During this week’s State of Law class, we had a debate about whether capitalism, socialism, populism, communism, or any other economic and political system known to man is the best path to follow. Arguments were exchange fiercely but with respect. Some argued for universal income, others insisted on free education for all at all levels (primary, secondary, and tertiary). In my case, I easily became the spearhead of the capitalist faction, as I advocated for a minimum role of the government in our society, meritocracy over technocracy, and opportunities for everyone. This last one must be understood as fair play at all possible situations, never as a proxy for equal results. For example, anyone who wishes to be a doctor is free to become one, but him/her becoming a good or a bad one is left to the individual’s will.
Obviously, every person will have a different perspective, yet the beauty of a good debate is that all those distinct voices can be listened and taken into account. Nevertheless, there must always be respect present between the debaters, as well as facts sustaining their arguments. This is not politics but economics.
Nonetheless, today that kind of discussions can only seem to be able to happen in academia due to the current political context in which you are either black or white, the gray seems to be forgotten.
Imagine my surprise when I read that prime minister Abe had recommended president Trump for the same Nobel prize that former president Obama had won years earlier. All comments were either criticizing or defending but none were even trying to find some common ground.
In the economic world, the same is happening, as some economist are proclaiming the rise of a new monetary theory, the Modern Monetary Theory (MMT), which argues that government bonds (debt) is not constrained by neither demand nor supply but rather by the ability of its economy to keep growing with inflation subdued.
The first problem of this new theory is that is the “modern” one, while all the others become the outdated ones. The second is that it is stating that government debt has overcame the very forces of the market that all goods and services are constraint by. The third is that inflation will occur naturally when an economy is expanding, and even thought it can be tamed, it will eventually set free itself.
With such theory, economists are forced to take a side because the new premise does not allow for common ground. Thus, you are either in favor of governments racking up more debt or not.