Category: Podcast

Money on the Left speaks with Pavlina Tcherneva, Professor of Economics at Bard College and leading scholar of–-and advocate for—Modern Monetary Theory (MMT). Many of our listeners will be familiar with Dr. Tcherneva’s contributions to MMT, especially her book, The Case for a Job Guarantee (Polity Press, 2020). She is also Director of Open Society University Network’s Economic Democracy Initiative, instrumental to the publication of a United Nations report on the job guarantee, titled “The Employment Guarantee as a Tool in the Fight Against Poverty.” We speak with Pavlina about her work, and also get her perspective on the causes and conditions of MMT’s movement from the margins of economic discourse toward the mainstream of political economic thought. 

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Transcript

The following was transcribed by Mike Lewis and has been lightly edited for clarity.

Billy Saas:  Pavlina Tcherneva, welcome to Money on the Left.

Pavlina Tcherneva:  Thank you for having me.

Billy Saas:  We’re very excited to have you, of course, a very accomplished author and researcher, and respected MMT principle theorist. How did you get here, where you are today? And how did you come to MMT?

Pavlina Tcherneva:  Oh, how long do you have? It is true that perhaps your audience knows me most with my work on the job guarantee and the recent book that came out in 2020 The Case for a Job Guarantee, but I didn’t actually quite start there. I would say that probably like most MMTers, certainly the initial group. I, too, was caught up by what Keynes called “Babylonian madness”. We all were provoked to look at the history of money because we realized early on that there was one research project that was not fully developed even in heterodox theory. That was the project of understanding money as fundamentally a public institution and as you well know, heterodox theory has long talked about money as a core analytical category in understanding a monetary production economy, a capitalist economy, a market economy. Orthodox approaches had no finance, had no money beyond some very simple kind of assumptions about it being a numeraire. But Post-Keynesian Institutionalists, too, didn’t really have a rigorous program, looking at money as a public institution. We had a lot on endogenous money, on financial instability, on how unemployment is a monetary phenomenon, on all of the important things of capitalism, except I would say the state. This work did exist out there, but I would say that with our work and our introduction to Warren Mosler, getting together with Randy Wray, Matt Forstater, Stephanie Kelton, the familiar names, this is when we all started thinking: well, what’s missing here in the analysis? And there’s one very basic, fundamental, stylized fact that every student knows. Every student knows that the currency is a public monopoly. It’s probably the purest form of monopoly, and yet the profession didn’t have much to say about this. So when I did my internship with Warren Mosler in ’96, that was really the first question: what are the implications of a currency being a public monopoly? In economics, you might find something in mainstream theory, mainstream literature about competing currencies, the efficiency of the chosen numeraire, these kinds of frameworks. Then you will find something about the state usurping power over the monetary unit because it comes from gold and market exchange, all of this really unfounded in history and anthropology and sociology. Nobody tells the stories except economists. But that’s the extent of what we would find in Orthodox theory, that the currency monopoly is somehow the state taking over some innovation that the private market came to. The other thing you would find in mainstream theory is to say, Well, if the government decided to then print its own currency, then of course, it naturally will inflate it, it will abuse it, and can’t do anything good with it. That is just a very thin analysis. But there are deeper, I think, questions to be answered. Some of the very first things that I did, and almost in a playful way, when I was working for Warren was to say: okay, well, can we model this? What could be some of these implications that if the state is the monopoly currency issuer, what are some implications from that basic stylized fact? The very first one is the one that everybody associates with MMT: the government can’t run out and that’s obvious. I think we got to go deeper than just the very obvious that we can’t run out of money. That’s clear. Well, if you’re a monopolist, then you have some unique powers. Pricing power is an important one. I think that is still under-researched, in terms of the MMT project. We have statements, we have made certain claims, but I feel like the literature needs to develop on that front. One of the pricing powers is that you can set the price of money itself. That is, of course, the interest rate. We know very well that the government can do that. The central bank is the one that can set the price of money. The other one is that you can also set the price of how the currency exchanges for other things. You can set a conversion rate. So, if the state is the one that imposes some kind of tax liability, and people need to earn the currency, then what do they need to deliver in exchange and what price would be paid for whatever they deliver? So, those were kind of macro, they were modeling questions, they were as theoretical questions to me, they were very interesting questions because one of the things that I showed with the math model is that if the more you pay as a currency monopolist, the fewer resources you’re going to attract, given a certain tax liability. That was kind of counterintuitive. The more the public sector injects it to the private sector, the fewer resources it might be able to attract given the tax obligation. So that was the first question, but then the second was: Well, how could the state inject currency into the economy? Could the state do it in a way to just always employ unemployed labor? Again, the job guarantee initially was, for me, this very much of a macro question, is there a way for the government to spend in a better way, in a way that it can secure full employment? Very quickly it was clear that full employment and price stability were not competing goals. That, in fact, they were very much part of these inherent powers of the state. So the job guarantee emerged as this alternative to the NAIRU. Heterodoxy, for a very long time, had criticized the NAIRU. It had very thorough, rigorous critique, but I would say, probably not an alternative policy proposal. I think, for me, that very quickly was quite obvious that certainly you can use your pricing powers to anchor prices of a very fundamental, most essential input of production. You can do it to create full employment, and then, of course, you have other tools to deal with inflation and price stability. So as I said, for me, the MMT project was about identifying some kind of essential principles behind the currency rather than some accidental, if you will, aspects to the monetary system, and how we can utilize the monetary system to create more economic stability and full employment. Over time, this project became quite personal. It became personal when I did my dissertation because I was able to observe how a job guarantee or program inspired by the job guarantee proposal was implemented in Argentina. When I was able to visit and see how the program was run, the impact on women, on poor mothers, on communities, I mean, that’s when everything changed. It became just as important that we have a framework for thinking of how macro policy can be implemented, but also to understand the on the ground effects of macro policy. If there is one theme that I think runs through my work, is the question of how can we do things better? That ranges from how to do fiscal policy better, how we can improve on what we’re doing currently, how we can do monetary policy better, and the like. So I would say that that is really the overarching theme. Not so much “Can we pay for it?” Yes, of course we can. But now that we can, what shall we do with these fundamental powers?

Scott Ferguson:  Very often, I hear from folks, sometimes well-meaning, sometimes not well-meaning, that MMT is just a warmed over or a reboot of so called Keynesianism and there’s no attention into, let’s say differentiations in the history of what’s been called Keynesianism, no recognition that what came to count as Keynesianism in mid-century was highly influenced by neoclassical modeling. I want to give you an opportunity to tell our listeners about your research in your readings of Keynes, and in your view, how MMT is related to Keynes’s work?

Pavlina Tcherneva:  Keynes’ own writings are really a treasure trove of information. You can dig in and dig in, and it’s fair to say that what we find in the textbook has very little to do with his overall approach. And I would argue that they stand apart, both on theoretical and methodological grounds. So what we typically get in the textbook is this kind of hydraulic version of Keynesianism, which says, the private sector has some kind of flaws, imperfections, sometimes they could be shocks, and the public sector can step in, to smooth out those cycles. There is a notion that when there’s a shock to demand, to spending and investment, then the public sector just needs to boost its own expenditures, and bring us back to our growth path. Then there’s something about multipliers and what is the effectiveness of that spending? Is it really the right way to go about this, could monetary policy do the job? There’s a whole bunch of discussion there of which policy tool is the more effective one. Well, Keynes was very clear on this matter, monetary policy is not a way to stabilize an unstable economy, it’s really the fiscal authority that can do the job. But the way we go about it is also very important. Keynes almost never spoke about aggregate demand. He never talked about aggregate demand management, he will talk about aggregate measures trying to figure out aggregate activity, because he was trying to separate the macro economy from the micro economy. But he mostly talked about public investment. He mostly talked about public works. This was not because he just preferred public works, but because he was very interested in the connection between spending and employment. For him, this was the cardinal measure for figuring out the effectiveness. It’s not whether you smooth out this business cycle. It’s not whether you bring the economy back to some growth path, it is whether you can create full employment, and by full employment, we mean people who need work. And he has very clear statements that when we think about people, we’re thinking about people who are newly entering the labor force, we’re thinking of people who might be underemployed, disguised unemployment, the whole life. Even his methodology in the way we measure economic activity was based on two units, and those were wage units and labor units. So you see, the entire framework was grounded in, I would say, this kind of humanistic approach that the economy is there to serve people to serve the concrete needs of society. The way we measure our economic activity is by what we do. So from there, fiscal policy would need to provide public employment and public investment to create a well-run economy. Keynes used to say the two outstanding faults of economic society were the failure to secure full employment and the arbitrary and inequitable distribution of income. From the point of view of policy, these are connected. If you fail to secure full employment, you are going to have an arbitrary and inequitable distribution of income. There may be many other reasons why inequality might be increasing, but labor income is critical for the more equitable distribution of income. So I have an article called Permanent On-The-Spot Job Creation—The Missing Keynes Plan for Full Employment and Economic Transformation. In that article, I make a case that, actually, the original Keynes proposal for full employment very much resembles a kind of job guarantee or employer of last resort proposal, because for him, it was quite easy to get the economy to work at let’s say, 90% capacity, but the remaining 10% were much harder to achieve and that meant full employment. For him, it was better distributed demand, hiring people in distressed areas, having a policy of Public Works that will be on standby, that will be permanently implemented, so that it absorbs new entrants, job seekers as needed; that those projects will be implemented in areas that have the greatest economic need, the greatest level of unemployment; and that this policy will not be a stop gap measure the way we normally do fiscal policy. We have crisis and fiscal policy steps. It is something that is permanent infrastructure, so that folks have an unemployment safety net, some kind of security and we minimize the huge impact from mass layoffs. We always have a public employment option. The Keynes plan was very clear: it’s very difficult to fluctuate big infrastructure projects in short order. What you have to be thinking about is direct public employment. But we normally associate Keynesian policy with building bridges and mass infrastructure investment. All of this is well and good, all of it as necessary, but it’s not a way to achieve full employment. For Keynes, of course, the greatest socialization of investment was very important so that there will be major projects that will be under public auspices. I would call them economic rights. You can think of healthcare, you can think of education, you can think of housing, you can think of various public services, but of course, infrastructure too, and still that will not be sufficient. We still will need to have a direct employment program, and that will be a kind of policy to address community needs. He has these marvelous quotes, he says: There are things to be done. There are people to do them. Why not put the two of them together? Why not put people to work? The country is not a finished proposition, far from it. It’s crazy to sit puffing one’s pipe telling the unemployed that it would be most unsafe to find them any work. I just love it, and everything that you read, you see how he had a very strong social concern. Something that I don’t know if people normally associate. He had a concept of the good life. And I think that that motivates a lot of his writings. He says that goodness is never really the problem, it’s cleverness. We just need to devise the means, we have to find new mechanisms to secure full employment. For me, the job guarantee very much falls in the spirit of this Keynesian approach. The contemporary fiscal policy is this very much top down hydraulic approach, where we just provide mega contracts to the mega firms with mega profits. Firms that, as we know, thrive on predatory labor practices, predatory pricing practices, and that is an upside down kind of approach. We count on this to stabilize our economy and bring full employment, which of course it doesn’t. So then we redefine the problem. We say, well, there’s only so much we can do, we have to live with some level of natural unemployment. That was an anathema to Keynes. I can go on and on, but I would say that Keynes does preempt the NAIRU debates in his own work, because he is very clear that the closer you get to full employment, the more you attempt to secure it by generalized means, by aggregate expenditure, the more income will go to the capital share, rather than the labor share. And you’re already going to be creating income inequality through these aggregate measures, by directing them to sectors that are already saturated, that are operating at maximum capacity, and you’re just going to feed the profit share. This work is then, I’d say, augmented by Minsky’s own analysis, which also informs my own work, where he talks about how the there is an inequality within the labor share, because we tend to stabilize the employment chances and opportunities of those who are employed already, and those who are high wage folks. The current paradigm is very inequitable, so we go back to MMT and say, Okay, we clearly have extraordinary spending powers. What should fiscal policy do? Should it mimic private sector investment behavior? Should it try to stimulate investment-led growth? Or should we find a kind of bottom up policy that acts as a robust, automatic stabilizer that stabilizes wages at the bottom and secures full employment over the long run?

Scott Ferguson:  My next question, I think you’ve already begun to answer it. But I want to be more explicit about this question. And it has to do with politics and power. Certain interpretations, especially on the left of Modern Monetary Theory, usually verbally linked to accusations that MMT is just warmed-over Keynesianism is that: well, MMT is merely technocratic. It’s offering a bunch of technocratic fixes, but it has no analysis of power and has no relationship to power. Of course, we at Money on the Left do not believe this at all. But we want to give you a chance to respond to that kind of criticism.

Pavlina Tcherneva:  In some way, I understand where the criticism comes through. My proclivity is to get some of the macro right. But that is not to say these policies, as we articulate, are a shoe in for our political landscape. It’s almost like a doctor, you need to know the medicine that’s right. Whether that is going to work really depends on the patient. It depends on the social circumstances. It depends on the context within which we’re practicing. It depends on so much of the social reality. I think that the second thing to say is that MMT really makes very clear that money in and of itself is a political project. That it emerges within the context of some exclusive powers and those powers, whether it is the power to tax, whether the power to compel somebody to work, whether it is the power to command resources, all of that, you need to have a political analysis and historically contingent analysis of how a monetary system would work. I would say MMT, long before the critique, was the one that developed a kind of a spectrum, I would say, for sovereignty. We began with, in fact, studying a non-sovereign regime. A lot of our work began by looking at the Eurozone, and that was a political project. That was a project that chose to integrate Europe via structural adjustment. I would say from the very beginning, we zeroed in on these political forces that created a very dysfunctional framework, which then deliberately constrains the capacity of the state to act. So I would say that in all of our work. I think at core, our focus has been on how to emancipate the state from not just myths about government spending, but from this kind of neoliberal logic that the state can’t act. We need private actors. We have to solicit large private capital to do social investment. I mean, this is really the reason behind our insistence that the state has capacities–capacity to spend, capacity to act–because we, at bottom, would like to have a more just, if you will, democratic order. Very often it’s true that we say that the MMT precepts are there for the taking. Autocrats can take them, right? Authoritarians can take them and they do often. So we want to be able to articulate a vision of what a democratic social order might look like, and this is where we might disagree with what are the objectives of a public policy. We will indeed insist that full employment will be front and center. Not full employment as an abstraction, but as a real thing. What does it mean to have full employment? What does it mean to have decent jobs? What does it mean that every person should have access to dignified employment opportunities? In some ways, I’d like to skip over the question of how we will pay for it so that we can start talking about the difficult questions. Should we have an economic system where some people are denied employment? On what grounds and bases do we deny them? I think the politics are very much wrapped into these myths. We can’t really put a stake through current political, I would say institutional obstacles to doing public policy, until we shed some of these myths about jobs, about the state, about its funding capacity, etc.

Billy Saas:  Talking about power, I think it’s interesting to reflect on the recent history of MMT. As an aside, warmed over Keynesianism is pretty good on reflection when Keynes is such a great writer. And you can go back and find so many beautiful quotes and so much evidence of his literary and philosophical sophistication and the inseparability of its theoretical, economic insights with the normativity of those insights and his kind of normative preferences. A long aside there, but just a shout out to warmed-over Keynesianism on its own. We had a great episode with Matt Seybold, host of The American Vandal podcast a couple months ago, where Matt talked with Scott and Rob about the literary character and interest and emphasis of Keynes writing. The recent history of MMT is of great interest to me and something that I have written and researched quite a bit about. I want to simultaneously do two things: one, run my understanding of that recent history by you and see if I can get a verification, and maybe correction, but then also ask you to kind of reflect on as, especially over recent years, there have been more numerous and I think, very interesting, sometimes difficult encounters of MMT with power. Y’all have gotten very close to it. Right? In terms of the body of theorists and the discourse of MMT has been in the mainstream press a lot. They’ve been in the conversations and important policy discussions. So two-parter. MMT we got here rough and ready. It starts in a listserv, as a conversation between a number of people across the world, the post Keynesian listserv. It starts to take off in the early 2000s, and late 1990s, through your own research through Randy Wray’s writing, through the publication of Stephanie and others. Then the blogs happen. And that takes off in its own little way. But it’s not until the financial crisis that the MMT narrative really kind of takes shape, and gained some popularity in the blogosphere and on social media. Of course, Bernie Sanders’ ascension as a kind of figure of interest on the left, and Stephanie’s proximity to him, brings that narrative more to the mainstream. I think, what I’m interested in as a communication scholar, is the rhetorical strategies and how they’ve sort of evolved over time and talk about power, in the context of economics. It is notoriously concentrated in a few departments, with PhD programs, and then they train students who go out and spread the gospel of neoclassical or orthodoxy and whatnot. So part of the story of MMT is, and this has shown up a lot, I think, in the work of your own and others, reflection on what has worked in persuading people to see the world and the economy in the way that y’all see it. You talked about the myths that are constantly presenting themselves, they seem to never die. They’re just always there. They’re incredibly resilient about balanced budgets and so on. There’s a long list. The way I sort of see it now, and again, more interested in your response to this than my hypothesis, is that those hang ups, those myths and the rhetorical strategy of MMT scholars and the MMT community generally, to focus on debunking those seems like there might be some limitations to it that I think you’re acknowledging, right. You talk about, we need to sort of outline and have the difficult conversations that come after answering the simple one, which is you pay for it, because you have the money in every case. So when we’re having the conversation that we’re having right now, in 2024, MMT has had some really big moments. It’s come under controversy in the context of inflation. I guess, to wrap up my very, very long question, do you agree that what am I missing, and then narrative of the kind of history of MMT and the importance of thoughtful rhetorical strategy, which y’all wrote about and talked about a lot through the blogs. Here’s what we’re doing, to now where we seem to be at a kind of, and maybe have been for a moment at a pivotal point where the strategies are they working, as well as they once did? And what needs to happen next?

Pavlina Tcherneva:  That’s a really great question. I hope I can give you some satisfactory answers. But strategy, I think, clearly has to evolve for the moment that you’re faced with. In some ways, we stumbled upon a strategy early on, because so much of what we were saying was different from the mainstream, that we had to be very clear. Sometimes when you pare down a concept to its bare essentials, it was provocative, right? Taxes don’t pay for federal spending, it gets very provocative. And it’s a double edged sword. Because, you know, when you look at the institutional analysis, when you look at how we’ve constructed our laws, how our entire polity is surrounded around the question of a taxpayer myth. It is a really big challenge to communicate to folks that operationally, taxes don’t technically fund the government. But the clarity of the statement has been also effective because it’s attracted attention. Oh, what are those folks saying over there? Why are they even saying such a preposterous thing? And then what we’ve done is we have done the hard work to show the operations and to show the technical aspects of government finance. This without a doubt is MMTs strong suit. But as you say, just because you can demonstrate the technical aspects, doesn’t mean that folks might be convinced that that’s good enough. I think the other strategy has been, and here, you know, the economy offers no shortage of teachable moments, is that we have been able to articulate what is happening in the face of major crises, to offer a fresh perspective. It is unfortunate that crises lend themselves to concentrating the mind, and getting folks to acknowledge what is happening. I think that, in my work, I have tried to articulate how this new paradigm of whatever it takes financing is really the perfect illustration of some of the things that MMT has been saying. MMT has never been advocating whatever-it-takes financing, MMT has been articulating how the mega support that big monetary policy provided to the banking sector will not do the job. It won’t pull the economy out of a crisis, and it won’t stabilize the financial sector. Now we’re looking at mega fiscal policy, right? We have the return of Big Fiscal policy. In some sense, it’s a little silly that MMT is blamed for the return of fiscal policy. Because I think we just learned our lesson that monetary policy didn’t do the job. We slogged through the greatest jobless recovery, and now that we embrace the fiscal tools, voila, we have the fastest postwar recovery. So MMT has been there front and center, articulating what is happening and that there are ways to do things better. Even when the mega fiscal packages were being passed, very early on in March 2020, it was saying, Look, you need to have a concrete mobilization and employment and investment strategy, not just spend the money. As a communication strategy, I would say that we are using these moments to offer, I think, new ways of thinking about public policy. What is next, I think, is, well, we are now seeing the return of big industrial policy. In a way, I feel that fiscal policy has morphed into that. Fiscal policy provided reasonable economic security for folks during a very uncertain, devastating time. We had child allowance, we had income support, expanded healthcare. We had a moment in which we saw what could be done, and then that quickly disappeared as the policies expired. That is being morphed into like another big government policy, big industrial policy, but it’s again, wrapped in this neoliberal logic that we need to get private equity and investment funds to mobilize finance for the purposes of the green transition. One strategy is to always connect to what is happening, because, even though we’ve seen the return of the big three, we don’t exactly have a fundamental structural transformation of the economy. Folks are still experiencing the same problems that they were experiencing, prior to 2008. So this connects me more to what’s the next step? I do think that articulating the vision is essential. It’s not just the technical aspects. We’ve been there. We’ve explained that. If folks want to take an honest reading of what we have done, then all we can do is remind them that these last 20 years clearly demonstrated that the pay for question is bogus. It is clear, and I think that we shouldn’t entertain for a moment, reasonable economist talk of the old talk, but austerity is back with a vengeance, right? Budget cuts back. We are already reneging on climate commitments. Yeah, I’m talking about globally, right in Europe. We certainly don’t have a bold green agenda. Now, where did that energy go? I think that the return of Big Fiscal and Big Industrial is what took the air out a little bit of that energy. That we have seen things we hadn’t seen in a very long time. Now we are seeing bold Keynesian policy that we hadn’t seen in a long time. We’re a little bit, and I don’t mean we, I think the progressive movement is regrouping. Where is the next kind of major battle for our future. MMT, here, maybe I’m wrong to assume that we have won the pay for question, but to the extent that these old frames are being weaponized, it means something else is missing, right? It’s not just the technical analysis that needs to be clearly articulated. I can show you endless balance sheets and show you how with coordination without coordination, the bills are paid. But it clearly is not sufficient. I think one of the things that MMT can do is articulate maybe a little more clearly that we need to have a lid on government spending, not a lid as like budget debt to GDP ratios and deficit to GDP, but a kind of a conception of what is too much. Because I think that this is one thing that MMT unfairly suffers from, that somehow we’re being blamed for runaway spending and endless money printing. As we were talking earlier in our conversation, we’ve always had different measures for what is enough and what is appropriate and what is spending that serves the public purpose. What we’re seeing is very much this whatever it takes spending paradigm that validates a highly inflationary industrial state. An industrial state where power is resolutely in the hands of big tech, big corporations, big finance, as I said, with pricing power with, you know, abusive labor practices. This is a very inflationary paradigm. The big finance that is now being extended through industrial fiscal monetary policy validates these power structures, validates, underwrites these pricing powers, these abusive practices. I think MMT’s next question will be how to articulate that this way of using the public purse actually undermines the neoliberal structure. So I don’t know if that really answers the question of what is a good strategy to communicate these questions, but at least in terms of where the ideas are. People, in their gut, feel some kind of unfairness. Why are they so angry with the government budget? Reagan managed to sell us on the lie that we don’t have money, but actually, he repackaged folks’ anger with the big contracts, the big support for the military industrial complex into a narrative that we don’t have money. That was a huge coup. Now that we have exposed this as a lie, we still need to go back to the question of, why are we funding forever wars? Why are we funding industries that deliver very little by way of public goods, and certainly good jobs, and we can’t solely be relying on direct action and unions to do the job. We need to have public policy to upend that neoliberal logic. Again, in terms of communicating, I think going to folks’ anxieties about how this economic system doesn’t work, and deploying powers of the state is one way, but also kind of emancipating. We need to have a positive vision of the state,

Billy Saas:  That was wonderful. Yeah, brought to mind. When I think about the recent history, which is pretty much all of the history of MMT, as a body of theory and research, I wonder in thinking about communication and rhetorical strategy for getting the message out, I wonder if you have any models in mind for previous economic thinkers or bodies of literature that have overcome or somehow succeeded in becoming? I’m thinking specifically of neoclassical and Milton Friedman and neoliberalism’s ascension. Maybe another way to say this or ask this question in a more direct way is: is Milton Friedman maybe a good role model for rhetorical adaptation and strategy, given the apparent success of that school of thought in the 70s and 80s, when there was, part of their story, a breakdown of Keynesian thinking, which we know is not full Keynesian, not even warmed-over Keynesian thinking, in the 1970s. But yeah, are there other models to look at for strategies for being ready when the crisis happens, to strike? Right? And maybe not so violently in terms of, you know, an aggressive strike, but maybe MMT wasn’t ready in 2020? And how might it be ready next time?

Pavlina Tcherneva:  Well, I’m not sure that that is necessarily true. In what way can we think of MMT as being ready? In my understanding of the events that unfolded, MMT, in some ways, gave permission to policymakers to embark on bold policies without having to invoke the deficit myth. We’ll take credit because we mainstreamed this idea. We made it unacceptable to talk about how the government “doesn’t have the money”. The reality is that, throughout history whenever there have been major crises we have responded. The public sector has responded to whatever they’ve considered policy priority. What was different is that we didn’t return so quickly to have some kind of fiscal commission to some kind of mind the budget, rhetorical policy, even though it’s being weaponized at the political level. It’s just not really taken too seriously at this point until maybe, you know, Republicans come and they start slashing budgets. But as we know, the kind of support for industry, I suspect the support for industry is not going to go away. Europe has not really rushed to reinstate its fiscal rules. They’re mulling that over. There is some kind of budget crunch happening, but at least I feel that it is not looming on the horizon. If anything, MMT and if you remember the famous Mario Draghi statement, “is this the best way to allocate liquidity when it’s a matter of the green transition or inequality. No, it probably is not the best way to allocate liquidity and some new ideas like MMT, we should look at them.” I think that this was exactly the reason why Europe reverse engineered its monetary sovereignty. They understood where the straitjacket was. They had to break their own rules. Of course, this was not for the purposes of funding governments, it was really for the purposes of stabilizing yields and bank balance sheets. There is kind of an ideological battle there. Right. But how can we be ready? I mean, I think here, it is probably a question of what policies do you have on offer. The one most closely associated with MMT would be the job guarantee, although we have for a very long time talked about the downsizing of the financial sector. Certainly Randy Wray had written a lot about it, we here at the Levy Institute, for decades have been talking about financial reform. We have ideas, we’ve made statements about Medicare for All, housing guarantees, etc. So in a way, the framework is there for economic security. I don’t know if it’s rhetorical strategy that will get us there, or another fluke and another accident. Some other kind of crisis, where, you know, this will be the next idea, one of these is going to be the next idea on offer. I think you are correct. Rhetorical strategy matters, because folks have to believe in what is happening. They shouldn’t feel like the wool is being pulled over their eyes, and that they need to understand these are good measures. But what I have found in my research over the years is that the job guarantee, for example, even though it wasn’t part of mainstream conversation for such a long time, has polled very well. Even in places where then the idea is just newly introduced, it just consistently garners very high support. I will admit, even to my own surprise initially, but then you look at how bipartisan the support is, and it just makes sense. Our own history teaches us how popular the New Deal was, and how many folks called themselves Roosevelt Democrats because jobs were brought to their communities, and those were important reforms. So, I’m not sure if I’m answering your questions satisfactorily. But is Milton Friedman the model for communicating? Well, to the extent that he has made provocative statements, maybe MMT, should continue to do that, just to rattle the mainstream and bring attention to some of our ideas

Billy Saas:  I am just to clarify, I’m not suggesting that Milton Friedman was some sort of rhetorical mastermind, a lot of it was right place, right time, and serving the interests of power, and that’s entrenched at that moment. Yeah, I think that there are different considerations when you have an agenda that is not explicitly about enriching a certain amount of the population at the expense of the rest, but is about serving the public purpose.

Pavlina Tcherneva:  Let me make a comment on what has dominated the conversation over the last 20 years and I have contributed to this as you know, the question of inequality. As you know, economists didn’t talk about inequality for many, many years and that mainstream economists euphemistically referred to inequality as poverty. So the distribution of income was not really seriously taken until recently. At least in some of my work, I’ve tried to show how just the way the economies work and the way they’re stabilized, does not bring better income distribution, if anything, it makes things worse and worse. But I am worried that in that conversation about inequality, we have lost the conversation about economic security. We do understand that there is a fundamental unfairness if an economy is really shoveling all incomes and rewards to a very small group of people. But that alone is not enough. Why is the bottom 90% not able to make the good life? The so-called good life? That’s really, I think, the fundamental question of inequality. It’s not a question of income. It’s not a question of redistribution. It’s the question of pre-distribution. There was a little bit of a conversation about redistribution, but I feel that that did not take hold, as much as it should have. To the degree that we can return to that, like, what does pre-distribution mean? What does it mean for folks to have decent market income? Is that enough? What can you get with your marketing? I mean, are there preconditions to good life that are provided. The fundamental anxieties are problems that families face and are the same. This is not just the matter of income level. Yes, most people have challenges providing for health care, education, housing, but none of us are insulated from the vagaries of a financial market. Rich or poor, we all fall prey to a system that is highly unstable, very speculative and precarious. So one of the things that we have been doing at the economic democracy initiative is trying to shine a spotlight back on the question of precarity and the uncertainty of livelihoods to expand the scope. Of course, jobs to me remain critically important. But to expand the scope of what that precarity entails.

Scott Ferguson:  So you’ve made the transition for me because I was going to ask you next to tell us about your recent project, the Economic Democracy Initiative.

Pavlina Tcherneva:  Well, yes, the Economic Democracy Initiative is a project at Bard College, which as the name suggests, tries to address the fundamental questions of what we once called economic rights. Our research, our policy outreach, our curricular programs, really tried to get to this question of the structural transformation that might be required for a more democratic social order, we have a few major projects. One is this symposium on what happens after neoliberalism. And there we engage with a series of topics. But the two dominant themes, and what sets this project apart from other projects on neoliberalism are two specific areas. The first one is the area of precarity. That’s a fundamental force that reproduces the neoliberal economy. I already talked about this. We don’t see illiberalism, or the rise of authoritarianism, as some kind of evidence of the Crisis of Neoliberalism. To the contrary, we see that as a consolidation of neoliberalism. It’s because liberal democracy has failed to address the question of economic insecurity. So that’s like the first overarching theme. The second overarching theme is an MMT informed theme, that we want to look at this interdependence between public and private finance, and really zero in on how we can emancipate the public purse from private interests. That can happen both at the policy level but also legally and institutionally. As I just discussed, the states respond to crises with whatever it takes financing strategies, but they don’t do the same for the purposes of the green transition, for the purposes of securing the social safety net, so I have a piece that’s coming out on that symposium on this precise question. Then, we explore various other sub topics like the future of work, what is a diagnosis, what is ailing the 99%, what varieties of capitalism, if you will, or trajectories for social transformation. We try to interrogate emergent futures, etc. So this is a long form symposium with long form pieces. I urge you to see it, and the website is postneoliberalism.org. The second project that we’ve been working on is a project around the job guarantee, we have curated a resource, online resource, which not only presents interested researchers and policymakers with the vast body of literature, academic policy, and other, but we also have a global map of programs, which have been tried large or small, that have some of the features of the job guarantee, or at least aspire to kind of a job guarantee model, we don’t obviously have a fully fledged job guarantee anywhere in the world, although there is a major program in India, which I think is still not well known by many in the West. It has provided a lot of interesting lessons about implementation, and impacts of a job guarantee in a developing context. So we have anything from polling information to various legislative documents. It’s a resource for the taking, we also have highlighted the Living New Deal map with legacy projects of the New Deal in the United States. So that’s the second research project. We are now seeding research, as I said, on New Directions In Finance, together with the Levy Economics Institute, and we had a fantastic workshop in November, all the videos are posted on our YouTube channel. So I invite your listeners to look those up. So I’m wondering if you can say a little bit more about pedagogy in the EDI curriculum? Yeah. Some of the programs that we have put together are accessible to students all over the world. Bard College is part of a broader university network, with institutions with whom we’ve partnered for many, many years. Some of the things that we’re doing include summer workshops that are attended by students from virtually every continent, as well as crafting courses that are then also offered at partner institutions. We have a certificate in public policy. The basic philosophy behind the certificate is that one cannot consider themselves an informed policymaker unless they understand the intellectual history of some of the policy ideas. So one of our core courses is actually a course called Economic Perspectives, which I teach at Bard, that is a history of economic thought course with a policy twist, where students try to grapple with the grand debate around ideas such as the minimum wage. Why do they disagree so much on a minimum wage policy and on living wage policy? This tension between markets and state, we try to explore this in this critical way, both when they learn their intellectual giants, but also how these ideas are being applied today to public policy. So that’s the first component to that certificate. The second one is that, well, an informed policy maker needs to know something about economic history as well. We have a number of courses that do that, but one of the ones that I have created is the course called The Right to Employment. That basically studies the struggle to secure the right to employment through time, but in a very interdisciplinary way. Students do get introduced to, again, some of the battles of economic ideas, a little bit of modeling, a little bit of theory, but also legislative documents around the world, various international debt declarations, and concrete policies that have attempted to secure that right to employment and we have a number of other curricular programs. One of them, as I said, is a summer workshop, which is open to undergraduate students. It does provide a new approach to public finance. Again, it is an introduction to some MMT ideas, but it does provide a framework of core policy goals around which discussions of money take place. So the framework is one that is centered on questions of stability, sustainability, and security. This provides us with the context in which we can explore questions of the green transition, macro questions of how do you stabilize an unstable economy? What is security, the multi dimensional ways in which we can think about economic security? These have been really great fun. MMT has typically engaged with the graduate community, and now we’re engaging with undergraduates. Sometimes education happens in mysterious ways, not in ways in which you plan it. So one of the most recent things that I learned about is that currently there are high schools across the country that are debating the job guarantee because it has made it into the national debates. The proposition that is being discussed this year, and the background literature is actually put together by the Librarian of Congress, and that proposition is that the government should substantially improve income distribution by implementing a federal job guarantee, basic income, or Social Security. I have been hearing from students and debate judges and program managers from around the country telling me that the job guarantee really is emerging as a favorite, as a topic of great interest. Students have been studying it for the last few months in preparation. This has been really, really heartwarming and really just phenomenal to hear.

Billy Saas:  It’s so cool, not something that you could plan for or sounds like you would have planned for at all.

Pavlina Tcherneva:  No, I didn’t, I had nothing to do with it. I received an email from a program manager who said, “Did you have any idea that this was happening?” Since then, I have been asked to connect with students. I’ve received emails from students with questions. So it’s just really fantastic. Young people are engaging. There’s something in the air because I was asked to give a talk to another high school just like a month ago and there were like 500 students in the audience and their eyes were like this. And yeah, I don’t know. But the Chicago project managers said that the students were putting together their own proposals for a job guarantee. I will vote for them.

Scott Ferguson:  That is fantastic. That is so wonderful. So one of the final things I’d like to ask you about, if it’s kosher to respond to this question, but I know you’ve done some research and publication with the UN. Could you talk about that work and maybe think about how you seem to have a global framework whenever you’re discussing any of these issues, but it seems like the work with the UN is very much explicitly addressing questions of poverty and jobs policies in an international context.

Pavlina Tcherneva:  Yeah, absolutely. Last year, I worked with the Special Rapporteur, the UN Rapporteur Olivia De Schutter –he’s the Special Rapporteur on extreme poverty and human rights– in developing the new UN report on the job guarantee. I think this was a really, really important document because it is, of course, an international statement of the importance of the policy. The angle that he took was primarily poverty eradication, because in the vast majority of the world, you know, this is an acute problem, and the employment strategy, I would say, is probably under emphasized. Of course, the ILO has been doing this for many, many years, but it is important that the UN had a statement, because in some way, there’s a kind of formal presentation of these policies to nation states. If they so choose to reflect, then they have to make a formal position and some kind of statement on the document. There’s some interest in the international level, they have been interested in Brazil and Colombia, folks who are thinking hard about this kind of employment intensive strategy for development, and the job guarantee specifically. Some of the work has filtered into other legislative work  organically and naturally. We had worked last year to build a job guarantee coalition in Europe, I had worked with a European MP Aurore Lalucq, who was also instrumental in drafting a resolution for the European Union on just transition and good jobs. The document is also very, very powerful, and it also includes the job guarantee proposal as part of that framework. I think what we’re looking for here is shifts in thinking and policy and strategy. I think it is fair to say that the job guarantee is a policy innovation. There have been direct employment projects, active labor market policies that will be implemented in various contexts, whether it is to address gender issues, poverty issues, crisis, youth unemployment, but the job guarantee as a framework for employment security, employment safety net, does represent, I think, a shift in the policy and the mainstream thinking about about these issues. So it’s good to see that there is some kind of international recognition, and hopefully, that can also translate into concrete policy action. Certainly in Europe, there are various experiments that are ongoing, and they are really good to study. They give us some really good insights into the health effects of these programs on people, the community effects, and the way to run the projects to administer them. It’s really, really important work.

Billy Saas:  In this context of an international statement through the UN on a job guarantee, I wonder, is there space you think for, or has there been much discussion of exploring a policy of an international job guarantee? What that might even look like? If it’s possible in any sort of way, shape or form?

Pavlina Tcherneva:  I like your ambition, Billy. I mean, at the end of the day, isn’t that the logical conclusion of the job guarantee? It is important for developed countries to do it, to lead, to set the tone, to demonstrate to mainstream this kind of policy focus. But what I have found is that perhaps the greatest interest currently is from the developing world, because unemployment is such a huge, acute problem, and the largest scale experimentations in recent history happened there. Argentina, South Africa, India. But I think at the end of the day, you’re right, we want to have a full employment framework everywhere. I should say that once the international community did recognize this very clearly, certainly in the UN charter, the ILO Charter, the WTO charter, the initial charter. The idea was that every country has to pursue full employment so that we can benefit from whether it has benefits from trade, whether it is from other cooperation, economic integration.

Billy Saas:  Well, this has been wonderful. Pavlina Tcherneva, thank you so much for joining us on Money on the Left.

Pavlina Tcherneva:  Thank you for having me. It was great to talk to you

* Thanks to the Money on the Left production team: William Saas (audio editor), Mike Lewis (transcription), & Robert Rusch (graphic art)

Scott Ferguson and Billy Saas speak with New Yorker writer Nick Romeo about his exciting new book, The Alternative: How to Build a Just Economy, released in January 2024 with Public Affairs. Romeo’s The Alternative rebukes Margaret Thatcher’s infamous axiom that “there is no alternative” to neoliberal capitalism. In doing so, the book inventories the most promising experiments in radical economic democracy underway across the world today. Such experiments include, but are not limited to: a publicly-owned and -run gig work platform in Long Beach, California; a True Price system in Amsterdam; a public budgeting project in Cascais, Portugal; and a public Job Guarantee in Gramatneusiedl, Austria. (See our previous episode on the Austrian Job Guarantee for a deeper dive into that topic.) Taken together, these and other initiatives profiled in the book “share a vision of the economy as a place of moral action and accountability,” as Romeo puts it, while modeling the kind of radical political economic imagination that is so utterly and urgently needed to meet our dire ecological moment. For Romeo, then, it remains insufficient to simply deny Thatcher’s quip that there is no alternative. The crucial task is to actively imagine and create the alternative.

Visit our Patreon page here: https://www.patreon.com/MoLsuperstructure

Music by Nahneen Kula: www.nahneenkula.com

Transcript

The following was transcribed by Mike Lewis and has been lightly edited for clarity.

Scott Ferguson:  Nick Romeo, welcome to Money on the Left.

Nick Romeo:  Thanks for having me.

Scott Ferguson:  So we’ve asked you to join us today because you have a new book that’s just out with Public Affairs Books called The Alternative: How to Build a Just Economy. We want to get into the book, but maybe to kick off our conversation, you can tell our listeners a little bit about your professional background, and how you came to become the reporter of political economy at The New Yorker Magazine. 

Nick Romeo:  Sure, yeah, I like that description. I’m not sure the magazine would endorse it, but I will. Two levels at which I could answer that. The first is just the last few years I have been covering a kind of political economy beat for The New Yorker. I was in Europe for a lot of that time, which was helpful in finding interesting economic paradigms and models that are a little outside of the status quo. A second level is zooming back a bit more in time. Some of my graduate work in academia was in ancient philosophy, which might seem very different, but my way into economics, the thing that actually let me get excited about it was recognizing it as a branch of political philosophy. Not only is the word from ancient Greek, but really for a lot of the tradition of economics, the subject itself was thought of as political economy. As that title suggests, there are these inescapable normative and ethical dimensions to it. I think if you push on economic premises, pretty quickly you get to really rich philosophical questions about what is a good life? What is a fair society? And these are just eternally interesting.

Billy Saas:  So who are you guys in terms of ancient philosophy?

Nick Romeo:  Well, Aristotle, I think, is actually incredibly insightful as an economist, and I’m interestingly not alone in that view. The economist Sam Bowles ends a book on game theory with the observation that a lot of these insights that have come out of the field in the last 10 years are sort of rediscoveries of Aristotle and that Aristotle in a lot of ways is still more subtle than contemporary economists. So I think a lot of the brighter economics people today are cognizant of that intellectual heritage.

Scott Ferguson:  I think most of the book, most of the chapters are exploring various kinds of alternative programs, ways of not just conceiving of political economy, but practicing it and structures and organizations and designs. We want to get into those details, but maybe we can begin the way you begin the book, which is kind of reframing for a more popular audience, reframing what the proper questions and problems of economics are. I was wondering if you could give our listeners a little taste of how you set up the book and how you frame it.

Nick Romeo:  Absolutely, yeah. So the first chapter of the book is about the struggle for the Econ 101 curriculum that is currently raging in academia. That led me to get into some of the history of the field and how it’s been conceived and organized in the last few centuries. One sort of simple way is to think about a famous quote from John Maynard Keynes, who once remarked that the master Economist has four elements: he or she must be mathematician, philosopher, statesman and historian to some degree. So a critique of how economics has kind of emerged in academic contexts in the last 50 years would be that it really shears off three of those four elements and has a highly mathematized form, especially as you get more into graduate level work. It’s very, very interested in formal modeling and quantification. I think Keynes is right, though, that these other elements are essential to the discipline. There are people who share this view still today. Ha Joon Chang, who I quote in the book was an economist at Cambridge for many decades. He, within the last decade, remarked that economics is just one long political argument. The feminist economist Julie Nelson, is also pretty sympathetic to this framing of the field. So you might wonder what’s at stake here, right? It’s a fair question when academics are debating about the contents of a curricula you might think, does this actually matter? In the first chapter, I also get into some of the political stakes for how economics is taught. Paul Samuelson wrote one of the best selling Econ textbooks of the 20th century. He also famously said, “I don’t care who writes a nation’s laws, if I get to write it’s economics textbooks.” So, he got his wish. His book helped introduce Keynes to America. There’s something profoundly creepy about that remark. I think it’s very kind of anti-democratic, he’s cognizant of his role as a shaper of cultural common sense. He can sort of constrain or expand political imagination at will. Delegating that to an economist, or to anyone, even if you’re sort of sympathetic to their politics, there’s a kind of principled objection to doing that, right? I mean, we should be a little more explicit in our premises and assumptions. So another way to think about the stakes of economics education, and why does it matter what’s in econ 101, is that we don’t want just one person or even a set of people presenting what are moral and political assumptions under the rubric of natural science. A final strand that I think is relevant, and that I tried to trace, at least at some level, in the first chapter of the book, is this maneuver that analogizes the economy to a physical sphere with discoverable, immutable laws, akin to laws of physics or chemistry. This dates all the way back to the dawn of the field in the modern period. So there’s a quote I have in the book from David Ricardo, he’s critiquing poverty relief in the early 1800s, in England, and he invokes the law of gravitation. He says, “these poverty relief efforts are going to produce more misery and suffering, and this is as certain as the law of gravitation.” Fast forward a century, early 20th century, or it might be late 19th, turn of 19th to 20th century, William Graham Sumner, very influential American intellectual, uses the same metaphor in somewhat different contexts. He’s talking about increasing corporate concentration of power. He says this is just as inevitable as gravitation, it’s sort of a law of the universe, right? So the progressive agenda around antitrust, and dismantling monopolies, this is as naive and misguided as literally opposing the law of gravitation. Fast forward another 100 years. Today, this tradition is alive and well. One example is, there was a graph in Science, I think, in 2014, showing wealth inequality. People who describe themselves as econo-physicists commented that the slope of this graph, which was an exponential curve, was an inevitable feature, sort of akin to other slopes that you can find throughout nature, whether it’s the distribution of sizes of ant colonies, population clusters of microbes, et cetera. All of these sorts of patterns in nature were mapped on to wealth inequality to, once again, justify the status quo and frame any opposition to it as similarly misguided to opposing a law of nature. So you can see how fighting about Econ 101, while it might seem academic, the stakes are quite high. This does shape and constrain political imagination. The goal of Chapter One was to raise these issues and also highlight the work of people who are trying to expand the way the discipline is taught.

Billy Saas:  The quote that you mentioned from Samuelson got my hackles raised a little bit because Samuelson features frequently in our spaces, and in my mind and the MMT world, specifically, because in a documentary about John Maynard Keynes in the 80s, basically, the effect of his statement was: we may not need to balance the budget talking about the federal government, like that’s not actually something that needs to happen. However, he’s saying this on tape in a documentary about Keynes: it might be important for people to believe that, right? Because if they didn’t think that there were restrictions and that we had to balance the budget then anarchistic chaos and inefficiency would prevail. That’s particularly insidious next to the quote that you have in your book, which is exactly “I don’t care who writes a nation’s laws or crafts its advanced treaties, if I can write its economics textbooks. So acknowledging in 1990 the effect of his work that has been published and revised since 1948, and then ultimately subject of some criticism, but dominant for a long time. In talking with economists who are currently practicing, whether they’re in Orthodox schools or heterodox, I think that there’s just generally a frustration with Samuelson, but I’m particularly offended by acknowledging the power of the narrative on one hand, and then on the other hand, saying: yeah, it’s necessary to have some of these fictions so that people don’t get too out of hand and start demanding nice things like social welfare benefits on a mass scale.

Nick Romeo:  Absolutely. Just to pile on to Samuelson here for a minute. Another comment that he made on national television, I think this was on 60 Minutes. He was discussing what used to be called Kelso Plans. And these were the predecessors of ESOP’s, Employee Stock Ownership Plans, which have been extraordinarily successful in sharing equity with working people across America. This is kind of our best answer to worker-owned cooperatives, like the Mondragon co-ops in Spain. So he’s on national TV, and the interviewer asks him, what are his thoughts on Kelso’s plans? He evokes Marie Antoinette, he says: “Oh, sure, it has a Marie Antoinette-ish ring to it. Let them have capital,” describing workers. So I just thought this was wildly irresponsible. He’s sort of suggesting that extending some level of worker ownership will result in the French Revolution. He also then made some comment about how it’s similar to lollipops growing on trees. So once again, this would contravene a fundamental natural law of the universe. And oh, if that argument doesn’t persuade you, it will also lead to enormous bloodshed. It’s a very irresponsible comment. Luckily, it’s been contravened by 50 years of success for ESOP’s. But you do wonder how much more widespread those could be if they were the default model for business ownership. Of course, workers have an equity stake in the businesses that they make successful. What if that was just the default as opposed to a sort of niche organizational structure? I think one can reasonably point a finger at people like Samuelson and say there’s really some blame there. They’re kind of abusing this position of expertise to advance very plutocratic agendas.

Billy Saas:  After having been accused, as you note in your book too, that in the 1940s when MIT was looking at it, they thought that it might be too communistic, too socially minded and not really.

Nick Romeo:  Isn’t that wild.

Scott Ferguson:  Meanwhile, he’s primarily responsible for shoving Keynes’s legacy back into a neoclassical IS-LM framework, right? There was another Keynesian textbook by an economist named Tarshis, that was much more faithful to what Keynes was up to, and pushing hard on neoclassical assumptions. Whereas Samuelson basically tamed the Keynesian revolution as he was perpetuating it. One of the things I really appreciated about your introductory framing was taking non-strictly economic knowledge seriously, whether that’s literature and short stories, or it’s comedy sketches from the UK. I don’t know if you want to talk to us a little bit about how some of those other ways of understanding political economy are important to you.

Nick Romeo:  Yeah, that’s a great question. I’m glad you raised that. I started the book with a short story by Leo Tolstoy, who I think is a wonderfully subtle thinker about economics, in his non-fiction, as well as his fiction. It’s interesting how even Anna Karenina, Levin is fascinated by political economy. He’s always reading the political economists that were gaining ascendance in 19th century Europe. He goes out and does farm work with his workers. These are sort of semi indentured people. He has this sort of anguish, this ethical torment about his own wealth. So Tolstoy was fascinated by economic themes and fiction and nonfiction. But I started the book with a short story called, How Much Land Does a Man Need? It’s this beautiful, concise moral fable that, I think, should be taken seriously as an investigation of a lot of economic themes. You can find in literary form antecedents for a lot of the stuff that behavioral economics folks think that they have discovered, whether that’s the sunk cost fallacy, the idea of like a hedonic treadmill. All of this is implicit in the narrative and much more beautifully rendered than in any behavioral econ study you can find. It’s a kind of pointed story because after seeking constant acquisition, the hero dies and ends up in six feet of earth in which he’s buried. So this is, in fact, the quantity of land that all of us need eventually, right? Death is this kind of final check on acquisitive frenzy. It’s also fascinating how it links up with other material in the book. I was talking with someone in upstate New York, who was the retiring CEO of an optics manufacturing firm. In his own way, he more or less paraphrased the title of the book. He had some options when he was retiring. He could have sold to a strategic buyer for a lot of money, probably hundreds of millions. Instead, he converted his business to an employee ownership trust, to secure it in perpetuity. So very pro social policies like not offshoring the company, sharing profits with workers. So in describing those choices, and why he did that, he more or less said, I’m just one person, how much money do I need? If I took the higher offer, I would spend my whole retirement just doing money management. More importantly, I would have betrayed these values that I spent decades building the business to enshrine those values. So I think it’s striking to hear a guy in upstate New York echoing Tolstoy. There’s something universal about this human intuition that it’s pretty profoundly misguided to always have that next acquisitive summit you must ascend.

Billy Saas:  It does play out, too, in pop culture and media. I keep thinking of Daniel Plainview in There Will Be Blood, right at the end. It’s just him and a little bowling alley. Oh, he’s finished, right. Yeah.

Nick Romeo:  Totally. 

Scott Ferguson:  Another major critique that runs throughout many of your chapters, that we very much share with you, is a rejection of the very notion of economic externalities. The idea that somehow the only proper sphere of economic analysis, behavior, meaning is the private competitive marketplace, and any effects that seem to exceed that very narrow sphere, is external to it, and then can be understood and variously priced or accounted for or discounted for, as a so called “externality”. And this, I think, is a pretty good transition to talking about your first really substantive chapter about alternative programs, which is about the theory but also the practice of what’s called “true price”. And I’m wondering if you could tell our audience a little bit about that.

Nick Romeo:  Yeah, absolutely. I think at a really simple level, the intuition is well captured by a bumper sticker that I often see walking around in Berkeley, California, which says something to the effect of: “when you throw something away, what do you mean by away?” So “externality”, this term that’s kind of central to economics, presupposes some border beyond which we pay less attention to some impact of how we produce or consume or transport economic goods. So “true pricing” is an initiative sometimes it’s assimilated to a broader set of accounting practices called True Cost Accounting. True price, specifically, is in Amsterdam. It originated in the work of a nonprofit there, although it has affinities to other movements around Europe and the world. If you think about the kind of econ 101, classic example of apples, you go into a grocery store. Currently, we have very limited visibility into all sorts of information about what we consume. To stick with the Apple example: maybe you know that it’s organic. This does convey actual information, there is a legally enforceable definition of that term. But even the organic label tells you nothing about its carbon footprint, where it came from. Maybe you do know that it’s local, and you can infer something about the carbon footprint. This tells you nothing still, your local organic apple, you have no information about the people who were involved in transporting and growing it. So workers conditions: did they have the right to unionize? were they paid adequately? No visibility into that. Okay, so maybe it’s a fair trade, local organic apple. It’s getting better, there are some wage floors. There’s some content to fair trade, it might not be as robust as we could hope. But you’re sort of getting the picture here that I’m painting of a very partial patchwork of labels, none of which really gives you insight into all the things one might care about. In fact, I think a lot of people do care about it. All of these labels are also subject to copycats, right? People who want to use the label, but evacuate all content and meaning. So the free rider problem, as it’s called in game theory. They want all the benefits, but none of the costs of using the label. So there are all kinds of self-certification schemes in industry. Terms like ‘sustainable’ and ‘natural’ are largely meaningless in a grocery store, and that’s challenging. True Price says, somewhat audaciously, look, what if we actually could capture all of the relevant externalities for a good. Quantify them. Reasonable people can disagree about how that works, or even some of the moral hazards that can be involved in doing that for certain kinds of infractions. Their view is that this is a second best option. In a lot of cases, it gives you some information. That’s better than the default option of no information. So if we can quantify all the relevant externalities, whether that’s something environmental or something involved in the treatment of humans throughout a supply chain, and communities, suddenly you have information that is relevant not only to consumers. You could have consumer facing applications where in a grocery store, for instance, you actually had one product with a True Price and another product with a different True Price. And you could compare the prices in this would instantly tell you the size of the externalities of the two products, that would do a few things, right? On the one hand, insofar as people are sensitive to price signals, they would consume less of the worst product, because its price would be higher. Simultaneously, this would motivate a company to change its production and transportation and supply chain issues that resulted in such a high True Price. So if they’re destroying soil quality, depleting aquifers, involved in all kinds of labor abuses, or human rights issues throughout the supply chain, all of that shows up in the true price, which can only be lowered by improving those issues. That’s only the consumer facing application of True Prices. It can and also is being used as a kind of internal auditing tool. So even if consumers are not paying that price, the European chocolate company, Tony’s Chocolonely, uses True Price analysis to try to improve their supply chains year after year. So it’s a kind of benchmarking whereby they’re trying to improve, and they now have ways to measure all of these different dimensions of the impacts of products. I think maybe the most ambitious but hopeful application of true pricing would be in policy and regulation. I mean, you could imagine, if you think about what is subsidized in the American food system, for instance. Imagine replacing that with a more rational and coherent set of taxes and subsidies that reflect the actual impacts, whether that’s showing up in medical costs, right? If people eat very unhealthy and addictive food, in some sense, the cost of that shows up in the medical system, maybe years or decades from now. Of course, there are also huge ecosystemic costs. One report I quote in the book from the Rockefeller Foundation that’s using True Price analysis essentially tripled the annual cost of the US food system. It’s actually costing about three times more to produce and consume food the way we do currently. The thing I think that is crucial to keep in mind with true pricing: there’s a temptation to think, well, this is just sort of making up numbers and then adding it to the cost of things. And how could we do that, especially with inflation running high? I think one key insight that helps me when I think about what a true price means is that the price is already going to be paid. It’s not that we’re inventing a price. That there is some sort of true price. What we’re talking about is who is going to pay them. So when we buy incredibly cheap goods that are produced by supply chains that on some level involve a lot of human suffering and misery and also environmental degradation, that cheapness is completely illusory. It’s not that by not paying it, we’re making the prices go away. We’re just making someone else pay those prices, often someone in a much more vulnerable position, maybe somewhere else in the world, maybe in our own country. There’s been a lot of terrifying reporting in the last year about the resurgence of child labor and American factories. Maybe they are people in future generations, maybe they are non-humans, maybe they are animals and ecosystems, but there is this price, we’re just not paying it. So true pricing kind of imports, I think, very reasonable moral and ethical considerations back into the economic sphere and says, Well, maybe we, broadly conceived, should be paying these prices. Not necessarily consumers, I mean, companies could pay them, governments could pay them, consumers could help. What seems least defensible, is what we’re currently doing. And that’s kind of ignoring them and having vulnerable workers and the natural world bear the brunt of our current consumption and production practices.

Scott Ferguson:  If I understand you correctly, the importance is not coming up with exact pricing, as if now we’re getting the number right. If anything, it seems more about re-injecting or newly disclosing the political rhetorical, qualitative, ethical and moral constructs that hide behind seemingly natural prices. In that way, it seems to me like this really speaks to or fits within a much longer tradition of thinking about what was called, especially in the Middle Ages, Just Price Theory, right. And I’m thinking about the writings of Thomas Aquinas and others who were not just talking about what is a fair contract between two people or two firms or something like that. But how does the whole system get organized in order to create a more just economic system?

Nick Romeo:  Yeah, absolutely. I mean, that’s like a fascinating tradition, the Just Price theorizing from Aquinas onward. But no, I think that’s right. There’s something very interesting, psychologically, that happens when you use quantification as a tool. There is this illusion of utter precision, where there’s a sense that, okay, we’ve got this exact price. Here’s what it’s worth, to, let’s say, degrade the aquifer beneath the land that grows the grain that feeds the cow, etc, etc. It is a useful tool, but I think it’s important to see it as a heuristic, right? It’s a first approximation, it is based on assumptions. And yet, it’s not invented, right? You can look at studies that say, well, here’s how long it would take to restore soil quality. Even with the treatment of workers, here’s what a reasonable living wage would be, so you’re under paying workers by this amount. That figure is not arbitrary. But it is debatable, right. It’s not a finding of natural science. It’s a construct that is still very useful. I mean, I think a lot of the subtler economic thinkers are completely on board with that. But there is often this slippage where just by virtue of quantification, people sometimes have the sense that we’ve given a completely exacting and exhaustive account of value. So I agree with how you put it, basically. Yeah.

Billy Saas:  It seems too that the True Price system, to a certain extent, in the Amsterdam example, and in your book it exists in that country. It exists more generally, and I think this is where the MMT framework can come in handy, in places like the United States where we have sin taxes in states. And we have tax schedules that are organized and arranged federally where, in a very real way, the state is determining the price of doing certain activities. It is harnessing its ability in the case of the federal government to create and regulate the money system. So I’m thinking about disincentivizing it by making it prohibitively expensive, for example, to buy cigarettes. To do things that will, and there are some calculations that are done to that effect. I guess I’d be interested in exploring the differences between what’s exciting about the True Price system and what already exists in terms of a tax system, that is, primarily, it seems about incentivizing certain labor and disincentivizing labor and consumption in other directions.

Nick Romeo:  Yeah, that’s a really interesting point. I think I do see where you’re going with that. I mean, one thought is the True Price, in part, is a kind of consciousness raising tool, right? So one could probably make the same case about taxes, although I don’t think they’re quite as ubiquitous as prices, especially in a consumer society. You forget about them a lot of the time, and then you grumble once a year and deal with them or something. But maybe with the exception of sales taxes, sales taxes might be an exception there. To take cigarettes, your example, it’s interesting how it can apply to so many things. Hamburgers: people have done these really striking calculations about if we paid the real cost of a hamburger with a more expansive scope, boundary, defining those costs in space and time on humans and nonhumans, very few people would eat a lot of $120 Hamburgers, right? This would just change consumer behavior. But for people who were still willing to do that sort of behavior at an exorbitantly high price, you would also then generate some surplus, some revenue that could be used to remediate those harms in theory. So I don’t know if that answers your question. But that’s a provocative one.

Billy Saas:  It does get me thinking about hamburger parties in the Hamptons, and I liked that thought. It’s kind of funny to me.

Scott Ferguson:  Maybe we should move on to the next chapter in which you take on the construction of the very idea of a living wage. This is a phrase that gets thrown out a lot. I think I often use it, especially when I’m trying to argue for and explain what a federal job guarantee or a local job guarantee might be, and what kind of social benefits it will provide. I’ll say, it provides a living wage, right. But you’ve looked into how that notion is variously constructed, and some of the problems and possibilities with it.

Nick Romeo:  Yeah, you know, I found this chapter really interesting to report and research because I think, like you, I had this view that living wages are really pretty good. They let people enjoy a reasonable and decent kind of middle class life. And my sense of what that means would include things like going out to a meal, now and then in a restaurant, saving a bit for retirement, being able to buy your kids a gift, saving a bit for a rainy day fund, cars break down, phones get dropped, stuff comes up in life. All of this intuitively seems like part of living. So if we have the term living wage, shouldn’t it enable this? So in that chapter, I look at one of the more influential living wage calculators, which is run by an economist at MIT, it’s just the MIT living wage calculator. So this is used by all sorts of businesses in wage setting, as well as by nonprofits in shaping policy guidelines. So it’s a very influential tool. Yet, the actual content of life that this tool enables it’s very meager, and it’s much less generous than the idea of a living wage even 100 years ago, as articulated by people like Teddy Roosevelt, the Labour leader Samuel Gompers, the Catholic priest John Ryan, who coined the phrase ‘living wage’ in a book. They all had a much more capacious sense of what living was that includes some of those elements I mentioned, like saving for retirement, for a rainy day, some vacation or leisure time. All of this seems like it should be part of living. So when you have a highly influential tool that receives some level of corporate support for its research, and then that same research is enabling corporations to pay very meager wages, alarm bells pretty naturally go off. The chapter is kind of trying to argue for an expansion of the concept, but we’re in a tricky terminological corner, because the living wage already exists in the public imagination and its true terms are largely defined. So for people who want to expand it, the options can feel cumbersome. You can say, we pay a “real” living wage or a “true” living wage. In the UK, this gets a little more absurd because they call what we call a minimum wage the living wage. So then their critics want the true living wage, but then they themselves have a pretty constrained definition. So now we’re several levels in and you have to have: “no the real true living wage” … At some point, you kind of throw your hands up and say we need a new term. Yet there’s something really important that that term captures, which is that there’s a moral dimension to wage setting. It’s not simply where supply and demand meet and markets clear, where the good in question is labored. No, there’s a kind of moral choice that employers are making when they’re when they’re wage setting.

Billy Saas:  Thinking about these terms back to the true price, but incorporating it here, the definition of life and living, the definition of true. These are the province of philosophers, and rhetoricians, and humanities scholars broadly, right? So it seems like your book makes a compelling argument that we need to bring philosophy back into the center of economic discussions. As we’ve been talking about these things, I completely agree. It occurs to me that when it comes to these moral questions the economists as presently trained are some of the least equipped to have them. To a certain extent an economist is someone who can get away with making broad claims without considering the moral and ethical components of those claims and impacts of those claims. They just sort of don’t have to. It’s assumed that they will not. So of these projects, you document several of them, it seems economists are maybe not the best to have these conversations, although there are exceptions, of course. Maybe Silicon Valley bros are not the best at determining how labor should be distributed and how people should be paid. This was, I think, one of the more exciting, in that it’s new, and I wasn’t aware of it, and I could see its implementation. Scott and I were talking about it before jumping on with you, it seems incredibly promising. Could you talk to us about the public management of the gig economy as it’s being piloted in a town in California?

Nick Romeo:  Yeah, absolutely. I also find this a really fascinating case study. I think it’s maybe a little bit more outside the Overton window. But that’s kind of precisely why it’s interesting. Living wages are on people’s radar, even if the term has been corrupted and co-opted. It’s sort of in the imagination already. But the idea that gig work should exist is a public manifestation, that there should basically be a public option for people who do irregular work. Now, that could be irregular work, as the gig companies are currently structured. So delivering food, driving, those kinds of part time jobs, but it could also be all kinds of other irregular work, whether that’s engineering or architectural, or legal. There’s not something limiting it to one set of occupations. The deep insight, I think, in this chapter is that the current benefits of gig work are separable from its private sector manifestation. So you can retain some of those benefits. In fact, you can increase them. Things like flexibility, an attractive range of types of work, you can retain those benefits while eliminating some of the very well documented downsides. So for instance, if you deliver or drive for some of the dominant gig work companies today, you may lose 30 to 50% of every transaction in fees that are supporting venture capitalists and distant shareholders. That’s a huge part of the economic transaction that’s flowing away from the workers. A public option could dramatically reduce that extractive component. It might be 2%-5% per transaction, enough to maintain overhead and infrastructure for the platform, but there’s no commitment to enrich shareholders. That’s not part of the structure. It operates in the public interest, by design. If you had a public option for good work, you would have much more money left on the table for those workers. This could also show up in more affordable prices for consumers, right? Again, there would be a kind of ethical calculus that would have to balance those competing demands. But increasing the size of the pie is one very attractive feature. Another thing that I think is striking here is that there are good reasons to aggregate a lot of supply and demand for work in one place. Network effects are real. Convenience goes up for both job seekers, and for the consumers of that work when a lot of people are in one place. So by siloing all of this work across dozens of competing private sector platforms, where we’re losing efficiency, interestingly. The private sector is being lauded every day in the media as this sort of generator of efficiency and ruthless productivity. In fact, it’s highly inefficient, a public option could be much more efficient in harnessing those network effects. A final thing I’ll say about that chapter is just that we’re already familiar with this model, right? Public infrastructure is cherished even today, in a kind of bipartisan sense. People liked the Post Office, right? People liked functioning roads, people like safe water. So road systems, water networks, expanding that same principle to labor markets, such that workers had safe, attractive options for jobs with benefits that could be portable, like you could enforce labor law much more readily. You could have benefits that travel with workers, their legal classification as employees, all of this would be much easier in a public sector option. A final interesting wrinkle, and then I’ll pause. But a final interesting wrinkle with this is, there’s a certain amount of latitude in implementation. There are trials happening at municipal levels in multiple cities around America. There’s also interest from larger, regional governments in multiple countries. One other wrinkle that is kind of interesting is that even if you are highly committed to the somewhat tendentious view that private markets are inherently more efficient, and you think, okay, a public option would just be mired in bureaucracy and red tape and it would function like the DMV, it would be no fun, right? No one would want to go use it. Even if you have that view, that’s actually not fatal to this model. And the reason for that is that you could have a sort of concession, whereby, in the same way that a national lottery or a National Park will have private operators functioning within a broadly public program. The operation of the platform per se, you could have a competitive bid and let a company operate it. And then so whatever sorts of benefits that are, in fact, unique to private markets, you can retain those right? If the platform is just going to be much more intuitive and well designed, the software will never glitch if a private company runs it. Okay, let’s assume that that is the case: we can still have a public option, you just have a concession whereby, you know, for a term of five years through a competitive bid, a private operator manages the platform. But the statutory function is still in the public interest, right? Profits are kept for that private operator. And the goal is the provision of work in a public utility model.

Scott Ferguson:  I’m curious if any of the people you talk to or any of your research took you to the history of workforce boards in the United States? I have an older friend in the Tampa Bay area who, for Hillsborough County, worked in public job training and placement for decades and decades, from the Great Society to the end of welfare as we know it. He saw all those changes, and they were able to do all kinds of interesting, creative activist training and placement work and they would have libraries built and then they would have the people they were working with staff those libraries once they were built. Building boardwalks along waterways and creating jobs and training people and placing people in public employment. According to his telling, I’m not some, studied historian of this history, but I know something about it. According to him, it’s the Clinton administration in the 90s that changed the legal structure of workforce boards, which basically turned the requirements for representation from public majority to private majority. So the more active, public governmental mediation of job training, and job placement that used to go on has been more and more and more privatized, and serving private interests. It seems like this model of a public option for a digital gig economy would be a way to push back against the legacy of Clintonism.

Nick Romeo:  Yeah, absolutely. I think workforce boards are probably one of the more plausible candidates for implementing this model. I know, in fact, that they are already in conversation around the country with Wingham Rowan, who is a sort of British policy entrepreneur who helped introduce this idea to the American political and economic space, he is very closely integrated to workforce boards. It makes sense intuitively, you’re already as a Workforce Board convening a lot of private sector employers getting a sense of your local labor market. So if there is a stadium in town that hires a lot of people seasonally, or maybe there is a dock where a lot of cargo is getting unloaded but they’re hiring workers sporadically. They’re already looking for reliable workers, and instead of letting all of that work go through private sector staffing agencies, which again, take very large, extractive cuts per transaction. Aggregating that through a public sector option, I think it can push back on privatization, which I don’t know the Clinton history, but I think that sounds right, broadly. Another thought is just that public entities, whether this is City Hall, public schools, parks, and open space departments, are already large employers in many states and cities around the country. There’s a lot of work that they are hiring, much of it is part time and flexible. So there’s basically a lot of low hanging fruit. I think workforce boards are natural conveners to sort of match supply and demand within a more prosocial public option framework.

Scott Ferguson:  Great, this obviously leads us to what led us to you, which is the job guarantee or jobs guarantee. The phrase is interchangeable. So you became interested in this pilot program that’s in this small town in Austria. Our listeners are pretty familiar with the job guarantee, because that plays a huge role in Modern Monetary Theory, Pavlina Tcherneva, who is an MMT Economist you cite at length in your book, in your chapter about the job guarantee.

Nick Romeo:  Yes.

Scott Ferguson:  If we just presume that our audience probably knows something about the job guarantee, what was it like experientially as a reporter to go check out what they’re doing in Austria?

Nick Romeo:  It was fascinating. This town, it’s maybe 45 minutes outside of Vienna. It’s got a really interesting history where, in the 1930s, it was decided this classic sociological study on the effects of unemployment. It was a one factory town, factory shuts down in the 1930s. Some sociologists show up from the University of Vienna, and in a very kind of journalistic, anthropological way, they just ask people questions, they spend time with them, they talk to them about how their lives are going. The results are really quite sad, but very interesting. people’s mental health kind of falls apart without work. A lot of the social fabric of the town frays. People have this sort of sense of structureless-ness to the day, they don’t really know what to do. There are quotes from original people in the study where they say things to the effect of: I just feel kind of stuck between the four walls of my room. I don’t know what to do all day. So fast forward to the present where the job guarantee is a kind of reversal of the original condition. The first sociologists are studying the effects of unemployment. Today, what happens with guaranteed employment? How does this affect people? Not just economically, but psychologically, socially as well. Chatting with folks, it was almost uncanny how some of the comments from the original study showed up in different forms. I talked to one guy who said, I have breakfast, and then it’s just like, I don’t know what to do all day. He was describing being unemployed before he joined the job guarantee. So this sense of like, looming expanses of time that are very hard to fill. There are both economists and sociologists involved in studying the current job guarantee. The plural of anecdote is not data, but they do have data. I was there getting anecdotes, and you put those two things together, it’s a pretty compelling picture of how meaningful work is and that’s an important caveat, people in the job guarantee are co-designing the work they do, they’re not just forced into any job. But meaningful work has these tremendous benefits for time structure, self esteem, and social relationships. It was a huge range of folks that were participating in the job guarantee, also. Just being there and talking with dozens of them and pretty quickly dispelled any stereotype of the typical unemployed person. It was everything from people with advanced degrees to people who hadn’t finished high school. A huge range of ethnic backgrounds, range of ages. One thing that was kind of interesting, this is a cumbersome phrase, I’m not sure I love it. But there was this sort of internalized neoliberalism in a lot of their comments where they felt like unemployed people are still sort of just like, “bad and lazy”, and “even though I’m in this job guarantee, and I’m eligible for it, because I was unemployed, I’m not like those people. I’m the exception.” You wonder sometimes just talking to folks, that feels like a pretty devastatingly harsh view that is pretty deeply internalized in a lot of people’s comments. That’s another thing that was a bit of a through line in remarks was the sense that you are a bit of a failure if you haven’t found a job, even though they sort of recognize that the private market is failing utterly. Not only is it not producing enough jobs, but it’s not satisfying a lot of basic needs. A lot of work that needs to be done, whether that’s care work, green transition work. I do lean heavily on Pavlina. She has a wonderful book on The Case for a Job Guarantee, and what it would look like at a federal level, which was really influential to how I approached that town in Austria. I think she makes very effective arguments for how it could scale and why it’s a compelling proposal. But the journalistic work was just fascinating. It’s really powerful to hear folks talk about the non-financial benefits of work.

Billy Saas:  In the introduction, you preview the book by talking about a bunch of really promising developments, policies that are being piloted and tried out and all these cities across the world. But you also say that some are not considered or discussed in your book. In certain cases, the omission of discussion of those policies or initiatives reflects a critical assessment. I couldn’t help but notice that universal basic income is not featured, although there are pilot programs for UBI across the world. I’ll just qualify and say that we’re not big UBI folks. We’re jobs guarantee folks. So I wonder if UBI might be one of those that you have a critical assessment in your back pocket and ready to talk about or not, or if there are others that you considered, but didn’t make it into the book?

Nick Romeo:  Yeah, you know, I think the big one is crypto. I don’t see that as a plausible or even legitimate intervention that can improve economic outcomes from people. It seems just like a Ponzi scheme, and the evidence for that accumulates almost weekly with new legal indictments of various companies around the world. So the other things that don’t make it into the book, I’m very sympathetic to various policies. Tax policy, for instance, I would love to have done a chapter and did get some way into reporting for a chapter on international tax evasion, tax fraud. There is not any sort of plausible role for tax evasion in a just economy. So the exclusion of that from the book was much more a matter of just practicality than principle. I would have loved to have had the bandwidth and the time to really report that out thoroughly. You won’t be surprised to hear that these are really kind of intricate, complicated cases. If you’re going to do justice to tax evasion that spans many jurisdictions and continents, and has very sophisticated accounting to conceal any wrongdoing, that would almost be a book itself. So I wasn’t able to do that. I would definitely like to explore that more. The universal basic income, I also am more sympathetic to Job Guarantees than I am to UBI, and there are a few reasons for that. That being said, I’m certainly not opposed to all of the interesting experiments. It does seem to have lots of traction, there’s a lot of good research on it. People don’t spend the money on video games or alcohol. It’s very helpful as a kind of buffer. One thing I find a little more compelling about job guarantees is just what we were describing, some of the psychological benefits that people can derive from meaningful work. The objection, often, to that comment I just made is that all of those benefits reflect a previous socialization in which we’re taught to think that work should be central to our identities, and this is the kind of capitalist socialization that we should resist. I don’t know, I mean, I don’t have a strong view on that. I can understand that critique. But I also feel like it could very easily be overstated, and that there probably is something pretty deep in human nature that responds to doing meaningful work with other humans. I guess, again, the UBI folks would try to take a generous view of what their response would be, would probably say: Well, sure, people will still do that. They’ll mount musical productions, and they’ll stage plays. Maybe they’ll even do all kinds of things that people in jobs currently do, but it won’t be within an employment framework and that’ll be better. Sure, that could be the case. The other thing I find a little more compelling about a job guarantee, though, is just that we do have so much work that has to be done, right? I mean, I’m thinking of two things in particular: care work and infrastructure slash green transition. We don’t care well for young people, or old people, or sick people in America. That’s like a huge need. When you combine that, there are a lot of people who are a latent workforce who are not working, because private sector options are atrocious, and don’t work for them. Combined care work with all of the green transition and infrastructure work that we desperately need, I see job guarantees as a tool for meeting that in a way that UBI might not be able to.

Scott Ferguson:  Yeah, and for the record, I think we are all for robust welfare benefits. We’re all for not letting people starve, and we’re all for public spending that allows for self actualization. But I think we concur with your critical comments about UBI and would just follow up and say that it’s a largely laissez faire kind of libertarian approach to problems that need, as your book points out over and over again, that needs some serious provisioning. Like some serious design and structures and possibilities, rather than just leaving people with some minimal amount of funds to experiment a little bit on their own. If there aren’t social structures to experiment within, then where are you going to do that experiment?

Nick Romeo:  Absolutely. Yeah. I think we’re on the same page there.

Scott Ferguson:  Just had to add an idea. So a job guarantee, right. So I’m thinking about an ideal world where everybody’s happy, including the UBI advocates: Jobs Guarantee and then also a publicly administered gig platform where one of the gigs is thinking about all the things you would do with your UBI. So just getting together and brainstorming…I don’t know.

Nick Romeo:  I actually think that a publicly administered option for irregular work would be a very natural mechanism for implementing a job guarantee?  I mean, that could be one among many other options on that platform. Another thing that we haven’t touched on, but I’m sure you’re aware of with job guarantees is that they exert this really positive pressure on private sector employers. So depending on your moral framework, this is good or bad, right? I mean, a lot of people would say, this is horrible, private sector folks will have to pay more, they’ll have to improve the quality of jobs, precisely because people have a compelling outside option. They know they can go find a nice, well paid and enjoyable and meaningful job through the public sector. So why would I work at a horrific private sector employee that changes my hours week to week, where I have no voice and no agency and a very low wage? Well, if those people have an outside option? Yes, they will take until private sector employers improve conditions and wages. So that upward pressure, I think, is another very compelling feature of a federal job guarantee. In some sense, this might be a faster route to a genuine living wage than living wage laws. I’m not sure I would actually defend that statement too hard. But it’s this sort of other way to get to that same goal. I think a genuine living wage legislation would be wonderful. But if we can’t get that we could also have a job guarantee that sort of functionally does the same thing.

Billy Saas:  Yeah.

Scott Ferguson:  I mean, that is an argument that we stand behind, and it’s very much part of MMT thinking. I think Pavlina would stand by it as well, which is that the way it’s often framed is that even with minimum wage laws, as long as there is structural unemployment, that the true minimum wage in a country, an economy, and the world, is $0.

Nick Romeo:  Yes.

Scott Ferguson:  It’s only through a public option and a wage and benefits floor for the entire economy that you can get to anything resembling a minimum wage, let alone a living wage.

Nick Romeo:  Absolutely, yeah.

Billy Saas:  Wonder if the gig platform and the publicly administered platform for irregular labor would also be a kind of backdoor to implementing a jobs guarantee. So right, anybody who needs a job can get one through the irregular labor, locally administered job board that just expands and it can be framed as a municipal innovation, right? You could get some seed money from some, maybe not just any venture capitalist, but a socially minded one. Have in its charter that it’s supposed to be. I’m always trying to think about ways to get it through the back door, because I don’t think the jobs guarantee, and maybe this is my last question for you about this is surely you’ve thought about the political prospects of these various initiatives, and you’re sensitive to their contexts and to what kind of conditions might need to be in place for these different things to flourish or even be considered at the local level. There needs to be certain progressive values or other politics present in order for some of these things to happen. Where do you stand in terms of your relative level of optimism and pessimism on a scale for the wider spread implementation? Do you see promising developments? Maybe this is the better way to go? Which trajectories do you find most promising of the policies and plans that you outlined in the book?

Nick Romeo:  With the caveat that it’s hard to read the crystal ball accurately, I do have some thoughts on that. And I am pretty optimistic in an American context that the municipal level could function as the proof of concept for the irregular public sector option. I love the thought of this functioning as a backdoor for a job guarantee as well. And I think actually in some of the cities that are currently thinking about it, that may be perhaps not explicitly articulated as a goal but it may be a kind of implicit strategy that exists to give people work. By aggregating a lot of demand for labor, both public sector jobs, but also private sector ones, we want to have a sufficient supply of demand for labor, such that anyone interested in finding a job within the city can do so. I think in an American context, that is going to be the route by which it scales. I’d be a little surprised if it started federally, and then flourished locally. I think if you have proof of concept at city, or maybe state levels, this could be compelling. Now, it would be wonderful to have an entire government take this on and that seems more possible around the world. You could think maybe about a New Zealand, maybe an Ireland, depending on what happens with elections. You can imagine certain governments being relatively open to some version of this. I’m sure you’re probably more familiar than me with the program in India as well, which is enormous in its scale, but somewhat limited in maybe its scope and the access to work that it provides for everyone. But I guess I am sort of optimistic. If you think back, even six or seven years, a lot of the major industrial policy, I’ll call it, that Biden has done would have seemed pretty inconceivable during the first Trump administration. You wouldn’t have thought that the CHIPS Act or the IRA would happen. That would have seemed kind of wild. So in five or six years, a lot of stuff that seems a little far fetched today could be quite plausible. You just said the first Trump administration. What did you mean by? Oh, God you’re right. I’m not feeling optimistic. Maybe we should strike that from the record. Of course, that’s a terrifying thought. But it’s not looking good.

Billy Saas:  It’s not looking good. In part because a lot of this has to do with domestic variously defined national or intra-state intra-governmental policy. I wonder if the international versions of these programs, or applications of this kind of thinking, have you come across more internationalist versions of the job guarantee or or any of these other programs that don’t seem to be so limited? Because I think one of the, or a shortcoming potentially of the job guarantee, as currently conceived, is that it does seem to be bounded. Not necessarily, not essentially. But in terms of the imagination, and the way that we talk about it, it tends to be, you said in the American context. I’m not expecting you to have the answer or even an answer, but more to highlight and open up discussion of international contexts and its foreign policy, in addition to domestic policy when it comes to these questions of like economic justice, and employment for all.

Nick Romeo:  Yeah, that’s a very interesting question that I don’t have a great answer for. I’m not aware of any international job guarantee, or even really how that would function. I mean, the one thing that I will say just from the book is that one of the models I focus on is the Mondragon cooperatives in the Basque Country in northern Spain, and they have a lot of incredible features. Yet one of the things that are consistently criticized for is that they rely on cheap labor. So not within Spain, but in places like China and Mexico. A lot of the precursor components for the industrial manufacturing that happens in Spain, a lot of this is coming from very low wage contexts where people are not unionized, they’re not paid particularly well. There are not great labor conditions. There has been some effort by Mondragon to try to extend a worker-owned cooperative model into these international contexts so that their entire supply chain would reflect the same values that they’re so, I think, rightly proud of at Mondragon in Spain. They haven’t had a lot of success, and people are kind of split on why that’s the case. If you listen to Mondragon, they’ll say, look at the local laws, labor laws, tax laws, even the ability to have a legal structure as a cooperative, this just doesn’t exist in these contexts. We can’t make everything in Spain, we have to have the competitive advantage that derives from these supply chains that originate in places like Mexico and China, or else we’ll literally go bankrupt. That’s the Mondragon story, for what it’s worth. On the other hand, there are critics, including people within Mondragon, who say we’ve got to be able to figure this out. It’s possible here, it may be harder elsewhere. There are some interesting stories about even cultural resistance among workers in Mexico, for instance, who have not heard of a worker owned co-op and are very suspicious of it, and are not particularly interested when people come and try to get them excited about transforming their company into that model. There’s a lot of pushback. That being said, Noam Chomsky is famous for criticizing Mondragon on these grounds. But even people within Mondriaan are pretty sensitive to this sort of double standard and the way workers are treated. I guess it just seems like a tricky issue that has not really been solved effectively. I’d be curious if you guys have thoughts on how to extend either job guarantee or just better wages and benefits in an international context. That seems like a tough one. The only other thought I have on that is true pricing. Right? Because that is a mechanism for saying exactly how much we are under paying people throughout a supply chain. If the European Union does pass some of this supply chain due diligence legislation, then if companies are shown to have human rights abuses in their supply chain, they’ll be sued for a lot of money. It doesn’t feel like a great solution, but it is a sort of tool, right? I mean, this could motivate improvement in working conditions along, really, the whole length of supply chains that span continents. But what do you guys think?

Billy Saas:  Just to clarify what got me on this trajectory was considering the prospects of a second Trump administration in light of the fact that currently there’s a lot of discourse around how good the economy is, and how people are ignoring that Biden has gotten us through and that his policies work. Throwing their hands up at his historically low popularity levels, while also not really having discussion about the foreign policy of the United States, and the kind of apparent and striking, stark incompatibility of a robust domestic program of public provisioning, at the same time, as one is provisioning, foreign militaries and the support of them as they conduct occupations. It seems like there’s moral inconsistency there that needs to be parsed and grappled with. I feel like it’s too easy to say, well, these are separate issues, and that we can have this conversation without having that conversation. But that is increasingly implausible, also.

Scott Ferguson:  Even some of the earlier, big Biden legislation was often packaged as good and as interesting and as neoliberal-jamming as they were. And I support them for those reasons. They were nevertheless packaged as anti-China. This zero-sum game with China and we got to put down China or we got to get ahead of China. So, yeah, there’s all kinds of dimensions to this.

Billy Saas:  I don’t think we have any answers.

Scott Ferguson:  We have no answers, just problems.

Nick Romeo:  I think it’s an important question. I don’t know how far we should go down this road, but it reminds me a bit of the green growth versus degrowth debates where the folks who lean really hard on green growth often buttress their arguments for a decoupling between economic growth and environmental impact. Those arguments are really effective to the extent that they have a very narrow scope. They don’t count emissions along the entire length of supply chains. So what looks like decoupling, if you kind of zoom out and expand the scope, which of course for ecosystems and climate is really the only reasonable approach, those arguments become much less persuasive very quickly. In a global context, we’re not doing well, environmentally. I agree that sort of partitioning that off from the economic success story is misguided. Yeah.

Scott Ferguson:  Well I don’t want to let you go without asking you to talk about one of your later chapters in which you take on these legal forms that I admit I knew nothing about. But I find them totally fascinating. It’s kind of expanding your exploration of alternative models of ownership that you discuss in the Mondragon chapter. That’s what this legal instrument called Perpetual Purpose Trusts. Do I have that right?

Nick Romeo:  Yes. That’s right.

Scott Ferguson:  So what are they? And what do they do? And why are they important?

Nick Romeo:  Yeah, so they’re sometimes also called employee ownership trust, but whatever they’re called, they are legal documents, and they are a new way of organizing ownership of companies. To back up a little bit, if you think about someone who is on the point of selling their company, maybe a retiring baby boomer, of which there is no shortage in America. There’s a lot of wealth that will be transitioning in the next decade, and it’s happening already. One thing those folks can do is simply sell to a strategic buyer or to private equity. So a competitor within their economic sector, or a bigger private equity firm, typically. Now, if you do that, it’s very likely that your business will cease to exist. The strategy of rolling up companies within a sector, this happened famously with veterinary practices in private equity. But it’s actually a pretty pervasive strategy. So jobs go away, stuff gets consolidated. Return on Investment over a pretty short term time horizon is prioritized. What’s an alternative model? Well, this is where the legal instrument of a trust becomes important because you can kind of guarantee through the trust that the business will not be sold to private equity. You can say this business will remain owned by its workers, or it will remain owned by an advisory board. But you can stipulate within the trust not only a permanent ownership structure, but also a permanent set of goals that typically do not include profit maximization. So some of the folks I’ve profiled in the book are using this to enshrine very prosocial goals: things like profit sharing with employees, things like donating a percentage of profits to an environmental non-profit, even structural things like never letting the highest to the lowest paid worker ratio exceed 10:1. Another example is prioritizing hiring people who are formerly homeless or incarcerated. There’s a bakery in Oakland, right next door to where I live that wanted to enshrine that goal, but they also needed financing. They needed money from investors. The concern was, if we take money without any kind of protection, the goal of the business is kind of expensive. It’s hard to work with folks who are formerly homeless. This costs money. If our investors want their return, and they see an opportunity to cut costs, we could lose the entire mission of the business. The trust is a way around these kinds of dilemmas. It’s a way of permanently enshrining more prosocial motivations into the DNA of the ownership of a company.

Billy Saas:  We spoke, I guess a couple years ago, with Kim Stanley Robinson about his book, the Ministry For The Future, which as I was reading your book, found a lot of parallel in terms of object. It seems like if we are to right the ship, in whatever way you choose, but especially with respect to environmental catastrophe, we need to fundamentally rethink our relationship to the economy and ask questions about what it is. So there’s optimism, I think I asked earlier about pessimism and optimism. I share I think both with you, I detect both in your answers. It depends contextually. But in terms of Kim Stanley Robinson’s work in that book, are you familiar with it?

Nick Romeo:  I am. Yeah, I’ve read that novel.

Billy Saas:  So that novel. You know, it’s about a job guarantee. He talks about Mondragon. He talks about all of these different initiatives, and it’s not one thing, it’s a basket to use a favorite metaphor for economists. It’s a basket of things.  They are all necessary in the end. One of the things that has stuck with me about and I think is relevant in our current context where we have Elon Musk owning X, formally Twitter, and the ownership of our social media platforms are so much of the information. Where we will share about this episode of this podcast and effectively help to perpetuate his ownership and wealth. That at the center of KSR’s work is an intervention into public ownership of media. And the labor that is done collectively by people who participate in it. I guess, I wonder if you have any thoughts in that direction, about the place of not just social media, but media generally, media work as a media — I don’t know if you consider yourself a media worker, as a writer who publishes in primarily online spaces now. Yes, maybe ask you by way of conclusion to sort of reflect on your position in this broader media landscape and help us to, to understand our own.

Nick Romeo:  Yeah.

Scott Ferguson:  Easy question. A little lob.

Billy Saas:  Softball.

Nick Romeo:  That’s such a great question. I’m sure we could have a whole other conversation just on that topic, much of which would need to be off the record. In part, because I’m very critical of the way the mainstream media covers economics. A lot of it is just so disappointing. It’s so limited in scope and imagination. There’s a kind of hagiography of entrepreneurs as visionaries, which is often just profoundly misguided and un-empirical. There’s this cheerleading for the Fed and markets, and the casual acceptance of very outmoded models, whether that’s through labor markets, or how inflation works, how unemployment works. I’m very critical of both right and left wing media coverage of economics. So I like your suggestion, which I’m sure Kim Stan would agree that ownership of media itself is a pretty decisive intervention. It’s not a coincidence that the current UK government is trying to kill the BBC. NPR loses public funding, it seems by the year. The one thing that gives me a little hope for the media is the nonprofit model. Places like ProPublica, but really quite a few other very, very impressive newsrooms are grant funded. You’re still in some sense relying on the goodwill of foundations, and very wealthy people, some of whom have very questionable political commitments. It’s not a perfect system, but I think any kind of protection where you have a dedicated endowment, and then you can do your own research and reporting that’s helpful. Even The New York Times takes a lot of money from the fossil fuel industry. They have this outfit called T Brand Studios, where they write ads for fossil fuel companies using The New York Times employees. So they’ll have their kind of climate coverage, and then right next door, they’re making money from T Brand Studios. The Guardian, in 2019, stopped taking money from fossil fuel companies, which is encouraging and a generation ago that same debate played out with taking out money from the tobacco industry. the majors in cigarettes. So there’s some hope. More and more people in the media are realizing that how it’s funded really has huge implications for what is covered and how it’s covered. I think the disappointment I have with mainstream coverage and economics is not unique to me. I think a lot of thoughtful people feel this kind of sense of claustrophobia when they read the coverage. So maybe they just don’t read the coverage. But that’s a problem, too. To zoom out a little bit, Paul Samuelson is not the only person sculpting cultural common sense, however influential his econ textbook is, it’s also the journalists who study that textbook and then go to write for Bloomberg or the Times, or NPR. A lot of ostensibly liberal publications are absolutely committed to very un-empirical and dogmatic economic positions that are not taken seriously by a lot of economists who would like to change how the field is taught. Maybe that brings us full circle to teaching economics, letting that shape journalism, changing the ownership and funding structure of journalism: all of these interventions are really crucial to improving what the philosopher Michael Polanyi talks about The Tacit Dimension, which is this kind of reservoir of assumptions and common sense. Brother of the famous Viennese economic historian Karl Polanyi. Very interesting family.

Billy Saas:  That was wonderful.

Nick Romeo:  Great. Great. 

Billy Saas:  Nick Romeo. Thank you so much for joining us on Money on the Left. We really enjoyed it.Nick Romeo:  Thanks to you both. It was a pleasure.

* Thanks to the Money on the Left production team: William Saas (audio editor), Mike Lewis (transcription), & Robert Rusch (graphic art)

We are joined again by Benjamin Wilson to discuss what it is like to teach Economics from a heterodox Modern Monetary Theory perspective in 2023. Wilson is associate professor and recently-minted chair of the department of Economics at SUNY, Cortland. In previous episodes, we have chatted with Wilson about his research, the Uni Currency project, and his innovative work experimenting with classroom currencies. Developing these topics further, our conversation this time explores the potentials and dangers of using neoclassical textbooks in the heterodox classroom; the utility of classroom currencies for Econ classes of all levels; the place of narrative in neoclassical and heterodox theory; and so much more. Our dialog with Wilson is shaped in several respects by our conversation with Larry Johnson in last month’s episode of Money on the Left. If you are passionate about pedagogy, then this episode is for you.

Visit our Patreon page here: https://www.patreon.com/MoLsuperstructure

Music by Nahneen Kula: www.nahneenkula.com

Transcript

The following was transcribed by Mike Lewis and has been lightly edited for clarity.

Scott Ferguson:  Benjamin Wilson, welcome back to Money on the Left.

Ben Wilson:  So great to be here. Thanks for having me.

Scott Ferguson:  So since you last joined us, I hear you’ve become the chair of the Economics Department at your university. Is that true? Are the rumors true?

Ben Wilson:  The rumors are true. I took that role with a tremendous amount of hesitancy. The rumors are true that it is a significantly greater amount of work. But I’m glad that I’m doing it. I’m halfway through my second year, and it’s looking like I’ll probably take on a third year because at the end of my third, then we’ll have enough people that have been tenured and gone on sabbatical and done things that we can go forward and and elect a new chair and then have rotations of two to three years for each of us moving forward, which I think is a really exciting evolution in our department and really part of us getting a series of new hires after retirements and coalescing as a new team for what will be hopefully the start of my second full decade at SUNY Cortland, which is a little bit mind boggling to me.

Scott Ferguson:  What’s it like teaching economics at SUNY Cortland? As an outsider who knows just a little bit about economics and economics pedagogy in the United States, my impression is that most economics departments really suck, and they teach some pretty horrible things and reproduce a culture of neoclassical economics that doesn’t really encourage critical historical, social, political, or ecological thought at all. I have a sense that something different happens at SUNY Cortland in the economics department.

Ben Wilson:  Yeah, it very much does. In terms of what goes on in other economics departments, I have a hard time saying because my graduate work was at UMKC, which is another super unique opportunity and space. Even as an undergraduate at the University of Kansas, which ended up being a pretty strongly orthodox department, my first professor at that university was very much more of a heterodox inclined political economist. I really didn’t appreciate how great that was until I started doing the PhD work there, and it was all models and maximization and all those things. We’ve talked about that previously. So at Cortland, we have a very pluralistic department. Hopefully this airs before we close our next application process for interviews because we are hiring another two new tenure line faculty this year.

Scott Ferguson:  Congratulations.

Ben Wilson:  Yeah, it’s just amazing. I mean, it’s exhausting work. But it is really exciting to bring new folks on. I’m very much the beneficiary of a legacy of people at the school that really valued political economy. All of our students, whether business economics is their major. So we have a business economics degree that’s housed in a college of arts and sciences. We’re ahead of the curve there in that right now, lots of business schools are looking at their programs and thinking that they’ve kind of missed the boat in their School of Professional Studies in terms of being able to incorporate the benefits of developing and thinking about an education that brings forth good citizens and really focused too heavily on the narrow values of productivity, efficiency, profits, individuality, etc, that are the cores of neoclassical economics, really. All of those students, whether in an economics major or the business economics major start their journey with Political Economy and Social Thought 105. That class is taught by four or five of us and we rotate those sections and all of us approach it in a little bit of a different way. We share different textbooks and procedures. I myself have taught it a host of different ways. It’s a really hard class to teach just because you want to do everything. So, do I start with Adam Smith in 1776 and sort of work through it chronologically to the modern day? Or do I start with a modern day and then work backward deconstructing those things? Or do we construct it based on thinkers? Do we construct it based on ideas? I go back and forth. This semester, I’m teaching it as an honor section. This is one of the things that I’m guilty of, I’ll read a book in the summer, and I get really excited. I think this is going to be a game changer. It’s gonna be an awesome read for this class…

Scott Ferguson:  Then you tell me about it.

Ben Wilson:  That’s right. And then I read it for the second or third time as I’m teaching it, and I’m like, God, why did I do this to myself? This book is Robert Shiller’s Narrative Economics. It’s actually been better than I just said, but Shiller is as big a name in the orthodoxy as you could probably put forward, but he’s really wrestling with this idea that narrative matters. It influences the length, duration, severity, etc, of the financial crisis, but he falls a little bit short of really digging into the structures that are causing the crisis. The Great Depression lasted longer than it needed to, because people kept talking about unemployment in various ways, and it’s not that people were actually unemployed that was the problem. Bubbles and real estate happen because everybody’s talking about how great it is that their house price is going up, and it creates irrational exuberance, and all these things, and no mention whatsoever at all of deregulation and assets, and that the US economy was creating the environment for this and these stories. It’s a good book for thinking about just how shallow a lot of Orthodox analysis can really be, and that we need a little bit more complexity in the way that we’re thinking about these things to really prevent and understand and make these sorts of crises less painful for the people that bear the brunt of it. So far, so good. It’s been a great reintroduction to the classroom post-pandemic in a way that has been so rewarding as these students have really engaged with the reading and are giving me a hard time. They’re predicting that I’m not gonna like this chapter, and the reasons why I didn’t really care for it. It’s just been a really good semester so far. And I think, as department chair, the most rewarding part of that job is classroom visits. As part of the evaluation of the quality of our teaching and maintaining a strong culture of teaching, the department chair has to visit anybody who’s coming up for a particular review. I’m just blown away by how much thought and care and energy our faculty puts into their classes. I’ve stolen a few techniques here and there that have been very useful in my classes. I think my favorite is the use of the software Perusal. Are you guys familiar with that?

Billy Saas:  Just got something in my inbox about. I’ve not used it before.

Ben Wilson:  Yeah, it’s been great. It’s like Brightspace, or any of those other online learning management systems, but it allows you to highlight and comment in the readings and everybody can see it. So the students really appreciate it because they say it feels like we’re reading it together. The other really nice thing about it is it keeps information and collects statistics on how long students are in the document. So they can’t just open it and leave it open. So for example, it’ll say it was open for 24 hours, but they were active in it for seven minutes. So I even give people a little bit of a hard time and be like, alright, let’s see if we can build that stamina from seven minutes to 21 minutes and maybe by the end of the semester, a solid hour. For maybe 45 minutes consistently in the readings, and then we’ll really be cooking with some gas.

Billy Saas:  I want to talk about Shiller a bit more. What was the name of the book again?

Ben Wilson:  It’s called Narrative Economics.

Billy Saas:  Maybe a word for it could be a foil for the class. It’s like you’re teaching through critique of the book. And in our last episode, we talked with Larry Johnson, and that’s how he shared his story of coming into heterodox economic thinking through critique of Samuelson. Would it be fair to say that Shiller is on par with modern Samuelson? Not quite every classroom.

Ben Wilson:  He’s kind of been my victim. But it’s been a fascinating book, because it was published in 2019, just before the pandemic. The subtitle is: How Stories Go Viral and Drive Major Economic Events. The whole metaphor throughout is about contagion and viruses. So the narrative is always this sickness that’s happening. One of the questions we asked is, can we write some positive stories? Or are there some good ways that we can turn this ship around?

Scott Ferguson:  Does he not really allow for that?

Ben Wilson:  My reading is that I don’t even know that it’s crossed his mind.

Billy Saas:  Is this meant for a popular audience, do you think, more or less?

Ben Wilson:  That’s one of the reasons why it’s a good one for the 105. I wish one of the things that I would like to see more heterodox folks do is write sort of this 100 level book. We’re confined either publishing in our journals and writing these really heavy books, or the textbooks, like I said for 105. They’re either sort of this, featuring the great thinkers sort of way or…

Billy Saas:  Accessible, heterodox? Yeah,

Ben Wilson:  Raj Patel, he’s got a book, The Value of Nothing, it was published in 2008. So it’s starting to get a little bit dated. But it aligns so nicely with the critique that I levy against microeconomics in my 300 level economics course. So starting with Homo economics and the individual consumer and then thinking about the corporation and the firm. He has a nice chapter on value theory and then the second half of the book kind of explores alternatives in forms of democracy that allow us to think about the state, firms that aren’t maximizing profits, and nonprofits and co-ops and all those sorts of things. I guess there are a few, I just wish that they came out and got as much acclaim and fancy book jackets.

Billy Saas:  You can’t buy him in the airport. So I want to talk about that 100 level heterodox, economics intro book, and see what we think would need to be in there. But before we do, is there an index? Or are there sources cited in that book? I’m just curious, because it seems to me like what Shiller’s describing is also incredibly derivative, and a story that’s been told a bunch of times. I wonder to what extent there’s any kind of citational practice there.

Ben Wilson:  It’s pretty shallow, and for a second, he talks about MMT, but I can’t remember the exact straw man that he uses. But it’s really bad. So those are good things, right, to be able to point out and say, this is the way people write in these books similar to the textbook and in our economics class. They write things like instead of saying in our model, they say that if the government provides a tax incentive to increase investment, it’s going to increase interest rates. Instead of saying, in our model that has all of these assumptions, if the government provides an incentive, then our model predicts that interest rates will rise. There really should be much more thought to that. There’s just no room for thinking that what the model does is not going to happen in reality. Which is really problematic. Especially when you teach a loanable funds situation, and go through all that, and the interest rate is going all over the place. At the end, we really should say, but none of that really actually happens, because the interest rate is a policy variable. I don’t know, it’s really hard. Having been trained in neoclassical economics and spending all that time, when you think about it from an intellectual project, the idea that we can model the economy using these tools of physics, it’s actually pretty creative and kind of a fun idea. But at some point, the fun idea, and the fact that it just keeps failing us; at what point can we abandon it and just stop teaching this stuff? I don’t know.

Scott Ferguson:  You’ve told me about how you teach Orthodox economics in the past, and I think you’ve referred to metaphors of building blocks, there might have been Legos involved.

Ben Wilson:  Yeah, so I mean, it is model building. And, the micro economics, the 300 level class we teach, I teach the textbook, and we develop the model and all of its calculus glory, and drive the demand curve and the law of demand and find our supply curves. Then we go through, meticulously, all the assumptions of the perfectly competitive market. We do the whole shebang, in all of its glory, straight out, honest, and I even speak about its elegance, and how it is sort of captivating to think that we could somehow harness the power of physics to control and think about unemployment and inflation and all these things. What we derive is partial equilibrium and the way that I present it toward the end is that, what we’ve accomplished, people like Alfred Marshall did, and all the economists, long lines of them have done this work. Since then it’s developed into general equilibrium. From general equilibrium, we get dynamic stochastic general equilibrium. Really, all that’s occurring is that we’ve gone from what we did in this class, which is the Duplo, LEGO model of the economy. All you really are doing when you get to the more sophisticated is you’ve made the pieces smaller, and more complicated, and much more painful when you step on them as a parent. But at the end of the day, the pieces are all the same, right? The rational agent is an efficient firm, you’ve just made it much more rigorous, and the assumptions and the assumptions actually become even more narrow and less like reality, the more complex the math gets. So there’s like an inverse relation between the two.

Scott Ferguson:  For example.

Ben Wilson:  To get to general equilibrium, you’ve got to assume perfect information. And you don’t necessarily need perfect information in the simpler partial equilibrium model. So things just get more and more convoluted.

Scott Ferguson:  So is there a theory of the press that goes along with how perfect information circulates?

Ben Wilson:  Oh, man, that’s a good question. I’m not, I’m not aware of it off the top of my head. That would be an exogenous shock that the press is presenting information in the wrong way or something. What’s the press? Is there a market? Where are they exchanging their words?

Scott Ferguson:  So much narrative, so much viral narrative getting in the way. We need more monetary silencing.

Ben Wilson:  It’s an exogenous shock to the system that will create a short term perturbation and then we’ll return to normal.

Scott Ferguson:  So the rational agents get their information by simply using their five senses and by looking at the market?

Ben Wilson:  Oh, I don’t even know that they have five senses.

Scott Ferguson:  They’re just brains in a vat.

Ben Wilson:  Yeah, they’re agents, right? They’re solving optimal problems. It’s not even so much that they’re agents or things because we’re not even really looking at them, we’re looking at the optimal points that emerged from their decisions. So, the aggregation. Economics, from the free market perspective, it’s just constantly aggregating choices, optimal choices, to form these structures that we call the demand curve, the supply curve, and then there’s one magic optimal point …

Billy Saas:  Subjectivity is a veil over real aggregate relations.

Ben Wilson:  Yeah, I mean, this is where we should invite Mitch Green into this sort of conversation, because he is the master of the neoclassical language. And in jokes, the neoclassical dad jokes, he’s the master. So we go through that, and does this Death Star model of Legos really tell us any more about how we behave and who we are and what’s going on in the economy than the Duplo one? I’m not really sure that it does. I wish they had to go through and say all the assumptions every time they make a proclamation about what’s going to happen in this policy choice. Because it’s really unfair, even in their papers or in a presentation, they would just say: assume the standard assumptions. If they even acknowledged the assumptions at all. It just presents theirs as “this is the way that it is.” Then, when you critique or raise an alternative, you have to deconstruct all that stuff. So it’s almost like you’re reproducing it again, in your own head, and then they’re listening to you reproduce it again. And then by the time you get to the punchline, they’re like, Well, you just said, all the same things. You just talk past each other all the time.

Scott Ferguson:  And you’ve cited the hell out of orthodox journals.

Billy Saas:  Yeah. That’s why I feel like the kind of the by now pretty standard, or standardized approach that Shiller seems to be taking in that book, without having read it, but having your description in hand, there’s fundamentally a defensive posture in it. It’s like “what we’re doing is not narrative, everything else is narrative,” right? And to the extent that we can detect narrative, that’s the extent to which we can detect that we’re straying from our Death Star model. And we’re out in kook land.

Ben Wilson:  Yeah, please stop telling all these stories, because you’re shocking people’s preferences, and they’re not making optimal choices anymore. Whereas maybe, the fact that we let people take out a bunch of mortgages without proving income, that’s why we got a bubble?

Billy Saas:  And the trick there is that you can always locate narrative in those points of breakdown. There’s no narrative at the optimal point, but there is always narrative at the non optimal points. Right, the irrational.

Ben Wilson:  Shiller is clearly very much influenced in thinking about the Great Depression. Lots of the narratives and stories that he tells about consumption and frugality and the way that things move through that period come up throughout the book. One of the things that we’ve brought up in the class as a counter is the interview you did on the myth of the redemptive depression, which really goes into how these stories come about, and why they come about and what it was actually like, and what was going on and the vivid descriptions of what it means to have nowhere to go and to be hungry and to be trying to care for children through this time period. At some points, even having to give up your children. That sort of thing is why narrative and story carries on through generations. Not that it was a shoeshine boy telling Rockefeller that something bad is gonna happen. When you get the redemptive depression narrative, thinking about Grandma’s here because she had local supply chains and worked hard and made it through and came out of this morally stronger. Then you transition to the 60s in the civil rights movement, and Martin Luther King talking about the right for jobs for all and why do we need jobs for all? The New Deal didn’t really actually do anything to allocate resources. What’s the argument here? Then, you can pull back these sorts of silly individualist stories and think more holistically about all the things that are interconnected in our lives. The importance of work and jobs and stability and risk and why we study what we study and all these sort of bigger questions that are much more interesting and fundamental. So you guys, big shout out to podcast and I mean, I love returning to this catalog, and listening to these episodes. There’s just so much in this podcast that is so applicable. The value, like I was saying, is that there are these accessible books. Lots of the books, and the people that you guys talk to, the books aren’t appropriate for the class, but hearing them discuss their books and their work in the podcast is sort of like an introduction to how to critically read and how to think about what an author might be trying to do, and the way that they’re structuring their books and their articles and their research. So in those ways, it’s so useful, especially from a heterodox perspective to be able to think about what are these different methodologies? What are these different tools that we can use to start understanding these economic outcomes from different perspectives? Because one of the challenges of being a heterodox economist is there’s no “this is our method.” Right? This is our toolbox. This is what we do, we’re not going to stray from it.

Scott Ferguson:  It’s automated.

Ben Wilson:  Where’s my beta hat? It’s really much more eclectic. We’re always wrestling and grappling toward what is a social science methodology that can give us meaningful and useful knowledge?

Billy Saas:  That’s the thing: meaning and purpose as objectives versus the internal model consistency.

Ben Wilson:  Yeah.

Billy Saas:  I agree.

Ben Wilson:  Let’s tell a really good story about utopia, and there you have it. Right, and that’s frustrating too, right? Socialism gets painted as this utopian narrative, but free market economics is the most utopian story maybe ever told. That autonomous individuals with no constraints will spontaneously decide that these tokens are money and that all of us transacting and doing things will lead to our harmonious and good society. Like, what? This is crazy talk. Like, we can’t even spontaneously agree what to get for dinner most nights. Like society is supposed to spontaneously believe this is our medium of exchange because it has an intrinsic value.

Scott Ferguson:  So I think our listeners, at least our longtime listeners, know you on this podcast, in part because you are a pioneer of classroom and university currency experiments where you model so-called tax-driven money as an obligation to the institution, as the foundation for monetary production. I think often when we gloss those experiments, we’re doing so in different contexts. Now, we’ve invited you on to talk about economics pedagogy, and in a more kind of holistic way. So what happens with these service learning currency experiments in relation to learning about orthodox economic models, the different models of equilibrium, different heterodox models? How do conversations get started? Or how do students metabolize, make sense of all of these things in conversation with one another?

Ben Wilson:  Yeah, that’s a great question. It’s one that has changed, really, every single time I’ve issued a currency in the classroom. It really depends on what classroom. So it started off that I would only do it in the 105 class, as an introduction, so that they would know what I’m talking about when we get to the upper level classes, or at least have been introduced to it. Now, I’m gravitating toward that I just need to do it in all my classes, so that when they get to the upper level classes, maybe they already have some of the currency already in their possession, and it’s transferring between time periods. I mean, this is what Fadhel has been able to successfully do at Denison is this intergenerational thing. I’ve just not quite ever, I think I was building up toward that pre-pandemic, especially with the debt theme that was going on on campus and bringing people like Stephanie Kelton to talk. We still have to get you up there, Scott, to give your talk that was canceled, like so much else that fateful spring. This semester, the last time I did it, I did it with digital money, and they had wallets and that had its own sort of fun to it. But this semester, I went back to just paper money. And it’s a Comparative Approaches in Political Economy class, where we’re looking at the differences and methodologies and political economy from Orthodox and Heterodox around questions of money and how it works and what it does. The primary text in the class is the classic Ten Men of Money Island that I learned about from Jakob Feinig, which is really pretty fascinating, just because who knew you could write an imaginary story about money that’s grounded in state theories of money.

Scott Ferguson:  Tell us about it.

Ben Wilson:  It’s really fascinating and terrific. The characters in the book are named after what they do. So like Sledgehammer, and Reaper, the agriculturalist. The name for the government person is Do Nothing. The name of the banker is Discount. It really builds the story, right? They’re all kind of doing their own thing, they’re building their community on this Fantasy Island, and they decide that they need a bridge, right? They’ve set up shop in ways that, now they’re spending so much time getting around the island that it would really benefit everybody if we just had a bridge right in the middle. They’ve wrestled with how they’re going to do it, how are we going to mobilize the resources to build this bridge? Basically what they arrive at is: Do Nothing writes notes to prove that you spent time building the bridge, and they set a timeline for when you’re going to have to prove that you contributed equally to the building of the bridge. There’s a central ledger, Do Nothing is issuing this new money and it’s comical. I don’t know if it’s intentionally satirical. These conversations that they’re having and thinking like Sledgehammer spending a lot of time on the bridge, but the guy that does all the textile creation in clothing isn’t spending any. He’s so excited about these new shirts, and he’s got extra shirts and Sledgehammer has extra money and what on earth are they going to do? So at the end, they get a bridge and everybody’s contributed to the building of the bridge or they’ve been able to contribute to those who have built the bridge. All the money gets turned back in and they’re like: Alright, great, what should we do now? Then the idea comes up: well, I’ve seen this shiny stuff in the river. Maybe we should go dig that up, and that will be how we established the money is, this gold. So they spend the next chapter, some of them are digging up this river and bringing all this gold and they’re issuing their monies. At the end of they’re like, Oh, what did that do? All we’ve got now is a ruined river and this big pile of gold. Which is so Bitcoin, right? It’s just like, Oh, what do we have now? We’ve got all this carbon coal that we burned in China and nothing really to show for it. So that book is good. It gets them imagining money and gets them thinking about … it goes all the way through. The finance franchise gets developed with the creation of the bank and their over reliance on debt and not issuing credit through the state anymore. The bank gets really greedy, and then the state colludes with the bank to do its thing. Then at the end, they start over and they’re like, “well, we were not going to fall for that stuff again.” Then we read Jakob [Feinig]’s Moral Economies of Money. The parallels between the development and the experimentation and the wrestling with theories of value and production and money as a democratic medium, and that it mobilizes production and the scarcity of money really seems to be a significant problem. We can solve the scarcity of money problem by creating more money. It’s starting to sink in. Along the way, we’ve listened to Saule [Omarova]’s interview with you guys to think about the finance franchise. Then we show Bob and their diagrams and their paper. Now that we’ve gotten to Bitcoin and thinking about digital currencies, that allows us to think, again, about the importance of the philosophy that’s undergirding the monies. This idea of individual, decentralized exchange, and that is not what’s producing stuff. I think it’s starting to sink in. They’ve given some good presentations and done some nice group work, and now they’ve been assigned. I’ve given them all jobs at the Federal Reserve. Their final project is to use the criteria and the four sort of big questions about where does the money come from? How much should we produce? How do we create demand for that money? How do we do these things and those criteria and thinking about should we just edit the US dollar? Some of the ways that it enters the economy, or how much we should produce or the tax circuit? Or do we need new monies in New York state or here in Cortland, like our classroom currency? It seems to be working: we’re mobilizing resources, we’re solving problems. You guys are getting interesting and meaningful work done for loaves and fishes and the SPCA. We’re gathering data with our partners in the Adirondacks about HVAC providers that are part of New York State’s bigger plan to reduce carbon emissions and move to energy efficiency. So we’re doing all sorts of these little things that are adding up, hopefully to big things and, do we need the federal government to issue the money or change the money? Or can you do it at a local level? All those sorts of questions really challenged the idea of governance and challenged the idea of “inside” and “outside” the state and market. I’m having a lot of fun, and I think some of them are having a lot of fun. We’re having writer’s workshop meetings before the break to go over their project and talk one on one, which I think always helps ground the community and get us off on the right track. I don’t know if that answered the question. Next semester with urban I want to continue sort of the same projects in the Adirondacks, but we’ll think about it from the urban economics perspective, and land and land use and data and GIS and all that sort of stuff. It’s pretty fascinating.

Scott Ferguson:  I love this. I think we’ve come full circle because we’re right back at Narrative Economics, but now it’s not a dirty virus that gets in the way of distorting optimal preferences, but instead is the lifeblood of provisioning as an imaginative process. I guess my next question for you that you started to kind of answer is: you ask them to write these proposals, what are the strategies, what are the genres that they can write in? Are they telling stories? You say that they maybe mobilize data in different ways?

Ben Wilson:  Yeah, so in our individual meetings we’re wrestling with their idea that I’ll be able to suggest various opportunities. They could be doing an interview on a podcast. So that could be an interview that they could write. Or the standard sort of field guide, case study style as one of the ways that I think is pretty straightforward. That translates well for professional writing and thinking about that. The writing assignment that has the most freedom that I’ve given this semester is in that 105 class, the Shiller class, where I asked them to write their own economic narrative, and it’s 2050. I just kind of picked 2050 randomly, but it’s actually just about exactly the difference between my age and their age right now. That kind of helps them think about, well, it could be this huge radical change, or it could be sort of still looking fairly similar. But they have the freedom to write a dystopia or utopia and use the different context and stories and what catches fire. How do we rethink the individual as cooperative and altruistic and always interdependent? Or do we keep beating our brains against the wall and trying to separate ourselves and isolate ourselves and be individuals? Homo Economicus. I’m really hoping that these conversations are as fun as I anticipate them being and that they have the chance to free their minds from all the constraints that exist. What is the problem that is keeping you up at night? Right? Is it just about getting a job? Or are you worried about climate, and let’s work through and think about the work that you might do for the rest of your career to make a meaningful and useful contribution to solving that issue? What sort of institutions and support would you need to do that? Hopefully, we’re getting there, because so much of what we talk about is how dire things are, the crises, and it’s awful. But at the same time, we really have to equip them with the vision and the ability to envision a better world than we currently have. I think that that’s something that most of these generations since World War Two in this country have kind of had. That’s under attack right now. Even as the data suggests that this generation of students has got a less than 50-50 shot of having a better income and life outcome than this current generation. That’s kind of terrifying and sad. We don’t want to shackle them with those sorts of doomsday scenarios. I mean, we need to take it seriously. But we’ve got to give them the tools and the freedom to think about what a good and just and verdant and exciting and healthy world looks like.

Billy Saas:  I love that so much. What does a rubric look like? Is an A paper for its convincing portrayal of a dystopia achieved by Goldbug resurrection, insurrection, or the intensity of your feeling of joy and euphoria the vision of a Green New Deal world that they give you? How do you grade this thing?

Ben Wilson:  There’s specific parameters. One of the most important parameters I think students need to get familiar with is following directions. 12 font, double spaced, and then familiarity about where to turn it in. So I use OneDrive and things like this where they’ve got to navigate folders and submit it to the correct space . This is an iterative project, so they’ll submit an abstract or an outline, and I’ll provide comments. How well do you address the comments that I’ve provided? There’s a number of quotations and references and I’m looking for the intertwine of the readings and the materials in the course. Then, I get a little bit of leeway with something like creativity, to sort of emphasize that they should try to have fun with this. I experienced this as an undergrad. My Growth and Development teacher, her assignment was: you are now the leader of this developing country, implement your economic strategy. And I tried to find this paper, because I know that I wrote a super neoliberal, crazy, terrible …

Billy Saas:  Micro loans for everybody!

Ben Wilson:  I remember thinking that it is so good, and free markets. Like everything, you get so influenced by what it is that you’re reading at the moment, and I remember that I got a good grade because I used all the references, and I followed directions, and it was a pretty good story, I think. I could tell that the teacher was just like, oh my god, how did he just totally miss the point of this class? I’ll have some love for the Gold Bug emergence and Bitcoin decentralization occurs. Softens the blow, right?  You know, because we all go through…You gotta have an intellectual crisis at least once in your life, or you’re not thinking hard enough.

Scott Ferguson:  Provisioning intellectual crisis with Benjamin Wilson.

Billy Saas:  Good one-two punch would be you and Larry because his kind of inductive approach alongside your critical narrative driven approach?

Ben Wilson:  Well it’s so exciting to hear that somebody is teaching future teachers how to wrestle with this stuff. Can you imagine the system of education that is cultivating an understanding that money is a productive promise that we are announcing to each other all the time? The Uni project, and the classroom currencies and thinking through Jakob’s book, and the whole thing is really these folks wrestling with how to organize productive activity. This tool is either being used really well, or really ineffectively all along the way. If we could harness that spirit of experimentation throughout our educational curriculum, the same way that we’ve allowed homo economics to infiltrate every dimension of our educational system. All of our disciplines and all of our laws, going back to Oliver Wendell Holmes, giving his “Bad Man” speech at Harvard Square, right? How do we begin to disentangle and take apart all of these ugly structures that assume the worst in one another, and allow us the freedom to experiment and think about production and money and promises in so much more rewarding and effective ways? This sort of thinking is so much a part of social studies, and even the sciences, right? How many great scientific experiments are submitted to the National Science Foundation, they get turned down just because it’s a random selection or the reviewers don’t necessarily like this particular project, or having an affinity to it. Do 91% of the projects to the NSF not deserve to be funded? I can’t imagine that.

Billy Saas:  Then there’s the old thinking about the context of what gets submitted. There is the stuff that is going to satisfy the expectations of the review committee, and that is to sort of colloquially show that you already know what you’re gonna find, right. So, discovery is not a priority in this otherwise discovery-oriented discipline, as a result of monetary scarcity imposed from the top.

Ben Wilson:  Yeah, the question of the unknown. In our conversations about what it would look like if we implemented this full employment program: you don’t know any more than Jerome Powell knows what’s going to happen if they raise the interest rates again. But there’s like, a certain amount of gravitas or so many people saying: yeah, this is what’s gonna happen. That we’re allowed to experiment in that way, but not others. It’s so constraining and so narrow, and it’s so self defeating. It seems like people are finally, at least in the moment, like Galbraith’s piece the other day was really great calling out Jason Furman. Yeah, well where’s that six and a half percent unemployment? Maybe we don’t need to throw people out of work, except for maybe you. Then maybe we can move forward with the business of finding those meaningful and useful jobs. That’s one of the things, selfishly, why I like the classroom currencies and engaging with the nonprofit sector, and in these groups that are trying to solve some of our problems outside the business world, so to speak. Sometimes it is a little bit hard to imagine what all these jobs are going to be and how many jobs we would actually need. If we solve the problem of hunger, what’s next? What’s the evolution of this new care driven economy? How much less material waste do we produce? I think those sorts of unknowns are a lot less scary than the unknown of when we’re gonna burn the final tree on this planet or the ocean isn’t going to be able to support life anymore. I would much rather pursue these other avenues of when there is too much art? When is a workday just way too short? Is it three hours? I put in my half hour today and AI cranked out the rest.

Scott Ferguson:  I’d like to talk about the future of your department. As chair, you’ve discussed with me a little bit in the past that your department is going through a kind of generational turnover, and that the curriculum has been divided and organized in a particular way. The participants who put that plan into place are phasing out and retiring. It’s raising the question of where to go from here. Like all these other topics that we are describing, there’s no automated map for you to follow. Obviously, you’re not doing it single handedly. Being a chair is not being a dictator, or it shouldn’t be. Unless I’m in charge. Can you tell us a little bit about this history of the department and what kinds of questions, challenges, and aims seem to be bubbling up as you reckon with the question of the future of this institution?

Ben Wilson:  This all happened well before my time, so that my institutional understanding of a lot of it is probably guided by conversations and things of this nature. But the short of it is, that a long time ago, they made the decision to create a business economics degree in a liberal arts setting. That turned out to be a really shrewd and an excellent move because over the course of the last 20 years, the department rather than shrinking in size has steadily grown and now we’re the largest department on campus in the liberal arts and sciences. We are operating from a position of strength and stability and the success of that department and our students in those things are all terrific. So we’re wrestling with this question. Out of these 500 majors that we have, 30 of them are economics majors. Is the goal to have a better balance between economics and business economics? Is there a way to more robustly teach the business economics degree as sort of a pluralistic economics degree? I’m a little bit torn. As a political economist, I’d like to see us just teach all these political economy classes. The work of Sanjukta Paul and [Nathan] Tankus on coordination rights and thinking about the firm has been something that I think fits really nicely in the literature for liberal arts management and thinking not of it as management, but as organizational behavior, is the new name. I think that that’s a great sort of way of introducing a lot of heterodox concepts and ideas into a business curriculum. The sole proprietorship is going to, organizationally behave significantly differently than the corporation or the worker-owned cooperative, or the non-profit. So it begins to introduce all the ways in which the corporation will maximize and fit these really narrow value systems of efficiency, production, shareholder value. Whereas the Mondragon cooperative has managed to be a very successful global enterprise for multiple decades by embracing a much more holistic view and a democratic workplace. I would love it to see us sort of embrace this idea of the structure of the organization really matters, and to be training students to adequately be able to assess whether or not I want to run and manage a corporation, or a Mondragon. I think that that would be infinitely more healthy social enterprise and the budding hipness of social entrepreneurship. I think all guide themselves to this idea that we could really create a robust and interesting liberal arts education that gives students the idea to think through these issues. Even beyond, it would turn right back to money, where how we structure access, and who creates and how it is entering the system, and all those things become that coordination right, as well. There’s no inside-outside, we are always all practicing governance. Whether it’s our department or a business or a family or a nation-state, there’s always the possibility for experimenting and decision making and collective decision making that we should be approaching. With all the resources that we have here locally in the Finger Lakes for experimenting in farming and agriculture, tourism. That is just exacerbated up in the Adirondack Park with our partners in our campus up there. I think the possibilities for this really exciting new degree programs that aren’t abandoning business or management, but framing them from a liberal arts perspective is super exciting. That’s not gonna happen overnight. I think a lot of it has to do with how the hiring process goes and that sort of thing, but I think it opens up the possibility especially for grant writing and community partnerships and things in a really exciting and robust way that lots of people are excited about.

Billy Saas:  So where does podcasting fit into the new curriculum at SUNY Cortland, in the economics department?

Ben Wilson:  Great question. I think that’s no more than trying to get other faculty in my department to issue the currency. I would love the communications department to issue for the creation of new digital medias around the reporting and analysis of these new organizational structures that we’re creating in the economics department to mobilize production. Because we need some good news, and we need some good reporting, and we need de-sensationalized our need for breaking news and Donald Trump. Can we just take a timeout from reporting about this person? He’s just not that interesting.

Billy Saas:  A different kind of social media like in a very literal sense.

Ben Wilson:  Yeah, we had a guest speaker, I think it was last year, she did the movie, Tik Tok Boom. It was a pretty good, interesting film about how TikTok is shaping our children’s brains, and how the algorithm works to keep you on it and engaged and how that works for influencing and all that. The heart of the way that that application is structured is all around the idea of attention and attention translates to profits. So how do we create apps that aren’t about that, right? TikTok, it’s not all bad. I think it helped my golf swing a little bit this season. Occasionally, a nice recipe pops up. Otherwise, it’s just a time sink that is so unuseful. TikTok and Facebook, and all these folks are starting to think: we need programmers, but we need programmers who understand some history and the humanities and can communicate. We can desperately not let them go to those platforms. Or take them over, yeah.

Billy Saas:  Maybe from the inside. We’re wrapping up a course in Media Studies, and we just had a conversation about TikTok and the different platforms through Cory Doctorow’s lens of ‘Enshittification’. Are you familiar with this one? The platforms like TikTok, Facebook are designed to degrade right? Essentially, in terms of quality of the experience. They begin as these big, hospitable places in order to get people in, and then the more people get settled in, the less they feel like they can leave. That’s when they turn the levers and start making life more shitty in Doctorow’s theoretical lens. So we talked about with the students what would it take for this ‘Enshittification’ to be reversed? Not to just keep talking about old Money on the Left episodes, but let’s do it. Kim Stanley Robinson, a critical portion of the utopian, mostly utopian near future, a version of climate catastrophe. Part of the story is the development of a public social media. A publicly-funded and non surveillance driven, non ad driven, open platform for social interaction online. That’s where we should send the historians. Let’s build something new and as utopian and far off as that can seem, it seems pretty important.

Ben Wilson:  Yeah, I wonder when you read about the New Deal, and the amazing archives and interviews about family members of former slaves, and the catalog that was developed in that time period: how are we going to know about this time period in the future? Where’s this data going, and who’s cataloging it? Our department is full of file cabinets with all the documents that have recorded the history of what’s been going on in our institution. Now they’re all on our U-drives. Where do those go in the future? And will we even know what our history was, as this technology gets wiped out? I think that’s a lot of meaningful and useful work that’s not getting done right now. Or at least I’m not aware of how it’s getting done or what it would look like. Our vision of things changes as we change what meaningful and useful product is instead of just like, how do we streamline this to be cost effective all the time.

Scott Ferguson:  Do you get resistance in the classroom? Somebody who’s just team Homo Economicus and insists as much?

Ben Wilson:  I think it’s so hard for them to see where I’m coming from ideologically, I think. I don’t know if they know when to be resistant or not. Even when I teach the 301, I do two thirds of the class on neoclassical in 1/3 of the class heterodox micro, with the critique of the neoclassical throughout. At the end, I’ll have two or three students ask me: so are you an Orthodox or a heterodox economist? The real answer is that you’ve got to be both. You’ve gotta keep up with what’s going on so that you’re not straw manning them the way that they do us. But as far as I can tell, the neoclassical model still remains the driving force of so much of the thinking that’s going on. In the Twitterverse, they’ll say, oh, no, that’s not informing our research, and then they’ll post their textbook diagrams in their threads below. I don’t know. I’ve gotten a little bit away from that, because I feel like there’s a little bit of dishonesty there. So in recent years, I’ve just flat out said, I was a really staunch neoclassical orthodox economist, it was in a Ph. D program, and I became disenchanted with what the school of thought was delivering, and I no longer had the feeling that I was doing something that was going to make the world a better place. I really felt lost, and I didn’t know what to do. I left school for a number of years and worked in the professional environment. Then I found out that there was this other school of thought that I could return to, to be part of the academy and teach and that was all very exciting. And so here I am, and every once in a while I look back, and I’ll wrestle with some of the ideas in these pieces. I’ll be like, Oh, maybe that is a meaningful move forward. So I think, as long as you’re never 100% sure of what you’re doing, students respect that. They have the freedom to be an orthodox economist. I’m not gonna tell them no. If you want to do your Orthodox, maximization problems and you find joy and excitement, and you think that that’s gonna make the world a better place, go for it.

Billy Saas:  Just imagine what that looks like. Yeah.

Ben Wilson:  My master’s thesis at Kansas was a factor model. So what’s the impact of institutions on economic growth and development? And there was this really interesting government data that was all like, categorical variables about whether or not they were a dictatorship or not, and the houses of how their government was divided. It was an interesting, fun exercise. It turns out that institutions with more democracies have better economic outcomes.

Billy Saas:  You get a hell of a grant for that one, I’m sure.

Ben Wilson:  Yeah, I mean, so you can still tell good stories from that perspective, I suppose. But I find much more joy and excitement and thinking about social science methodologies, and how to role in the humanities and institutional structures and human behavior as not an individual thing, but as a collective. So I’m gonna stay there for now. Billy, how did your class end up that I talked to, how are those projects?

Billy Saas:  Yeah, so in that class that you visited over Zoom to talk about classroom currencies, the class was called Money, Culture, and Media, or MCM, if you’re into acronyms. But of course, it’s from the MMT perspective. The course, each student is tasked with designing a complementary currency for use in the New Orleans area here, whether it’s in the city or on campus. We had a lot of fun, they did presentations of them. At the end of the semester, we held a vote and the top ones were going to be passed on to the next class. The next class would inherit the top proposals, and then develop and refine those proposals with the idea of iterative design. I think my intervention from the communication perspective was on the design and the discussion and the deliberation back end. Whereas I think a lot of the existing excellent classroom currency assignments are about design, but then it’s also implementation. I’m intimidated as hell of actually rolling out the classroom currency and managing it.

Ben Wilson:  I get that apprehension. That’s probably the most common thing that I hear from folks when I’m like why don’t you do this?

Billy Saas:  Another hang up. So there’s that, and I think it’s understandable. But we also, in that class, talk about grades and debt, like in the framework of debt, and you earn credits, and we’re in this whole accreditation system, and so on. So it ends up being usually a pretty interesting conversation. We’re talking about the rhetoric of debt in economics, and then we just locate it everywhere, like Lakoff and all that stuff. To what extent using the classroom currency as a stand in for, or as a part of their grade is sort of a redundant thing to do. Right? What are we actually achieving other than introducing complexity to the situation in the form of … Maybe complexity is community, complexity is buy in, and maybe that’s worthwhile. I am asking you, I guess, if a student comes up and says well isn’t this just the same as 10 points that you were already going to assign me based on work that I did? I guess for me, the answer is, yes, but we have now talked about it as opposed to just being the de facto.

Ben Wilson:  I think that having the grade component, whether it’s 10% or 5%, that you get that part of the grade through the redemption of the money that you’ve issued opens up the conversation about coercion. Was it even necessary for me to implement this tax? Would I have gotten the same result and the same amount of productive activity without it? Because 10% of a grade for the semesters is a pretty good chunk. It’s also a chunk that they’re guaranteed to get 100% of if they do the work. I think it gives them the choice, how much of this am I going to do? What am I going to do? How coercive is this actually? Because I also have students that just flat out choose not to show up for a midterm. I think it’s an interesting way of thinking about what we’re actually getting out of this credit process and out of education, and how much we’re buying into the way that we’re chunking up these classes and saying, was what you learned working for Loaves and Fishes really 10% of what the learning outcome of this class was, or maybe the most enriching and fundamentally eye open component of the class versus the 25% that I gave you for the paper, the particular readings and all these sorts of things. I think it is worth the physical issuance and redemption process to really drive home that it comes from a particular place first, and that we’re not recycling tax money. That I can always deliver my promise of 10% of your grade, just as the state can always deliver on whatever it is that we collectively promise, whether it’s whatever $1 trillion of military spending is supposed to deliver for us versus however much money I have to mobilize in this class to get the data that I need. We are capable as we the people of making whatever promise we the people want to make. I think employment, education, health care, and all those things are there if we want to mobilize in this different way and wondering and thinking through what the redemption process is in the circuit and how we create demand for satisfying each other’s collective promises, I think it’s an important exercise and thinking about our theories of value.

Scott Ferguson:  It seems to me that it introduces the question of, but also a legitimately new structure of receiveability in the classroom and beyond and among the students because grades are, and credits that they’re earning without the currency, those are receivable higher up the food chain. Those are receivable in the wider institution, and then in different ways on the job market. Maybe for getting into a graduate program, right? There’s many ways in which those grades that they are earning are receivable, but we call it cheating if they try to do horizontal coordination, which I refuse to call exchange, but that’s just me. If they are horizontally coordinating, that’s an illegitimate liquidity, right? Whereas, at least the way I’ve heard it described by you, Ben and Fadhel and some others, there is the possibility for horizontal liquidity. That’s different from the vertical redemption or the vertical liquidity of the teacher to students relationship.

Ben Wilson:  Yeah. I don’t think it’s ever happened where I didn’t have a number of students to weigh more than they needed to satisfy the tax obligation. That might be because they were already doing this work beforehand, or you’re doing community service by mandate already. There’s all sorts of things going on. But there’s also this situation in which a student was like, this was so awesome that I kept going back. This student that was going to feed people at Loaves and Fishes said this is the most rewarding and eye opening thing about people and life, I just did more of it. That’s part of it too, right? When you find reward in your work, that is so insanely valuable. I think that’s an important thing to be teaching our students as anything else, right? It’s not just about clocking in and clocking out, we want to find meaningful and useful work. I love that terminology for the full employment program. So at the end, as we’re closing in on tax day, there’s those students that have way more than they need, and there are students that still haven’t done anything. I’ve issued more than enough to collect and satisfy a balanced budget, should I just close the opportunities, and you guys can now turn to Jimmy and Sarah and Samantha, and you guys can go work for them? Because now they’re the private sector. So that you can get the money that you need to pay the taxes? Then we will hold the vote, right? Should we keep the government open at the risk of running a budget deficit and running a full employment program? Or should we allow you guys to reevaluate your life choices and pull yourself up by your bootstraps and go do some volunteering or gather the data that we’re working with our community partners to build on. 17 hands go up to keep the government open and three hands or one hand will go up to close it. So those sorts of things are surprising and unexpected, and you would think that when you describe it, it just sounds like all the students will go and do exactly 10 hours of community service and that’ll be the end of it, but inevitably these students are unpredictable, right? Just like all of us are, we all have things going on in life. The question about whether or not these folks had “already had these volunteer opportunities lined up for them, is that fair? It was so easy for them, I had to go find it.” It opens up all those really good and interesting discussions that don’t happen unless some of them have the money, and some of them don’t.

Scott Ferguson:  I’ve been thinking recently a lot about my 15 year old son, who is part of this pretty great … I mean we’d like to see college being free for all and open enrollment and all these ways, but living in the state of Florida, we have a program called Bright Futures. If you get a certain GPA, and you fulfill a number of requirements, basically your tuition is taken care of at a public university, which the future of the public university system in the state of Florida is another kind of impending question. But one of the key requirements is 100 hours of community service, and my son’s been doing a lot of these hours. He usually tries to get in an hour a week or so. And I keep thinking about what a tremendous mobilization of young people and their labor, and my son will go to a local nonprofit that serves communities in need, and whether it’s about food service, or working in their thrift shop, he does any number of things. That is a lot of money! That is a lot of money, that is a lot of labor, and yet, we put out a proposal for a university currency system at the federal level, and people think we are insane. Right? And how do we live in a world in which…

Ben Wilson:  And our workers are old enough to work!

Scott Ferguson:  Yeah. How do we live in a world in which one of those models is gigantic, tremendous, in a currently super right wing state, and the other one is absolutely nuts. It is unthinkable. In fact, they’re not that different. I think that the pedagogical experiment of the classroom currency, in constant dialogue, and in this reflexive relationship around the institution, and grades, and coercion can be one way of pulling down the kind of conceptual barriers that make one of those sound totally rational and doable, which it is because it’s happening every single day in the state of Florida, versus these other proposals.

Ben Wilson:  I would imagine none of these students that are trying to participate are having any trouble finding work. There’s so much that needs to be done. I applaud the idea there. I think maybe that’s a way of merging and thinking through the transition from high school to college, and higher learning in an interesting way. Talk about having exposure to some really important social and environmental issues and going into college with those ideas already in mind. Then, having that experience to be able to continue to grow on what it is that you’ve done in the past in new places, with new people and organizations, and build capacity in those areas that doesn’t exist when we’re only relying on volunteerism. That’s really the hardest thing that occurs. I’ve built really good partnerships here, but all my partners are dependent on soft money. Lots of people work in these places as long as they can and then the reality of expenses and mortgages and family and the turnover in the space is just non stop. Programs just end on a fiscal date, and then you gotta start over again. If this program could grow and provide them with that sort of monetary labor stability such that we’re always building capacity and growing and achieving these goals and objectives and missions, that would be terrific. But we’re still …

Billy Saas:  The transitory nature of public good inflation. People come in and do good work, and then they gotta go.

Ben Wilson:  The buffer stock is an interesting pedagogical tool and should we choose gold or labor. If it’s really meaningful and useful work, you don’t want people just picking up and going because they got a higher bid from the private sector. That’s not really building capacity and stabilizing communities in the sort of way that I think creates this ongoing social cohesion and environmental awareness and respect for human life. I think it just falls into that trap that we’re automatons making choices and doing our own thing, rather than part of this much bigger collective that is really something that we need to be more aware of.

Billy Saas:  This has been really great. Ben Wilson, thank you so much for joining us on Money on the Left.

Ben Wilson:  Thank you so much for having me. Please, please if you want to issue your own currency and experiment with this, I am always open to talking and chatting. You can reach me on Twitter at @autogestion77 and it’s a similar handle on Blue Sky. I’m just starting there. bcw@cortland.edu is my email and that’s where I’m bombarded every day by all sorts of things. So it’d be nice to get a question about how to issue currency in my classrooms.

Billy Saas:  Where do we go for job ads and when does the job close?

Ben Wilson:  Oh, that’s good. First week in December, it’s available on the JOE (Job Openings for Economists) and our website, our Human Resources website. Thanks for asking.

* Thanks to the Money on the Left production team: William Saas (audio editor), Mike Lewis (transcription), & Robert Rusch (graphic art)

This month, we speak with Larry Johnson, associate professor in the Social Foundations of Education Program at the University of South Florida, Saint Petersburg. In his pedagogy, Johnson focuses on the complex relationship between education, culture, and society with the goal of exploring policies and practices from historical and contemporary perspectives that address structural inequality, and transforming educational institutions into sites for social justice. Johnson is notably a long-time proponent of Modern Monetary Theory (MMT) and variously mobilizes MMT’s insights when training our teachers-to-be. In our conversation with Johnson, we discover just how constrained the US system of public education is by wrong economic thinking and what it would mean to think otherwise. Together, we ask: How do federal interest rates shape US education policy? What do standardized tests have to tell us about neoclassical economics and the nature of money? Why is the rhetoric of education in the United States so narrowly focused on preparing students for careers? How do classist and racist myths of taxpayer financing create unequal schooling? And how could we ever reasonably hope for the political economy of education in the United States to ever be otherwise? Pondering such questions, Johnson opens a window onto his longstanding advocacy for radically rethinking US public education through the lens of endogenous public money theory.

Visit our Patreon page here: https://www.patreon.com/MoLsuperstructure

Music by Nahneen Kula: www.nahneenkula.com

Transcript

The following was transcribed by Mike Lewis and has been lightly edited for clarity.

Scott Ferguson:  Larry Johnson, welcome to Money on the Left.

Larry Johnson:  Thank you. Good to be here.

Billy Saas:  We’re excited to talk to you today about the Social Foundations of Education, which is your area of expertise and something you teach about at University of South Florida. Could you start us off by telling us a little bit about what the Social Foundations of Education are and how one like yourself comes to study them?

Larry Johnson:  Sure, sure. The basic idea is you are trying to look at the relationship between school and society. As an historian, I look at how education is related to political economy and ideology. That really runs throughout the social foundations field. So we’re always trying to think about how, for example, if you’re thinking about kids not doing well in school, we have to look not just at what’s happening in school, we have to look and see, poor communities often–the kids in poor communities often do badly in school because their schools are poor as well. Both the community and the school lack resources, just as an example.

Billy Saas:  And we’re specifically excited to talk to you about the overlap of your research and teaching in the Social Foundations of Education with questions related to what money is and how it works. In fact, I think we have slated this episode, The Monetary Foundations of Education. What do you think of that? Does that work?

Larry Johnson:  Ah, that actually might work. Yeah, yeah. Yeah, maybe even MMT is necessary for education.

Scott Ferguson:  I like it. It’s just too long for our title art, but I do like it.

Larry Johnson:  Okay. I got thinking about issues of the federal budget and how it works fairly early on. When I was in high school, I had a teacher. This is 1965, the year after Goldwater’s run for the presidency. And lots of students in class were Goldwater supporters. They were preoccupied with passing a balanced budget amendment, and they raise those kinds of issues in class all the time. And one day the teacher happened to say, as he was addressing some of these kids, and I can’t remember exactly the context. He told us if we went down to the IRS office in Ogden, Utah, where people in the Rocky Mountain West send their taxes every year. If we paid our taxes, we’ve got a bag full of cash and got down there and paid our taxes with cash, the IRS would shred it. And yeah, so what does that mean? And I just happen to think, well, it means the government doesn’t need our taxes to spend money. And he kind of smiled. That was the end of it. We didn’t go any farther. But I went home and asked my dad about it. And he told me, like he often did: call someone and find out, so call Ogden and find out. So I called. The receptionist was very good. She ended up connecting me with the chief economist at that IRS office. And he got on the phone and said I hear you’ve had an interesting conversation in school. So I told him about it. He said that’s exactly right. If you paid your taxes in cash, we would shred it, because we don’t need that cash. We issue the currency. And that was really interesting. And I must say, the man was very nice. He invited me to come down to Ogden to meet with him. But I was a 17 year old, I never did go. I passed up a real opportunity to learn something. And the next instance where I really got a chance to think about this was the fall quarter of my sophomore year in college, I took a class: general introduction to economics. And the fellow thought it was a guy named George Fuller, a very interesting economist who had read Keynes had read Marx. He used both in the class, and the department had assigned this class to use the Samuelson economics textbook. So what George would do is, we’d go through Samuelson and then he’d give us stuff to read to critique what was in Samuelson. A very interesting way to teach it. During that semester, he gave us a pre-publication copy of something that Hyman Minsky had written critiquing the War on Poverty as a conservative effort to address poverty. So we read that. It was fascinating to me because my dad was a Roosevelt Democrat. Although, he would say he’s a Roosevelt. One time some supercilious businessman tried to correct his pronunciation, and he asked him, How do you say the name of the animal that crows wake up in the morning, rooster or roaster. Rooster. He said Roosevelt. But he was very critical of Kennedy and Johnson, because they simply weren’t doing enough of the kinds of things that Roosevelt did to intervene directly in the economy. And of course, both of them argued that education was the way to solve poverty, which I knew even at the time didn’t make sense, but I wasn’t exactly sure how to make those arguments. So we talked about it a lot, my dad and I. When I got assigned Hyman Minsky’s piece, it really gelled, and he helped me see important ways to criticize the War on Poverty: criticizing it because it did not spend enough money; criticizing it because it wanted to change the people who were poor, instead of changing the economic system. For example, guarantee people jobs or had a full employment policy so people could work. It was always very clear that people who faced long spells of unemployment and frequent spells of unemployment are much poorer than those who are able to work continuously at a decently paying job. So that was clearly the most important thing we can do to address it. Training and stuff was not of any great interest. I wrote a paper about that the next quarter, winter quarter of 1968, in a social psychology class and the teacher was just absolutely enraged, because he was a strong supporter of the War on Poverty and believed it was exactly the way to go and education was the only solution. So we had this confrontation in the class. And, wow, this is really interesting, people really don’t like to be told this stuff. That made me even more interested, so I spent a lot more time trying to find information and then look at it. Then, when I was out of college, I was working for a community action program in Weaver County, Utah where Ogden is. I was put on the Manpower Training Council. John Kennedy passed this law to create these Manpower Training Councils around the country. The whole purpose was you got this federal money, and you could choose programs to train the poor. We were on that for a good couple of years, and it became clear to everyone on the council that this was not the way to end poverty. I mean, you’d have businessmen who really liked the idea of training workers because they want to socialize training as much as they can, the cost of training. But what we needed was more jobs in the county. We needed better paying jobs. So we all began to advocate for that sort of approach. And just reinforced the idea that what we really need is a meaningful full employment policy. I ended up getting my doctorate in education because I wanted to partly address the criticisms of education, which were unfounded, and talk about how education actually fits with our economy and what we ought to be doing, kinds of things. I was always motivated by the history of education, what people have said throughout history the purpose of education was. When I teach my classes, we often start on the first day by looking at what the Manifesto the Plebeians in the French Revolution said: “All knowledge, universities, and schools have to be held in common. If they become the property of a single class, they are oppressive.” And that’s extremely important right? The enclosure movement is driving people off the Commons, and commoners said straight up: you’re not only destroying our livelihood, you are destroying the way in which we teach our children to live. By driving those people off the commons, forcing them into the cities, putting them to work in factories was destroying a way of life. It was also destroying a way of education. They were very tuned into the idea that education has to be for all. Of course, the United States gave Horace Mann who creates the common schools, so rich and poor, Muslim and Christian, would be taught in the same schools. Of course, Catholics criticized his schools for being Protestant. But that’s for another time. So that’s going on. Then, a couple of interesting things happen in the 19th century. African Americans develop very powerful arguments that education should be for liberation. It should help them think about what their freedom means and how to shape it. And of course, you had philanthropists in the North trying to impose what was called industrial education on Blacks. That didn’t have anything to do with industry. It was meant to teach Black teachers how to farm, do all these menial tasks from sunup to sundown, and then get a couple hours of education at the end. Well, let me backup. If you look at the schools that were created to train Blacks by Northern philanthropists, like Hampton Institute, and Tuskegee Institute, one in Virginia and one in Alabama. They promote what was called industrial education, which didn’t prepare Blacks to be in industry at all. These were schools to teach teachers, they were normal schools. But their idea of how to teach teachers to teach Blacks was you’d make them work from sunup to sundown, give them a little bit of training on academic subjects in the evening. But their goal was to work in schools and teach Blacks the value of labor. Odd for people who’ve labored for centuries. But that was their goal. So Blacks clearly understood that that was an education for subordination. What they needed was a much more academic education, what we think of as liberal education, so that they can think about freedom and what it means and how to shape their own freedom. In the late 19th century, you’ve got the Populists, an organization of Blacks and whites, trying to constrain the power, overthrow the power of the planters in the south, and the bankers and railroads in the North. Their conception of education was that education should help us understand the machinery of society, and how to control it to benefit ourselves. How to control it in our own interests as a large working class. Then, one of the statements that my students really gravitate to was from WEB DuBois in a commencement address that he gave at Howard University. He said, “Our task is to out-think, and outsmart the people who own the world.” So they’re very different conceptions of what education ought to be doing. Then we get from presidents of the United States, from John Kennedy, to Joe Biden, that education is about training people for work. And so we need to recognize that people have thought much more deeply about what education is, and why we ought to do it. So that’s how we start and then we move on from there to raise a whole host of issues about education, how it’s related to the economy. I don’t argue with him that there’s no relationship. For example, we know that we in our society use education to compete for things. We compete for jobs, we compete for incomes, we compete for status, and we use education in that competition. So it surely is the case that if you get more education than people in your neighborhood, you have a better chance of getting a job than the people around you. An economist named Barry Bluestone said many years ago: getting an education is like getting a new pair of running shoes to go bear hunting with your friends. On your own, you can’t outrun the bear, but all you have to do is outrun your friends, right? So the bear eats them and you survive. That helps students understand that particular way of thinking about how we use education. Again, that’s thinking just about education in a very narrow way. But it is an important way that we use education. We spend a lot of time talking about why education can’t end poverty. In recent years, we get a chance to see, for example, in 2018, there was a magnificent headline, well two headlines, in the New York Times. One was about how prisoners were being taken out of prison and put to work in factories because the factories couldn’t find enough employees. Okay. And the other one was, employers no longer require drug tests. Okay. Now, for decades, we’ve been told that these people end up in prison, they really can’t get jobs, they’re not job qualified and so forth. And the people who smoke dope, obviously, they’re unemployable. Well, it turns out, they’re not. In a tight labor market, there’s room for all those people to be employed. And that’s important, because it wasn’t that those people got an education in prison that allowed them to go work in an automobile factory. It was that we had a tight labor market, employers were competing for employees, and they wanted to expand the pool of employees. So they wouldn’t have so much pressure to pay them more. So they go into the prisons, they get workers who they would have rejected before, because they would have failed the drug test. But now they can hire them. It really is that these people are functioning as a reserve army of the unemployed, being drawn in when the labor market is tight. All of that helps students to think about education in a much broader way. That all helps students think more deeply about the limitations of the conception of education of our political leaders. They really are misleading us about the role of education. For example, we actually talked about this in class: President Clinton always talked about people who are unemployed and were not job ready, and they needed to get the training, so they would be job ready. Well, the only time you talk about job readiness is when you have unemployment, you’re a political leader, and you don’t want to say, well, I could have different policies, and then people will have jobs. Instead, you put the onus on the unemployed and say: well, they’re just not job ready. But Clinton himself, when he ran for president in 1992, the big conflict between him and George Bush Sr was how low unemployment could go without triggering inflation. Clinton said it could go down to 5.5%. George Bush thought it could only go to 6.1%. So they’re debating this, of course, and they’re saying, oh, unemployment, we have to keep unemployment high in order to forestall inflation. It’s interesting when we talk about that, just as an aside, I tell my students: now if you believe that, how would you distribute unemployment fairly? Would you have a lottery? So it’s not always the same people who get shoved on the unemployment line. But what’s interesting to note is that Bill Clinton, I had this really interesting, short article that for years I had students read. It was titled, “Professors Give the New President High Marks.” Bill Clinton was talking about how low unemployment can go without triggering inflation. Then Clinton says, “we have to have” … It’s interesting, he talks about, these people are unemployed, because we need to have high unemployment, to forestall inflation, but the people are unemployed because they’re not job ready. They don’t have the training and the skills to get the jobs. If we did that, they’d find jobs and it’d be fine. My students read that and just within a couple of paragraphs to get a chance to, okay, here, he’s saying we need high unemployment to forestall inflation. And here he’s saying, we need education so people can get jobs. But if education actually worked and people got jobs, it would undermine his effort to use high unemployment to constrain inflation. Of course, unemployment dropped to 4.0%, and we didn’t see inflation, right? Alan Greenspan, appointed by Ronald Reagan, as chairman of the Fed, continued for many years through the Bush administration through Clinton. He’s saying, well, there is this rate of unemployment that, if we fall below that it will trigger accelerating inflation. But we can’t see what it is. We know it’s there. But we just can’t see what it is. A very odd thing for someone who calls himself an Objectivist to claim, right? I mean, so anyway, you see how Clinton was just simply wrong about 3 million people not having the skills that were needed to get a job. Of course, he’s wrong about the other millions too. Under the right circumstances, of course they would have jobs. They’d be able to do just fine.

Scott Ferguson:  So we’re getting this sense in which your pedagogy around the social foundations of education are not only situating education in a broader social context, but also in a political economic context. And that for you, and for a long time, Modern Monetary Theory, or the ideas surrounding Modern Monetary Theory have been really central. What we’re hearing is that you have a practice of orienting your students to the evidence of the world like. Like a seemingly innocuous article about giving the new president high marks on his economic discourse, how whether it’s explicit or implicit, how the Modern monetary theory perspective makes contradictions in the dominant political, economic and education discourse extremely salient, such that you can’t ignore them. You can’t pass over them. I want to go further into this project of yours. But I want to step back for a second and tell our listeners a little bit about how I’ve gotten to know you in the last year.

Larry Johnson:  Yes.

Scott Ferguson:  You emailed me probably about a year ago. You are a professor at the University of South Florida, as am I. You’re at our St. Petersburg campus, I’m at the Tampa campus. And you invited me to participate on a committee that you were putting together. And that all went very well. There’s no reason for me to talk about the committee work on this podcast. But I remember when you first emailed me, you introduced yourself and said, how about you join this committee? It’ll be good fun. And by the way, I’ve been practicing MMT for something like 40 years. I did like a triple take. I read the email like 10 times and I thought to myself, first of all,: what? I thought I was the only strange Freakazoid at the University of South Florida that cared about Modern Monetary Theory, let alone heterodox economics. Secondly, I was just delighted that somebody else cares. I’m not alone. And thirdly, I was pretty confused because, as far as I know, Modern Monetary Theory is not that old, right? Modern monetary theory came into being in the mid to late 90s, famously on a heterodox economics listserv. And you’re telling me that you’ve been doing this for decades. And I’m just scratching my head. Part of me thought: I’m sure he thinks he’s telling the truth, but is he lying to me? What’s going on? But then it turns out, right, that as you’ve informed our audience, you’ve actually been reading the works of the heterodox precursors to what eventually comes to be known as MMT. Right. 

Larry Johnson:  Okay. Yeah, yeah.

Scott Ferguson:  And then MMT is a much later designation for this body of scholarship. I mean, here’s another aspect to this story that I think is defamiliarizing for me and potentially for our listeners, which is that I think of Money on the Left and our editorial collective as being, along with certain movements in critical legal studies and left law scholarship and activism, I think of us and this generation as being on the vanguard of doing interdisciplinary research with MMT principles and ideas and trying to think about what are the implications for MMT once you start taking them outside of heterodox economics as relatively narrowly defined? And it turns out, I guess you beat us to the punch a long, long time ago. So we genuflect to you.

Larry Johnson:  Well, Thank you.

Scott Ferguson:  But with this background in mind, I’d like to get back into some of this interdisciplinary thinking and pedagogy that you’re doing with your students around education and the political economy of education, and obviously, the sort of political and even radically political importance of education for social justice and environmental justice. But at the same time, the kind of blind spots the normative or hegemonic blind spots that position education as a kind of salve, and as a kind of excuse to perpetuate a society of austerity and all the kinds of sexist and racist and homophobic and ecocidal impulses that are behind it. And I know you’ve talked to us in our kind of preliminary conversations a lot about the way that the rhetoric and politics of testing has informed this kind of dominant impulse of austerity. I was wondering if you could flesh out some of that argument for us?

Larry Johnson:  Sure, sure. Yeah, it’s useful to start with a couple of things that happened in the early 80s, particularly in 1983. Oddly enough, one year. You had the publication of A Nation at Risk; the report from the Reagan administration that claimed that schools were failing, and that’s why we were unable to compete effectively with Japan and Toyota was making better cars than Ford and selling a lot more of them. This report made a number of claims about declines in test scores, what students were and weren’t able to do. I’ll just give you a brief account of that. It has a list of 12 or 13 claims that justify their report. I always have my students go through and look at those claims. One example is that in the report, they say, there’s been an unbroken decline in science test scores for 17 year olds. And this is from the National Assessment for Educational Progress tests, 9, 14, and 17 year olds. So you wonder, well, what about 9 and 14 year olds? Well, I get my students to look up AP scores. And sure enough, those kids do pretty well. There’s no evidence of decline. Then we look at this wonderful graph, and it shows the exact data that the President’s Commission on excellence in education was looking at. You look at the 9 year olds, 14 year olds, and you see no decline in reading, math or science. Same with the 14 year olds. Then you get up to the 17 year olds, and in math and English, they’re doing just fine. But in science, they have a relatively flat line and then a little bit of a downward slope between 1980 and 1979. Before that, there isn’t any data comparable, so they project that data. They assume that well, in the sense scientists assume things I suppose –maybe not scientists, but others — that this brief downward slope they see between a couple of years, that slope continues on into the past. So they retroject or retrodict. Instead of predicting, they retrodict; they predict about the past. And they claim that the scores would have been. That’s how they claim there’s a decline in scores. My students go through and look at every one of those claims in the report, and they find not a single one of them is clearly true. They’re either misleading, they’re false, or you can’t quite be sure what they mean. One of my favorites is that the test scores of students graduating college are also lower. Well, we never had, fortunately, an FCAT testing program to test people as they graduate from college. If you go into graduate school, you take the GRE and stuff, but there’s nothing that we do, like in many states that have tests for kids graduating high school, or maybe their sophomore year in high school. But there’s nothing like that in college across the country, so there really was no way to make that comparison. But if you think about it, test scores are also lower. Well, there’s no clear meaning to it. It’s like the language of advertising. Tied, get your clothes cleaner. Cleaner than rolling around in the dirt? Sure. Yeah. It makes no sense. I have my students look at those kinds of claims. I have them look at a speech that Barack Obama gave his first year in office to the Hispanic Chamber of Commerce. His major Education addresses his first year in office. In this address, I haven’t listened to a clip lately, but he make some claims about Blacks test scores and test scores in general, it’s always objectionable, but he says in the course of this: if we’re looking at our international comparisons of scores in science and math, we have fallen to ninth place. Well I looked at those scores with my students, and it turns out the previous test, the United States, was in 16th Place. So if you go from 16th to ninth, are you falling or rising?

Scott Ferguson: We fell up! 

Larry Johnson:  We fell up. That’s right.

Scott Ferguson:  A tragic ascension.

Larry Johnson:  A tragic ascension. Yes, yes. So it’s pretty clear that Obama wanted to say something negative about education. It’s been common in politics, for presidents at least, for the last 60 or so years. Going back to the 50s and Eisenhower’s time with Sputnik being launched then people say: oh their education systems are better than ours. Which is another matter. It’s one of those things where just you see political leaders want to say something bad about the school system. And it’s very odd, like Obama, if you may recall, between the time he was elected, and when he took office, he was asked constantly about, should we clawback that money from the banks, the fees that they got. He says: no, the sanctity of the contract has to be respected. Then his first year in office, Providence, Rhode Island fires all the teachers in high school, which violated their contract, right? They hire back all but the leaders of the union there, and Obama says we should have more of this. The teachers’ contracts are like straight jackets, they’re keeping us from reforming the schools. I was asked whenever I ran into a strong supporter of Obama’s. I always ask them, I think it’s a question that he should address too, why are contracts with bankers sacred, and those with teachers profane? It’s just amazing how they maneuver to position schools and teachers as the enemy. And that means that they can deflect criticism of their policies and say, Oh, it’s a failure in education. You think about The Nation at Risk, saying, Oh, our education system explains why Japan’s able to build better cars and sell them better than Ford. Well, Japan’s economy went in the tank a couple of years after that. They didn’t say, Oh, that was their education system. And our car started selling better. They went back and said: our teachers are doing this. Of course not. Now I mean, whether we sell cars, that depends on federal policy. It depends on decisions of people that own car companies, all kinds of things, and has nothing to do with education. Education is just an excuse. Let me come back to what was going on in 1983 because it’s very useful. That year is when you see this testing regime really being put in place in southern states. Mark White, Democratic governor of Texas promises teachers he’ll give them a raise. He goes to a businessman and says we want to give teachers a raise. Well, I know you want to make sure the teachers are competent. So we’ll test the teachers, make sure they’re competent, and we’ll test the students to make sure they’re learning. So they invented this whole big testing rigmarole. Ross Perot heads up his committee that creates his reform plan. Bill Clinton in Arkansas the same year, creates a committee on educational standards headed up by his wife. And they come up with exactly the same plan they did in Texas: massive testing of teachers and students. Richard Riley in South Carolina, he became Bill Clinton’s Secretary of Education and does the same thing there. All Democrats in the south. Then Lamar Alexander, the only Republican that I’m aware of, in Tennessee implements exactly the same plan. These ideas are very prominent in the south. It’s odd because these southern states have among the worst education systems in the country. In Tennessee, they ranked 49th in per pupil spending, and their graduation rates are right at the bottom. Same with all these states. But they end up dominating national education policy. There’s no other word for it than just deplorable. These people, they are the ones who put the straitjacket on education, making it much more limited. Their focus on test scores is: we have to test students to make sure they have the knowledge that their future employers want. That’s a question that we should never ask. We need to ask, what do students need to develop fully? What do they need to interact with the world in useful and interesting ways? I mean, if their employer wants them to know something, they should foot the bill to train them. Of course, they don’t want to do that because if they train them, then they can go to work for someone else. They want to socialize the cost of training by putting more and more of the stuff in the schools. But there’s no evidence that employers even care about these test scores. Bill Gates has put hundreds of millions of dollars into improving test scores, and in the old days his job application used to be available online. It doesn’t ask you to give your high school test score. One of my mother’s great nephews, my grand nephew I guess, went to Microsoft to work. He was from California, I asked him, did they ask you for your California test scores? He said, of course not! The only ones that had to get tested were in the keyboarding pool. The typing pool, we used to call it. So they do their typing tests, but nobody else. His whole thing was to program handheld devices. He didn’t have to report his test scores.

Billy Saas:  So what are those test scores doing then? On your read?

Larry Johnson:  Oh, what do they do? That’s a really good question. One is you can always find a way to use them to undercut education. Think of No Child Left Behind. It divides students up into different groups based on race, whatever. And the more time the more groups you divide any larger group into, the more likely you’re going to have a group that falls below some arbitrary standard. So diverse schools. We’re gonna finally disaggregate the scores so we know how Blacks are doing, how Hispanics are doing, this and that other groups are doing. But the more groups you create, the more likely you’re going to have one group that fails. Now, I’m not just saying that off the top of my head. There were a couple of people who worked in the Bush administration who explained very clearly, when they were interviewed, that the goal of No Child Left Behind was to make schools look like they were failing and make it easier to privatize them. It’s a very simple argument. Testing goes way back. When Horace Mann created the common school system in the 1830s. He and his allies figured they were trying to promote centralizing control of the schools more in the state school board. Mann created the state school board in Massachusetts, and he was its first Secretary of Education. He and his allies created a test to test common school kids. You have to remember, common school takes you up to like the third grade, or what we would call a third grade. They had these test questions, they asked all the kids in Massachusetts, and one of the questions was: you’re in Cincinnati, Ohio, and you’re traveling to Vienna, Austria. Name of the rivers, locks and oceans you would travel through on the way. Now you have to ask yourself, do you think Horace Mann or his friends could have answered that question without looking at a globe? I couldn’t! Could I have even understood what it meant when I was a third grader? I’m not entirely sure. So yeah, and another question they had was, if you’re traveling on the Mississippi, is Cincinnati on your right or your left? That’s the question. Well, it depends whether you’re going upstream or down, right? So you literally can’t answer. So the kids didn’t do well on his test, not surprisingly. Mann could step in and say, Okay, we need greater centralization of the schools, greater standardization. People have always understood how they can use testing to achieve a political goal.

Billy Saas:  Just a little anecdote, I live in New Orleans. We have a four and a half year old who’s looking to get into kindergarten, which means they’re entering into a fully charter system.

Larry Johnson:  Yeah.

Billy Saas:  Very overwhelming org charts. They have CEOs at each of these respective charter schools. And there was this really great pitch that they were giving, these are people representing the school system and trying to help us navigate this just circuitous and helplessly bureaucratic, but also, free market. Yay!

Larry Johnson:  Which, by the way, was supposed to do away with bureaucracy, right?

Billy Saas:  Exactly. Oh, my goodness, just looking at my partner the whole time I’m like, this is not efficient. One of the things is that it used to be the case that in order to get into the schools, you’d have to apply to each one, right? And there’s something like 65. Not all of them service kindergartens. So they made it more efficient by creating the one app, or the common app, where you can apply and then you just list your top 5, 6, 7 or whatever. Then you enter the lottery to find out if you get into that one. Two of the kindergartens have testing. They say that the common app is supposed to be, you fill it out, and then everything’s sorted out. It’s something that makes it easier for parents and schools and everything, and it’s universal. But then they make this qualification. This is what happened throughout the entire presentation, it was like: this is the universal policy, and here’s how it is changed at every individual school. And here’s why you as parents need to start researching last year in order to figure out where you’re going to send your kid to kindergarten. But the testing thing is something that everybody knows in that room. It felt like because charters are so dominant in New Orleans, that they don’t have to give an argument for the system. So I asked about the testing, and is that equitable. I happen to know because we’ve talked to people who’ve had students go there before to take the test that they use iPads, and they complete the tests on iPads. And there are many just sort of transparently prima fascia inequitable practices entailed. So we asked the question, how do you ensure that this is equitable? The question can’t be answered because it’s transparently not equitable. That’s why it exists, right, for separation purposes. That goes back to the testing, in general, as a premise for privatization or creating new markets, right?

Larry Johnson:  Yeah. So we wouldn’t test kids unless we wanted to say they were different and deserve something different, unless we had some other goal.

Billy Saas:  Exactly. Right. So when you are outlining this history, you’re drawing a line between Alan Greenspan’s theory of engagement with NAIRU to funding for education.

Larry Johnson:  Yeah.

Billy Saas:  The fact that the chair of the Federal Reserve is in a roundabout, but maybe not so roundabout way, determining the boundaries of education policy. It seems like you do this very deductively over the semester with students. How do you end up at the end of the class without there being a kind of revolt and tearing down the walls of the classroom itself?

Larry Johnson:  Well, yeah, that’s so funny, worded that way, because one of the things I do is when we’re looking at the criticism of education, I quote from Alan Bloom’s book. He wrote a book criticizing schools and stuff, and he says in there: the American education system has totally collapsed. We’re sitting there and I say, look around, collapsed right? Here you are in college.

Scott Ferguson:  Is this The Closing of the American Mind?

Larry Johnson:  Yes, yes. Thank you.

Billy Saas:  The roof might be collapsing in on you. But the firmament is there.

Scott Ferguson:  Yeah because it’s underfunded.

Larry Johnson:  Yeah, we get a chance to look at another strand of those kinds of arguments.

Billy Saas:  But it seems like it is quite literally, you are inducing a revolution or a full scale change in thought and how we understand or are educated to understand what education is and what it’s for. Maybe you could share anecdotally what the student response is to this kind of cumulative macro picture, political, economic situation in education?

Larry Johnson:  Sure. You know, it’s surprising I taught this way at Utah for a number of years. Then, when I came to St. Pete, when I came to USF, it was really interesting. The very first semester that I taught here, I had some incredible students, one of whom ends up on the faculty with me now. But on their own initiative, they continued to meet after the end of the semester, to continue to talk about what to do with these ideas. I’ve had other students tell me that they have taken what they’ve learned and tried to figure out how to use it in an age appropriate way with their students in elementary in high school. I had one woman, this was actually at Utah, who tried to figure out what she could do with this stuff, what she would do teaching first graders, so they could get a foundation so they could resist propaganda later on. Yeah, surprisingly enough, she actually applied for — there was a national group that was providing money, they just chose one person. It was for somebody who was trying to have a transformative career in education. Here she was, and most of these people are already teaching, and they’re coming back for masters and doctors. She was an undergraduate, and she applied with her ideas, and she ended up being a finalist for this. She didn’t get it, but she went a long way. Much further than I expected. It’s interesting to me, I mean, I have students who come back three, four or five years later and say: when we were in class, I thought it was a bunch of garbage. But now I’m out there teaching, I can see why you had to think about this stuff. They’ll talk about how their curriculum is indoctrinating the students with neoclassical economic ideas beginning very early in grade school. So they’re thinking, okay, now that I have different ideas, how do I respond as a teacher? What can I do? They often come back and ask me and I’m not always much help. I’m usually a listener and ask them questions, try to figure out okay, what do they want to try to do? Okay. You want your students to understand this? Their first graders. Okay, how do you get them to think about this so it doesn’t fall back on the standard “the federal budget is like the family budget.” Okay, how do you help them to do that? And how do you help them understand that the federal government issues currency? Once you understand that it changes everything.

Billy Saas:  The fact that it prints the currency, that it makes the currency, that it circulates the currency is, in this case, maybe not as important as highlighting that, at the same time, it doesn’t do it. Like when it doesn’t want to do it, and to what ends it is not?

Larry Johnson:  Oh, yeah.

Billy Saas:  To those first graders, the reason that we don’t have music class anymore is because the chair of the Federal Reserve thinks that unemployment is too low or whatever, right?

Larry Johnson:  Yeah, so we’re gonna cut everything back. And that means you’re gonna have less in school. Now, they’re not gonna have less in school up on the east hillside where the rich kids go, but we’re gonna have to get by without trumpets and clarinets, for band class.

Billy Saas:  Because our test scores are low.

Larry Johnson:  Because our test scores are low. That’s right.

Scott Ferguson:  I can speak from experience that …

Larry Johnson:  Please do.

Scott Ferguson:  Teaching some of these fundamental principles of public endogenous money gets easier and easier the younger and less indoctrinated your audience is. I can say this about my own children. I mean, my now 15 year old, I think I probably started talking about MMT when he was four, four and a half, and I never stopped. It’s very easy to just begin with money is something that is public and comes from the government and is organized by the government. It is given out and not given out in different ways. Where teaching MMT gets very, very challenging is when you have to cut through all of the neoclassical assumptions and garbage and even cut through some of the more critical approaches to political economy that sometimes come out of the Marxist tradition, and Polanyi, and some of these other traditions. It’s when you have to unwind those worldviews when things get very difficult. The basics of MMT, I mean …

Larry Johnson:  Are pretty easy to understand.

Scott Ferguson:  Pretty easy. I mean, some of the stuff about the interest rate is supporting this and that and the financial system. We don’t have to talk about that with the four and a half year old. But nevertheless, I think it is a lot easier.  I’m actually curious to hear you talk a little bit about pushback, if you get any? When I’m teaching, I don’t get a lot of pushback, but I will get a lot of bewildered faces. Like huh? But I know you’ve told me about, I think I recall, parents have contacted you kinda wagging their fists on some of this stuff?

Larry Johnson:  They’re less resistant!

Scott Ferguson:  Yes, yes. They think I’m indoctrinating their child. But what I found exciting about all those things is that the students were going home and talking to their parents and their spouses and their kids about all this stuff. I mean, that’s great. Yeah, I’m happy to talk to any of them. We don’t have to agree. It’s about, you know, stating the debate.

Larry Johnson:  That’s exactly right. I always hide behind that.

Scott Ferguson:  No, but it is both true.

Larry Johnson:  It is. I’m not trying to change what you believe, I want to change what you understand. I want to help you to understand things that you may not have understood before. You can think about this. And I know my students will think about it for years, and come back and tell me they’ve continued to think about this stuff.

Billy Saas:  Well, I think that you’re talking about the deductive approach, as I’ve called it, where you’re putting the evidence in front of them in sequence over time so that it’s not … If it’s indoctrination, it’s very passive, right?

Larry Johnson:  Very much, yeah.

Billy Saas:  And can’t be considered indoctrination to the extent that you’re just sort of questioning things, right?

Larry Johnson:  Yeah, and it’s funny how students will come to insights. I remember, I was talking about a student we were talking about. Actually, this is kind of funny because I often these days will show undergraduates and graduates the little collection of video clips that one of Stephanie Kelton’s postdocs did where they have people talking about the budget deficit and all that stuff: Obama leads, oh, we’re out of money. We have to get our credit card with the Bank of China, blah, blah, blah. They’ll watch that, and we’ll talk about it. Along the way, we’ll talk about Obama. This is very interesting in, say, 2018 when unemployment had dropped down well below 4%. We talked about Obama, what his beliefs were about the budget, which was always interesting. I’ll mention, you know, his position was that unemployment couldn’t drop below 5.4%. without triggering inflation. 1/10 of a percent better than Clinton, right?

Scott Ferguson:  Progress!

Larry Johnson:  Yeah, progress. Yeah. This kid who had been pretty quiet most of the semester, pipes, and he says, but he was wrong, wasn’t he? I said yes! And for that student, that conversation opened it up, and he’d go back and look at stuff we’d read, that he just hadn’t comprehended. But for some reason, understanding it that day opened up the whole semester for him.

Scott Ferguson:  You never know when it’s gonna happen.

Larry Johnson:  That’s right. It’s kind of the neatest thing. Yeah. Wow, you have a kid back there. He doesn’t say much. He’s kind of you know, morose. He’s just coasting through. And then suddenly, something happens. And you figure a lot of stuff out.

Scott Ferguson:  We’d like to talk to you a little bit about the history and structure of school financing in the United States. And neither of us are experts at this.

Larry Johnson:  Me either, there are people that know a lot more about this than I do.

Scott Ferguson:  Okay, well we still want to pick your brain. As you know, we became interested in this question in higher education, which has an entirely different financing structure, and its own history. We were responding to the calls for downsizing, and austerity, and the elimination of departments, and greater adjunctification, and the exploitation of staff and students and graduate workers, et cetera, et cetera, especially during the pandemic. And the idea was that there was some natural occurrence of this virus and yeah, and state state revenues were going to drop. And so there was really no choice but to not not let the crisis go to waste, so to speak. And to cut, cut, cut are already struggling Universities, especially the big public ones. And we came up with a proposal that understood money as public and as endogenous. And as designed. We called it the uni short for university, a kind of university currency. But we named it the uni to rhyme with Muni, because the Federal Reserve, we’re mounting with all kinds of Windows, so to speak, for various sectors to take advantage of to stabilize their liquidity access. And they have opened up a Muni right. Liquidity facility. And we were first arguing that, well, if it’s good enough for municipalities, why isn’t it good enough for big public university systems? And then over time, we began to experiment and rethink this. And later on, we were thinking, well, maybe we can, we can structure the financing of the public university system across the country, via the Treasury, and maybe we can bake this into the proposed public Banking Act. And this can be public financing as needed for the public purpose through these major centers of research, and these economic anchors and all kinds of regions. And you’re familiar with this proposal. I think a lot of our listeners are familiar with this proposal. And what I would say is, you know, this, this would be interesting to me to contemplate, for K through 12, which I’ll just say what little I know about K through 12 financing, which is that it’s his Historically tied to property taxes, I think at the county level, which is already deeply classed and perpetuates the myth, that taxpayer money finances, things instead of, instead of anchoring the currency, and, you know, we we draw on the work I’m not sure if you’re familiar with her work. Her name is Camille Walsh. She’s a historian who wrote a book called racial taxation that’s all about tracing the kind of rhetorics of taxpayer citizenry, taxpayer citizenship, in the history of American education, policy and politics, and and essentially making the argument that this becomes a highly racialized in addition to a class category, that that of course, justifies, justifies the perpetuation of itself. So I’m wondering, what do you know about the financial structure of K 12 education in our country? And how would you maybe recommend going about transforming it with public, endogenous money in mind?

Larry Johnson:  Yes, very much. Yeah, actually, let me shift gears a little bit, and talk a bit about the effort to restrain the universities. As you may know, in the middle of the 20th century, Republican and Democratic governors had created a higher ed system in California, that was tuition free. You did not pay tuition from community college up through your doctorate if you’re a resident of California. When Ronald Reagan decided to become a right winger, he was the perfect candidate for them to run for governor and he succeeded. He set about attacking universities right away, because universities, of course, he and his allies saw as the origin of the civil rights movement at colleges and universities. The origin of the anti war movement, blah, blah, blah and set the state police out to pull protesters down the marble steps at the administration building there at the University of California, bouncing off the marble steps. Then, even though tuition free colleges and universities were very popular in California, he was determined to impose tuition. A guy who was working in the Nixon administration named Roger Freeman went out to consult with Reagan to help him do this. Freeman was quoted in the San Francisco Chronicle as saying, we have to be careful about who we let into and through our universities, because we are in danger of creating an educated proletariat, and that’s dynamite. Spiro Agnew said, straightforwardly, we’re letting too many Blacks into the universities, we need to stop that. Nixon himself made several comments about making universities more expensive. Now, universities were free in California, but across the country, they were much, much cheaper than they are today. When I was a sophomore in college, it’s actually in the economics class I told you about. I wrote a paper that compared tuition in the state at universities that were designated the liberal arts university in the state, sometimes people call them flagship universities like University of Florida here. Then the state universities like Florida State and Utah State, and then state colleges, like Weaver State College in Utah and well New College here. I looked at all 50 states and I looked at their liberal arts university, the State University often had been called agricultural colleges in the past, agricultural mechanical colleges, and then they were all universities, the University of Utah, Utah State University, Colorado, Florida, Florida State. Then, the college system. In the university system, our tuition, across the country, paid between 11 and 14% of the cost of the college education going through a bachelor’s degree. The rest was paid by the state, some federal money, grants, other things, some foundation money. But, state appropriation was a big chunk. Tuition paid a very small percentage. If you looked at the state colleges, that tuition covered about 7% of the cost of the students’ education. People that allied themselves with the right wing of the Republican Party, not the Lincoln wing, which is rapidly disappearing. Their goal was to make universities more expensive, and restrict and make administration more controlling, so they could make the universities do what they wanted, rather than have them be an independent source of criticism, and so forth. They were really pushing that idea and trying to make it so that universities were not as open or inviting or accessible to nearly as many students. Some people say they didn’t anticipate the students would be willing to go into debt with student loans like they have been to get a college education, which really shows how important they are to students. Maybe they were, and that was okay, because that would then strengthen the banks, you had all this debt to the banks. In any case, their goal was to change the universities so they were not criticizing the church and the state. Going back, I used to joke with people all the time. Universities need to understand why Roger Bacon was willing to go to prison in the 13th century. Universities have a long history and have a long history of challenging sources of power. That’s an essential part of what universities are. That’s not the only thing universities do, but it’s one thing they have done, certainly from time to time. So, if you’re representing an authoritarian wing of politics, you want to restrain that at the very least. You want to focus universities on doing things that will benefit corporations or the capitalist class, generally. You don’t want them to be a source of criticism. One way to do that is by restricting access to universities by the working class.

Scott Ferguson:  So can you speak to the problem of K through 12 financing? And if we were going to harness the powers of public endogenous money, that’s just step one. What happens when we need to implement it and implement it in a democratic and inclusive way?

Larry Johnson:  Right, right. I think the problem there would look very much like the problems with universities. How would you make sure it would be used for things that benefited the students or society, rather than some other interests in the community?

Billy Saas:  Say a CEO.

Larry Johnson:  Yeah, paying a CEO. We know with charter schools, they pay their CEOs far more than school principals get paid. In New York, an organization had two charter schools, and the CEO over this, they called it a network of charter schools, was paid more than the Chancellor of Education in New York.

Scott Ferguson:  I like that you laugh at these atrocities. I think it’s healthy.

Larry Johnson:  The only way you can keep fighting. But Juan Gonzalez has written some really neat stuff back in the days when he worked for the New York Daily. He had some really neat articles about what’s going on with charter schools and how they were paying their CEOs exorbitant sums. And of course, that’s what they cared about. You take the Pay for Success stuff that Barack Obama promoted, and George Bush actually started, but they would pay people to …Like the banks, social impact bonds. You get some money from Goldman Sachs. Actually, in Utah, Goldman Sachs was part of this. They came in and they offered programs for disabled kids. Then, each year that those disabled kids stayed out of special education classes, stayed in regular classes which reduced the costs, Goldman Sachs got paid for it. Which, to my mind, is insane. For Goldman Sachs, it was a way for them to get money out of the public schools. This is a big deal. If you read Barack Obama’s Every Student Succeeds Act, it’s filled with that. Obama takes away states’ right to limit or prevent charter schools. He says, Every state, if they’re going to receive Title One money, has to allow charter schools. And all the states have to engage in what he calls Pay for Success, this whole system where somebody comes into the program, and it works, you pay them. Like with Goldman Sachs in Special Ed, if you continue to see benefits in your schools, then they’re entitled to get some kind of compensation, because they’re continuing to benefit the school system. That’s a very destructive way to treat the education budget. People have to realize, public education has a budget of right around $800 billion. Students don’t often realize that. That’s a lot of money. If you can privatize this and still keep that money stream going, you can make a lot of money. If you can get even a small share of that, the biggest share of that is state funding. Federal funding is a chunk of it, and then you’ve got local millage and so forth, it provides some of that. That’s a lot of money to spend. You divide it up per student, and you see it’s not a whole lot per student. But the problem is, it’s not distributed equitably. Schools that serve wealthy families may, as Jonathan Kozol points out, get 10 times what schools serve poor families get per kid. Certainly, two or three times as much. I mean, I’ve seen those examples myself. If you think about what happened in South St. Pete, when they re-segregated the schools, they actually reduced the funding going to the segregated schools that would serve just Black kids on the south side. It’s just remarkable. That happens partly because we don’t have a strong enough democracy to control it. We’ve limited the vote, we’ve restricted voting in ways where, if you’re in one of those communities, you simply it’s harder to vote, you don’t have the standing to go to the school board and speak. So I often tell students, if we want to improve the schools, we have to make sure we have universal suffrage. Everybody votes, everybody gets counted. You have to have universal employment, job guarantee, everyone has a job. I used to spend a lot of time organizing poor people to go to the school board. They would ask these people, I mean, they would show up certainly in a different quality of clothing than the school board members wore, for the most part. They would ask these people what they did for a living, and they’d say I’m unemployed. Once they said they were unemployed, you could see people stopped listening. They just don’t have the standing to be heard. So you have to organize in other ways to get their voices heard. You have to put pressure on the board in other ways. But if we had a job guarantee, those people would have standing to speak for their own kids to push for the schools to serve their own kids. Then, I think you could have a chance. One, you could prevent the kind of destructive use of funding or use of funding to destroy schools that serve poor kids. You could actually have people getting something better out of that. Say for example, we had a government through whatever mechanism was willing and able to willing, obviously they’re able to issue the currency so that we could have more money for schools. Really, for poor schools, schools serve kids who are disadvantaged in a variety of ways. That would be great. But unless we control the political situation, that money wouldn’t be spent where I would argue it needs to go. We’ve got to address that political issue so that no matter how much money we can create, it goes to the right places. Don’t use it to fund wars. We use it to actually provide a decent education for kids. I’m always amazed at how committed parents are to education. They need to get that support, the money coming into their schools. We people talk about the schools here in St. Pete, how terrible they’ve gotten after resegregation. But still, most of the parents even though they know there’s a lot of violence in the schools, they know the teacher turnover is high, they have the least experienced teachers, and a curriculum that they don’t necessarily find engaging. But nonetheless, they send their kids there because they believe that the kids will get something valuable. That’s true across the country. I remember attending a conference 30 years ago where a woman was talking about the schools in Chicago, and she described them grimaced, the way Jonathan Kozol describes the schools in his book and in poor communities, especially poor Black communities. The window encasements are falling in, there’s sewage coming up through the drains, or even out on the playground. She describes the schools, and then she shifts and she talks about only 57% of the students graduating. I’m sitting there thinking: if I had a school look like that, I wouldn’t go. I would just tell my parents, I’m not going. But 57% of these kids persisted and graduated from high school. That’s remarkable. That’s an extraordinary commitment to schooling. We ought to support that by actually spending the money. It’s hard to imagine how you would organize a movement to get that funding now from state legislatures. But if you could use the issuing of currency to take away their argument that they can’t afford it, then at least we would talk about it in real terms. It’s okay, well, this is what the kids need. We don’t want to give it to them. It forces them to say, we don’t want to give it to them rather than what we can’t afford.

Scott Ferguson:  It forces the class and racial and, and sexual politics to the forefront rather than having those be hidden behind seeming not laws of nature and economics.

Larry Johnson:  Yes. We can never explain why we can’t afford it here, but up there, suddenly, we can afford it. We can afford it last year there, but not this year here. Yeah. That funding is always used to dodge what needs to be done, dodge having to say straight out what they’re actually doing. If we took care of the funding issue, then we can have a much more vigorous debate about what we ought to do, and why we ought to do it. That’s not it’s not a very technical discussion of school finance. It’s what matters. Yeah. That’s an important part of how I see this. It takes one of the most destructive arguments that never leads anywhere off the table. Because now they can’t use it. We understand we can spend the money if we choose to. That’s what we have to address if we choose to. What do we choose to do? Clearly a political problem. Yeah.

Billy Saas:  What a wonderful way to start winding down. Probably a good place to end it but I can’t help myself. I like in my classes where we talk about the job guarantee. I have a similar sort of let’s take steps there and kind of stumble into the revelation and see how encompassing this is. I like to pose the question, visa vie education and money, what would happen to education if there were a robust, strong, universal job guarantee where the jobs paid well, had benefits, did not require in most cases, or if any, credentials in the same way, because you’re learning on the job, right? You’re learning the job while doing it. What do you think would be maybe the most radical changes if we had a robust job guarantee?

Larry Johnson:  I actually asked my students exactly the same question. If we had a job guarantee. What would that mean for education? How would education look differently? How could it look differently? My students, probably because they’re my students, then say: then we could do the things we ought to do in education. We can help students understand the world. We can help them study examples of how people built coalitions to get something they want in the world, that kind of thing. And it would take the straitjacket of job preparation off of us.

Billy Saas:  What’s exciting and makes me a little bit anxious is, it reduces the priority of education in its kind of strongest rhetorical sense, as we’ve been critical of it. Right, it becomes less important.

Larry Johnson:  Yeah, you know, it’s funny, I actually have had a student say, only one, fortunately, in 30 years, that: if we do that, how are we going to motivate students to do well in school, if we can’t tell them they have to do well in school in order to get a job and they need a job in order to survive? Well, then you have to find other ways to make what you’re teaching valuable to the student. I remembered going through school having teachers constantly talk about, when you’re in third grade, or well, my third grade teacher didn’t do this. When you’re in second grade, my second grade teacher actually did this: when you’re in sixth grade, you’ll need to. Everything’s about preparation for the future, and then in junior high it’s: you’ll need this for high school, and you’ll need this when you apply for a job. I had my student read a piece which actually addresses this question. The people who pushed vocational education, really, were able to establish this idea that the purpose of schooling is job preparation. So they get a chance to read some of the people who make these arguments and they read a really nice piece from a different perspective, comes back and says, …Herb Kliebard characterizes this process: All education is just shilly-shallying, waiting for the future. There’s nothing of value in itself at the time. And arguing as Dewey did, that we need to make education valuable to kids at that time. We have a sense that there are many things they need to understand about the world in order to make the world the place that serves them, a good place for them to live. They need to understand those things. They need to have those conversations. They need to be educated and learn things so that they can have those conversations. Like Blacks in the 19th century wanted education, to give them the intellectual tools that they needed to discuss what freedom would mean for them.

Billy Saas:  The return to education as liberation. Yes. Not shilly-shallying your way to a job. Well, increasingly, the carceral apparatus of the state is working to ensure that you are there shilly-shallying, and you have no other option.

Larry Johnson:  That’s right. Yes, for sure. And nothing else can be of any interest to you. I was like my parents’ attitude. When I was growing up, we didn’t have much homework in public schools, not in grade school. The only time you had homework was if you were sick, and you missed a few days, and sent some stuff home to catch up. In high school, not a lot of homework. I tried to do most of my work in and around my classes. So when I got home, my time was my own, I could do other things. My parents really supported that. Don’t just stay locked into school. You don’t want to be someone who comes home and then just goes into your little cubicle and continues doing schoolwork. This is the time for you to do other things you need to develop other things. If you do that, you’ll get more out of school. So that was a really interesting approach. They were very clear about that. My mother was a schoolteacher. They just said, you can’t have everything revolve around school. I was so surprised when I came to Florida. I happened to go to an eye doctor’s office, right when I got here, and a secretary was bemoaning how she had spent four hours the night before helping her second grader with homework. What can you do to a second grader, that would take four hours, it would be in any way useful. Of course, what you find out with all this crazy homework is the parents do it. Because it’s not of any value to the kids. They can understand it. I noticed that my great grandkids get assignments. I remember this a few years ago, they gave my great grandson something to do on the computer. The computer program was so clunky, it was virtually impossible to figure out what he was supposed to do. They gave instructions very briefly at the beginning, then you entered in part you’re supposed to do. There was no way to go back and listen to the instructions without exiting, and going back and starting. I was sitting there watching him and I said: boy, you are patient, you must have gone out and started that five times to get clear on the instructions. He said yeah, it’s what I have to do. I said I would have given up.

Billy Saas:  Near guarantee that that software cost the school quite a bit of money and was sold by a private vendor who contracted someone else out to slap it together and there was no oversight.

Larry Johnson:  Oh, gosh, I’m absolutely sure that’s true.

Scott Ferguson:  And that’s why there’s homework.

Larry Johnson:  Yeah, that’s why there’s homework and homework that can’t be done. What better way to do it, than you ensure?

Billy Saas:  The lesson that you’re supposed to learn is very clearly secondary to the lesson that you’re actually learning about how impossible this whole thing is.

Larry Johnson:  Yes, yes. I could never understand how students, I mean, clearly, well, off family students managed to get through this stuff. Maybe it’s just because school makes a decision that they will get through. It doesn’t matter what they actually do. How do they learn to pass these tests? One of my students said, Well, one thing if you’re lucky enough to go to school in a rich community, you learn you don’t think about anything too much. You learn what you’re supposed to say, and that’s what you do. I had a student who I thought had misread a passage and something we’d read the other day. I criticized her and gave her that feedback. She got back and said, No, no, this is what the piece said, and this is what I said. She copied and pasted from each. And I looked at it and I thought, I think you left a note out of what you said, and she got back to me. She says, Yeah, I did. I left a note out of it. And I said, Well, you were willing to read the feedback, and follow up on it. That’s the whole purpose of this. If you had gone through this in a discussion group, I would have given you full credit. You went through with me, I probably would still give you full credit. She was willing to come back and challenge my feedback, which I thought was excellent. That’s what you hope your students will do. So look at it, think about it, try to understand it, and come back. So I said, You’re doing everything I could ask of the student.

Scott Ferguson:  I think that is a beautiful place to end our conversation. Larry Johnson, thank you so much for joining us on Money on the Left.Larry Johnson:  Thank you. It was great talking to both of you. Take care.

* Thanks to the Money on the Left production team: William Saas (audio editor), Mike Lewis (transcription), & Robert Rusch (graphic art)