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Ramanan expands his assessment of the export issue to cover broader problems in the MMT-conception of the external sector:
Hi Georg,
Basically, there's Post-Keynesianism and there's MMT. MMT is part of Post-Keynesian theory.
To be more precise: what's correct in MMT is not original and what's original is not correct.
But still, it is very useful, as it provides non-economists to become immediately interested in economics and they can start learning.
Some work of MMTers like Scott Fullwiler is useful in central bankey stuff.
MMTers are right side of the political economy generallly, not always.
MMT is million times better than mainstream.
But MMTers fail to understand the importance of the external sector.
Free trade puts a large constraint on nations and "exports are cost" is wrong. Rich nations impose free trade on poor nations while they themselves had protection in their early stages of development.
A poor nation if it expands demand, its imports will zoom and might soon be faced with balance of payments crisis, fixed or floating.
So the solution is a reform of the world order, WTO, IMF etc so that surplus nations can't run surpluses beyond a point.
Etc.
Ramanan
My reply:
Hi Ramanan,
Thank you for your enlightening synopsis. I can entirely relate to it. Other than criticising the Mosler-export-doctrine, I had not yet come to appreciate wider problems with MMT's treatment of the external sector. Thank you for this pointer. I shall also consult Godley on this issue, which I have become aware of very recently thanks to your posting.
Best regards,
Georg
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