Keen and Mosler on MMT

Some MMT advocates interpret the implication of MMT, that all resources including labor can be fully-employed if the government runs a big enough excess of spending over taxation (I refuse to use the word deficit, given its false negative connotations here), to mean that the government “causes” unemployment.

To me, this is rather like blaming cold temperatures inside a house on the air-conditioning system rather than the weather outside. Yes, the house would be warmer if someone turned the temperature up, but fundamentally it’s cold inside because it’s cold outside.

It also implies that in the absence of government (or equally, if government always ran a balanced budget) there would be no unemployment: in other words, it’s Say’s Law in another guise.



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