A Sad Lesson For Modern Monetary Theory

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The governments of the world are spending trillion upon trillion of newly invented money. Just like that Modern Monetary Theory says they should:

Governments were caught out when Covid-19 hit, having overlooked the need to be able to test for new diseases because they were focused on drugs and vaccines for those they already knew about.

Now there are fears that the rush to supply wealthier countries pressing for more tests may destabilise the fight against HIV, malaria and tuberculosis, illnesses that kill millions, mostly in low- and middle-income countries.

“Some companies are planning to reduce or stop malaria, HIV and TB test production,” said Dr Catharina Boehme, the chief executive of the Foundation for Innovative New Diagnostics (Find) and an adviser to the World Health Organization. “They are shifting their production to Covid-19 tests.”

Oh dear. But a nice lesson in the fact that it’s not money that matters. It is the ability to do something, the productive capacity that does. Printing more pieces of paper doesn’t change the basic economic truth, we’re in a world of limited resources and there are opportunity costs – if we do one thing then we can’t another – to whatever it is that we decide to do.

MMT doesn’t change that basic problem in the slightest.

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BongoChester DrawsPhoenix44jghView from the Solent Recent comment authors
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View from the Solent
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View from the Solent

“…because they were focused on drugs and vaccines for those they already knew about”

How do you prepare a test for an unknown disease?

jgh
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jgh

By teaching people how to think instead of how to pass exams.

Phoenix44
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Phoenix44

And how does that enable you to do produce a test or a vaccine for an unknown bit of RNA?

Chester Draws
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Chester Draws

You do know it is impossible to teach people how to think, don’t you?

I’d love to put some “teach them how to think” people in the classroom and ask what the first step would be. “Think!” dammit. Now what?

Phoenix44
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Phoenix44

Man working on vaccine for malaria now working on vaccine for COVID.

Bongo
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Bongo

Quite so – all you can do with MMT in practice is move resources around. Like the nurses who were allegedly being paid 10k USD a fortnight to work in NY recently when they could have been working in their home states.
Unless you can increase productivity or expand total resources, MMT gets you nowhere overall. But the State can do those things, indeed it can, liberalise planning, cut the cap on medical school places, shorten the time to train a nurse, replace the WFA with £5/week on SRP and PCGC etc, but those arguments aren’t coming from MMTers.