Lot's Wife Edition 4

Lot’s Wife • Edition Four
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Money,
Solve My
Problems
Words by Jeanne Cheong
Editors’ Note: The opinions expressed in the piece are
not necessarily representative of Lot’s Wife.
Everyone’s a Keynesian – still! And if you don’t know what that is, you’re
probably still one anyway. Maybe you were like me before I started my
degree and when you read Keynesian in your head, your brain mumbled an
incomprehensible sound or, immediately thought of Keiynan Lonsdale from
the underrated Australian TV classic, Dance Academy.
So what is a Keynesian you ask? Taking its name from Keynes – John Maynard
Keynes, Keynesianism is a macroeconomic theory that considers how aggregate
demand in an economy affects output. Truthfully, I don’t think I can summarise
the *key* theory of his seminal book The General Theory of Employment,
Interest and Money (1936) better than what has already been said, so I will
do as economists do (which is to maximise efficiency) and quote Tom Butler-
Bowdon (2017) instead:
Elegant models of how economies work are often wrong. Markets are
not self- correcting, but need constant intervention and management
to ensure high consumer demand, investment and employment.
In other words, policies by (usually) governments, or their agencies such
as a central bank, are needed to achieve positive outcomes for the economy
as a whole. This differs from the belief that the economy (‘the market’)
can inherently fix its own problems, problems such as low employment or
inflation. Think of the market like you and your sister fighting over the remote;
constrained by network programming and with different viewing preferences,
you might spend the whole night bickering over who gets control. However, a
better strategy may be realised by your mum when she storms in telling you to
change to advertisement-riddled Channel 93 because Midsomer Murders is on
in five minutes and that’s what you all wanted to watch anyway. Because of her
experience, authority and knowledge of the Green Guide (does this still exist?),
a satisfactory outcome is able to be achieved more quickly than if you decided
yourselves. However, this analogy does also bring up questions about the actual
ability of governments to make the ‘right’ decisions, as well as how to avoid
paternalistic policy overreach.
Nevertheless, because we live in Australia, where the Government fulfils this
mother role and we generally agree when it does, it’s difficult to contest the
validity of Keynesianism. As such, rather than rejecting Keynesianism, Modern
Monetary Theory (MMT) takes its ideas further.
Despite being an Economics 1 major, I only discovered MMT recently whilst
live streaming a discussion with American economist Stephanie Kelton.
Although logging on late (sadly, the switch to online events has not improved
my punctuality), I was quickly intrigued. Deficits are historical records while “a
budget…is a moral document”, she explained. Earlier, fellow panellist Richard
Denniss mused that an election promise to bring the budget back to surplus is
a promise “to collect more in tax than… spend[ing] in healthcare, education
and other government services.” If true, these statements show government
budget decisions to be constrained only by political will, rather than actual lack
of access to funds. Consequently, these statements are a challenge to rethink
the parts of ‘the Economy’ we accept as immoveable and amoral but are not.
This motion and morality that Kelton presented is of course Modern Monetary
Theory, as discussed in her book The Deficit Myth (2020).
1 I want to shout out my Human Rights major too because Arts degrees are
underrated (and underfunded if the changes go ahead).
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