By Elizabeth Njambi

Just what does the election of US President-elect Joe Biden mean for the fight against inequality, in the US and around the world? How might billionaires be feeling? What’s it going to take to put the right policies into place? What can we learn from FDR? And just how can Modern Monetary Theory – “MMT” – help? We talk to the influential economist Professor Stephanie Kelton. She was formerly chief economist on the U.S. Senate Budget Committee and senior economic adviser to Bernie Sanders, and has been recognized by Prospect as one of the world’s top 50 thinkers this year. An illuminating and inspiring episode!

This is episode 3 of the EQUALS podcast Season 3 – and if you’re joining us for the first time, tune in to our earlier interviews – from talking with best-selling author Anand Giridharadas on whether we need billionaires, to thinker Ece Temelkuran on beating fascism, Darrick Hamilton on racism in the economy, and the Managing Director of the International Monetary Fund on what comes after the pandemic.

The following is a truncated “transcript”, but you can listen to the full episode below or on your preferred podcast platform. Or listen as you read along!

Hope in the Wake of the US Election Results

We ask Prof. Kelton if she’s feeling hopeful.

“Definitely, I think a huge sigh of relief … and … healthy optimism.”

Just How Might Billionaires be Feeling?

Nabil wonders what billionaires might be going through and says, “As we’re reading up, we loved how vocal you’ve been about Billionaires. We loved when you wrote, ‘No one makes a billion dollars. You take a billion dollars!’ How do you think billionaires in the USA might be feeling now after this election cycle?

Stephanie answers, “I think to be very honest with you, I doubt very much that they’re shaking in their boots. … They may be feeling a little bit of heat, but I think that deep down inside, they probably have the sense that they’re going to be okay.”

An FDR-style Presidency

Nabil: … Now, we’ve heard some of President-elect Biden’s advisors are suggesting that he wants to have an FDR-style Presidency, which I think is music to our ears. But given the political realities for example in Congress, what do you think an FDR-style presidency might look like today and which specific policies would look like tangible progress to you?

According to Stephanie, “FDR kind of had like … The “3 Rs” … You have Relief, Recovery (and) Reform the system … And you reference that tweet that I sent some time back about, the problem with the people at the very top isn’t so much for me that they don’t pay their fair share.  It’s that they keep taking more than their fair share and they do that through a variety of mechanisms including patents, monopolies, various forms of protection, trade deals, the tax code, labour laws. So FDR sort of went at all of that and that’s what a real reformist agenda would look like. So, if we’re imagining what this Administration might do that’s on a scale even remotely like FDR, then I think you’re looking for, you know, very ambitious investments in the economy and new industrial policy; big investments in manufacturing; reshoring jobs; dealing with climate; doing it in a just way so that there is an opportunity for workers to transition; large-scale public spending programs that directly employ, re-employ millions of workers; building a care economy!”

Nabil follows up asking, “…What do you think it’s going to take to actually pursue such an ambitious reform agenda?”

Stephanie explains, “You know FDR remember famously said, “You’ve got to make me do it!” The pressure really does need to come from the bottom. Look where we are today. … Congress has gone AWOL. They’re home for the holidays! And so, you know, I think that what is going to take is an enormous amount of pressure being brought to bear on members of Congress to get them to do, well their jobs. …it’s going to take all of us frankly. On the phone, in the streets making our voices heard because … they seem incapable of understanding the magnitude of what this economy is facing in the months ahead.

What the Election Results Mean on the International Front

Nadia asks what Stephanie thinks we can expect from this Administration on the international front.

Stephanie says, “The first big thing we can expect is that the US will re-enter the Paris Climate Agreement. That is going to happen very very quickly, and I think that the International Community knows that that’s coming and that they are extremely happy that the election went the way that it did so that the US re-engages on that front but I think you know that the tensions are going to subside in many respects … but, it’s not going to be all, rainbows and roses. There are still differences in terms of where the US wants to be on a variety of international fronts. There will be challenges to be sure, but I think that we’re going to have leadership again that the rest of the world recognizes that the US is re-engaged internationally and will be a partner and a leader going forward.

Modern Monetary Theory (“MMT”)

Nadia steers us into an interesting learning session asking, “One of the constraints the new Administration will inevitably face as it looks to promote any number of things from Universal Health Care to student debt relief is the famous response, “That all sounds good. But how will you pay for it?” And I understand MMT can help answer that very question. Could you explain for our listeners in a very simple way what MMT is all about?

Prof. Kelton explains, “… Well, think about what that question means when someone says ‘where are you going to find the money’. It literally evokes in your imagination this idea that you have to go somewhere and look for a thing that exists like there’s money. Is it under the seat cushion? Is it in a cave? Is it in a vault? Where do I find it? Who has it? And an MMT comes along and says ‘… Our monetary system’s changed. We have what’s called a “Floating Fiat Currency” and boy is that sexy! And what does it mean? It means that the federal government doesn’t have to quote unquote “find the money”. That when Congress wants to fund a priority whether its tackling climate change or dealing with the economic Fallout around coronavirus or anything else, It doesn’t go out and find the money. What they do is find the votes. If you can find enough colleagues in the House in the Senate to vote for your spending priority, the vote authorizes the spending. And the federal government has the unique capacity to do something the rest of us can’t do. And that is, it can spend money it doesn’t have. The government can spend money literally into existence and they can do that because they have something we often call ‘the power of the purse’. The federal government in the US, in Australia, in Japan, in the UK, Canada and many other countries is the issuer of what we might call a Sovereign Currency. The issuer of the currency is like the scorekeeper at a basketball game, right? The stadium doesn’t run out of points. The arena doesn’t run out of points. The Sovereign currency issuer can’t run out of its own money. Now, that doesn’t mean that there are no limits.”

“It can spend too much. Congress could authorize too much spending and the punishment for that is not default. It’s not bankruptcy. It’s inflation. So, there are limits but the limits under the kind of monetary system that exist today, are in the real economy. It’s in our economy’s ability to keep up. To supply enough real goods and services to keep up with any demand the government is enabling by spending more. But apart from the inflation constraint, there’s nothing about the Government’s finances or budget that are at all akin to those of a household or of a private business.”

MMT vs. Inequality

Nabil asks her to explain what MMT means for the fight against inequality.

Stephani then explains, “… MMT is not using the rich like a piggy bank. MMT does not want to treat Billionaires as you know, the obstacle to prosperity; the thing that you have to go through in order to get to where you want to go. … The federal government has far greater spending capacity than even Jeff Bezos. … That doesn’t mean you don’t go after concentrations of wealth and income in order to deal with extreme inequities. It just means that you don’t have to allow the Billionaires to be impediments to progress. You don’t have to take from them in order to achieve other goals.”

Nabil then further asks, “So what you are suggesting is a subtle but significant shift in framing that we don’t actually need to rely on the wealth of the rich to fight inequality.” To which Stephanie clarifies, “yes, I don’t want to become dependent on the wealthy in order to fund an ambitious progressive agenda. I would never want the Billionaires to hold the key to prosperity.”

Nadia seeks clarification on this, “If MMT means Uncle Sam can pay for everything, does MMT then negate the importance of taxing wealth and how do you deal with concentration of wealth then?”

Prof. Kelton clarifies, “… Well, I think about pre-distribution … I don’t think of it in terms of redistribution. … And MMT recognizes that the purpose of the tax is not to pay for XYZ. The purpose of the taxes to remove dollars from somebody else’s hands and the question is why. Well, you might do that simply because you want to aggressively deal with the concentrations of wealth and income and so that’s the purpose of the tax. It seems like a subtle difference, but I think it’s really significant.”


As is our tradition, Nabi asks Stephanie where she sees the influential progressive movement in the USA (which she’s a part of) in the next few years.

Stephanie finds hope in solidarity. She states, “I think what’s interesting is the alignment between different movement groups. … Solving one problem often requires addressing the other problem or problems. And so, I think that when that begins to happen and you get movement groups … and other kind of organizations aligning their movements, … then that’s where the real potential for unleashing progress comes from.

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