US. Great. Well, these 60 00:03:47,040 --> 00:03:49,400 Speaker 1: are I have a lot of questions, so let's get started. 61 00:03:49,720 --> 00:03:53,360 Speaker 1: Cool Faddle, Thank you so much. For joining us, Thank 62 00:03:53,360 --> 00:03:55,680 Speaker 1: you for having me on the show. So maybe just 63 00:03:55,800 --> 00:03:59,600 Speaker 1: to begin, you could give us an overview of how 64 00:03:59,720 --> 00:04:02,760 Speaker 1: you ut involved in this topic and why so many 65 00:04:02,800 --> 00:04:05,760 Speaker 1: people on Twitter are pointing to you as the expert 66 00:04:06,120 --> 00:04:10,520 Speaker 1: for m m T outside of the US experience. Well, 67 00:04:10,560 --> 00:04:12,800 Speaker 1: when I was in grad school about twenty years ago 68 00:04:12,840 --> 00:04:15,400 Speaker 1: at the University of Missouri, Kansas City at Young k C, 69 00:04:15,600 --> 00:04:18,880 Speaker 1: where a lot of the you know MMT scholars were 70 00:04:18,920 --> 00:04:22,640 Speaker 1: based there, Randy Ray, Stephanie Kelton, map for Stature, and others. 71 00:04:23,240 --> 00:04:26,320 Speaker 1: At that stage in the early two thousands, most of 72 00:04:26,320 --> 00:04:31,120 Speaker 1: the discussion around m m T was focused on the US, Canada, 73 00:04:31,160 --> 00:04:34,200 Speaker 1: Australia countries that are you know, advanced countries, countries that 74 00:04:34,279 --> 00:04:37,680 Speaker 1: have full monetary sovereignty. And I grew up in a 75 00:04:37,680 --> 00:04:39,800 Speaker 1: developing country. I grew up in Tunisia, and I was 76 00:04:39,960 --> 00:04:42,520 Speaker 1: always interested in, you know, how does this supply, how 77 00:04:42,560 --> 00:04:44,880 Speaker 1: does this transfer? What are the differences, what are the 78 00:04:44,960 --> 00:04:47,279 Speaker 1: adjustments that need to be made? And that's how it 79 00:04:47,279 --> 00:04:50,640 Speaker 1: all started in terms of me trying to expand some 80 00:04:50,800 --> 00:04:53,279 Speaker 1: of the MMT and the post Kayzee in literature in 81 00:04:53,320 --> 00:04:57,200 Speaker 1: general in the context of developing countries. So one of 82 00:04:57,240 --> 00:05:00,160 Speaker 1: the things that is still to this day appoint to 83 00:05:00,480 --> 00:05:05,120 Speaker 1: confusion about what MMT says. It's it's a very basic 84 00:05:05,200 --> 00:05:08,560 Speaker 1: definition of what monetary sovereignty is. And even though we 85 00:05:08,640 --> 00:05:11,240 Speaker 1: keep saying monetary sovereignty, most people here pass it and 86 00:05:11,279 --> 00:05:14,919 Speaker 1: they just hear sovereignty sovereign government, which is what the 87 00:05:15,040 --> 00:05:18,240 Speaker 1: general public and even you know, mainstream economists understand as 88 00:05:18,320 --> 00:05:20,839 Speaker 1: political sovereignty. A country that you know, has its own 89 00:05:20,880 --> 00:05:23,719 Speaker 1: borders and its own flag, and its own army and 90 00:05:23,839 --> 00:05:28,720 Speaker 1: its own currency, which is not completely what MMT is saying. 91 00:05:28,760 --> 00:05:32,960 Speaker 1: So monetary sovereignty is defined as far as I'm concerned 92 00:05:33,080 --> 00:05:37,200 Speaker 1: in the following way. It's it's four basic elements that 93 00:05:37,240 --> 00:05:40,080 Speaker 1: need to apply. One is, yes, a country issues its 94 00:05:40,080 --> 00:05:43,400 Speaker 1: own currency, its own sovereign currency. Number two, it's a 95 00:05:43,440 --> 00:05:46,400 Speaker 1: country that imposes taxes and fines and fees on its 96 00:05:46,400 --> 00:05:49,839 Speaker 1: population in that same currency, the national currency, And that's 97 00:05:49,839 --> 00:05:52,919 Speaker 1: pretty straightforward. Most countries can do that. And then three 98 00:05:52,920 --> 00:05:57,760 Speaker 1: and four is where developing countries become a category of 99 00:05:57,839 --> 00:06:01,800 Speaker 1: their own and start losing some degree of monetary sovereignty. 100 00:06:01,880 --> 00:06:05,159 Speaker 1: So number three, it's a country that only issues debt 101 00:06:05,279 --> 00:06:08,760 Speaker 1: denominated in its own national currency. And as you know, 102 00:06:08,960 --> 00:06:12,440 Speaker 1: most developing countries, because of trade deficit, they have external debt, 103 00:06:12,920 --> 00:06:16,680 Speaker 1: which means they issue debt denominated in dollars, in euros 104 00:06:16,680 --> 00:06:19,760 Speaker 1: in Japanese end, and that's where they start losing degrees 105 00:06:19,760 --> 00:06:23,320 Speaker 1: of of monetary sovereignty. Number four is also related to that, 106 00:06:23,400 --> 00:06:26,080 Speaker 1: which is, you know, fixing the currency or trying to 107 00:06:26,200 --> 00:06:29,159 Speaker 1: stabilize the exchange rate at a particular level, pegging the 108 00:06:29,200 --> 00:06:31,440 Speaker 1: exchange rate to the dollar, to the euro, to other 109 00:06:32,120 --> 00:06:35,559 Speaker 1: strong currencies, and so both are related to the trade 110 00:06:35,600 --> 00:06:39,040 Speaker 1: deficit issue. Both are related to the external debt issue. 111 00:06:39,480 --> 00:06:42,719 Speaker 1: So that means that you don't have a binary where 112 00:06:42,760 --> 00:06:46,200 Speaker 1: a country either has monetary sovereignty or doesn't. It's really 113 00:06:46,279 --> 00:06:49,240 Speaker 1: degrees of monetary sovereignty. So when you look at that 114 00:06:49,600 --> 00:06:52,800 Speaker 1: the US, Australia, Canada, these are countries that enjoy full 115 00:06:52,880 --> 00:06:56,479 Speaker 1: monetary sovereignty. In Japan is is the same. Whereas you 116 00:06:56,480 --> 00:07:00,120 Speaker 1: know countries that completely gave up their monetary sovereignty. You 117 00:07:00,160 --> 00:07:04,080 Speaker 1: think of countries that dollarize, like like Ecuador completely, so 118 00:07:04,360 --> 00:07:07,560 Speaker 1: the extreme other opposite of of that spectrum. But most 119 00:07:07,560 --> 00:07:11,320 Speaker 1: developing countries are somewhere in between. And what what MMT 120 00:07:11,480 --> 00:07:14,480 Speaker 1: allows us to do if we start from this basic 121 00:07:14,560 --> 00:07:19,360 Speaker 1: definition is to ask the question what would allow a 122 00:07:19,440 --> 00:07:25,960 Speaker 1: particular developing country to regain or reclaim its full monetary sovereignty, 123 00:07:26,080 --> 00:07:30,600 Speaker 1: and the question of external debt becomes important. And that's 124 00:07:30,600 --> 00:07:34,520 Speaker 1: where the distinction between the debt denominated in the national currency, 125 00:07:34,600 --> 00:07:38,720 Speaker 1: the local domestic national debt versus the external debt becomes important. 126 00:07:38,760 --> 00:07:42,320 Speaker 1: And unfortunately, most analysts just talk about debt as if 127 00:07:42,400 --> 00:07:46,080 Speaker 1: it's the same thing. And that's where it becomes very 128 00:07:46,120 --> 00:07:48,480 Speaker 1: clear that the US, when we talk about the US 129 00:07:48,560 --> 00:07:50,960 Speaker 1: and the job guarantee or a green new deal, the 130 00:07:52,000 --> 00:07:57,080 Speaker 1: comparison between a US debt and Venezuela's debt or or 131 00:07:57,120 --> 00:08:01,160 Speaker 1: any other you know, developing countries that become irrelevant. And 132 00:08:01,200 --> 00:08:04,440 Speaker 1: that's why for most mainstream economists, the case of Japan 133 00:08:04,520 --> 00:08:07,200 Speaker 1: is a puzzle. As as bol Krugman said several times, 134 00:08:07,400 --> 00:08:12,640 Speaker 1: it's just not they can't comprehend why massive national debt 135 00:08:12,680 --> 00:08:14,880 Speaker 1: in the case of Japan doesn't lead to hyper inflation, 136 00:08:15,360 --> 00:08:18,640 Speaker 1: doesn't need to default, and things like that. So, first 137 00:08:18,680 --> 00:08:21,400 Speaker 1: of all, that was really helpful, and I think I 138 00:08:21,440 --> 00:08:26,560 Speaker 1: had never quite heard monetary sovereignty articulated that well, because 139 00:08:26,600 --> 00:08:28,840 Speaker 1: it is a term that gets thrown around a lot. 140 00:08:29,320 --> 00:08:32,280 Speaker 1: One thing that I think is really important and I 141 00:08:32,320 --> 00:08:34,440 Speaker 1: don't want to gloss over it is you know, in 142 00:08:34,480 --> 00:08:37,040 Speaker 1: the intro we were talking about the US and it's 143 00:08:37,120 --> 00:08:39,960 Speaker 1: reserve currency status, and I think it's striking that you 144 00:08:39,960 --> 00:08:43,120 Speaker 1: didn't include that in any way in your definition. And 145 00:08:43,320 --> 00:08:48,200 Speaker 1: so we have the full characteristics of monetary sovereignty obviously 146 00:08:48,240 --> 00:08:50,560 Speaker 1: in the US, but as you point out, you also 147 00:08:50,559 --> 00:08:55,080 Speaker 1: see him in Australia and New Zealand and Canada, and 148 00:08:55,120 --> 00:08:59,040 Speaker 1: no one would consider any of those national currencies to 149 00:08:59,080 --> 00:09:03,880 Speaker 1: be anything closed to reserve currencies exactly. So, so once 150 00:09:03,920 --> 00:09:07,520 Speaker 1: you have, once you have your full monetary sovereignty, then 151 00:09:07,800 --> 00:09:11,280 Speaker 1: or if you lose your monetary sovereignty like most developing countries, 152 00:09:11,320 --> 00:09:14,560 Speaker 1: then the question is what is the thing that's leading 153 00:09:15,040 --> 00:09:19,640 Speaker 1: to those structural problems? And it's hard to generalize, but 154 00:09:19,679 --> 00:09:23,360 Speaker 1: I'll still attempt to generalize. In general, you'll find three 155 00:09:23,559 --> 00:09:28,000 Speaker 1: structural weaknesses that most developing countries suffer from. It as 156 00:09:28,040 --> 00:09:30,800 Speaker 1: a result, most countries that lose monetary sovereignties suffer from 157 00:09:31,080 --> 00:09:34,400 Speaker 1: So when we talk about reclaiming monetary sovereignty or regaining it, 158 00:09:34,480 --> 00:09:38,320 Speaker 1: you have to focus on those root causes. So number one, 159 00:09:38,800 --> 00:09:43,040 Speaker 1: it's energy deficits, and this is even true for countries 160 00:09:43,040 --> 00:09:46,680 Speaker 1: that are big oil exporters, and I'll explain in a second. 161 00:09:46,840 --> 00:09:50,920 Speaker 1: Number two it's food imports, food lack of food self sufficiency. 162 00:09:51,360 --> 00:09:55,160 Speaker 1: And number three, which is the biggest problem for developing countries, 163 00:09:55,600 --> 00:10:00,320 Speaker 1: it's it's a situation where countries find themselves imp boarding 164 00:10:00,400 --> 00:10:04,480 Speaker 1: high value added content and exporting low value added content. 165 00:10:04,840 --> 00:10:07,480 Speaker 1: So no matter how fast you accelerate your your exports, 166 00:10:07,520 --> 00:10:09,720 Speaker 1: you're always digging yourself in a in a deeper hole 167 00:10:09,800 --> 00:10:15,160 Speaker 1: because you're just adding cheap labor and you know, subsidized 168 00:10:15,240 --> 00:10:19,080 Speaker 1: public policy to a production process. But you still have 169 00:10:19,120 --> 00:10:22,079 Speaker 1: to import all the intermediate goods, all the capital goods, 170 00:10:22,080 --> 00:10:24,559 Speaker 1: all the technology. So you end up losing in that 171 00:10:24,600 --> 00:10:27,800 Speaker 1: game on on the energy front. So the solutions, obviously, 172 00:10:27,840 --> 00:10:30,240 Speaker 1: if you want to reclaim monetary sovereignty, you have to 173 00:10:30,280 --> 00:10:34,280 Speaker 1: plug those holes in your in your economic systems. And 174 00:10:34,320 --> 00:10:39,400 Speaker 1: in this day and age, it becomes urgent to invest 175 00:10:39,440 --> 00:10:43,520 Speaker 1: in renewable energy production sources in most developing countries so 176 00:10:43,559 --> 00:10:48,040 Speaker 1: that you produce energy domestically and you stop not only 177 00:10:48,200 --> 00:10:51,600 Speaker 1: fossil fuel emissions, but you stop the massive imports of 178 00:10:51,679 --> 00:10:55,840 Speaker 1: petrochemicals and fossil fuels into the local economy. Number two, 179 00:10:56,800 --> 00:11:00,880 Speaker 1: it's it's food self sufficiency. Food sovereignty is extremely important 180 00:11:00,920 --> 00:11:04,720 Speaker 1: for monetary sovereignty for developing countries, and that obviously relates 181 00:11:04,760 --> 00:11:07,640 Speaker 1: to a lot of international trade issues that we can, 182 00:11:07,760 --> 00:11:11,400 Speaker 1: you know, spend another thirty minutes discussing um. Number three, 183 00:11:11,559 --> 00:11:15,120 Speaker 1: it's this structural you know, import and export issue in 184 00:11:15,120 --> 00:11:17,520 Speaker 1: in in the process of industrialization, where you end up 185 00:11:17,840 --> 00:11:20,640 Speaker 1: importing a lot of capital goods and intermediate goods and 186 00:11:20,840 --> 00:11:24,640 Speaker 1: high value added content and just export low value added content, 187 00:11:24,720 --> 00:11:27,760 Speaker 1: so you're just an assembly line, you know, adding cheap 188 00:11:27,840 --> 00:11:33,439 Speaker 1: labor to the production process and subsidized industrial development. Nothing 189 00:11:33,559 --> 00:11:37,640 Speaker 1: is gonna address the external debt issue unless we address 190 00:11:37,720 --> 00:11:41,120 Speaker 1: these three issues. And if you shift for a second 191 00:11:41,160 --> 00:11:44,600 Speaker 1: to the US or Japan, you realize these are not 192 00:11:44,840 --> 00:11:48,200 Speaker 1: these are not the issues, right. The fact that the 193 00:11:48,320 --> 00:11:52,880 Speaker 1: US has a reserve currency doesn't really affect these three 194 00:11:52,880 --> 00:11:55,560 Speaker 1: structural issues that are that I'm describing here. So if 195 00:11:55,559 --> 00:11:59,559 Speaker 1: a developing country wanted to reclaim it's monetary sovereignty, this 196 00:11:59,640 --> 00:12:02,600 Speaker 1: is where the job guarantee comes in. You can use 197 00:12:02,679 --> 00:12:07,480 Speaker 1: the job guarantee as as a policy tool to reclaim 198 00:12:07,559 --> 00:12:10,600 Speaker 1: that so that you're directing jobs in areas where you 199 00:12:10,679 --> 00:12:15,160 Speaker 1: need additional productive capacity for food or for renewable energy, 200 00:12:15,600 --> 00:12:20,640 Speaker 1: or for higher end production lines that add more value 201 00:12:20,640 --> 00:12:24,760 Speaker 1: added to the process um than than the current situation. 202 00:12:25,200 --> 00:12:26,800 Speaker 1: So this is this is where I would start, and 203 00:12:26,840 --> 00:12:29,240 Speaker 1: this is where the MMT lens allows us a completely 204 00:12:29,280 --> 00:12:31,880 Speaker 1: different way of looking at the process of economic development. 205 00:12:32,200 --> 00:12:34,960 Speaker 1: What are the national priorities and at the same time, 206 00:12:34,960 --> 00:12:38,240 Speaker 1: how to deal with inflation. Because if you're importing food 207 00:12:38,800 --> 00:12:41,800 Speaker 1: and your trade deficit, your external debt is putting pressure 208 00:12:41,800 --> 00:12:46,240 Speaker 1: on your exchange rate, then a currency depreciation means the 209 00:12:46,280 --> 00:12:49,000 Speaker 1: next morning, where you're importing wheat, when you're importing medicine, 210 00:12:49,280 --> 00:12:52,959 Speaker 1: you're importing inflation. So this is why the mm T lens, 211 00:12:53,240 --> 00:12:58,479 Speaker 1: the job guarantee, the inflation issue are built into the analysis. 212 00:12:58,520 --> 00:13:01,600 Speaker 1: You can't really separate one from the other. And I'm 213 00:13:01,640 --> 00:13:04,360 Speaker 1: happy to talk more about this, you know so called 214 00:13:04,400 --> 00:13:07,800 Speaker 1: political you know connection between MMT and the job guarantee 215 00:13:07,840 --> 00:13:11,120 Speaker 1: and a political choice, because I have a few things 216 00:13:11,120 --> 00:13:14,439 Speaker 1: to say about it if we have time, Well maybe 217 00:13:14,480 --> 00:13:17,119 Speaker 1: just before that, foul, could you walk us through exactly 218 00:13:17,360 --> 00:13:20,800 Speaker 1: how you think that the full employment or or the 219 00:13:20,880 --> 00:13:25,079 Speaker 1: job guaranteed type program can affect. I mean, basically, you're 220 00:13:25,080 --> 00:13:29,319 Speaker 1: talking about structural reform of developing economies. How does that 221 00:13:29,480 --> 00:13:34,400 Speaker 1: work exactly? So you start looking at a particular country, 222 00:13:34,520 --> 00:13:38,720 Speaker 1: you identify the particular items that are putting pressure on 223 00:13:38,760 --> 00:13:42,080 Speaker 1: the exchange rate, putting pressure on on the external debt. 224 00:13:42,280 --> 00:13:45,040 Speaker 1: In most cases, I said, it's it's food imports, it's 225 00:13:45,160 --> 00:13:48,719 Speaker 1: um energy imports. So you're not going to switch the 226 00:13:48,800 --> 00:13:52,920 Speaker 1: system structurally overnight. What you want to do is, you know, 227 00:13:53,120 --> 00:13:55,760 Speaker 1: stop doing what you've been doing for the last thirty 228 00:13:55,840 --> 00:13:58,080 Speaker 1: years that's been getting you deeper and deeper in trouble, 229 00:13:58,520 --> 00:14:01,320 Speaker 1: and look for a new stratgy. The new strategy says, 230 00:14:01,400 --> 00:14:05,800 Speaker 1: shift away from subsidizing fossil fuels, for example, which most 231 00:14:05,800 --> 00:14:09,520 Speaker 1: developing countries do, because they imported at a higher cost. 232 00:14:09,960 --> 00:14:13,760 Speaker 1: And if it's not subsidized, then it goes into the 233 00:14:13,800 --> 00:14:17,040 Speaker 1: economy as a higher cost of doing business, higher costs 234 00:14:17,080 --> 00:14:20,600 Speaker 1: for transportation, higher costs for energy production, for heating, for cooling, 235 00:14:20,640 --> 00:14:23,280 Speaker 1: and all of that, and that means riots on the streets, 236 00:14:23,320 --> 00:14:26,400 Speaker 1: and in most countries, the same thing with food food imports. 237 00:14:26,400 --> 00:14:28,880 Speaker 1: If it's if it's not subsidized, and your importing inflation. 238 00:14:29,200 --> 00:14:32,000 Speaker 1: You have riots the next morning, food riots, bread rice. 239 00:14:32,000 --> 00:14:34,480 Speaker 1: We've seen this in many countries. So what you want 240 00:14:34,520 --> 00:14:38,640 Speaker 1: to do is start shifting the current subsidy system that 241 00:14:38,720 --> 00:14:43,720 Speaker 1: you have in most developing countries away from subsidizing fossil 242 00:14:43,760 --> 00:14:48,240 Speaker 1: fuels and into building more productive capacity for renewable energy. 243 00:14:48,320 --> 00:14:51,640 Speaker 1: And the more you accelerate in that direction, the closer 244 00:14:51,680 --> 00:14:54,880 Speaker 1: you get to reclaiming monetary sovereignty. When you get so 245 00:14:54,920 --> 00:15:00,200 Speaker 1: called aid from the Western world from development agencies, the 246 00:15:00,320 --> 00:15:06,560 Speaker 1: aid shouldn't be directed towards subsidizing the existing mechanics that 247 00:15:06,640 --> 00:15:09,520 Speaker 1: gets you deeper in trouble. The aide should be directed 248 00:15:09,560 --> 00:15:14,640 Speaker 1: towards building productive capacity that's encourages and enhances your productive 249 00:15:14,640 --> 00:15:19,840 Speaker 1: capacity of renewable energy, of sustainable food locally, of moving 250 00:15:19,880 --> 00:15:24,560 Speaker 1: your productive capacity from low end, low value added manufacturing 251 00:15:24,560 --> 00:15:28,520 Speaker 1: to high value added manufacturing. So you restructure the national priorities. 252 00:15:29,040 --> 00:15:33,160 Speaker 1: Because most countries have some sort of employment program, especially 253 00:15:33,160 --> 00:15:37,240 Speaker 1: emergency employment programs that happened during economic crisis, they tend 254 00:15:37,280 --> 00:15:41,160 Speaker 1: to be small scale, they tend to be temporary. They're 255 00:15:41,200 --> 00:15:43,280 Speaker 1: not a job guarantee in the fullest sense. Of the 256 00:15:43,360 --> 00:15:46,040 Speaker 1: term that that we talk about in the MMT and 257 00:15:46,080 --> 00:15:48,680 Speaker 1: the post games in literature, and they tend to be 258 00:15:48,800 --> 00:15:51,480 Speaker 1: phased out or canceled as soon as the economy goes 259 00:15:51,520 --> 00:15:54,480 Speaker 1: back to normal, so called normal. So what we're talking 260 00:15:54,480 --> 00:15:59,200 Speaker 1: about is directing these employment programs and increasing their effectiveness 261 00:15:59,240 --> 00:16:03,360 Speaker 1: over time to build productive capacity in this area. Most 262 00:16:03,360 --> 00:16:06,160 Speaker 1: mainstream economists will tell you, in the developing world especially, 263 00:16:06,200 --> 00:16:08,800 Speaker 1: will tell you if we pay workers through some sort 264 00:16:08,840 --> 00:16:11,720 Speaker 1: of public works program or a job guarantee program, those 265 00:16:11,720 --> 00:16:13,480 Speaker 1: workers are going to take their wage, which is in 266 00:16:13,600 --> 00:16:16,480 Speaker 1: the local and the national currency, and they're gonna go 267 00:16:16,520 --> 00:16:19,200 Speaker 1: out and buy stuff. It's going to add to food demand, 268 00:16:19,240 --> 00:16:21,200 Speaker 1: it's going to add to transportation, is going to add 269 00:16:21,240 --> 00:16:23,880 Speaker 1: to demand for imports. So that money is going to 270 00:16:23,960 --> 00:16:27,240 Speaker 1: find its way as a point of pressure on the 271 00:16:27,240 --> 00:16:30,160 Speaker 1: exchange rate. So what they say we need to do 272 00:16:30,360 --> 00:16:34,360 Speaker 1: is leave people unemployed. You know, what a what a 273 00:16:34,400 --> 00:16:37,920 Speaker 1: cruel system to you know, use a buffer stock of 274 00:16:38,080 --> 00:16:42,080 Speaker 1: millions of people unemployed and poverty and misery and not 275 00:16:42,320 --> 00:16:45,640 Speaker 1: using the human capabilities that we have in the system, 276 00:16:45,720 --> 00:16:49,840 Speaker 1: especially human capabilities that developing countries has spent hundreds of 277 00:16:49,840 --> 00:16:52,520 Speaker 1: millions of dollars to educate, to raise in a healthy 278 00:16:52,520 --> 00:16:57,320 Speaker 1: way and then leave a young population in mass unemployment 279 00:16:57,400 --> 00:17:01,120 Speaker 1: instead of using it in a in a productive way. Fottel, 280 00:17:01,160 --> 00:17:04,840 Speaker 1: I have a couple uh. First, a short question and 281 00:17:04,840 --> 00:17:06,879 Speaker 1: that's slightly longer. On the short one, why does a 282 00:17:07,000 --> 00:17:11,320 Speaker 1: country in your view like Saudi Arabia, which obviously has 283 00:17:11,359 --> 00:17:15,080 Speaker 1: no problem on its energy balances, why does it seed 284 00:17:15,119 --> 00:17:21,639 Speaker 1: monetary sovereignty byger definition in not letting the real float freely? Well, 285 00:17:22,280 --> 00:17:24,760 Speaker 1: if you if you look at sat Arabia in particular, 286 00:17:24,840 --> 00:17:27,800 Speaker 1: that's that's an interesting example because it's it's a massive, 287 00:17:28,359 --> 00:17:32,120 Speaker 1: you know, oil exporter. But if you look at sat 288 00:17:32,160 --> 00:17:35,720 Speaker 1: Arabia's imports, it's actually the extreme case of of what 289 00:17:35,800 --> 00:17:40,960 Speaker 1: I've been describing. Um, most of the food that's that's 290 00:17:40,960 --> 00:17:45,080 Speaker 1: consumed in sat Arabia probably close to a not exactly percent, 291 00:17:45,160 --> 00:17:48,560 Speaker 1: but most, I would say, at least the eyeballing at 292 00:17:48,600 --> 00:17:53,240 Speaker 1: here is imported food. And satur Abia also imports all 293 00:17:53,320 --> 00:17:58,719 Speaker 1: the capital goods, all the intermediate goods for its manufacturing. Uh, 294 00:17:58,800 --> 00:18:01,600 Speaker 1: satur Abia also import it's a lot of labor, foreign 295 00:18:02,160 --> 00:18:07,959 Speaker 1: cheap labor, and Saturreby also imports refined petrochemicals to think 296 00:18:08,000 --> 00:18:13,040 Speaker 1: about the interject But does MMT from this lens implicitly 297 00:18:13,359 --> 00:18:17,399 Speaker 1: reject this sort of a popular view of trade, which is, 298 00:18:17,480 --> 00:18:20,639 Speaker 1: you know, some countries are not are going to specialize 299 00:18:20,680 --> 00:18:23,560 Speaker 1: in oil, some countries are going to specialize in food. 300 00:18:23,960 --> 00:18:26,280 Speaker 1: And one country sells the other country oil, the other 301 00:18:26,280 --> 00:18:28,280 Speaker 1: sells food and they both when when I mean, it 302 00:18:28,280 --> 00:18:31,960 Speaker 1: doesn't really make sense for a country that's essentially in 303 00:18:32,040 --> 00:18:35,880 Speaker 1: the middle of the desert to expand energy on turning 304 00:18:36,000 --> 00:18:40,119 Speaker 1: its land uh into good farmland when there maybe a 305 00:18:40,200 --> 00:18:44,560 Speaker 1: nearby neighbor that can grow food uh much more efficiently, right, 306 00:18:44,680 --> 00:18:48,320 Speaker 1: And nobody's arguing that satur Abia should start growing food 307 00:18:48,359 --> 00:18:51,080 Speaker 1: in the desert. Although you know, if if we're talking 308 00:18:51,080 --> 00:18:54,320 Speaker 1: about aquaponics, which doesn't need to use any soil and 309 00:18:54,440 --> 00:18:58,120 Speaker 1: uses less less water, especially the more advanced forms of 310 00:18:58,440 --> 00:19:01,640 Speaker 1: you know, high tech equaponics these days, then you can 311 00:19:01,640 --> 00:19:04,520 Speaker 1: grow it anywhere, including and especially in a country like 312 00:19:04,560 --> 00:19:07,600 Speaker 1: sat Arabia. I've been advocating this actually for for a 313 00:19:07,640 --> 00:19:11,560 Speaker 1: number of years now. Um. But from an MMT perspective, 314 00:19:11,640 --> 00:19:16,719 Speaker 1: the kind of the simplistic international trade framework is not 315 00:19:16,840 --> 00:19:20,520 Speaker 1: the right way of looking at things because specializing and 316 00:19:20,600 --> 00:19:23,880 Speaker 1: low value added content is a trap. It's it's not 317 00:19:24,200 --> 00:19:28,119 Speaker 1: about efficiency, it's about a trap that leads to loss 318 00:19:28,160 --> 00:19:31,240 Speaker 1: of monetary sovereignty, and it leads you into a public 319 00:19:31,280 --> 00:19:35,679 Speaker 1: policy framework that keeps you locked into that situation. It 320 00:19:35,720 --> 00:19:38,920 Speaker 1: doesn't actually move you higher up. Think about the countries 321 00:19:38,960 --> 00:19:41,399 Speaker 1: that really made it in terms of the process of 322 00:19:41,400 --> 00:19:46,840 Speaker 1: economic development, like like Korea, like UH, Singapore, UM. They 323 00:19:46,880 --> 00:19:49,439 Speaker 1: didn't make it by specializing and low value added content. 324 00:19:49,640 --> 00:19:52,800 Speaker 1: They made it by having a very clear industrial strategy 325 00:19:52,800 --> 00:19:55,720 Speaker 1: of moving up higher and higher up in terms of 326 00:19:55,800 --> 00:19:58,919 Speaker 1: value added content and not specializing in the cheap stuff. 327 00:19:59,640 --> 00:20:03,000 Speaker 1: And the countries that specialized in you know, um UH, 328 00:20:03,640 --> 00:20:07,040 Speaker 1: low value added agriculture and low value added manufacturing, they 329 00:20:07,080 --> 00:20:09,520 Speaker 1: went deeper and deeper into external debt and deeper and 330 00:20:09,560 --> 00:20:12,960 Speaker 1: deeper into trouble. The countries that have been blessed with 331 00:20:13,080 --> 00:20:16,800 Speaker 1: massive amounts of oil, they you know, they managed to 332 00:20:16,840 --> 00:20:20,400 Speaker 1: move closer to a higher level of degree of monetary sovereignty. 333 00:20:20,400 --> 00:20:23,840 Speaker 1: In the case of saut Arabia, saut Arabia lacks monetary 334 00:20:23,840 --> 00:20:29,040 Speaker 1: sovereignty because of the currency peg with with the US dollar. 335 00:20:29,640 --> 00:20:33,280 Speaker 1: It has massive amount of reserves that are you know, 336 00:20:33,400 --> 00:20:36,280 Speaker 1: depleting in the last few years, but it still has 337 00:20:36,320 --> 00:20:40,320 Speaker 1: a massive buffer of of foreign currency reserves that give 338 00:20:40,359 --> 00:20:45,280 Speaker 1: it some privileges. But by twenty eight, which is when 339 00:20:45,840 --> 00:20:48,360 Speaker 1: most estimates that have seen say that satur Abia will 340 00:20:48,400 --> 00:20:51,919 Speaker 1: become a net oil importer. If we continue at the 341 00:20:51,920 --> 00:20:55,160 Speaker 1: current pace, then sat Arabia will you know, quickly burn 342 00:20:55,240 --> 00:20:59,640 Speaker 1: through its foreign reserves and move into a classic case 343 00:20:59,680 --> 00:21:02,280 Speaker 1: of a developing country that imports all of its food 344 00:21:02,760 --> 00:21:07,640 Speaker 1: and imports you know, energy, and it specializes in little 345 00:21:07,680 --> 00:21:10,840 Speaker 1: value added manufacturing as simply line type of stuff. And 346 00:21:10,920 --> 00:21:15,399 Speaker 1: that's really you know, a disaster for most developing countries 347 00:21:15,440 --> 00:21:18,000 Speaker 1: that are trapped in this situation. So then what are 348 00:21:18,080 --> 00:21:21,879 Speaker 1: your public policy options? If you're developing country, then you 349 00:21:22,000 --> 00:21:25,760 Speaker 1: become obsessed with accumulating foreign currency reserves, so you try 350 00:21:25,800 --> 00:21:28,840 Speaker 1: to accelerate your exports. It doesn't work because you the 351 00:21:28,920 --> 00:21:31,159 Speaker 1: more you export, the more you have to import and 352 00:21:31,680 --> 00:21:36,400 Speaker 1: capital and energy and high value added content. Number two, 353 00:21:36,480 --> 00:21:39,520 Speaker 1: you you start to increase your tourism. Where you bring 354 00:21:39,520 --> 00:21:42,600 Speaker 1: more tourism, it means you bring more energy consumption, more 355 00:21:42,680 --> 00:21:46,000 Speaker 1: food consumption, more water consumption, and some parts of the world, 356 00:21:46,000 --> 00:21:48,720 Speaker 1: so it's a it's a trap, and you're competing with 357 00:21:48,760 --> 00:21:51,919 Speaker 1: two hundred other you know, a hundred and fifty plus 358 00:21:51,960 --> 00:21:54,320 Speaker 1: other countries who are also racing to the bottom because 359 00:21:54,320 --> 00:21:57,840 Speaker 1: they too want more tourism. Then you become obsessed with 360 00:21:57,840 --> 00:22:00,720 Speaker 1: foreign direct investment. But what kind of foreign direct investment 361 00:22:00,720 --> 00:22:02,359 Speaker 1: are you going to be able to attract as a 362 00:22:02,400 --> 00:22:05,880 Speaker 1: developing country that has, you know, not advanced so much 363 00:22:05,960 --> 00:22:09,119 Speaker 1: in terms of value added content you're gonna attract. It's 364 00:22:09,119 --> 00:22:10,800 Speaker 1: going to be a race to the bottom, and there's 365 00:22:10,800 --> 00:22:13,760 Speaker 1: gonna be another hundred plus countries who are also competing 366 00:22:13,840 --> 00:22:18,160 Speaker 1: for you know, outsourcing jobs from from the US and Canada. 367 00:22:18,800 --> 00:22:21,760 Speaker 1: You're not going to be Germany or Japan, you know, 368 00:22:21,840 --> 00:22:26,240 Speaker 1: competing for the high end skilled manufacturing stuff. So all 369 00:22:26,280 --> 00:22:30,040 Speaker 1: of these are traps that most developing countries are stuck 370 00:22:30,080 --> 00:22:34,920 Speaker 1: into because they need the currency reserves, because without currency reserves, 371 00:22:34,960 --> 00:22:39,280 Speaker 1: their currency will depreciate, and it means the next morning 372 00:22:39,280 --> 00:22:42,120 Speaker 1: they're going to import food and medicine and capital at 373 00:22:42,119 --> 00:22:45,960 Speaker 1: a higher cost, which means they're importing inflation. It means 374 00:22:46,000 --> 00:22:48,080 Speaker 1: in two days they're gonna have riots on the streets 375 00:22:49,040 --> 00:22:52,000 Speaker 1: unless there's an IMF intervention to put a band aid 376 00:22:52,040 --> 00:22:55,960 Speaker 1: on this situation and start over again with higher levels 377 00:22:56,000 --> 00:23:00,520 Speaker 1: of external debt, with lower degrees of monetary sovereignty. So 378 00:23:00,760 --> 00:23:03,680 Speaker 1: as as Warren Mosler sometimes says, if if you're stuck 379 00:23:03,720 --> 00:23:06,239 Speaker 1: in a in a hole, the first thing you do 380 00:23:06,320 --> 00:23:08,640 Speaker 1: is you stop digging and figure out a different way 381 00:23:08,680 --> 00:23:11,560 Speaker 1: to get out. And and that's really where the MMT analysis, 382 00:23:12,040 --> 00:23:14,879 Speaker 1: you know, shines a light on this, on this deep 383 00:23:14,920 --> 00:23:18,160 Speaker 1: hole that most developing countries are stuck into, and says 384 00:23:18,359 --> 00:23:23,480 Speaker 1: stop digging, stop using the traditional policy advice, and think 385 00:23:23,520 --> 00:23:28,119 Speaker 1: of real strategies to reclaim monetary sovereignty UM and focus 386 00:23:28,160 --> 00:23:31,119 Speaker 1: on the root causes that are leading to this situation. 387 00:23:31,520 --> 00:23:36,680 Speaker 1: And that's where directing job creation and incentives towards building 388 00:23:36,720 --> 00:23:41,119 Speaker 1: productive capacity in the areas that you identify as the 389 00:23:41,160 --> 00:23:46,119 Speaker 1: weaknesses becomes the important strategy of creating jobs, developing a 390 00:23:46,200 --> 00:23:51,240 Speaker 1: country on a sound foundation, and at the same time 391 00:23:52,560 --> 00:23:56,600 Speaker 1: dealing with the inflationary pressures, the real inflationary pressures that 392 00:23:56,640 --> 00:24:00,399 Speaker 1: are existing in the system in most developing countries. And 393 00:24:00,680 --> 00:24:04,280 Speaker 1: that's why I keep saying you can't separate the MMT 394 00:24:04,440 --> 00:24:09,359 Speaker 1: analysis from the structural policy solutions that need to be 395 00:24:09,480 --> 00:24:11,760 Speaker 1: in place to deal with the inflation, to deal with 396 00:24:11,760 --> 00:24:32,240 Speaker 1: an employment, to deal with climate change to So how 397 00:24:32,320 --> 00:24:36,520 Speaker 1: easy is it though, to start digging yourself out of 398 00:24:36,560 --> 00:24:40,240 Speaker 1: that hole? Because, as you describe it, the entire existing 399 00:24:40,520 --> 00:24:44,760 Speaker 1: system of trade and global capitalism, I suppose, is pushing 400 00:24:44,800 --> 00:24:48,280 Speaker 1: you in one direction, which is that race to the bottom, 401 00:24:48,440 --> 00:24:52,919 Speaker 1: and you're fighting against that, trying to shift productive capacity 402 00:24:52,960 --> 00:24:56,040 Speaker 1: again as you put it into areas where it hasn't 403 00:24:56,160 --> 00:25:00,280 Speaker 1: naturally been shifted before. How do you do that? How 404 00:25:00,320 --> 00:25:02,800 Speaker 1: hard is it to do that? And where does the 405 00:25:02,880 --> 00:25:06,560 Speaker 1: money come from in order to make that happen? Right? Well, 406 00:25:06,600 --> 00:25:09,600 Speaker 1: it's nobody says it's easy. Because number one, you have 407 00:25:09,760 --> 00:25:13,080 Speaker 1: to fight the ideas of the mainstream policy makers, the 408 00:25:13,080 --> 00:25:16,679 Speaker 1: mainstream economists. That's that step number one. Number two, you 409 00:25:16,720 --> 00:25:19,800 Speaker 1: have to fight the power structures, the the interest groups 410 00:25:19,800 --> 00:25:24,160 Speaker 1: because in most developing countries there is you know, licensing 411 00:25:24,240 --> 00:25:29,400 Speaker 1: systems for importing food, for importing energy, uh, and those 412 00:25:29,440 --> 00:25:32,280 Speaker 1: are those are quite profitable. So people are going to 413 00:25:32,359 --> 00:25:35,760 Speaker 1: oppose that with with whatever power they have. Then you 414 00:25:35,800 --> 00:25:38,800 Speaker 1: have the global trading system, the w t O rules. 415 00:25:38,800 --> 00:25:41,640 Speaker 1: I mean, we live in a in a free trade world, right, 416 00:25:41,720 --> 00:25:45,160 Speaker 1: so you're not gonna be able to exit from from 417 00:25:45,160 --> 00:25:48,639 Speaker 1: those trade relations easily. Uh, you're gonna fight, you know, 418 00:25:48,760 --> 00:25:54,040 Speaker 1: domestic business interests that you know from from an individual perspective, 419 00:25:54,600 --> 00:25:58,399 Speaker 1: UM gain from from the existing system, but then comes 420 00:25:58,520 --> 00:26:00,320 Speaker 1: to you know, if if you deal with all of 421 00:26:00,320 --> 00:26:02,840 Speaker 1: these issues, then it becomes how do you do this? 422 00:26:02,960 --> 00:26:04,840 Speaker 1: You're not going to be able to switch it overnight, 423 00:26:05,640 --> 00:26:10,359 Speaker 1: especially with the structural low value added exports, high value 424 00:26:10,400 --> 00:26:13,119 Speaker 1: added imports stuff, because in order to shift to higher 425 00:26:13,640 --> 00:26:16,800 Speaker 1: levels of value added production, you need to invest in 426 00:26:17,440 --> 00:26:21,440 Speaker 1: UM infrastructure. You need to invest in education, vocational training, 427 00:26:21,840 --> 00:26:24,120 Speaker 1: you need to invest in research and development. And that's 428 00:26:24,119 --> 00:26:26,280 Speaker 1: not going to happen overnight. It takes a generation or 429 00:26:26,359 --> 00:26:31,080 Speaker 1: two of consistent investment in those areas to move up 430 00:26:31,160 --> 00:26:34,359 Speaker 1: to that higher level. In terms of food production, no 431 00:26:34,400 --> 00:26:38,640 Speaker 1: country can move to you know, full food sovereignty in 432 00:26:38,640 --> 00:26:41,280 Speaker 1: in one or two years or even a decade. But 433 00:26:41,400 --> 00:26:44,280 Speaker 1: you have to start somewhere, and you have to demonstrate 434 00:26:44,680 --> 00:26:47,600 Speaker 1: that you're actually making progress, and you need to dedicate 435 00:26:47,680 --> 00:26:53,040 Speaker 1: more resources. This is where sacrifice becomes important. You may 436 00:26:53,119 --> 00:26:56,080 Speaker 1: have to impose capital controls, you may have to restrict 437 00:26:56,160 --> 00:27:00,159 Speaker 1: certain imports or or use your taxes them your RIF 438 00:27:00,280 --> 00:27:04,960 Speaker 1: system to incentivize uh, certain kinds of consumptions and certain 439 00:27:05,040 --> 00:27:09,720 Speaker 1: kinds of behavior in the domestic economy. It's really hard 440 00:27:09,760 --> 00:27:13,440 Speaker 1: to do it as a single developing country. It's slightly 441 00:27:13,520 --> 00:27:16,720 Speaker 1: easier to do it as a block of developing countries. 442 00:27:16,960 --> 00:27:19,640 Speaker 1: So this is where the idea of you know, uh, 443 00:27:20,040 --> 00:27:23,840 Speaker 1: competition and in a national system and free trade is 444 00:27:23,680 --> 00:27:27,720 Speaker 1: is an important concept to look into because everybody says 445 00:27:27,760 --> 00:27:30,480 Speaker 1: competition is is good, it's fair, it's healthy, it's efficient, 446 00:27:31,240 --> 00:27:33,879 Speaker 1: like in like in sports, like if if you're in 447 00:27:33,640 --> 00:27:38,200 Speaker 1: a boxing game, we we have heavyweight, you know, boxers 448 00:27:38,240 --> 00:27:42,200 Speaker 1: fight heavyweight boxers and lightweight go with with lightweight. Nobody 449 00:27:42,240 --> 00:27:44,679 Speaker 1: would watch, you know, it's it's illegal to have a 450 00:27:44,720 --> 00:27:48,119 Speaker 1: heavyweight champion, you know, beat the hell out of a 451 00:27:48,240 --> 00:27:52,199 Speaker 1: lightweight boxer. It's ugly, it's illegal, Nobody would watch it. 452 00:27:52,520 --> 00:27:55,000 Speaker 1: And yet we allow that to happen in the international 453 00:27:55,000 --> 00:27:57,800 Speaker 1: trade system. When we say it's healthy, it's competition, well 454 00:27:57,800 --> 00:28:02,840 Speaker 1: it's not. So nobody says competing with countries that have 455 00:28:03,200 --> 00:28:07,240 Speaker 1: equal levels of economic development is not a good idea. 456 00:28:07,440 --> 00:28:11,000 Speaker 1: And this is where South South trade becomes an important 457 00:28:11,080 --> 00:28:16,080 Speaker 1: mechanism to enhance competition amongst equals and to use the 458 00:28:16,160 --> 00:28:22,080 Speaker 1: complementary endowments of different countries within the region to enhance 459 00:28:22,200 --> 00:28:25,560 Speaker 1: their the size of their market, access to markets, to 460 00:28:25,760 --> 00:28:30,320 Speaker 1: enhance competition, and to build resources within the region that 461 00:28:30,480 --> 00:28:35,400 Speaker 1: can secure a better level of economic development. UM, so 462 00:28:35,440 --> 00:28:39,680 Speaker 1: we have to rethink international trade systems in that context. Thought, 463 00:28:39,880 --> 00:28:43,040 Speaker 1: before we go, I want to make sure we touch 464 00:28:43,080 --> 00:28:48,160 Speaker 1: on one other point in your characteristics of monetary sovereignty, 465 00:28:48,160 --> 00:28:50,160 Speaker 1: which in my mind might have a lot of relevance 466 00:28:50,240 --> 00:28:52,480 Speaker 1: in the e M world, and that was your number 467 00:28:52,520 --> 00:28:55,400 Speaker 1: two point, which we haven't talked about much, and that 468 00:28:55,560 --> 00:28:59,880 Speaker 1: is essentially the ability of a government to raise taxes 469 00:29:00,120 --> 00:29:03,400 Speaker 1: levy finds within its own currency that it prints, and 470 00:29:03,480 --> 00:29:07,640 Speaker 1: one of the things that developing countries might lack is 471 00:29:07,760 --> 00:29:11,080 Speaker 1: essentially good government infrastructure. And a key part of government 472 00:29:11,120 --> 00:29:16,320 Speaker 1: infrastructure is essentially the ability to do exactly that, to 473 00:29:17,040 --> 00:29:23,880 Speaker 1: actually maintain tax compliance, to of eliminate tax evasion, stuff 474 00:29:23,920 --> 00:29:26,520 Speaker 1: like that. Talk to us about that challenge and how 475 00:29:26,560 --> 00:29:29,880 Speaker 1: important it is, and within the e M context, just 476 00:29:29,920 --> 00:29:33,640 Speaker 1: this ability to build up stable institutions that aren't driven 477 00:29:33,680 --> 00:29:37,200 Speaker 1: with corruption and that can actually enforce the use of 478 00:29:37,240 --> 00:29:41,720 Speaker 1: the domestic printed currency. Absolutely. I mean the issue of 479 00:29:41,840 --> 00:29:45,960 Speaker 1: tax evasion and corruption, especially in developing countries, is a 480 00:29:46,040 --> 00:29:49,400 Speaker 1: key structural weakness and it's not something that that can 481 00:29:49,440 --> 00:29:52,200 Speaker 1: be fixed overnight. I mean, we've tried, we've tried and 482 00:29:52,520 --> 00:29:56,880 Speaker 1: tried with corruption, it's it's very easy for it to 483 00:29:57,000 --> 00:30:00,480 Speaker 1: seep into the system and it's extremely difficult to to 484 00:30:00,960 --> 00:30:03,080 Speaker 1: cleanse the system of it. But that doesn't mean we 485 00:30:03,080 --> 00:30:05,160 Speaker 1: should we should give up. And and this is where 486 00:30:05,520 --> 00:30:11,040 Speaker 1: international assistance, this is where enforcing the democratic institutions, transparency 487 00:30:11,080 --> 00:30:16,200 Speaker 1: within within countries is extremely important. So MMT doesn't reject that, 488 00:30:16,280 --> 00:30:19,880 Speaker 1: if anything, we want to enhance that. The the issue becomes, 489 00:30:20,120 --> 00:30:23,680 Speaker 1: especially in developing countries, the the issue of progressive versus 490 00:30:23,720 --> 00:30:27,560 Speaker 1: regressive taxation because most developing countries rely on value added 491 00:30:27,600 --> 00:30:32,000 Speaker 1: tax UH sales tax and developing countries and that that's 492 00:30:32,040 --> 00:30:36,719 Speaker 1: not ideal, but that's because there's a lot of informal 493 00:30:36,760 --> 00:30:39,280 Speaker 1: transactions that happened in the system. There's a lack of 494 00:30:39,320 --> 00:30:43,920 Speaker 1: effectiveness and and reporting and tax collection UH. There's also 495 00:30:43,960 --> 00:30:48,000 Speaker 1: the issue of UM taxing the rich, taxing wealth versus 496 00:30:48,000 --> 00:30:53,240 Speaker 1: taxing income UM. All of these issues need to be addressed, 497 00:30:53,280 --> 00:30:56,479 Speaker 1: and some countries are doing a better job than others. 498 00:30:56,520 --> 00:31:00,720 Speaker 1: But that's a that's a key aspect of the effectiveness. Uh. 499 00:31:00,760 --> 00:31:03,680 Speaker 1: The point that MMTY highlights across the board for developed 500 00:31:03,760 --> 00:31:07,760 Speaker 1: or developing countries is the purpose of taxation. The purpose 501 00:31:07,800 --> 00:31:10,320 Speaker 1: of taxation is not to raise revenue to fund a 502 00:31:10,360 --> 00:31:15,400 Speaker 1: particular program. The purpose of taxation is to offset some 503 00:31:15,560 --> 00:31:18,200 Speaker 1: of the spending and to deal with the inflationary pressure. 504 00:31:18,640 --> 00:31:21,400 Speaker 1: And in the case of you know, high marginal tax 505 00:31:21,520 --> 00:31:24,960 Speaker 1: rates and wealth tax rates, it's also to protect the 506 00:31:25,040 --> 00:31:28,640 Speaker 1: democratic process and to reduce the market power and the 507 00:31:28,640 --> 00:31:32,240 Speaker 1: political power of the elites of the oligarchy and the 508 00:31:32,280 --> 00:31:35,520 Speaker 1: political process and the democratic process. Not because we need 509 00:31:35,560 --> 00:31:38,480 Speaker 1: their money to fund a particular program, but because we 510 00:31:38,560 --> 00:31:42,040 Speaker 1: need to reduce their influence in the political process and 511 00:31:42,080 --> 00:31:45,080 Speaker 1: reduce their influence in the market process, because let's not 512 00:31:45,120 --> 00:31:48,640 Speaker 1: forget that, you know, political influences always for an economic gain. 513 00:31:49,120 --> 00:31:52,000 Speaker 1: So that also has something to do with inflation, something 514 00:31:52,040 --> 00:31:56,080 Speaker 1: to do with with the rentiers mechanism that that exists 515 00:31:56,120 --> 00:32:00,440 Speaker 1: in most countries. So MMT acknowledges that, and it's an 516 00:32:00,440 --> 00:32:03,800 Speaker 1: important thing. MMT is not a silver bullet to you know, 517 00:32:03,920 --> 00:32:07,400 Speaker 1: fix everything, but it does acknowledge that there is corruption. 518 00:32:07,440 --> 00:32:11,760 Speaker 1: It does acknowledge that their political issues, and the criticism 519 00:32:11,840 --> 00:32:14,880 Speaker 1: that sometimes you hear from from some colleagues about MMT 520 00:32:15,600 --> 00:32:18,760 Speaker 1: kind of going into a slippery slope of you know, 521 00:32:18,840 --> 00:32:23,080 Speaker 1: political prescription or whatever is is really not a fair 522 00:32:23,600 --> 00:32:28,480 Speaker 1: criticism because give me any theory or any analytical framework 523 00:32:28,520 --> 00:32:33,360 Speaker 1: that doesn't have a political bent to it, or I mean, 524 00:32:33,600 --> 00:32:36,040 Speaker 1: what is not political When you build a theory based 525 00:32:36,040 --> 00:32:39,560 Speaker 1: on certain assumptions, those assumptions have an ideological bent, They 526 00:32:39,560 --> 00:32:42,600 Speaker 1: have a political bent to them. And MMT is is 527 00:32:43,160 --> 00:32:47,880 Speaker 1: not saying we're we're politically neutral. Nothing out there in 528 00:32:47,960 --> 00:32:52,560 Speaker 1: terms of academic thinking and academic analysis is politically neutral. Uh. 529 00:32:52,600 --> 00:32:57,760 Speaker 1: It's always a certain choice about how you organize a 530 00:32:57,880 --> 00:33:03,360 Speaker 1: society and economy because it's organizing a society. Organizing economy 531 00:33:03,400 --> 00:33:06,600 Speaker 1: by definition is a legal process, which means it's a 532 00:33:06,640 --> 00:33:11,360 Speaker 1: political process. So you can't really divorce the economic thinking 533 00:33:11,400 --> 00:33:15,360 Speaker 1: from the legal thinking, from the political thinking from the 534 00:33:15,440 --> 00:33:19,360 Speaker 1: social realities. These are all intertwined, and m T S 535 00:33:19,920 --> 00:33:24,880 Speaker 1: really prides itself for building a coherent interdisciplinary framework to 536 00:33:25,000 --> 00:33:31,120 Speaker 1: address issues that are by definition multifaceted and require legal analysis, 537 00:33:31,160 --> 00:33:35,760 Speaker 1: economic analysis, and political analysis. So there is no slippery slope. 538 00:33:35,920 --> 00:33:38,240 Speaker 1: It's the whole thing from the beginning, start with the 539 00:33:38,320 --> 00:33:42,320 Speaker 1: social reality in which we live, which has legal implications, 540 00:33:42,320 --> 00:33:47,240 Speaker 1: of political implications and economic implications. Fat Out, I'm sorry, 541 00:33:47,240 --> 00:33:48,600 Speaker 1: we're going to have to leave it there, but that 542 00:33:48,680 --> 00:33:53,440 Speaker 1: was a really fascinating conversation. Fatal Kaboob, Associate professor at 543 00:33:53,480 --> 00:33:56,320 Speaker 1: Dennison University. Thank you so much for coming on all thoughts, 544 00:33:57,080 --> 00:33:59,520 Speaker 1: Thank you for having me on the show. That was great. 545 00:34:00,040 --> 00:34:17,799 Speaker 1: Thank you very much so, Joe. That was a very 546 00:34:17,840 --> 00:34:21,440 Speaker 1: interesting conversation sort of ended up in a very different 547 00:34:21,440 --> 00:34:26,480 Speaker 1: place to our previous conversation with Colin Roche in the 548 00:34:26,520 --> 00:34:29,880 Speaker 1: sense that I mean, Fottle is pretty out there about 549 00:34:29,920 --> 00:34:33,759 Speaker 1: the notion that whatever economic system you choose, or economic 550 00:34:33,800 --> 00:34:38,360 Speaker 1: theory you choose, comes with a set of political implications 551 00:34:38,520 --> 00:34:41,480 Speaker 1: or beliefs along with it. Yeah, and I really like 552 00:34:41,600 --> 00:34:45,759 Speaker 1: this conversation a lot because I think when people say that, oh, 553 00:34:45,920 --> 00:34:50,080 Speaker 1: you can't apply the MMC framework to emerging markets, what 554 00:34:50,160 --> 00:34:53,440 Speaker 1: they're really saying is you can't expect emerging markets to 555 00:34:53,520 --> 00:34:55,760 Speaker 1: just spend a lot of money all of us sudden, 556 00:34:55,880 --> 00:35:00,560 Speaker 1: overnight and produce beneficial effects. And what I think is, uh, 557 00:35:00,719 --> 00:35:03,560 Speaker 1: what Fottle the point he was making is like, sure, 558 00:35:03,760 --> 00:35:06,640 Speaker 1: that's true, but that's not really the idea, and that 559 00:35:06,719 --> 00:35:10,000 Speaker 1: the idea is let's go to the root premises of MMT, 560 00:35:10,320 --> 00:35:15,400 Speaker 1: the value of monetary sovereignty, and achieve that first. And 561 00:35:15,640 --> 00:35:18,520 Speaker 1: I really like that reframing because of course, the US 562 00:35:18,640 --> 00:35:21,920 Speaker 1: is different spending and fiscal capacity than a country like 563 00:35:22,360 --> 00:35:26,000 Speaker 1: Turkey or anywhere else, But that doesn't mean that the 564 00:35:26,120 --> 00:35:31,160 Speaker 1: overall framework isn't useful, both in terms of understanding Turkey 565 00:35:31,200 --> 00:35:35,160 Speaker 1: but also sort of a policy path that might benefit 566 00:35:35,200 --> 00:35:39,640 Speaker 1: these countries. Well, the approach is much more realistic than 567 00:35:40,200 --> 00:35:42,880 Speaker 1: I thought it would be when we first started discussing 568 00:35:42,920 --> 00:35:47,480 Speaker 1: the notion of applying MMT to emerging markets. But that said, 569 00:35:48,280 --> 00:35:52,080 Speaker 1: it's realistic in that sort of reframing of the problem. Sure, 570 00:35:52,480 --> 00:35:56,120 Speaker 1: but you know, when you listen to Fattle describe everything 571 00:35:56,160 --> 00:35:59,560 Speaker 1: that needs to happen in order for a developing economy 572 00:35:59,600 --> 00:36:03,279 Speaker 1: to actually climb out of the whole and start on 573 00:36:03,400 --> 00:36:07,560 Speaker 1: the path to monetary sovereignty, it sounds like a huge, 574 00:36:07,880 --> 00:36:12,359 Speaker 1: huge ask, right. They need to basically extricate themselves from 575 00:36:12,400 --> 00:36:20,160 Speaker 1: the existing exploitative trading and international capitalist system, restructure their 576 00:36:20,320 --> 00:36:26,000 Speaker 1: entire economy, deal with very controversial issues like taxation, um 577 00:36:26,040 --> 00:36:29,600 Speaker 1: and subsidies for things like fuel and food, and then 578 00:36:30,360 --> 00:36:33,120 Speaker 1: only then they'll be sort of at the beginning of 579 00:36:33,160 --> 00:36:37,319 Speaker 1: what's going to be possibly a multi generational process. Absolutely, 580 00:36:37,719 --> 00:36:41,000 Speaker 1: but I think what's useful about that, even though obviously 581 00:36:41,440 --> 00:36:44,759 Speaker 1: any country will phase extraordinary difficulty, is just how much 582 00:36:45,239 --> 00:36:50,200 Speaker 1: we've come to accept certain things about international development. Is 583 00:36:50,280 --> 00:36:52,520 Speaker 1: facts like, oh, of course you ought to boost your tourism, 584 00:36:52,680 --> 00:36:55,440 Speaker 1: or of course you start off by selling cheap stuff 585 00:36:55,440 --> 00:36:58,520 Speaker 1: and that enables you to eventually sell higher value stuff, 586 00:36:58,520 --> 00:37:01,640 Speaker 1: and then higher value stuff. Just these certain things that 587 00:37:01,680 --> 00:37:05,120 Speaker 1: we sort of assume our iron facts about development, and 588 00:37:05,160 --> 00:37:07,520 Speaker 1: that of course this is the way you're supposed to progress, 589 00:37:07,960 --> 00:37:10,360 Speaker 1: and as he points there all sort of drawbacks and 590 00:37:10,440 --> 00:37:13,080 Speaker 1: so obviously if you have a tourism boom, but all 591 00:37:13,160 --> 00:37:16,200 Speaker 1: that does is accelerate your demand for oil and water 592 00:37:16,440 --> 00:37:19,439 Speaker 1: and food to move and feed all those tourists. Are 593 00:37:19,480 --> 00:37:22,680 Speaker 1: you just on a treadmill? And so I don't think 594 00:37:22,719 --> 00:37:25,520 Speaker 1: it necessarily follows the tourism is bad per se, obviously, 595 00:37:25,840 --> 00:37:29,359 Speaker 1: but just these sort of conventional wisdom about this is good, 596 00:37:29,440 --> 00:37:31,400 Speaker 1: this is bad, this is what you do to develop 597 00:37:31,719 --> 00:37:35,000 Speaker 1: at least they're challenging some of our assumptions on those things, 598 00:37:35,040 --> 00:37:37,480 Speaker 1: which I really like. It could be a lot of 599 00:37:37,520 --> 00:37:41,919 Speaker 1: food for thought. Absolutely, if if nothing else, MMT has 600 00:37:41,960 --> 00:37:45,120 Speaker 1: definitely forced a lot of people to sort of reassess 601 00:37:45,200 --> 00:37:49,240 Speaker 1: our starting point for economic theory. For sure. That agree 602 00:37:49,280 --> 00:37:53,040 Speaker 1: and I think that all right, shall we leave it there? 603 00:37:53,080 --> 00:37:56,880 Speaker 1: Let's there cool. This has been another episode of the 604 00:37:56,880 --> 00:37:59,680 Speaker 1: All Thoughts Podcast. I'm Chasey Alloway. You can follow me 605 00:37:59,760 --> 00:38:02,880 Speaker 1: on Twitter at Tracy Alloway, and I'm Joe Wisntal. You 606 00:38:02,880 --> 00:38:05,640 Speaker 1: can follow me on Twitter at the Stalwart. And you 607 00:38:05,680 --> 00:38:08,520 Speaker 1: should follow our guest on Twitter, follow Koboo. He's at 608 00:38:08,560 --> 00:38:12,080 Speaker 1: Follow koboob and be sure to follow our producer to 609 00:38:12,280 --> 00:38:15,480 Speaker 1: for Foreheads. He's at foreheads T, as well as the 610 00:38:15,520 --> 00:38:20,240 Speaker 1: Bloomberg head of podcast, Francesca Leave at Francesca Today. Thanks 611 00:38:20,239 --> 00:38:20,720 Speaker 1: for listening.