Letter from The Cape Podcast
Episode 7:
May 19, 2023
In this podcast, we discuss the dangers that arise when we are lured into thinking that our experiences as households of our financial constraints and our budget somehow provide us with intelligence to assess the spending opportunities of our national governments. By falling into that trap, we undermine our own future by limiting the scope and size of the public sector. The only way we should assess whether government fiscal policy is serving its purpose is to understand that purpose, which is to advance human and environmental well-being in a functional way. The 'numbers' that are required to achieve that purpose - deficits etc - should be run up on the government scoreboard. But by being sidetracked into thinking that it is the numbers that matter, we lose sight of the functional purpose of government.
Duration: 7:57
About this Podcast
My educational venture - MMTed - is now an affiliate of 3CR Melbourne, which is a community radio station in Melbourne.
As part of that relationship, MMTed is assisting a new radio program - RadioMMT - which is hosted by Anne Maxwell and Kevin Gaynor and is presented every second Friday from 17:30 to 18:30.
I now contribute is a regular segment on their program. The topics are general but sometimes there will be specific local context provided, given the location of the radio station. They focus on Modern Monetary Theory concepts applied to contemporary issues in the real world.I am also making the segment available here as a podcast so that it reaches a wider audience.
A new podcast will be posted here about every fortnight.
Past Episodes
Listen (6:33)
In this podcast, we consider the role of the currency-issuer in achieving and sustaining the goal of full employment.
Listen (7:21)
In this podcast, we consider whether a scoreboard at a major sporting venue could ever run out of points and what this means for the currency-issuer in a nation.
Listen (6:27)
In this podcast, we discuss the popular misbelief that as 'taxpayers' we provide the government with the necessary funds that allow it to spend. We show that the idea that to enjoy better government services and infrastructure requires offsetting public spending cuts and/or higher taxes is a fiction and prevents the government from taking the necessary action to deal with the major challenges of the day.
Listen (9:28)
In this podcast, we play a pencil and paper game where I am the government and the listener represents the non-government or citizens. We see how the imposition of a binding tax liability motivates the citizens to supply their labour to the government in return for its currency. And, in doing so, the citizens solve the problem that the tax liability presents - where do they get the currency from! The corollary that arises is the it is the spending that creates the capacity to pay taxes rather than the fictional view that it is the taxes that fund the government spending.
Listen (8:16)
In this podcast, we wonder what all the noise about public debt is about. We extend our pencil and paper game to introduce national debt and we learn something fundamental - that the funds that the non-government sector uses to purchase the public debt comes from the government itself in the form of past fiscal deficits that were not yet taxed away. Those government deficits created financial surpluses in the non-government sector, which allowed citizens to accumulate financial wealth in the currency that the government issues. The debt issuance did not fund the government spending - it was the other way around!
Listen (7:57)
In this podcast, we discuss the dangers that arise when we are lured into thinking that our experiences as households of our financial constraints and our budget somehow provide us with intelligence to assess the spending opportunities of our national governments. By falling into that trap, we undermine our own future by limiting the scope and size of the public sector. The only way we should assess whether government fiscal policy is serving its purpose is to understand that purpose, which is to advance human and environmental well-being in a functional way. The 'numbers' that are required to achieve that purpose - deficits etc - should be run up on the government scoreboard. But by being sidetracked into thinking that it is the numbers that matter, we lose sight of the functional purpose of government.
