Replying to Keith Evans:

I get the politics part of your post. You are saying that Bernie is just creating bargaining room and would settle for something more like Medicare for America. At the debate, there was talk about a “glide path” toward universal health care that could be interpreted that way. I say fine, as long as it doesn’t create an opening for the GOP to win the next election using red scare tactics.

I would also like to comment on the MMT aspect of your comment. You say, “The monopoly issuer of the currency can afford anything that is available and priced in dollars without incurring inflation.” Even by MMT standards, a statement like that needs to be interpreted very carefully. It depends on what you mean by “available.” If you mean that M4A could be implemented using only resources that are now idle, you are within the bounds of orthodox MMT macro theory regarding inflation. However, as an empirical matter, I doubt that sufficient unused resources now exist.

Once you start talking about implementing large programs that require resources that are “available” only in the sense that at a sufficient price, they can be bid away from where they are already being used (or can be obtained only by bidding against other expensive programs, like, say, the decarbonization part of the GND), then you get into territory where even MMT says that you need to consider not just financial constraints, but also real resource constraints.

See, for example, Levy Institute Working Paper 931 on financing the GND. A quote: “We argue that financial affordability cannot be an issue for the sovereign US government. Rather, the problem will be inflation if sufficient resources cannot be diverted to the GND. And if inflation is likely, we need to put in place anti-inflationary measures, such as well-targeted taxes, wage and price controls, rationing, and voluntary saving.”

IMO when you get into M4A, especially if it is implemented as part of or simultaneously with a program like GND, you are definitely into the territory where such anti-inflation measures are needed, even giving full play to all elements of MMT.

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Economist, Senior Fellow at Niskanen Center, Yale Ph.D. Interests include environment, health care policy, social safety net, economic freedom.

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