Clearly not because it is ‘true’, or makes economic sense, because it isn’t and doesn’t. It doesn’t take much understanding of economics to see that cuts in government spending, depressed business confidence and investment, flat wage growth and increasing unemployment suggest we’re going in the wrong direction, and that even easing the cash rate further isn’t going to help much. And it presumably isn’t that hard to see that at least some of this arises from political decisions, such as those embodied in the last budget.
Ah, but the commentators say. There is a structural problem. Revenue is down. Health and welfare costs are rising. We can’t afford the ‘nice’ things we want. Even if this is true – and there are those Modern Monetary Theorists who say it isn’t – dealing with it remains a political problem. Need more revenue? Change the taxation regime. Too much spending? Stop spending on wasteful things. We’ve all seen recently just how hard it is to increase taxation, or stop spending on people who’ve come to expect it. But who and what you tax, and who and what you spend on are political, not economic decisions. Labor is freaked by it, understandably so, given the success of axe the tax and Labor waste throughout Labor’s term in office, and at the last election. How can they escape the current pervasive narrative?
The only way to change the politics is to change the language we use.
Modern Monetary Theorists, who think that budget deficits are and should be the normal state of affairs, and presumably neo-Keynesians, who accept the necessity for budget deficits in some circumstances (like now) all have to contend with this problem of language. Professor Bill Mitchell, a leading MM Theorist, did a great job in this article in the Guardian on the ‘unemployment industry’. Following on from his appearance on 4 Corners program The Jobs Game, he slammed the privatised employment services sector, and the thinking behind it: ‘The unemployed cannot search for jobs that are not there. It is a cruel hoax to punish the victims of the jobs shortage.’ He also pointed out the particular use of the the language in which the debate is conducted: ‘Since January 2013, employment has grown by a pathetic 2.1%, while the working age population has grown by 3.7%. Yet the public narrative still focuses on the supply-side – the allegedly “lazy” and “unskilled” unemployed.’ He also criticised both Liberal and Labor for their use of terms like dole bludgers, cruisers, job snobs and more recently, leaners –all terms that blame the unemployed and suggest they depend on tax payers’ generosity.
Professor Mitchell has also tried more generally to change the way economics is discussed at a popular as well as at an academic level. In his blog in November 2013 titled How to discuss Modern Monetary Theory, he looks at ‘the use of metaphors in economics and how Modern Monetary Theory (MMT) might usefully frame its offering to overcome some of the obvious prejudices that prevent, what are basic concepts, penetrating the public psyche.’ I hope he won’t mind my sharing an amended version of a chart he included:
| Focus of Attack | Metaphor | Intent |
| Government spending | Living beyond means, maxed out credit card | Irresponsible, excessive, need to stop spending at once |
| Budget deficit | Budget black hole, running out of money, ballooning debt and deficit | Government budget like household budget, running out of money |
| Public debt | Mortgaging the future, burdening grandchildren, intergenerational theft | Nation is a badly managed insolvent firm, being horrible to children |
| Income support | Welfare dependency, dole bludgers, leaners etc | Lazy, undeserving, parasitical |
These are the metaphors we day in day out from the LNP government and their supporters in the media, but regretfully also at times form more neutral commentators and the Labor front bench.
There’s much more to Mitchell’s post than discussion of these metaphors, including another table comparing mainstream – neo-conservative – macroeconomic prescriptions with MMT ones.
But the post also acknowledges that it’s one thing to recognise when the metaphors about the economy are serving a particular political agenda. It’s another thing to find different words. As Mitchell points out, ‘deficit’ always sounds bad, as something lacking, though a budget deficit can be either a useful tool or bad economic management, depending on the circumstances. Some of the other terms he thinks may be in need of different metaphors for explanation, or at least alternative terminology, are budget balance, budget surplus, public debt, government spending, government taxation, national income, Income support payments and full employment. Some of those commenting on the blog – and there are lots of them – recognise the need to ‘sell’ a different version of economics, but few have any really good ideas how. For example, if you can call government spending national investment, it is harder to equate it to waste, but it still doesn’t challenge the pervasive metaphor that government budget is just like yours.
Whether or not progressive politicians and commentators come to accept MMT, or remain neo-Keynesians, we still need different language to talk about what really happens in the economy, who wins and who loses, and what role political decision really play in it. If I hear the phrase ‘budget repair’ one more time, I’ll scream.
Any suggestions?