Episode 192 – MMT For M4A with Fadhel Kaboub

Macro N Cheese – Episode 192
MMT For M4A with Fadhel Kaboub
October 1, 2022

 

[00:00:04.590] – Fadhel Kaboub [intro/music]

Today, you’ll hear people blaming this current inflation that we’re seeing on that COVID relief spending. We’re blaming poor children in the unemployed during the COVID period. We’re saying they’re the ones causing inflation. So we need to reduce abuse government spending and raise interest rates when the actual sources of inflation right now have nothing to do with domestic spending.

[00:00:28.270] – Fadhel Kaboub [intro/music]

That type of inflation, abusive market power, can’t be eliminated by spending less or spending more on health care. It can only be eliminated by taxing and regulating that abusive market power out of existence.

[00:01:35.110] – Geoff Ginter [intro/music]

Now, let’s see if we can avoid the apocalypse altogether. Here’s another episode of Macro N Cheese with your host, Steve Grumbine.

[00:01:43.040] – Steve Grumbine

All right. And this is Steve with Macro N Cheese. I talk about the different thing we’re doing this week and the different thing we’re doing that week, but this week we’re doing something a little different. You know, Real Progressives has a webinar series called RP Live, and we invite any of you to come. Recently, we hosted one with Fadhel Kaboub.

You all know Fadhel. He’s been on here many times and will continue to be on here hopefully soon. But in the meantime, though, it was intended for activists who are new to MMT. We wanted to give them a chance to ask all their questions. Some people prefer to listen to a podcast rather than watch a video. So, we’re presenting you the audio. Hope you enjoy it. Check it out.

[00:02:27.450] – Virginia Cotts

Welcome, everyone. I just want to tell you guys a little bit about why we’re having this event. Real Progressives has partnered with the March For Medicare For All. We worked with them last year on the historic 56 city event in July, and this year we worked with them on a single big national day of action in Washington, D.C. on July 30, which happens to be the anniversary of Medicare.

We also are working on a filing with the United Nations accusing the United States of human rights violations by denying health care. So we have a lot of stuff going on. Luke is going to tell you where to find the March for Medicare for All website. But the reason that we asked Fadhel to come and speak with us tonight is because we find that understanding MMT makes all the difference in promoting social policy.

And I know a lot of the people who are working towards Medicare for All and other policies don’t really care about learning MMT. But what we’re saying is we think you will really appreciate it and really help. What we’re doing tonight is letting you ask your questions of Fadhel – anything you have trouble understanding. He is so good at explaining this stuff. So Luke, why don’t you introduce our wonderful guest?

[00:04:06.430] – Luke Parcher

Yeah, I’m very happy to be here to be a part of this. It’s great to see all of our friends from the March for Medicare for All group. And we’re glad that you took the time to be here today. Those that don’t know me, I’m Luke Parcher, I’m a volunteer with Real Progressives, I’m on our leadership team, and I also do a current events show on Sundays for RP.

And just some quick plugs for the organization: we are a 501(c)3 and a 501(c)4. Anyone can go to our website at realprogressives.org,  there’s all sorts of wonderful content there. We do all sorts of articles and podcasts and things of that nature. Our founder and CEO, Steve Grumbine does his podcast Macro N Cheese every Saturday. If you’ve been missing that, it’s an absolutely fantastic podcast.

I think it’s one of the most informative and insightful podcasts around. Make sure that you go check that out. You can go to our website realprogressives.org or our YouTube channel, Real Progress In Action. You can catch my show on Sundays. I cover current events and do political commentary and that kind of thing, of course, from an MMT informed perspective, as best I possibly can.

I also wanted to just reiterate for the Medicare For All folks, if you’re interested in helping them out, please go to m4m4all.org, the fours are the number 4, m4m4all.org. You’d like to help us out at realprogressives.org/donate. And with that, without further ado, we are very happy to have with us Dr. Fadhel Kaboub.

Fadhel is a professor of economics at Denison and he is also the president and founder of the Global Institute for Sustainable Prosperity. And Fadhel is, as Virginia said, I think, one of the best communicators about these macroeconomic concepts. We’re very fortunate to have him here today. Fadhel, thank you so much for taking the time.

[00:05:49.930] – Fadhel Kaboub

Thank you, Luke, it’s a pleasure to be here. And thank you all for joining us. So, I didn’t really prepare a formal presentation. I wanted to start with some opening remarks just to explain why we’re here and why this is relevant in importance for people who are interested in Medicare for All in particular. And I’m going to limit my remarks to the United States.

We’re not going to learn about the whole world today. And specifically, how do we pay for something as important, as vital as Medicare for All without bankrupting the country, without causing inflation or hyperinflation, without all the negative stuff that you typically hear from opponents to universal health care and Medicare for All and things of that nature.

So here we’re talking about a federal program, a national program funded by the federal government, not states, not municipalities. And the traditional thinking about how we pay for things. When I say traditional, I mean the mainstream politics, mainstream economic way of thinking about this is the following. They say, well, just like we pay taxes at the local level, we pay taxes at the federal level.

And those taxes are used to fund government programs. So, it’s natural from this mainstream perspective to think that a universal health care program will be funded by tax revenues at the federal level. And some would argue even if we wanted to spend beyond tax revenues, the federal government will have to borrow even more, issue US Treasury bonds to borrow money to pay for it.

And once you borrow and have a larger and larger national debt, we’re told that at some point that debt needs to be paid. And the way governments pay for their debts is by raising taxes at some point in the future. So it’s either more taxes now or more taxes later, or both. More taxes now and more taxes later. And therefore they argue that this is going to be too expensive, the tax burden is unaffordable.

You have the Tea Party movement – ‘taxed enough already’. And then there’s all the economics that goes with it, which argues, again, from a mainstream perspective, the opponent’s perspective, they argue that a larger deficit, a larger national debt, will raise interest rates on everybody in the economy and will cause inflation or even hyperinflation.

They say, ‘look at Zimbabwe, look at the Weimar Republic. They just printed money to pay for things, and then they have hyperinflation.’ So that’s the mainstream narrative. That’s usually the pushback against universal health care, in addition to, of course, some ideological pushback, the idea that the government shouldn’t choose your doctor and all that stuff that we’re familiar with.

But I’ll focus on the economics. How do we pay for it? And this is really where the MMT perspective or the Modern Monetary Theory perspective on how government finances operate can completely liberate us from that constraint that the mainstream of politics and economics typically puts to object to Medicare for All. So what does MMT say about these things?

Well, number one, the US federal government is the sovereign issuer of the national currency, the US dollar. So a sovereign issuer of a currency doesn’t need to borrow its own money and doesn’t need to collect it in taxes in order to spend. The logic is that you always – you as in the federal government – you spend that money into existence, you inject it into circulation, into the economy first, and then the federal government collects some of it back in taxes.

So as a matter of logic, you’re not constrained in terms of how much we can spend. The real constraint, and this is where our attention should be the real constraint on how much the federal government can spend is the risk of inflation. And if we spend too much, put too much money in the economy, we could have inflation. So now the focus of MMT and our focus if we’re interested in Medicare for All is what actually determines the risk of inflation.

The risk of inflation from an MMT perspective is determined by two things – and we’re going to talk about them separately and then put them together and explain why this is so important as a core component of understanding this democracy, US democracy. So, two sources of the risk of inflation. Number one, it’s the availability of real productive capacity.

That is to say, do we have enough doctors and nurses and hospital beds and technology and actual physical productive capacity to serve everyone in this country and provide decent health care? If we do, then spending more and being more inclusive in that health care system will not actually cause inflation. But if we have a shortage of productive capacity, that is to say if we actually don’t have enough nurses, don’t have enough doctors and hospital beds and spare capacity and pharmaceuticals and all of that, then we’re going to face a situation where we’re going to have a bidding war for those scarce resources.

So, even if we convince the federal government that, for example, dental care is a human right and every person in this country deserves the right to have free dental care, and we pass this and it’s the law of the land. So I pick up the phone tomorrow in the morning and I call my local dentist and I say I’d like to schedule an appointment. And they say, sure, we’re happy to take you.

This is now universal access to dental care and it’s a universal human right and we all agree to this and the government’s going to pay for it. But the next available appointment is in three years because we don’t have enough people to serve all the population. And then they say, well if you really need to be seen by next Wednesday we do have this premium gold membership that cost $10,000 a year.

We can see you next Wednesday. So we’ve just created yet another source of inflation pressure, yet another socioeconomic exclusion system because we lack the productive capacity. The good news about productive capacity is that it’s producible. We can train more doctors, we can train more nurses, we can train more technicians, we can build more hospitals and hospital beds and so on.

And the good news about this is that these producible resources, number one, will allow us to create even more jobs in the industry, make the services more inclusive and fair for everyone. But most importantly will actually tame and eliminate the source of inflation, which is shortage of capacity. So that’s one side of the inflation equation, so to speak.

The other source of inflation which most of you are familiar with and will really connect with here, which is a very important thing, which is abusive market power. When you have key players in an industry – whether it’s health care or energy and transportation or real estate – when you have key players who can raise prices simply because they can, we have pharmaceuticals who can raise prices because they can, or because we let them, who lets them?

Because the 535 people we elect in Washington DC to regulate the market power, they’re not doing their job. Or they don’t want to do their job because their seats are guaranteed by super PACs from those industries. So that type of inflation, abusive market power, can’t be eliminated by spending less or spending more on health care.

It can only be eliminated by taxing and regulating that abusive market power out of existence, by democratizing that market, by using antitrust laws, updating them to clean the system of abusive market power. And that can’t be done without having 535 people who actually are representatives of the people, a government of the people, by the people, for the people, not the government of the super PACs, for the Super PACs.

So it becomes fundamentally this question of inflation, this question of abusive market power is a question of democracy, is a question about corruption. And now we have to put the two together. The source of inflation coming from lack of productive capacity and the source of inflation coming from abusive market power, those are the real obstacles to having Medicare for all.

And if we tackle them in a democratic process, in a way that says this is how we actually eliminate the high cost of health care, democratize access to health care, make it truly a universal right in this country, then we have to tackle it on both fronts: increase productive capacity, democratize the system, go after abusive market power. And for us activists, organizers to recognize that it’s not the lack of money.

That it’s not about taxing somebody so that we can use their money to pay for Medicare. That recognizing that we don’t need the money or permission of the rich and the oligarchs to have universal health care. It means that we can tax the hell out of them for the sake of protecting democracy from the influence of the oligarchs. Protecting democracy from excessive inequality.

Abusive market power. Those are important reasons to tax Wall Street and Big Pharma and the oligarchs. But it’s not because we need their money or their permission to pay for universal health care. So now we know how to pay for it. Now we know what we need to tax and for what reason. And now we know who are the real obstacles to universal health care.

Most of you probably have this intuition. My little speech here is really to put things together in a coherent perspective so that we know exactly what needs to be done. We need to democratize the healthcare system, which means we have to have elected officials who are not corrupt, who are not funded and brought to you by super PACs from Big Pharma, from the American Medical Association, from abusive sources of market power – and that is within reach.

But if we as a community are trying to fight for universal health care and agree to the terms of the debate presented to us, which are, oh, you want universal healthcare, we’re going to have to raise taxes, and we’re going to have to have big government intervention to tax corporations. And when corporations are taxed, they may lose business, which means your livelihood, your job is on the line.

So maybe we shouldn’t have the full universal thing. We’ll just have an incremental policy to get us to better health care, more accessible health care, which means the status quo, this incrementalist approach to dealing with all of our problems. And on the issue of incrementalism, not only it’s misleading because here I refer often to Martin Luther King in the context of the civil rights movement.

He said, “I have no time for the tranquilizing drug of gradualism and incrementalism.” And this is very similar. This gradualism and incrementalism, which is the tranquilizing drug for the movement to allow us to compromise and just accept less than what we can afford, is enforced by the understanding of mainstream economics that says the federal government is just like everybody else, is like your state and municipalities and household finances, it needs to tax in order to spend, and it can’t do anything other than that.

And once you’re constrained by that framework, which applies to states and municipalities but doesn’t apply to the federal government, if you accept that, then you’ve accepted incrementalism. You’ve settled for the system that we have. And I don’t think we can afford to settle for this status quo. Knowing that we do have the technology.

The resources in the democratic institutions that we should take back and cleanse the system of corruption and abuse and can afford Medicare for all and can afford a Green New Deal and can afford to address all the other issues that have created so much socioeconomic exclusion for decades in this country. So with that, I’ll leave it at this very basic framing, and I’m happy to answer questions and follow up in the Q and A. Thank you again.

[00:18:03.950] – Parcher

We have a good one to start with, quite frankly here. Lee Stanfield asks, do you have a really concise and easily understood for people who have never heard of MMT blurb that can get people to understand how money works and why MMT is not just a pie in the sky idea. So just maybe a couple of good sources that people that want to dig in could look into?

[00:18:24.410] – Kaboub

Yeah, there’s lots and lots of short introductory text, but for people who want to dig into more details, Stephanie Kelton’s book, obviously “The Deficit Myth”, which is written for the general public, not for experts, not for people who have any background in economics. Real Progressives has lots of short videos, lots of short essays. I’ve written a few.

I’m happy to share later links to my website here. If people want to go through it. I’ve done tons of these presentations. Today was really the short version without going into the details. But I usually give these presentations to the general public, to activists and organizers without any assumption that anybody knows economics or anything like that. Thanks, Lee.

[00:19:09.890] – Lee Stanfield

What I was looking for, I was looking for something that’s really, really short, that will make people understand it enough that they’ll be interested enough to read Kelton’s book. I just want something like a paragraph for elevator conversation, something like that.

[00:19:29.570] – Kaboub

If you’re looking for a paragraph, I can give you a paragraph from an essay that I wrote that gives the short spiel. It’s really hard to put a bumper sticker paragraph and have people follow through on it because there’s only so much you can include in those in terms of nuance in a short paragraph. The text that I was hoping that people would read, it’s not short, it’s not a paragraph, but it was written for the general public and it’s accessible.

It’s written about the Green New Deal as a whole, which includes Medicare for All, Job Guarantee, but it’s about framing how we pay for it and addresses the issues that I highlighted here lack of productive capacity and abusive market power, linking it to the democratic process and what needs to be done.

[00:20:18.350] – Parcher

We have one here from Judith Albert.

[00:20:21.170] – Kaboub

Hi, Judith.

[00:20:22.850] – Judith Albert

So, I took some notes. I am trying to wade my way through Stephanie Kelton’s book, but I’m just a little confused about the tax. Where does taxing come in? You said, I think, that since we can print our own money, the feds basically spend money into existence and then collect some of it back. And I know in the book she talks about what taxes are really used for and then it’s not what people think. I wonder if you could explain that.

[00:20:54.340] – Kaboub

Absolutely. Thanks for the question. That’s a very good question. So, let me start with a historical example that a lot of people will connect with and then more recent examples of how federal finances work on a large scale. So World War Two, for example, which was the biggest federal government expenditure in the history of the US. And it came right after the great depression, the most miserable time in US history.

During the great depression, there was no money to be taxed. There was no money to be borrowed to fund World War II. So if taxes were the thing that we used to pay for World War II, that was not it during World War II. If that were the case, we would be speaking in German today, right? So how did we pay for that massive expensive program? It wasn’t by taxing anybody or borrowing from anybody.

It was by getting Congress to vote and approve the spending on World War II. The concern at the time was not finding the money, as Stephanie Kelton says it was about finding the votes in Congress. And it was unanimous. We need to fight this thing. And then the question was, where do we find the actual resources, productive capacity to build tanks and airplanes and soldiers and workers to produce all the war materials and the physical raw materials like rubber and steel and all the equipment needed for World War Two?

That was the real challenge. So the concern was, do we have enough productive capacity? And the answer was yes, but only if we actually dedicate some of Detroit, for example, which was producing consumer goods and convert it to producing military equipment, which we did. Do we have enough people to work second and third shifts?

The answer was yes, if we bring women in the labor force or if we bring older people back in the labor force and younger people in the labor force. And we did. We managed to mobilize real resources, scarce resources, labor resources. So that was done. We produced the tanks and airplanes, and then comes the risk of inflation. So now we’ve paid those people decent wages, and it’s a free country, so they take their wages and they go out and spend it the way they want.

Maybe they wanted to buy a new house, a new car, whatever entertainment people wanted, to buy textiles, clothing. The challenge was that we actually didn’t have any new houses for them to buy, or any new cars for that matter. We didn’t have consumer goods to provide to those workers. So what did we do to prevent the risk of inflation?

We said we’re going to raise taxes a little bit, quote/unquote ‘to pay for the war,’ even though the war was already paid for. So we raise taxes during the war, not before the war. And we started selling US government bonds to those same workers that we just paid decent wages to. We sold them freedom bonds, we sold them war bonds to capitalize on the patriotic mood of the nation, which says, buy these war bonds.

In other words, please postpone your consumption. Don’t buy that new house, don’t buy that new car. Save your money. We, the federal government, promise to pay you back plus interest. When? After the war, which was exactly what happened. People abstained from consumption because there wasn’t anything to consume anyway, and that’s how we dealt with the risk of inflation.

And right after the war, we paid them back plus interest and they went on a shopping spree. They bought houses and cars and furniture and all kinds of things. And then we faced another risk of inflation, which is all that new spending, that pent-up demand, to the point where we have to convert companies like Boeing, which was producing airplane engines, and Boeing started producing furniture for consumers who were building new homes and buying new furniture and all kinds of stuff.

So, we learned from that experience how to fund a massively, expensive and difficult program without causing inflation, without bankrupting the country. So we know how to do this, and then we learned how to manage the post war risk of inflation. So that’s one example to show you that the federal government actually doesn’t need to collect tax revenues in order to fund these massive programs, but it needs to use its taxation and its bond sales in order to manage the risk of inflation, stabilize interest rates, and stabilize other aspects of the economy.

But it’s got nothing to do with the actual funding of the program. So if we take that example and apply it to a Medicare for All type of scenario, it’s about the real resources, and it’s about once we pay people decent wages and benefits in the healthcare industry, what will they do with their money? They’re going to go out on a shopping spree. They’re going to buy houses and cars and entertainment?

Do we, as the US economy, have enough capacity for new houses and new cars and all that? If we do, there is no inflation. If we don’t, then we should be building more housing and more energy and transportation systems so that we provide the additional services and tame the risk of inflation. And if we have abusive market power in the health care industry and pharmaceuticals, then we should tackle them, because that’s the source of inflation.

That abusive market power is not going to go away if we look at the other way and pretend like it’s about spending more or spending less. So that’s really the key here. So in terms of a more recent example that all of us here are probably familiar with, it’s the COVID relief spending. When COVID hit, and President Trump at the time said, we’re going to have Covid relief for all consumers, $2.2 trillion  – that vote in the Senate and Congress, there was no debate about who are we going to tax $2.2 trillion or who are we going to borrow from?

There was just a national priority. We are going to do it, and we did it. And then the concern was, do we have enough productive capacity to produce enough food and toilet paper and Netflix accounts and entertainment to keep people safe at home? Do we have enough PPE equipment? Do we have enough nurses? That was the real challenge of the COVID. Do we have vaccines?

Do we have research and development? So, it wasn’t not having the money. It was not having the things that will keep us alive and safe and in decent quality of life. So it’s always that focus that should be our priority. The real side of the economy not about finding the money. And yet today you’ll hear people blaming this current inflation that we’re seeing on that COVID relief spending.

We’re blaming poor children and the unemployed during the COVID period. We’re saying they’re the ones causing inflation. So we need to reduce government spending and raise interest rates when the actual sources of inflation right now have nothing to do with domestic spending. They have something to do with disruption of supply chain globally.

It has to do with abusive market power that corporate CEOs are blatantly telling us on live television ‘we’re raising prices because we can.’ And yet we have people in Congress who are turning a blind eye and pretending like they didn’t hear it when they have the power to regulate corporate power and abuse.

And yet we hear the narrative that blames the poor for this inflation as opposed to going after corporations, going after the logistical disruptions that we have – shipping containers, shortages related to raw materials that are affected by sanctions, obviously energy prices – that have nothing to do with us consumers, but have something to do with conflict in Europe and things like that.

So it’s very important for us to call their bluff when they blame inflation on working class people and use that excuse to say we can’t afford Medicare, we can’t afford Green New Deal unless we tax the hell out of you, the middle class, to pay for it. And MMT says no, no, no, you don’t need to tax us to spend on this.

And by the way, even taxing the rich and oligarchs is not because we need their money or their permission. It’s because we need to tax them to decarbonize. We need to tax them to reduce the inequality, to reduce their abusive market power, to reduce the power of the oligarchs. Those are very important reasons to tax the hell out of them, but not because we need their money to fund Medicare for All.

So we decouple the taxing and spending and we completely changed the narrative about what needs to be done on a political level and on an economic level. I hope it helps. It’s a short explanation, but I’m hoping that it begins to move us away from the standard view of tax and spend, which by the way works at your state level, at the municipal level. Those entities, they have to tax in order to spend.

They have to borrow in order to spend. Here we’re talking about the federal government. So don’t try this at home, don’t try this in your municipality. We’re talking about the 535 people who have the power of the purse and who have the power to tax and regulate. We call them lawmakers. They make the laws. And who do they work for?

Is it a government of the people, by the people, or by and for the corporations and the super PACs? That’s why I always call this a question of democracy, a question of corruption.

[00:30:09.090] – Intermission

You are listening to Macro N Cheese, a podcast brought to you by Real Progressives, a nonprofit organization dedicated to teaching the masses about MMT, or Modern Monetary Theory. Please help our efforts and become a monthly donor at PayPal or Patreon, like and follow our pages on Facebook and YouTube, and follow us on Periscope, Twitter, Twitch, Rokfin, and Instagram.

[00:31:00.130] – Parcher

I love that little anecdote Fadhel. Don’t try this at home. That should come with MMT. I think that’s the mistake a lot of people make is their relationship to money is such that they have to bring it in before they can spend it. Right.

[00:31:09.590] – Kaboub

And that’s exactly the narrative, by the way, that politicians and anti-MMT narratives immediately put on the table. They say this is the kitchen table discussion that all of us have. Biden just was talking about the kitchen table issue. No, it’s not a kitchen table issue. It’s a kitchen table issue for us, the users of the currency. But not for the federal government. The federal government doesn’t have to sit at the kitchen table and figure out how to balance their checkbook.

[00:31:31.970] – Parcher

Yeah, 100% the case. Next up here we have Cheryl Van Epps.

[00:31:36.500] – Kaboub

Hi, Cheryl.

[00:31:37.570] – Cheryl Van Epps

Hi. I am talking to our progressive representatives here in Vermont, and I keep hearing from them… They’re talking in terms of costs over health care. And instead, I want them to speak about the harm being done to us when we’re going without. It’s a patient safety matter. Public safety. We’re not receiving quality patient care as a result of the lack of funding. So how do we change this framing of the issue?

[00:32:13.110] – Kaboub

Very good question. I would talk to them about the cost of doing nothing. The hidden costs of inaction, for example, the opioid crisis. The cost of inaction. The cost of the status quo is measured in the trillions of dollars annually in terms of fatalities and nonfatalities costs associated with the opioid crisis in this country.

So in terms of affordability, dealing with the sources of the problem is a fraction of the cost, and it gives us better quality of life. It removes the cost of pain, physical pain, emotional pain and destruction of life and the social fabric associated with the opioid crisis. I’ll give you an example. Wouldn’t we rather invest in after school programs to inspire kids with music and theater and science and technology and have summer camps and have really rich quality of life for young people?

Or instead say, oh, that’s too expensive, we can’t afford it. And instead offer them neglect and then 10, 15 years later, pay for it many times over with additional costs in prison and opioid crisis and unemployment and high school dropouts and all kinds of negative social effects that all of us pay for those individuals and their families pay for, as if we can afford that and it’s many times more expensive.

So, we’re talking about common sense here because the cost of doing nothing, we’re paying for it with blood, tears and money on a massive scale. Whether it’s related to health, whether it’s related to neglect of the elders or environmental destruction. We talked about it’s too expensive to clean the water source. It’s too expensive to have clean energy and instead pollute the water source in the soil and then pay for everybody’s cancer treatment for the next 30 years.

In the community, as if that’s affordable in real terms or in monetary terms. So calling their bluff and shifting the conversation about the actual hidden costs associated with doing nothing and showing that even if you want to be fiscally conservative, well, the fiscally conservative thing to do is to pay for the cheaper option, which is to do the right thing.

[00:34:27.310] – Parcher

So, we have one here that’s really quick. I’m just going to go ahead and pass it along. You might recognize the name Steve Grumbine. Steve is hoping you can just talk quickly about how it’s misleading to use the term printing money and why it matters how we frame those discussions.

[00:34:40.510] – Kaboub

So, all government spending is technically the government issuing new money. A lot of it is actually not printed. Most money issued by the government is issued electronically in terms of payments and wire transfers to contractors and government employees and so on. So the use of the term printing money is designed rhetorically to scare people into thinking about those wheelbarrows in Weimar Republic, Germany.

And that caused hyperinflation. But what caused hyperinflation in Weimar Republic? It was a shortage of productive capacity. It was the Allies taking 40% of Germany’s productive capacity and forcing the country to pay reparations for the war. And that caused massive hyperinflation because there wasn’t enough productive capacity to handle all of that demand that was imposed on the German economy.

Zimbabwe hyperinflation – the same thing. Productive capacity in farming and agriculture dropped by 50%. So you immediately have food shortages and prices going through the roof and cross border trafficking, taking advantage of the higher prices and fueling the hyperinflation. Venezuela’s hyperinflation.

It started with US sanctions that shut down 90% of the economy, which was the oil industry. The sanctions targeted the productive capacity. No spare parts for the oil industry, so no production, so no income for the whole country. And you immediately have fuel shortages, food shortages, because the country doesn’t produce anything else. It imports everything. So you have hyperinflation.

So that’s why it’s really important to be better informed, educated about what these things are like hyperinflation and inflation and printing money. And the use of the phrase printing money is designed specifically to trigger those thoughts that it immediately leads to hyperinflation. Counter example. Japan is the country with the highest debt to GDP ratio in the world, 265% debt to GDP ratio, last time I checked.

The problem is Japan doesn’t have hyperinflation. Japan doesn’t have high interest rate. Japan, if anything, suffers from deflation, from negative interest rates. Why? Because the entire debt stock of Japan is in Japanese yen. So it’s a sovereign currency, unlike Zimbabwe, unlike Venezuela and so on. And Japan has a massive, massive productive capacity to handle any additional demand in the economy.

Japan has other problems, demographic problems, social, political problems. But their problem is not a big government deficit or a big national debt or hyperinflation. So it’s important to be informed about these things so that we don’t get trapped by these rhetorical attacks that are designed basically to shut down the conversation about a Green New Deal, about Medicare for All.

[00:37:26.530] – Parcher

So, we have one here from Anne Garneau that she asked me to read. Do you have any statistics about the expertise available currently for a universal healthcare system? Is there a big gap in resources and needs? Is immigration of qualified medical personnel essential? And will the cost of medical training in school in the United States be affected?

[00:37:46.930] – Kaboub

Very good question. So yes, we do have shortage, and I think everybody discovered this the last two years during COVID that our healthcare system was brought to its maximum capacity by this pandemic. So we do need more hospital beds. We do need spare capacity because that’s how you have a resilient healthcare system.

Spare capacity in terms of physical space, equipment, but also staff so that when we have surges in demand like what we’ve experienced, we can have a humane workplace environment for nurses and doctors to handle something like a pandemic. So the first thing is, yes, we need to train more doctors. We need to train more nurses. Some of it can be supplemented by immigration.

But here are a little footnotes on immigration. If we’re taking trained doctors and nurses from other, especially developing countries, then they have those shortages too. So we have shortages on a global scale in terms of the needs, but that doesn’t mean we can’t provide the basic preventative health care services. I’ll give you an example. The military is really pretty good at that.

They take people who have no training whatsoever, and in a few months they turn them into a medic that can save lives in a conflict zone. Well, we don’t have to do that for conflict zones, but we can do basic preventative healthcare access in every single community in this country that’s definitely within reach. We can do it within a couple of years.

And there’s pilot programs, there are examples, and it’s very low cost. And the more you do on the preventative side, the less expensive and the less intervention you have to do as the side effects continue to build and as the illnesses get into a more serious situation. In terms of logistical capabilities, as I said, we managed to ramp up logistical capabilities during World War II to win the war with pen and paper.

I think our logistical capabilities are much more sophisticated than that today. But it requires tweaking the system and going after the real obstacles. For example, who controls the number of doctors that we train and graduate from medical schools in the United States? It’s not the government. It’s not even the market. It’s the American Medical Association. It’s a lobbying group.

It’s a cartel, essentially, that limits the number of doctors that we can graduate. So we have to untangle those real obstacles that are designed to abuse the system. They force medical students into massive debt, they create artificial shortages, and they raise the cost of doing business and make those services exclusive for people who can afford it, for people who are willing to go into bankruptcy to pay for medical services.

Those are real issues that we need to tackle. So it’s not enough just to train more doctors and more nurses. It’s about going after the abusive market power. And I think the wealthiest nation in the history of the universe, the most powerful nation in the history of the universe, should be able to do this and go after this abusive market power.

By the way, we didn’t have the New Deal of the 1930s without doing this hard work. We had to have Pecora investigations in Congress to go after the oligarchs of that generation and those who didn’t want the federal government to have a New Deal program. We have to go after them. We have to go after the corrupt senators and representatives and Wall Street executives to get them out of the way so we can have the New Deal, so we can save the American economy at the time.

We kind of have to do this today. We can’t have a Green New Deal. We can’t have Medicare For All without a clean New Deal cleaning the political system and the abusive market power in the economy.

[00:41:23.110] – Parcher

Excellent. We have one more from Steve that I want to ask just because it’s something we get asked quite a bit. He’s saying, in acknowledging the difference between the federal government and states in funding, why are states competing with each other and driving the race to the bottom that tricks us into believing we cannot afford programs like Medicare for All?

[00:41:41.590] – Kaboub

I think primarily for two reasons. One is not understanding that the federal government can actually do this on the financial front because lots of states probably think that somehow we need to raise taxes to pay for universal health care, so we might as well do it at the local level or at least get us started. And number two, I think because of despair.

Despair and recognizing that the political system at the federal level is just so broken that there is no hope for moving forward with universal health care. So it forces people into doing whatever they can, even if it’s more expensive, even if it might fail, even if it might work only in one state, but not in other states. People are just desperate and try to do something.

And that’s why I think the MMT framing helps us unite in our calls, in our organizing at the state level in calling for actual intervention on a national scale. And that’s why, again, I say it’s a political issue, it’s a corruption issue that forces people into second and third choices instead of going for what we can afford and what we deserve.

[00:42:49.690] – Cotts

One of the things that I heard in one of the March for Medicare for All meetings, I mentioned that we don’t have to raise taxes. This person said we don’t have time to teach a new theory. People understand progressive taxation. We need to convince people that we need health care. We don’t have time to teach MMT.

[00:43:12.190] – Kaboub

I completely agree. We don’t have time to teach MMT. Again, during World War II, we didn’t have time to teach anybody about anything. We just did it because waiting to have the general public and Congress understand how we pay for the federal government, again, we’ll be speaking German today. Following an incrementalist approach to winning World War II.

Can you imagine sending 10,000 troops to Europe and see if we can defeat Nazis in an incrementalist method? So I agree we don’t need to teach everybody, but we need a critical mass of decision makers, of activists to actually call their bluff on this narrative that’s basically designed to shoot us in the foot. Because if we let this narrative dominate that, we need to tax somebody in order to pay for Medicare for all, then, the question is who are you going to tax?

Well, the middle class, they’re going to vote against you. Working class, they’re going to vote against you. If you’re going to go after the rich and the oligarchs, then you’ve essentially agreed to their terms. Which is, ‘if you want a little bit more of our wealth to have your little Medicare for All and all of the other social programs, then, by definition, we need to have the capacity to generate even more wealth and power and influence so you can tax a little bit of it to have your little Medicare for All.’

So, you’ve agreed to their position of power, to their terms of the debate, and you’ve just agreed to make them more powerful, more influential, which means you’ve agreed that they will not give you what you want. And you’ve agreed to the corruption in the system. So, if that’s what the movement wants, then we’ve lost.

[00:44:44.530] – Parcher

Absolutely the case. We have one here from Sherry Reson. Sherry says Warren Mosler wrote, the narrative pushes health, equity and other bleeding-heart arguments with no mention of how free Medicare for All is deflationary and adds several percent per year to our real wealth and standard of living through immediate efficiency gains. Can you comment on the pros and cons of framing human rights?

[00:45:07.930] – Kaboub

Absolutely. So, on the deflationary part, you have to realize that the current health care system, the massive health insurance program, massive in terms of cost, but in terms of employment, of people doing paperwork, mostly to deny services to people who buy health insurance from private insurers. So, with a universal healthcare system, you eliminate all of that administrative costs associated with processing and insurance and payments and accounting and billing.

All of that will actually create unemployment in the industry, which means we have to figure out ways to transition people from this particular industry, health insurance and billing and accounting and all of that paperwork, into other jobs which is why we talk about the job guarantee program. Because we’re not going after the workers in those industries, we’re going after the abusive power of the industry that denies people services as a matter of routine.

That’s how you maximize your profits is by charging them more premiums and copays and denying them as much as possible and forcing people to stay away from their doctor to minimize the cost, which means you maximize the pain eventually when untreated illnesses pop up, eventually. So, Medicare for all will be deflationary in the sense that it will reduce the cost at the national level and it will create unemployment, and unemployment is deflationary.

So, we need to figure out an alternative employment transition program, as Warren calls it. So, we have to recognize that this is part of the economics of Medicare for all. The argument that it’s going to cause hyperinflation is the exact opposite. It will be deflationary. We have to figure out another way to employ people somewhere else and boost economic activity in other areas of the economy, which includes the care economy, caring for people, caring for the planet, caring for the elders. So, we will have a surplus of labor that we have to transition into actual delivery of quality care for people.

[00:47:18.250] – Parcher

And we have one here from Commie John, and he’s basically asking, I’m a Communist and I have a hard time explaining MMT to Marxist-Leninists because it’s deemed liberal economics. I would expand maybe the question he’s asking, how can I maybe frame that? I would maybe expand it to how do we frame this to people who just generally disagree with progressive policies as well. How do we use MMT to maybe bridge gaps along the political spectrum? And why is it important for people of all ideologies to understand the basics of federal finance?

[00:47:48.210] – Kaboub

Sure. So, I get these questions all the time. Is this consistent with socialism or communism or capitalism or whatever ‘ism’? I really don’t get into those ‘isms’. I don’t really care which ‘ism’ you label it as long as you deliver decent quality health care for everyone at decent cost. Universal public services – health, transportation, housing, employment opportunities, democratic process – if that thing that come out of all of these policy prescriptions that we’re talking about has a label and it’s got an ‘ism’ at the end, I don’t really care what it’s called as long as it delivers that.

So, for people who are ideologically obsessed with a particular ‘ism’, there isn’t very much you can do about their ideological obsession, whether it’s on the right or on the left. But if we can get them to soften up and give up the ‘ism’ for a second and think about what is it that ‘ism’ that they like is supposed to deliver and then how do we pay for it, how do we mobilize the resources for it, how do we do it in a democratic, non-abusive, participatory way that is fair and equitable and inclusive. If we can provide an MMT framework that gets us there, then I don’t care which ‘ism’ you put to it.

[00:49:03.190] – Parcher

And one here from Dan Gallagher. He says, what’s your best 30 second short answer to folks who ask, how are we going to pay for it?

[00:49:11.770] – Kaboub

You pay for it by mobilizing the real resources that are needed. You pay for it by democratizing the way we govern the market, by going after abusive market power, and making sure that the spending capacity that the federal government has is targeted towards building productive capacity, within the limits of productive capacity, and taxing and regulating abusive market power in areas that typically will cause inflation.

That will guarantee that we’ll not have inflation, that we’ll not bankrupt the country and that we’ll not have a breakdown in the political system. So, that’s kind of the short, sort of, bumper sticker label that would give to how we pay for it. It’s by mobilizing the resources and democratizing the system.

[00:49:55.630] – Parcher

We have one here from Aditya Paul.

[00:49:58.650] – Kaboub

Hi.

[00:49:59.660] – Aditya Paul

Hi, Fadhel. Thanks for everything. I know we’re really cutting short on time, so I’ll try to be as brief as I possibly can. I’m largely naïve about this thing. So, this is, like, a real question. Always the focus, especially with Medicare for All, is on the private insurance industry and eliminating them. But there are a lot of other private actors in the process, including hospitals and things like that.

I want to know, in your mind, if we do actually eliminate the private insurance industry, would that, in its own right, sort of obviate a lot of the perverse profit motives of the other private actors in the system, or would we have to do other measures on top of that to ensure, I guess, to tame abusive pricing in medical care?

[00:50:38.410] – Kaboub

Very good question. So, in terms of the people who will actually deliver the health care, the hospitals, the doctors, including private doctors and so on, we’re not touching their universe, so to speak, because we want more of them to be inclusive. The question for them is who is going to pay for these services? And for many hospitals who do the right thing and accept people without insurance and treat people without asking for payments and things like that, and doing the surgery and then sending you the $20,000 bill that you have to figure out with your bank or with your credit card company, whatever, or with bankruptcy court.

The delivery of healthcare is not the problem. It’s about the billing. It’s about the cost. And for those hospitals, sometimes the cost goes up because they have to make you pay for loss in revenue associated with treatments that they didn’t collect on. So, we have to figure out a universal way that allows them to bill patients or bill the federal government in this case for the actual cost of delivering health care, especially preventative health care, which will reduce the cost.

But then you have to also recognize that hospitals are also buyers of inputs from Big Pharma from the tech industry in terms of all the medical equipment – because I did look at itemized bills from surgeries that I’ve been involved in, and it’s incredible. The cost associated with small plastic devices that shouldn’t cost more than a couple of dollars are charged $500 a piece.

So, regulating the abusive market power associated with the actual delivery of healthcare, that’s where our focus should be. It’s not about banning private hospitals or banning private doctors or anything like that.

[00:52:24.550] – Paul

All right, thanks very much. That’s great.

[00:52:26.100] – Kaboub

Thank you.

[00:52:26.990] – Parcher

Yeah, that was a wonderful question. Unfortunately, that will be our last question here. We’re right up against it on time. I apologize if we didn’t get to your questions. Thanks to everybody for showing up today. Fadhel, before we go here, can you just maybe plug the Global Institute for Sustainable Prosperity and tell people where they can find your work if they’re interested in diving in?

[00:52:44.050] – Kaboub

Well, I would plug lots of organizations. So, I’m at the Global Institute for Sustainable Prosperity. You can find me on social media, on Twitter and other platforms, but especially find other people in this movement, including at the Global Institute for Sustainable Prosperity, Real Progressives, Macro N Cheese, the MMT podcast. There’s tons and tons of resources, and I’m forgetting most of them.

And I see Sherry’s here. She’s got a wonderful website that has a lot of archived links and resources. The Modern Money Network. Sherry’s website, I think it’s called, wecanhavenicethings.com, I think, but lots and lots of resources. And the reason I highlight all of these resources and I’m forgetting a lot of them, is because we’re not going to move the needle in this movement nationally and globally, unless we better inform, mobilize, educate, organize, and push back against the dominant narrative.

It’s a question of democracy. It’s a question of survival, to be honest, on whether it’s healthcare, whether it’s climate change in this country and beyond. So, we’re not going to move the needle unless we mobilize and organize. And as I say, sometimes it’s not enough to be angry and it’s not enough to raise the pitchforks.

We want not just organized pitchforks but well-informed pitchforks. And I think MMT provides the right framing to mobilize this movement. So, thank you again for this opportunity, and I look forward to further conversations on this subject.

[00:54:15.770] – Parcher

Absolutely. Thank you so much for taking the time, as always, Fadhel. It’s always wonderful to talk with you. And I’ll just briefly close things up by plugging realprogressives.org, realprogressives.org/donate. Huge thanks to the M4M4All folks for joining. m4m4all.org is their website. We very much appreciate everybody for being here today.

[00:54:32.600] – Kaboub

Thank you.

[00:54:57.040] – End Credits

Macro N Cheese is produced by Andy Kennedy, descriptive writing by Virginia Cotts, and promotional artwork by Andy Kennedy. Macro N Cheese is publicly funded by our Real Progressives Patreon account. If you would like to donate to Macro N Cheese, please visit patreon.com/realprogressives.