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The trillion-dollar woman - A conversation with the economist Stephanie Kelton about the "deficit myth," Modern Monetary Theory for dummies, and why the age of capital may finally be ending
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- Title
- The trillion-dollar woman
- Authors
- Anand Giridharadas
- Word count
- 3545 words
Also includes a good ELI5 of what Modern Monetary Theory entails (and doesn't entail).
Really discredits the interviewer, Anand, and the title itself. No one is calling for an end to capital. And quite frankly, why would you end capital? It's borderline moronic. Anand is basically asking for the literal implementation of Communism. Without capital how are are you suppose to get people to do anything they don't want to do, and how do you decide who gets the things that they want?
I would say that communistic implementations would only increase violence and wide spread poverty.
Also why are we hating on Neoliberalism exactly? The philosophy is very well done, simply because it's based on the idea that you invoke policy that is evidence based. Neoliberalism has pulled literally pulled hundreds of millions of people out of poverty. China is the big shinning example, they adopted policies of free trade and allowed for private ownership of property...and it seems like overnight they turned into a global power. You can also look at South Korea, Taiwan, Singapore, Vietnam, etc. Their adoptions of Neo-liberalism has produced a lot of fruit.
I think people misunderstand neoliberalism (largely due to socialist misinterpretations), neoliberalism isn't libertarianism... it's a very moldable centrist ideology. It doesn't mean your markets should all be completely free, just that free markets is a preferred way to go if there isn't market failure. For example the Carbon tax is a neoliberal idea to help address climate change. The Negative income tax (or UBI) is another neoliberal idea that addresses welfare.
Our society has remarkably very few issues considering that everyone thinks the west is collapsing. You have rising housing costs, tuition costs, and medical costs. You don't have to abolish capital to address these issues.
Read more carefully. He said an end to the age of capital. Which means an end to the primacy of capital-holders in policy and decision making.
Because it's created fertile ground for corporate consolidation, nativist and authoritarian politics, dramatically worsening inequality, and geopolitical instability.
All of these countries have extremely strict capital controls and restrictions on ownership of land and assets. In fact, when the IMF forced South Korea and the other Asian Tigers to liberalize their capital controls it led to a decades long recession recession in East Asian economies throughout the late 90s and early 2000s that they only started to crawl back out of about 10 years ago.
Washington Consensus politics has been discredited even within the international financial institutions that were its champions. Even the leading economists at the IMF and World Bank, these days, acknowledge that income inequality is the single biggest threat to the stability of global markets these days.
You do if capitalists have absurdly disproportionate power over the state.
Ya, but it has pulled 100s of millions out of poverty. A lot of the issues you see is actually a result of government failure. ie: Bailing out failing companies. Tariffs and Trade Wars (which isn't neoliberalism... just protectionism). The American Government Spends over 1 trillion on it's social program known as the Military Industrial Complex...much of which goes to waste...military should be used to secure trade routes.
You can claim that neoliberalism causes all these problems...but the thing is that the alternatives will lead to worse outcomes for the average person. What good is equality when everyone is equally poor?
Your claim of Geopolitical instability is not substantiated. We are in a period of peace not seen on earth since the dawn of civilization. Neoliberalism encourages interstate cooperation and is the reason why the USA and China have a coupled economy...Neoliberalism stops massive senseless ground wars. Instead of ground wars fought with blood, you simply get economic/information wars instead. Which btw, is why you see so much race bait and pro-communist/pro-fascist propaganda all over the internet these days... War is fought with information in neoliberal society. The Authoritarian politics you speak of is merely the result of an information war (China, for example, as an incentive for the USA to move away from neoliberalism to make them less competitive on the world stage). Many intelligence agencies report that Russia/China/Iran/etc all engage in Cyber warfare and misinformation campaigns.
Literally all of the countries on the top of this list are neoliberal. Bernie also lied when he called Denmark socialist. These european countries are neoliberal states with high tax burdens. But he keeps calling them democratic socialist...which is nothing short of a lie.
Would you rather have many people with power, or just a single powerful state? I would take the prior any day. The thing is, is that power changes everything. You have no idea what a more powerful centralized state would do...nor would you have any power do anything about it. Its amazing, Americans pretty much universally understand that their government has been shitty pretty much throughout it's history...yet they somehow think the solution is to increase state power? It's cognitively dissonant. Imagine if Trump had full control of the American Society. Just think about it, and you'll understand. You would be literally living in Nazi America right now. Democratic Socialists seem to think that democracy will deal with bad governments...but we can see from the history of American democracy that this is clearly not the case. And from the history of Germany, that radical right wing governments can form when conditions enable it (ie: Great Depression). Just curious...when you think of Bill Clinton's administration what is the first thing to come to mind? A Blow Job? Or the Serbian Massacre he committed? Ya, see democracy in the USA is a shame. No one cares about the specifics a government does. They care about whatever the media wants them to care about. Twitter/Reddit/Facebook/TikTok is the CNN/FOX of the internet and a very large portion of society gets all their media from these aggregators. Washington Post reported that "some presidential aides and friends are describing Kosovo in Churchillian tones, as Clinton's 'finest hour.'" What the hell is the point of democracy when you have lying media that your entire population subscribes to?
A lot of this just sound like "No True Scotsman" fallacy. You can't just sit back and wait for consequences and then decide that whatever works is "neoliberalism" and whatever doesn't is "socialism" or "government failure" or whatever other form of special pleading. The point of an ideology is to provide a useful explanatory framework for the things we see. But if you can't actually conclude what is or isn't "neoliberalism" until AFTER you make the key decisions then what good is it?
A lot of the rest is just outright falsehood or misattribution of cause and effect.
Almost ALL of this is in China, a country where you're not technically allowed to own land (only lease it for extended periods of time) and property is subject to confiscation on fairly flimsy grounds. I ask again, what exactly is the substantive lesson about economic development to draw from this example? Most people aren't personally invested in picking an economic ideology and dredging up talking points to simp for it, we're interested in explanatory frameworks. If all you want to say is that a market economy can be an effective way to allocate resources that's certainly an argument with some merit. But that's not "neoliberalism." What specific policy structures and framework are people supposed to decide works based on these examples?
FWIW, none of the Asian Tiger economies took off due to unrestricted free trade. In fact, they do a lot of choosing of winners and losers through industrial policy. Japan didn't become a giant in ship-building by accident, MITI invested in it specifically because they recognized they couldn't drive an export-led economy if they didn't own that vertical. They have capital structures and market economies, but basically everything about about how the state and economies work there are very different between nations and vary in degrees of state intervention and planning. Just saying they're all "neoliberal" tells us nothing. Especially not when you seem to be able to expand and contract the definition of "neoliberal" to be whatever you want it to be based on whether you like the outcome or not.
What's more, the metric is misleading. We haven't actually been collecting global poverty statistics until the '80s so there is literally no basis for comparison on how effective any of this shit actually is. It's all really kludgy back-solving based on scant data. It also conflates economic activity that isn't measured--because it happens in non-commercial ways through informal economy--as "poverty" because economists can't directly measure utils.
If I get $100 a week worth of utils from informal work between a mutualist community and $50 a week in wages, and then I switch to an industrial wage model where I make $75 a week in formal wages but, because of frayed community ties I only get $25 worth of non-commecrially traded value, the metrics look like I got richer when my lived experience is actually poorer. These stats are unable to differentiate between actual improvements in material well being and incidental changes in the mix of commercial and non-commercial economic activity.
When it comes to overall happiness and social stability, quite a bit actually. I mean, this is intuitive. People will be happier to live on a deserted island where everyone is equally poor over one where everyone is poor but one guy has all the money and lords it over everyone else. Both scenarios are hard, but in the former scenario people at least aren't subject to the arbitrary whims of that one guy.
Don't think I can't see the sleight of hand you've pulled here. I said instability and you're trying to wiggle it into "peace." Nice try! But also, the "peace" claim is in serious doubt. Just because European colonialist powers aren't presently killing each other over who gets to exploit which third world nation isn't some triumph of "neoliberalism." And just because belligerents nowadays are simply too weak to stand up against consolidated state power like they could before doesn't mean we have "peace." In the 1900s the Uyghurs would have had a bloody rebellion, but because state logistical power makes the leviathan stronger than ever they get crushed before they can get started. What kind of "peace" is this?
And even the formal sense of "peace" you were trying to talk about doesn't make the claim you want it to. That US Military spending you were just complaining about is the reason for this. Nobody can project power like the United States. The entire rest of the world's military logistical capacity would be a small bucket compared to America's bathtub. This isn't the triumph of free trade, it's the triumph of US Hegemonic stability and it will disappear as soon as our hegemonic influence wanes. Russia isn't avoiding a ground war with us because our economies are coupled, they're avoiding it because they couldn't possibly win so they have to adopt asymmetric tactics. You don't see them being so shy about it in Crimea, though, do you?
But really, the true indictment of the talking points you're trying to deploy is that we have records of status quo defenders saying basically the exact same things throughout history. Right before World War 1 people were also saying it was a glorious era of peace and prosperity and that everyone was richer than they had ever been. Check how that turned out.
Capitalism doesn't have "many people with power." It has a single powerful state under the direction of the capitalists rather than the people. The state moves quickly and decisively to do things like curtail inflation or protect IP laws, but it will hem and haw endlessly about extending healthcare to the entire working population or raise the minimum wage. I know exactly what a "more powerful centralized state would do" because it's exactly what the capital owners would want it to do, erode the negotiating position and autonomy of their workers. This is, in fact, the China model you were so enthusiastic about before.
States can't be authoritarian without the approval of the capitalists. Even left wing authoritarians just end up enshrining a different group of people in charge of the capital. What makes an authoritarian state authoritarian is when they work on behalf of connected elites to the detriment of the people, not because they "do stuff" or provision services to the public. If they're merely bad at service provision we call them "ineffective" or "corrupt" not "authoritarian. And we tend to bemoan their lack of effectiveness, not their abuses of human rights. But at least ineffective governments tend to want to be more effective and either don't know how or lack the political will to reform. Authoritarian governments, on the other hand, like being dysfunctional and will kill you for trying to fix it.
You are operating under a fundamental misunderstanding of what the state is. The state and capital work in concert. The tension isn't between state and people, it's people vs. capital. The state is the battleground they fight over.
Buddy, the United States just came off having a radical right-wing government form. How are you concluding that neoliberalism heads this off? The only reason the Constitutional order didn't fall was because we were lucky enough to get an authoritarian with dementia instead of a competent one. China, that golden child you seem intent on carrying water for, also has a more authoritarian government now than they've had in a generation. India, Brasil, and Russia too. We're in a worldwide retrenchment against democracy and even the notion of international cooperation and stability right when we need it most to head off the myriad catastrophes climate change is about to bear down on us which we are already too late to curtail. It's like you haven't updated any of your priors since 2016.
I think your praise of Neo-Libralism overlooks a lot of tragedy that was required to see those gains. I think you hit the nail on the head with "it's a very moldable centrist ideology". I'm going to come at this from a US centric position, because it's the system I am most familiar with, but I think it can be allied to nearly any western country. I think for many we've seen the failures as well as the successes of Neo-Libralism. For instance, the carbon tax and UBI your proposing have yet to be adopted but are held up as silver bullets. They have the potential to very effective, but there are more progressive systems, such as carbon cap and trade or traditional worker protections, that would have an even greater impact. To me Neo-Libralism implements the bare minimum of potential changes to release the building pressure of the masses. Neo-Liberalism brought us for profit health care, minimum sentencing, and limp environmental policy.
You may feel like we have remarkably few issues but that may be because you don't live them. No one is saying the west is collapsing, but we have systematic issues that have plagued our nations since they were established. There are far too many people living with food insecurity, housing issues, and health issues considering where we are at as a nation. You're also forgetting some of the larger issues at play: Climate change, population growth, resource distribution issues. All things that are exacerbated when we allow the "market", which is at the will of those with capital, to dictate our future. If Neo-Libralism were evidence based we'd have more aggressive policy on carbon (not the etherial idea of a carbon tax by 2030), medicare for all (instead of being the per-capita global lead on medical spending), and reducing the punitive nature of our judicial system (as we spend more per-capital then any other county on our prison system and receive higher re-incarceration rates.)
It sounds like our system works well for you and that is great. But it doesn't work for everyone or even most people, and that is why there has been such a polarizing to the two ends of the political spectrum. We need real change and Neo-Libralism isn't bringing it.
I'm curious if you realize that Obama has tried to push for medicare since 2008, and the republicans essentially blocked every single piece of quality neoliberal legislation (calling it socialist of course!). The republican party is a neo-con christian nationalist party...so if you're going to use them as a reason for a failure of neoliberalism...then I think you're being intellectually dishonest. The Republicans pulled the USA out of the Paris Climate Accord, and Trump has harassed global institutions like the WHO. It will be the neoliberal Joe Biden fixing this mess that the republicans created. (Btw I was a supporter of Joe Biden since the start of the Primaries along with all the Minority Americans who voted for him...it was mostly white privileged redditors who supported Bernie Sanders)
The Judicial System is a Government structure, and it's failures are government produced. It's an American problem not a Neoliberal problem. Norway has a fantastic prison system and they are neoliberal.
Btw, I am Canadian. Our government, run by the Trudeau Liberals, is a neoliberal party. What are your complaints about this government? Since forming government, the big pieces of legislation was; Cannabis Legalization, adding Gender as a protected class, and the implementation of the Carbon Tax. Currently they are studying UBI. Their response to COVID was mostly limited by the fact our population is full of actual morons, and provincial leaders that dropped the ball. For example the Liberal government passed a piece of legislation that gave everyone who was laid off 2000$/month, no questions asked. There was issues with CERB...but the thing is that it was passed in a very short period of time to help the people most effected ASAP.
The big issue in the USA is the republican party. This is why your country can't have nice things. They keep killing bills that will better the American society.
Thats the rub, neoliberalism does work for the most people (mostly because it's honest). I have yet to see any other political system work for more people (look at the countries with the highest standards of living). The reality of the situation is that is if you having something to provide (be it labour, skills, capital, etc) others, you'll be fine in a neoliberal society. The people who are most negatively impacted by neoliberalism are those who are non-competitive in the market. You should listen in on some people in socialist circles...these people non-ironically want to farm by hand...essentially going back to Mesopotamia style farming...not even using a bull to plow the field...it's borderline moronic. These socialists will cause famines because they will reduce the output of the average person. They think it's bad that our society doesn't wanna pay a lot of money for some of their awful pieces of art/crafts. I joined a Marxist student group meeting the other day (over zoom), and literally all these people were just complaining...none of these people have the skillsets to run a modern society nor have the drive to.
Literally all of the countries on the top of this list are neoliberal. Bernie also lied when he called Denmark socialist. These european countries are neoliberal states with high tax burdens. But he keeps calling them democratic socialist...which is nothing short of a lie.
There's no such thing as a political system that "works for everyone". Economics and Politics is all about how you distribute a limited set of resources. There's winners and losers with each bill... And quite frankly it's not as easy as a video game can make it seem... Good luck "eating the rich" when your society has no rich people. The people that make your standard of living possible want to get paid... if you make a system fight against this interest they will goto a country that will provide. Why do you think there's so many people moving to neoliberal countries? https://www.valuewalk.com/2019/05/top-10-countries-with-the-most-immigrants/ ? It's not because they want a vacation... They want to get paid for the services they can provide.
This seems like a circular argument to me. You're defining neoliberalism as "evidence-based" - doing whatever makes a country successful for the maximum number of its people - then saying that the proof of its success is that neoliberal countries have high standards of living.
You mention China is a shining example of neoliberalism with its approach to free trade. China is also committing genocide / ethnic cleansing against its Muslim minority population in Xinjiang. Is that a neoliberal policy? Is it possible to look at the policies of a neoliberal country and pick & choose which ones are really neoliberal? If so, by what criteria? What makes something like special economic zones neoliberal, but not the treatment of Uighurs?
It's possible to take any political belief, seek out people making the worst arguments in favor of it, and dunk on them.
Why not apply the principle of charity instead? What do you think are the best arguments for socialism, and why do those still fall short of convincing you?
From that link:
So, are the UAE and Saudi Arabia neoliberal countries too?
I'll just agree with NaraVara here.
Automation for things noone wants to do, and noone here is arguing for a command-and-control economy.
Mainly because of the near-total lack of safeguards against inequality, regulatory capture (AKA big businesses using the governments for their benefit), workers being in poor labor standards and being only moderately to entirely unconcerned with social conservatism and authoritarianism. Sure, some, maybe most of those things aren't intrinsic to the set of ideas, but not to the current form of neoliberalism.
While I agree that they have grown thanks to serving an international market and that's very important to Neoliberalism, the problem is that all the problems I have outlined mean that often enough, nearly all the growth neoliberalism gives goes to the top, which didn't need it, while the bottom gets little in return. The third world like the Asian tigers in the past are either lucky that they grew so much that the poorest still saw substantial returns from a tiny share of the pie, or their governments passed significant welfare to make sure this benefits the citizens, or their citizens are unhappy because they're working long, unfulfilling hours and have basically no power to change that within the current system because they have no leverage over corporations. We shouldn't stop at step 2 of Maslow hierarchy.
Sure, Neoliberalism has been attributed to very different people like Reagan, Obama, Clinton, Pinochet, etc. but personally if it's very moldable, I think it' shouldn't be called a single ideology (or it should be called an economic doctrine, which is probably more accurate.) My understanding of Neoliberalism is basically that it's economically conservative (of the anti-welfare pro-austerity type), socially indifferent or liberal, and usually indifferent to (economically conservative) authoritarianism or democracy. The leftist takes are social liberalism and to am extent social democracy, both of which value welfare, and regulation, but no hard control of the markets.
You don't need to abolish capital, but given how fundamental housing, education and Healthcare are to any population and the aforementioned wealth building and economic growth, these really aren't small problems.
Furthermore, I'd say the Asian tigers and China did so well precisely because they didn't adopt neoliberalism, they practiced state capitalism with heavy market intervention, which historically is about the only way countries ever manage to industrialize. Otherwise, playing solely to their comparative advantage mostly just keeps them impoverished resource colonies; even lower labor costs (read: Capital's lower valuation of different groups of people) don't help much unless you have significant investment in duplication of the productive infrastructure of industrial nations, which makes no short term economic sense since importing finished goods is so cheap, so markets aren't going to do it on their own.