13 June 2018; Leo Varadkar, T.D, on Centre Stage during day two of MoneyConf 2018 at the RDS Arena in Dublin. Photo by Stephen McCarthy/MoneyConf via Sportsfile

Feb 5, 2021 | Opinion, Politics | 0 comments

“Mission Economy” – Government has done too little for too long

Euros
Stephen Moynihan

Written by Stephen Moynihan

Mariana Mazzucato’s latest book leaves governments with little excuse for turning a blind eye to inequality in our society.

6min Read

Stephen Moynihan

Written by Stephen Moynihan

6min Read

Mariana Mazzucato’s latest book leaves governments with little excuse for turning a blind eye to inequality in our society.

“The wrong question is: how much money is there and what we can do with it? The right question is: what needs doing and how can we structure budgets to meet these goals?”

The above quote from economist Mariana Mazzucato’s recent book, Mission Economy, presents a radically different picture of conducting public policy within the framework of capitalism. It has the potential to revolutionise the way that the most pressing issues in our country can be dealt with. No more would talk of “limited budgets” and fears of “maxing out the [public] credit card” act as convenient excuses for government inaction and failure to mend societal ills.

Governments across Europe, including Ireland, can be blamed for treating themselves in the last decade more like guardians of the public purse-strings rather than pioneers who have the ability to shape and create the good society. Budget day rolls around and funds are allocated to paper over the cracks in a creaking health service and a broken housing system, before reassurances are made that such measures are “prudent”, with a shrinking deficit seemingly trumping all. There is rarely any long-term vision and government are always keen to emphasise that this is the best they can do. The public are expected sit back and accept it, because after all, “there’s no magic money tree!”… or is there?

By arguing that government should focus on “what needs doing” rather than questions of budgetary capacity, Mazzucato is convincing in her attestation that social problems can be dealt with far more effectively than under the status quo. Through the lens of Modern Money Theory (MMT), made mainstream by Stephanie Kelton’s The Deficit Myth, it is clear that the public finances are radically different than that of the household. Governments don’t have to cut their expenditure or sell off the family silver to fund their investments, and money doesn’t have to be taken from one department to fund another. This is because, through their respective central banks, governments have the ability to “print” money, which adds to the national debt. “Boo!”, say the deficit hawks.

But did they ever stop to think where this money goes? It doesn’t just disappear, it goes to the private sector, in many cases goes to productive uses, and stays there until its taxed back. As long as government is careful about how much money it “prints” and that the economy isn’t overheating, then the commonly cited fear of inflation shouldn’t rear its head. As long as there is demand for the currency, then there is no risk of default.

By coupling MMT with the notion that the rewards of the private sector should be shared with the public if they benefitted from government funding, Mazzucato allows for an envisioning of the public finances in such a manner that we can ask for much more from our governments. We can question why our health service is chronically underfunded, why social housing stocks remain low, and why a dignified standard of living for all has not yet been achieved. The lazy retort of “there’s no money for that” would no longer be sufficient, instead such failings would represent political choices.

One thing to take away from Mission Economy is that we shouldn’t have to live in fear of a return to the austerity of the early 2010’s. Such a measure would constitute incompetence and a failure of imagination, and to be fair to the Irish government there has been little suggestion that they are heading towards austerity at the nearest opportunity. But if they took a few leaves out of Mazzucato’s book, things would be that much better.

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