MMT, UBI, LVT

Two highlights of my past week have been Prosper Australia‘s excellent Monday night sessions on Modern Monetary Theory (MMT). They were presented by knowledgeable young gun, Jesse Hermans.

Herman’s strong graphics were supported by an excellent commentary and impeccable logic in his response to questions.

Those not acquainted with MMT are usually blown away when shown the illogical hoops through which current practices in the banking world make us all jump. But it has to be this way, because the 0.1% need to be able justify the unjustifiable. Chicanery is essential if the 0.1% is to continue to channel wealth unto themselves via the rent-seeking mechanism. 

As a Henry Georgist favouring Land Value Taxation (LVT), I’d argue that rent-seeking is responsible for inflation, via land price inflation and the taxation that is applied to labour and capital. This explanation of inflation remains entirely invisible to orthodox economists.

So, it’s encouraging that some MMTers, such Warren Mosler, have seen the need for a real estate tax “to anchor the currency.” Others, a little more agnostic on the point, have to explain how within an MMT-driven economy they’d keep a lid on the inflation emanating from perpetually escalating land prices. Capturing land rent has potential to reduce land price towards zero.

The same question, of course, could be asked of proponents of a Universal Basic Income (UBI), another thoughtful proposition amongst emerging economic ideas.

Without applying a brake to land prices and arbitrary taxes on wages and the return to capital, the outrage of those privatising what  are essentially public rents will continue to bedevil world economies. It’s these two extreme pathologies that have delivered us into an historic financial quagmire.

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